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England and Wales High Court (Commercial Court) Decisions |
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You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Customs & Excise v Barclays Bank Plc [2004] EWHC 122 (Comm) (03 February 2004) URL: http://www.bailii.org/ew/cases/EWHC/Comm/2004/122.html Cite as: [2004] WLR 2027, [2004] 1 LLR 572, [2004] 2 All ER 789, [2004] 1 All ER (Comm) 960, [2004] 1 Lloyd's Rep 572, [2004] 1 WLR 2027, [2004] EWHC 122 (Comm) |
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QUEENS BENCH DIVISION
COMMERCIAL COURT
NEUTRAL CITATION NO.
[2004] EWHC 122 (Comm)
Strand, London, WC2A 2LL |
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B e f o r e :
____________________
| Commissioners of Customs & Excise |
Claimant |
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| - and - |
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| Barclays Bank Plc |
Defendant |
____________________
Mr Michael Brindle QC and Mr Richard Handyside (instructed by Messrs Lovells) for the Defendant
Hearing dates : 16-17 December 2003
____________________
Crown Copyright ©
Mr Justice Colman :
Introduction
The Assumed Facts
"1. The Defendant must not remove from England and Wales or in any way dispose of or deal with or diminish the value of any of its assets which are in England and Wales whether in its own name or not and whether solely or jointly owned up to the value of £1,800,000.00.
This prohibition includes the following assets in particular, namely any money in the accounts numbered 01311633 at HSBC Bank, and account number 70845302 at Barclays Bank Plc."
"1. Effect of this Order:
It is a Contempt of Court for any person notified of this Order knowingly to assist in or permit a breach of this Order. Any person doing so may be sent to prison, fined or have his assets seized.
2. Set off by Banks:
This injunction does not prevent any bank from exercising any right of set off it may have in respect of any facility which it gave to the Defendant before it was notified of this Order.
3. Withdrawals by the Defendant:
No bank need enquire as to the application or proposed application of any money withdrawn by the Defendant if the withdrawal appears to be permitted by this Order."
"The Claimants will pay the reasonable costs of anyone other than the Defendant which have been incurred as a result of this Order including the costs of ascertaining whether that person holds any of the Defendant's assets and if the Court later finds that this Order has caused such person loss, and decides that such person should be compensated for that loss, the Claimants will comply with any Order the Court may make."
"We confirm that the Bank will abide by the terms of the order and would be grateful if all future correspondence concerning this matter could be forwarded to this Office quoting our reference shown above.
Substantial costs are incurred in handling Freezing Orders. You will no doubt be aware that we are entitled to reimbursement and would direct your attention to the Practice Direction dated 28 October 1996, made by the Lord Chief Justice with the concurrence of the President of the Family Division.
Please find enclosed a schedule of the work typically involved, for your information. In this case our costs to date amount to £150 and we shall be pleased to receive your early remittance in settlement. Cheques should be made payable to "Barclays Bank Plc".
Where further work is required, for example on an amended Order, we reserve the right to claim reimbursement of any additional costs incurred."
"Unfortunately a problem arose, shortly after the service of the Order, which we have been unable to resolve. The Order was served by fax at 11.38 am on 30 January 2001. Doveblue had the use of the Bank's 'Faxpay' system, enabling it to make direct transfers without reference to the branch. Steps were taken to amend the instructions on that system so that Doveblue could no longer make such transfers. However, at approximately, 2.00 pm, before the amendment could be put in place, funds were transferred from Doveblue's account under the 'Faxpay' system.
The Bank took immediate steps to recall the payments. A number of discussions took place with the recipient Banks. Unfortunately, the recipient Banks were unwilling to repay the sums transferred on the grounds that payments were in the ordinary course of their customers' businesses."
Preliminary Matters
"That, however, does not mean that there are no cases of negligent contempt where a penalty in the form of committal or sequestration would be appropriate. For example, where a contemnor had committed an isolated breach of a Mareva injunction due to the negligence of those responsible for giving appropriate orders to junior staff or perhaps due to having received negligent legal advice and had attempted to purge the contempt by restoring the status quo as far as possible, it might well be quite unnecessary for the protection of the administration of justice for any penalty to be imposed. Where by contrast there has been a very culpable degree of negligence which has resulted in numerous breaches of the Court's order involving the abstraction of large sums of money, it will often be appropriate to impose not merely a nominal penalty but one which will be recognized as reflecting the serious view taken by the Court of the failure to comply with its orders."
The Main Submissions
(a) The appropriate test for the existence of a duty of care on the facts of the present case is the so-called "threefold test" of (a) foreseeability of damage, (b) proximity between the claimant and the defendant and (c) that it should be fair, just and reasonable to impose a duty. The foundations for this test are formulated by Lord Griffiths in Smith v. Eric Bush [1990] 1 AC 831. at p. 865 and by Lord Bridge in Caparo Industries v. Dickman [1940] 2 AC p. 605 at page 617 – 618.
(b) Although the test of duty of care by reference to whether there has been a voluntary assumption of responsibility by the defendant as derived from Hedley Byrne v. Heller [1964] AC 465, per Lord Reid at p. 486-7, Lord Morris at p.502-3, Lord Hodson at p. 510 and 514 and Lord Devlin at p.528-9 has been applied relatively recently in such cases as Henderson v. Merrett Syndicates Ltd. [1995] 2 AC 145 per Lord Goff at p. 180-1 and White v. Jones [1995] 2 AC 207 per Lord Goff at p. 268, in the latter case where there was no direct dealing between the solicitor and plaintiff intended beneficiaries under the will, it is a less appropriate test for the circumstances of the present case than the threefold test. In this connection reliance is placed on the observations advanced in Clerk & Lindsell on Torts, 18 Edn, paras 7-22 and 7-23. Further, the test of assumption of responsibility is particularly apposite in cases where there has been a negligent misrepresentation or the negligent provision of professional services which by being relied upon have caused purely economic loss, as distinct from financial loss attributable to physical loss or damage, and in relation to which there is need for a restriction as to the extent of an assumption of responsibility to an identifiable individual or group, as explained by Lord Goff in Henderson v. Merrett Syndicates Ltd., supra, at page 181.
(c) A further test identified by Sir Brian Neill in Bank of Credit and Commerce International (Overseas) Ltd. v. Price Waterhouse [1998] BCC 617 at pages 631-634 as the incremental approach, which involved ascertaining whether the factual situation in question was closely analogous to that found in cases where a duty of care had been held to exist, was not treated as an independent test but rather as a cross-check or reference system by which to measure the extent to which a proposed extension of the scope of duty of care would be justifiable.
(d) That the assumption of responsibility test is not appropriate in the present case is demonstrated by the fact that this is not a case where the Bank gave negligent advice or information to the Commissioners nor where there has been consequential economic loss of the type sustained in Hedley Byrne. In both cases there was a specific fund in the account which, but for the Bank's negligence in permitting payment out, would have been available to the Commissioners as a means of enforcing their judgment debts. These facts differ materially from those found in cases where the assumption of responsibility test has been applied.
(e) As regards application of the threefold test, foreseeability of loss if a freezing order is ignored, is self-evident. This is not challenged on behalf of the Bank.
(f) As to proximity, the Commissioners reasonably relied on the Bank to protect their interest in as much as, having applied to the court for the orders, they had served them on the Bank. They had, by the act of obtaining the order and serving it, undertaken to pay the Bank's charges, as provided for in Schedule B, paragraph 7 (see paragraph (8) above). The Bank knew that the Commissioners were relying on it to preserve the companies' assets. Indeed, the Bank was familiar with the operation of freezing injunctions as shown by its responding to service of the orders by sending standard form letters to the Commissioners which referred expressly to the Practice Direction of 28th October 1996.
(g) The combination of the Bank's knowledge that the Commissioners were relying on it to protect their rights of enforcement and that only the Bank could provide that protection in respect of those assets against the background of the Bank's duty to the court to comply with the order were sufficient to create proximity.
(h) Further, the Commissioners and the Bank had a relationship closely akin to that of a contract. Even had there been no express undertaking to pay the Bank's reasonable expenses, such an enforceable undertaking would arise by implication, as indicated by Lord Denning MR in Z Ltd. v. A-Z and AA-LL [1982] 1 QB 558 at page 575.
(i) It is further submitted on behalf of the Commissioners that although, on the facts of this case, an assumption of responsibility by the Bank does not have to be established, the Bank nevertheless did assume responsibility for compliance with the orders by the very fact of its carrying on a public banking service in a jurisdiction in which freezing orders against customers' accounts are commonplace and/or by its sending out its letters of acknowledgement in response to service of the order.
In this connection as regards the order against Brightstar, the Bank had already sent its letter of acknowledgement before it released the funds, whereas as regards the Doveblue order, although it had acted internally in an attempt to comply with the order, the letter of acknowledgement was not sent out until the funds had already been released. It is submitted that there was objectively an assumption of responsibility in both cases, responsibility being assumed as a necessary incident of the Bank's business and subsequently acknowledged in its letter of 31st January 2001.
(j) The fact that the Bank was under a duty to the Court to comply with its order could not in itself preclude the existence of the necessary proximity. In this connection the Commissioners rely on the recent decision of the House of Lords in Arthur J.S. Hall & Co. v. Simons [2002] 1 AC 615 in which it was held that the fact that an advocate owes a duty to the court in the conduct of civil litigation no longer provides justification for his owing no duty of care in negligence to his client. The materiality of this approach is that the existence of a parallel but non-conflicting duty as a matter of professional ethics does not preclude the existence of an overlapping duty of care owed to a person who is sufficiently proximate. The Commissioners also relied on Al-Kandari v. J.R. Brown & Co. [1988] 1QB 665 as exemplifying the court's preparedness to find a duty of care on the part of someone (in that case a defendant's solicitor) who undertook to act in a particular capacity to the plaintiff and possibly to the court (namely as custodian of the plaintiff's children's passports), notwithstanding the solicitor's professional duty of care to the defendant client. In further support of the argument that, where there is foreseeability of loss and sufficient proximity, a duty of care can arise owed by a solicitor advising a client borrower as to security for a loan and the lender upon whom it was the purpose of the advice to confer adequate security, the Commissioners rely on Dean v. Allin & Watts [2001] 2 Lloyd's Rep 249. In this connection, Mr Sales, on behalf of the Commissioners, draws attention to the concept expressed in X(minors) v. Bedfordshire CC [1995] 2 AC 633 per Lord Browne-Wilkinson at pages 735-739 that a duty of care can arise from a relationship in respect of which a statutory duty exists by reference to the threefold test, provided always that there is no inconsistency between the common law duty and the statutory duty and that there would be no risk that the existence of a common law duty of care would tend to prejudice performance of the statutory duty.
(k) Finally, the Commissioners submit that it would be fair, just and reasonable for a duty of care to be imposed on the Bank. Firstly, but for such a duty, the party obtaining the freezing injunction would have no remedy for its breach other than the availability of proceedings for contempt, which would not necessarily provide an effective remedy, as explained in paragraph (21) above. Secondly, the magnitude of the risk of damage to the claimant having the benefit of a freezing order would be very great compared with the relatively light task of exercising reasonable care which such a duty would impose on a bank, particularly having regard to the fact that banks appear to have in place systems which, if properly operated, enable banks to comply with freezing injunctions and banks are entitled to be reimbursed the cost of compliance. Additionally a bank could insure against its liability arising from negligent operation of its blocking facilities. The standard of care required to comply with such a duty would overlap with that required to avoid non-compliance for the purposes of contempt proceedings. Thirdly, the fact that Brightstar and Doveblue by their conduct in triggering the bank's transfer machinery directly brought about the Commissioners' losses is not a reason for concluding as a matter of what is fair, just and reasonable that the Bank should be under no duty of care because (i) the Bank had an independent duty to the court to comply with the order and (ii) that duty extended to taking all reasonable steps necessary to prevent its customers from failing to comply. Analogous duty situations were exemplified by Dorset Yacht Co Ltd v. Home Office [1970] AC 1004, Al-Kandari v. J R Brown & Co (supra), and Reeves v. Commissioner of Police of the Metropolis [2000] 1 AC 360 where the House of Lords held there to be a duty of care owed to a person held in police custody to prevent him from committing suicide. Neither the existence of an overlap nor, conversely, the lack of co-extensiveness between what was required of the Bank in its performance of its duty to the court and what would be required of it were there to be a duty of care would not be a reason for excluding a duty of care. This was supported by Al-Kandari v. J R Brown, supra, X(Minors) v. Bedfordshire CC, supra, and also by Spring v. Guardian Assurance plc [1995] 2 AC 296, as to the incidence of a duty of care on a reference-giver in circumstances capable of being covered also by defences to claims for defamation.
(a) The claim by the Commissioners is for purely economic loss.
(b) Based on the observations of Sir Brian Neill in Bank of Credit and Commerce International (Overseas) Ltd v. Price Waterhouse [1988] BCC 617 at p634 para 719, the appropriate course for ascertaining whether there is a duty of care, at least in an economic loss case, is to look at any new set of facts by using each of the three approaches in turn, namely the threefold test, voluntary assumption of responsibility and the incremental test. "If the facts are properly analysed and the policy conditions are correctly evaluated the several approaches will yield the same result", per Sir Brian Neill at page 634, para 7.19.
(c) As to the threefold test, the relationship between the Commissioners and the Bank was not one of adequate proximity because service of the court's orders on the Bank imposed on it an automatic duty of compliance as to which the Bank had no choice.
(d) Further, the context in which the Bank's duty to the court arose was that of contentious litigation and, although the Bank was not a party to the underlying litigation between the Commissioners and its customers, it occupied a position analogous to a party on the opposite side to the Commissioners. In that context, the relevant principle was that one litigant does not in general owe a duty of care to an opposing litigant as to the way in which the litigation is conducted. Thus, in Business Computers Ltd v. Company Register [1988] 1 Ch 229 a winding up petition having been served at an address which was not that of the plaintiff's registered office, and nobody having appeared at the hearing, a winding up order was made against the plaintiff company which then sued in negligence in respect of the losses it alleged to have been sustained as a result of the order. The claim failed, Scott J. holding that it was not just and reasonable that a duty of care should be imposed. At pages 239-240 he said this:
"Is it just and reasonable that a plaintiff should owe a duty of care to a defendant in regard to service of the originating process? I do not think that it is. The plaintiff and the defendant, the petitioner and the respondent, are antagonists. The plaintiff, or the petitioner, is seeking a legal remedy in an adversarial system. The system stipulates the rules and requirements that must be observed by the two parties. The plaintiff must issue his process and must serve it on the defendant. If there is default in service the process must be struck out. If an order is obtained without the prescribed rules or regulations having been observed, the order may be discharged or set aside, sometimes by an application at first instance, sometimes on appeal. The prosecution of the action or of the petition is subject throughout its career from institution to final judgment to judicial control. Service of process is a step, in the prosecution. It must usually be proved before an order can be obtained against an absent defendant. The proposition that a duty of care is owed by one litigant to another and can be superimposed on the checks and safeguards that the legal system itself provides is, to my mind, conceptually odd. The safeguards against ineffective service of process ought to be, and I think must be, found in the rules and procedures that govern litigation. The rules and procedures require that, save on ex parte applications, proof of service be shown before an order is made against an absent party. If the proof of service is false, be it through negligence or design, an order may be made that should not have been made. The injured party's remedy is to have the order set aside. An action for damages cannot be based on the falsity of the proof of service. Nor, in my judgment, can the adequacy of the efforts made to effect service be subjected to a tortious duty of care."
"In my judgment, there is no duty of care owed by one litigant to another as to the manner in which the litigation is conducted, whether in regard to service of process or in regard to any other step in the proceedings. The safeguards against impropriety are to be found in the rules and procedure that control the litigation and not in tort. I am therefore of opinion that the plaintiff's statement of claim does not disclose a reasonable cause of action against the second defendant and ought to be struck out."
"(1) Save in special cases an undertaking as to damages is the price which the person asking for an interlocutory injunction has to pay for its grant. The court cannot compel an applicant to give an undertaking but it can refuse to grant an injunction unless he does.
(2) The undertaking, though described as an undertaking as to damages, does not found any cause of action. It does, however, enable the party enjoined to apply to the court for compensation if it is subsequently established that the interlocutory injunction should not have been granted.
(3) The undertaking is not given to any party enjoined but to the court.
(4) In a case where it is determined that the injunction should not have been granted the undertaking is likely to be enforced, though the court retains a discretion not to do so."
(g) As to whether there was a voluntary assumption of responsibility, objective analysis of the Bank's conduct demonstrated that there was none. In this connection the Bank relies on certain observations of Lord Steyn in Williams v. Natural Life [1998] 1WLR 830. in that case the relevant issue was whether the defendant managing director and principal shareholder of a franchising company was under a duty of care to the plaintiffs who had entered into a franchising agreement with the company in reliance on a brochure which referred to the managing director's experience and on certain financial projections in the preparation of which the managing director had played a major part. In the course of his judgment, with which Lord Goff, Hoffmann, Clyde and Hutton agreed, Lord Steyn said this at page 834:
"My Lords, a great many precedents were cited at first instance, in the Court of Appeal and in the printed cases lodged for the purpose of the present appeal. It is unnecessary to embark on a general review of the authorities. The sole purpose of the citation of precedent is, or ought to be, the identification of a legal principle or rule which covers, or may arguably cover, the issue in the case to be decided. And that is how I hope to approach the problem under consideration. In this case the identification of the applicable principles is straightforward. It is clear, and accepted by counsel on both sides, that the governing principles are stated in the leading speech of Lord Goff of Chieveley in Henderson v. Merrett Syndicates Ltd. [1995] 2 AC 145. First, in Henderson's case it was settled that the assumption of responsibility principle enunciated in Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd. [1964] AC 465 is not confined to statements but may apply to any assumption of responsibility for the provision of services. The extended Hedley Byrne principle is the rationalisation or technique adopted by English law to provide a remedy for the recovery of damages in respect of economic loss caused by the negligent performance of services. Secondly, it was established that once a case is identified as falling within the Hedley Byrne principle, there is no need to embark on any further inquiry whether it is "fair, just and reasonable" to impose liability for economic loss: p.181. thirdly, and applying Hedley Byrne, it was made clear that
'reliance upon [the assumption of responsibility] by the other party will be necessary to establish a cause of action (because otherwise the negligence will have no causative effect)" (p.180).'
Fourthly, it was held that the existence of a contractual duty of care between the parties does not preclude the concurrence of a tort duty in the same respect.
"Thus the issue in this case is not peculiar to companies. Whether the principal is a company or a natural person, someone acting on his behalf may incur personal liability in tort as well as imposing vicarious or attributed liability upon his principal. But in order to establish personal liability under the principle of Hedley Byrne, which requires the existence of a special relationship between plaintiff and tortfeasor, it is not sufficient that there should have been a special relationship with the principal. There must have been an assumption of responsibility such as to create a special relationship with the director or employee himself."
"Two matters require consideration. First, there is the approach to be adopted as to what may in law amount to an assumption of risk. This point was elucidated in Henderson's case by Lord Goff of Chieveley. He observed, at p.181:
'especially in a context concerned with a liability which may arise under a contract or in a situation 'equivalent to contract', it must be expected that an objective test will be applied when asking the question whether, in a particular case, responsibility should be held to have been assumed by the defendant to the plaintiff.'
The touchstone of liability is not the state of mind of the defendant. An objective test means that the primary focus must be on things said or done by the defendant or on his behalf in dealings with the plaintiff. Obviously, the impact of what a defendant says or does must be judged in the light of the relevant contextual scene. Subject to this qualification the primary focus must be on exchanges (in which term I include statements and conduct) which cross the line between the defendant and the plaintiff. Sometimes such an issue arises in a simple bilateral relationship. In the present case a triangular position is under consideration: the prospective franchisees, the franchisor company, and the director. In such cases where the personal liability of the director is in question the internal arrangements between a director and his company cannot be the foundation of a director's personal liability in tort. The inquiry must be whether the director, or anybody on his behalf, conveyed directly or indirectly to the prospective franchisees that the director assumed personal responsibility towards the prospective franchisees."
(h) Against that background it is submitted on behalf of the Bank that for reasons already summarised above, there was no assumption by the Bank of responsibility for giving effect to the court's orders, for all that crossed the line in each case was an acknowledgement that it had been served and nothing more. In particular the Bank thereby assumed no responsibility to the Commissioners. The necessary relationship between the Bank and the Commissioners was simply never created by any conduct on the part of the Bank.
The appropriate Methodology
"Mr Ashworth drew attention to the doubts expressed about the correctness of this decision by Kerr LJ. in the course of his judgment in the Court of Appeal, and submitted, on the authority of Hedley Byrne & Co Ltd v. Heller & Partners Ltd [1964] AC 465 that it was essential to found liability for a negligent misstatement that there had been "a voluntary assumption of responsibility" on the part of the person giving the advice. I do not accept this submission and I do not think that voluntary assumption of responsibility is a helpful or realistic test for liability. It is true that reference is made in a number of the speeches in Hedley v. Byrne to the assumption responsibility as a test of liability but it must be remembered that those speeches were made in the context of a case in which the central issue was whether a duty of care could arise when there had been an express disclaimer of responsibility for the accuracy of the advice. Obviously, if an adviser expressly assumes responsibility for his advice, a duty of care will arise but such is extremely unlikely in the ordinary course of events. The House of Lords approved a duty of care being imposed on the facts in Cann v. Wilson (1888) 39 CH D 39 and in Candler v. Crane, Christmas & Co [1951] 2 KB 164. But if the surveyor in Cann v. Wilson or the accountant in Candler v. Crane, Christmas & Co, had actually been asked if he was voluntarily assuming responsibility for his advice to the mortgagee or the purchaser of the shares, I have little doubt he would have replied, "Certainly not. My responsibility is limited to the person who employs me." The phrase "assumption of responsibility" can only have any real meaning if it is understood as referring to the circumstances in which the law will deem the maker of the statement to have assumed responsibility to the person who acts upon the advice."
"I have come to the conclusion that Yianni [1982] QB 438 was correctly decided. I have already given my view that the voluntary assumption of responsibility is unlikely to be a helpful or realistic test in most cases. I therefore return to the question in what circumstances should the law deem those who give advice to have assumed responsibility to the person who acts upon the advice or, in other words, in what circumstances should a duty of care be owed by the adviser to those who act upon his advice? I would answer – only if it is foreseeable that if the advice is negligent the recipient is likely to suffer damage, that there is a sufficiently proximate relationship between the parties and that it is just and reasonable to impose the liability. In the case of a surveyor valuing a small house for a building society or local authority, the application of these three criteria leads to the conclusion that he owes a duty of care to the purchaser. If the valuation is negligent and is relied upon damage in the form of economic loss to the purchaser is obviously foreseeable. The necessary proximity arises from the surveyor's knowledge that the overwhelming probability is that the purchaser will rely upon his valuation, the evidence was that surveyors knew that approximately 90 per cent, of purchasers did so, and the fact that the surveyor only obtains the work because the purchaser is willing to pay his fee. It is just and reasonable that the duty should be imposed for the advice is given in a professional as opposed to a social context and liability for breach of the duty will be limited both as to its extent and amount. The extent of the liability is limited to the purchaser of the house – I would not extend it to subsequent purchasers. The amount of the liability cannot be very great because it relates to a modest house. There is no question here of creating a liability of indeterminate amount to an indeterminate class. I would certainly wish to stress that in cases where the advice has not been given for the specific purpose of the recipient acting upon it, it should only be in cases when the adviser knows that there is a high degree of probability that some other identifiable person will act upon the advice that a duty of care should be imposed. It would impose an intolerable burden upon those who give advice in a professional or commercial context if they were to owe a duty not only to those to whom they give the advice but to any other person who might choose to act upon it."
"But I do not think the duty can be extended still further so as to include strangers of whom they have heard nothing and to whom their employer, without their knowledge may choose to show their accounts … The test of proximity in these cases is: did the accountants know that the accounts were required for submission to the plaintiff and use by him?"
"I agree that by obtaining and disclosing a valuation, a mortgagee does not assume responsibility to the purchaser for that valuation. But in my opinion the valuer assumes responsibility to both mortgagee and purchaser by agreeing to carry out a valuation for mortgage purposes knowing that the valuation will probably be relied upon by the purchaser in order to decide whether or not to enter into a contract to purchase the house."
and later:
"In the present appeals, the statutory duty of the council to value the house did not in my opinion prevent the council coming under a contractual or tortious duty to Mr and Mrs Harris who were cognisant of the valuation and relied on the valuation."
(i) the House of Lords clearly regarded the statements as to the appropriate methodology in Ministry of Housing v. Sharp, supra, as correctly qualifying or supplementing the references to voluntary assumption of responsibility in Hedley Byrne;
(ii) that qualification was at the foundation of the submission on behalf of the purchasers in Harris v. Wyre Forrest DC at page 835C that in an economic loss case, in spite of the fact that there was no direct contact (not "contract" as printed in the report) between the provider of the information and the recipient of it, there could be sufficient proximity to impose a duty of care provided that the ultimate recipient was identifiable and was somebody who would foreseeably suffer loss if the information were inaccurate;
(iii) the applicability of the assumption of responsibility methodology to the facts in Harris, in which the valuer's report was at no time shown to the potential purchasers, who simply relied on having received an offer of a mortgage from the local authority, would be appropriate only if that assumption were deemed to exist not because the facts were in any real sense "akin to contract" but because the law imposed a duty of care on the valuer having regard to the nature of his relationship with the purchasers, forseeability of loss if the information were inaccurate and, as a general control mechanism what was fair, just and reasonable; in their words the threefold test.
"But since the Anns case a series of decisions of the Privy Council and of your Lordships House, notably in judgments and speeches delivered by Lord Kinkel, have emphasised the inability of any single general principal to provide a practical test which can be applied to every situation to determine whether a duty of care is owed and, if so, what is its scope: see Governors of Peabody Donation Fund v. Sir Lindsay Parkinson & Co. Ltd. [1985] AC 210, 239f-241c; Yuen Kun Yeu v. Attorney General of Hong Kong [1988] A.C. 175, 190e-194f; Rowling v. Takaro Properties Ltd. [1988] AC 473, 501d-g; Hill v. Chief Constable of West Yorkshire [1989] AC 53, 60b-d. What emerges is that, in addition to the foreseeability of damage, necessary ingredients in any situation giving rise to a duty of care are that there should exist between the party to whom it is owed a relationship characterised by the law as one of "proximity" or "neighbourhood" and that the situation should be one in which the court considers it fair, just and reasonable that the law should impose a duty of a given scope upon the party for the benefit of the other. But it is implicit in the passages referred to that the concepts of proximity and fairness embodied in these additional ingredients are not susceptible of any such precise definition as would be necessary to give them utility as practical tests, but amount in effect to little more than convenient labels to attach to the features of different specific situations which, on a detailed examination of all the circumstances, the law recognises pragmatically as giving rise to a duty of care of a given scope. Whilst recognising, of course, the importance of the underlying general principles common to the whole field of negligence, I think the law has now moved in the direction of attaching greater significance to the more traditional categorisation of distinct and recognisable situations as guides to the existence, the scope and the limits of the varied duties of care which the law imposes. We must now, I think, recognise the wisdom of the words of Brennan J. in the High Court of Australia in Sutherland Shire Council v. Heyman (1985) 60 A.L.R. 1, 43-44, where he said:
'It is preferable, in my view, that the law should develop novel categories of negligence incrementally and by analogy with established categories, rather than by massive extension of a prima facie duty of care restrained only by indefinable 'considerations which ought to negative, or to reduce or limit the scope of the duty or the class of person to whom it is owed.'
One of the most important distinctions always to be observed lies in the law's essentially different approach to the different kinds of damage which one party may have suffered in consequence of the acts or omissions of another. It is one thing to owe a duty of care to avoid causing injury to the person or property of others. It is quite another to avoid causing others to suffer purely economic loss."
"But subsequent attempts to define both the duty and its scope have created more problems than the decisions have solved. My noble and learned friends have traced the evolution of the decisions from Anns v. Merton London Borough Council [1977] A.C. 728 until and including the most recent decisions of your Lordships' House in Smith v. Eric S. Bush [1990] 1 AC 831. I agree with your Lordships that it has now to be accepted that there is no simple formula or touchstone to which recourse can be had in order to provide in every case a ready answer to the questions whether, given certain facts, the law will or will not impose liability for negligence or in cases where such liability can be shown to exist, determine the extent of that liability. Phrases such as "foreseeability," "proximity," "neighbourhood," "just and reasonable," "fairness," "voluntary acceptance of risk," or "voluntary assumption of responsibility" will be found used from time to time in the different cases. But as your Lordships have said, such phrases are not precise definitions. At best they are but labels or phrases descriptive of the very different factual situations which can exist in particular cases and which must be carefully examined in each case before it can be pragmatically determined whether a duty of care exists, and, if so, what is the scope and extent of that duty. If this conclusion involves a return to the traditional categorisation of cases as pointing to the existence and scope of any duty of care, as my noble and learned friend Lord Bridge of Harwich, suggests, I think this is infinitely preferable to recourse to somewhat wide generalisations which leave their practical application matters of difficulty and uncertainty. This conclusion finds strong support from the judgment of Brennan J. in Sutherland Shire Council v. Heyman, 60 A.L.R. 1, 42-44 in the High Court of Australia in the passage cited by my noble and learned friends.
My Lords, I confess that like my noble and learned friend, Lord Griffiths, in Smith v. Eric S. Bush [1990] 1 AC 831, 862, I find considerable difficulty in phrases such as 'voluntary assumption of responsibility' unless they are to be explained as meaning no more than the existence of circumstances in which the law will impose a liability upon a person making the allegedly negligent statement to the person to whom that statement is made; in which case the phrase does not help to determine in what circumstances the law will impose that liability or indeed, its scope."
"Perhaps, therefore, the most that can be attempted is a broad categorisation of the decided cases according to the type of situation in which liability has been established in the past in order to found an argument by analogy. Thus, for instance, cases can be classified according to whether what is complained of is the failure to prevent the infliction of damage by the act of the third party such as Dorset Yacht Co. Ltd. v. Home Office [1970] AC 1004, P. Perl (Exporters) Ltd. v. Camden London Borough Council [1984] QB 342, Smith v. Littlewoods Organisation Ltd. [1987] A.C.241 and, indeed, Anns v. Merton London Borough Council [1978] A.C. itself, in failure to perform properly a statutory duty claimed to have been imposed for the protection of the plaintiff either as a member of a class or as a member of the public (such as the Anns case, Ministry of Housing and Local Government v. Sharp [1970] 2 Q.B. 223, Yuen Kun Yeu v. Attorney-General of Hong Kong [1988] A.C. 175) or in the making by the defendant of some statement or advice which has been communicated, directly or indirectly, to the plaintiff and upon which he has relied. Such categories are not, of course, exhaustive. Sometimes they overlap as in the Anns case, and there are cases which do not readily fit into easily definable categories (such as Ross v. Caunters [1980] Ch.297). Nevertheless, it is I think, permissible to regard negligent statements or advice as a separate category displaying common features from which it is possible to find at least guidelines by which a test for the existence of the relationship which is essential to ground liability can be deduced."
"The decisions of Williams v. Natural Life Health Foods Ltd. [1998] 1 WLR 830 and Standard Chartered Bank v. Pakistan National Shipping Corpn. (no.2) [2000] 1 Lloyd's Rep 218 do not, in my view, help Mr. Babb. They were each dealing with relationships and circumstances where the principal defendant was a limited company and the question was whether the director of the company had also assumed a personal responsibility. In those circumstances it was necessary to look for overt dealings between the director personally and the claimant sufficient to give rise to a personal liability which would otherwise not arise, since normally the director of a company is not personally liable for the actions of the company. But in many cases where Smith v. Eric Bush [1990] 1 AC 831 applies, including the present cases, there is no direct dealing at all between the valuer and the purchaser. Yet the law recognises that in those circumstances there is a duty of care without the need to find any direct overt dealings between the valuer and the purchaser."
"When confronted with a novel situation the court does not … consider these matters [foreseeability, proximity and fairness] in isolation. It does so by comparison with established categories of negligence to see whether the facts amount to no more than a small extension of a situation already covered by authority, or whether a finding of the existence of a duty of care would effect a significant extension to the law of negligence. Only in exceptional cases will the court accept that the interests of justice justify such an extension."
Discussion
(i) the court has taken the view that there is a real risk that, absent such an order, the customer will remove his assets otherwise than in the ordinary course of business with the effect of avoiding execution of a judgment;
(ii) it is not unlikely that the party who has obtained the freezing injunction will obtain judgment against the customer;
(iii) if the customer is permitted to remove funds from the account without the permission of the court there is a serious risk that such judgment as may be obtained will go unsatisfied, thereby causing economic loss to the party who has obtained the injunction;
(iv) the party who has obtained the injunction undertakes to the court and impliedly undertakes to the bank to pay the bank's expenses in administering the order : (see Z Ltd. v. A-Z and AA-LL [1982] 1 Q.B. 558, per Lord Denning M.R. at page 575).
(v) if the bank were mistakenly to release funds covered by the injunction it would be exposed to proceedings for contempt of court which might, but would not necessarily, result in the sequestration of its assets unless it purged its contempt by restoring the availability of such funds as it had released, although this might be difficult in practice.
"If the plaintiff's complaint alleges carelessness, not in the taking of a discretionary decision to do some act, but in the practical manner in which that act has been performed (eg. the running of a school) the question whether or not there is a common law duty of care falls to be decided by applying the usual principles ie. those laid down in Caparo Industries Plc v. Dickman [1990] 2 AC 605, 617-618. Was the damage to the plaintiff reasonably foreseeable? Was the relationship between the plaintiff and the defendant sufficiently proximate? Is it just and reasonable to impose a duty of care? See Rowling v. Takaro Properties Ltd [1988] AC 473; Hill v. Chief Constable of West Yorkshire [1989] AC 53.
However the question whether there is such a common law duty and, if so, its ambit, must be profoundly influenced by the statutory framework within which the acts complained of were done. The position is directly analogous to that in which a tortious duty of care owed by A to C can arise out of the performance by A of a contract between A and B. In Henderson v. Merrett Syndicates Ltd [1995] 2 AC 145 your Lordships held that A (the managing agent) who had contracted with B (the members' agent) to render certain services for C (the Names) came under a duty of care to C in the performance of those services. It is clear that any tortuous duty of care owed to C in those circumstances could not be inconsistent with the duty owed in contract by A to B. Similarly, in my judgment a common law duty of care cannot be imposed on a statutory duty if the observance of such common law duty of care would be inconsistent with, or have a tendency to discourage, the due performance by the local authority of its statutory duties."
"In the ordinary course of adversarial litigation a solicitor does not owe a duty of care to his client's adversary. The theory underlying such litigation is that justice is best done if each party, separately and independently advised, attempts within the limits of the law and propriety and good practice to achieve the best result for himself that he reasonably can without regard to the interests of the other party. The duty of the solicitor, within the same limits, is to assist his client in that endeavour, although the wise solicitor may often advise that the best result will involve an element of compromise or give and take or horse trading. Ordinarily, however, in contested civil litigation a solicitor's proper concern is to do what is best for his client without regard to the interests of his opponent."
"In so holding the passport the defendants were not acting as solicitors and agents of the husband, their client, but as independent custodians subject to the directions of the court and the joint directions of the parties. I have no doubt that in this situation the defendants owed the plaintiff a duty of care, since the purpose of holding the passport at all was to protect her lawful rights. The judge defined the duty [1987] QB 514, 522 as:
'a duty to take reasonable care that the passport should not leave the possession of themselves or, where relevant, their agents. They owed her, in my judgment, the further duty to take all reasonable steps to prevent harm coming to her from any failure to comply with or any agreed relaxation of the undertaking.'
I would put it very slightly differently. In my view the defendants in all the circumstances owed the plaintiff a duty to take reasonable care to keep the passport in their possession (save as the plaintiff might otherwise agree) and to inform the plaintiff if for any reason it ceased to be in their possession. I rather doubt whether the defendants should be treated as having themselves given any undertaking to the court (although plainly they could not connive at any breach by their client), but whether they should or not I regard their duty to the plaintiff as something separate and different."
"None of these English decisions, in my judgment, go anywhere near establishing a proposition that counsel for one party may in the absence of circumstances evidencing a voluntary assumption of responsibility to that other party owes a legally enforceable duty of care to that party. Nor do the two New Zealand cases to which we were referred."
Was there an Assumption of Responsibility by the Bank?
(i) to confirm that it would be complied with by the Bank;
(ii) to express the principle that its costs were to be reimbursed;
(iii) to explain the kind of work which service of such an injunction was likely to involve;
(iv) to quantify its costs so far incurred at £150;
(v) to call for early remittance of that sum; and
(vi) to request confirmation that the Bank should immediately be advised of the amendment or discharge of the order.
