Mutual Life & Citizens' Assurance Co Ltd v Evatt

[1968] HCA 74

HIGH COURT OF AUSTRALIA

Barwick C.J., Kitto, Taylor, Menzies and Owen JJ.

MUTUAL LIFE &CITIZENS' ASSURANCE CO. LTD. v. EVATT

(1968) 122 CLR 556

11 November 1968

Negligence

Negligence—Duty of care—Statements—Liability for unsound advice—Relationship between parties—Information and advice given by companies to inquirer about financial stability of associated company—Whether essential for liability that giving advice be part of defendant's business—Whether action lay in respect of advice not in writing—Usury, Bills of Lading, and Written Memoranda Act, 1902 (N.S.W.), s. 10*.

Decisions

November 11.
The following written judgments were delivered: -
BARWICK C.J. The respondent is the plaintiff in actions at common law in the Supreme Court of New South Wales, in which he claims that the appellants jointly and severally gave him incorrect information and advice as to the security of his investments, actual and projected, in a company H.G. Palmer (Consolidated) Ltd. (H.G. Palmer) and that in doing so the appellants were in breach of a duty to be careful in giving such information and advice which they jointly and severally owed to him in the circumstances. H.G. Palmer was a wholly owned subsidiary of the appellant The M.L.C. Ltd. (the holding company) of which the other appellant, The Mutual Life &Citizens' Assurance Co. Ltd. (the assurance company) was also a wholly owned subsidiary. (at p560)

2. There are two actions : in the first there is but one defendant, the appellant the assurance company; in the second there are two defendants, both the present appellants. In each case the substantial structure of the respondent's pleading alleging his cause of action is the same, though that in the second action contains more than one count, one against the holding company, another against the assurance company and a third against the appellants jointly. In each action demurrers were entered by the appropriate appellant or appellants to the respective count of the respondent's declaration, the demurrer point being the failure of the count to disclose a cause of action. In the second action, the appellants pleaded as well as demurred and in three pleas, the sixth, seventh and eigth, each in the same terms but respectively pleaded by the assurance company and the holding company severally and by the appellants jointly, alleged that the information and advice alleged by the respondent to have been given by the respective appellant or the appellants was "a representation or assurance made or given concerning or relating to the conduct, credit, trade or dealings of H.G. Palmer to the intent or purpose that H.G. Palmer might obtain credit or money", that such representation or assurance was not made in writing signed by the appellant or appellants as appropriate and that the action was in each case brought to charge that appellant or those appellants upon or by reason of such representation or assurance. This plea was based on s. 10 of the Usury, Bills of Lading, and Written Memoranda Act, 1902 (N.S.W.), which reproduces Lord Tenterden's Act, the Statute of Frauds Amendment Act 1828 (U.K.). To these pleas the respondent demurred, the demurrer point being that s. 10 "does not apply where the plaintiff's cause of action is founded on breach of a duty of care". Joiners in demurrer having been filed, the demurrers were heard by the Supreme Court (Court of Appeal Division), that in the first action on one occasion (1967) 69 SR (NSW) 50; 86 WN (Pt 2) 183 , and those in the second action on a subsequent occasion (1967) 69 SR (NSW) 73; 87 WN (Pt 2) 165 : but on each occasion by a bench comprised of the same judges. The Supreme Court ruled that judgment should be entered for the respondent on all the demurrers. This Court granted leave to appeal in each case and the matters on appeal to this Court have now been argued together. (at p561)

3. The essential assertions made by the respondent in his pleading are as follows (and for this recital I take the declaration against the assurance company):

(1) That he sought information and advice from the appellant as to the financial stability of H.G. Palmer;
(2) That the appellant was associated in business with H.G. Palmer both being subsidiaries of the holding company and

was in a position to obtain full, complete and up-to-date information concerning the financial affairs of H.G. Palmer and in a position to give the respondent reliable and up-todate advice concerning the financial stability of H.G. Palmer;

(3) That the respondent knew (which I take to include, if it does not mean, that he believed on reasonable grounds)

that the appellant was in the position above mentioned;

(4) That the appellant knew that the respondent intended to act upon the information and advice received in deciding

whether to retain his existing investments in H.G. Palmer and whether to invest further in that company;

(5) That the appellant did give the respondent information and advice as sought concerning the financial stability of

H.G. Palmer;

(6) That the respondent acted upon such information and advice and by reason thereof retained his investments in

H.G. Palmer and invested further funds in that company;

(7) That the appellant was negligent in giving that information and advice to the respondent whereby the respondent lost

the value and advantage of his investments. (at p561)

4. It is implicit, I think, in these assertions that the information and advice given by the appellant to the respondent was incorrect, that its incorrectness was due to a want of care in the appellant in not obtaining information which it could have obtained or in using the information it did obtain as to H.G. Palmer's financial affairs or in exercising or in expressing its judgment upon and in relation to such information as it had as to those affairs, or in some combination of these possibilities. In accepting these assertions as present in the pleading, it is of course necessary to make the word "negligently" do much work which in a better drawn pleading it would not be required to do. (at p561)

5. The count in the declaration also contained an allegation that the appellant "accepted the responsibility of supplying" the respondent with the said information and advice. We were told by counsel for the respondent that we are not to take this allegation as the assertion of an express acceptance by the appellant of a contractual or any obligation to use care in giving the information or the advice but rather that we are to accept it as an assertion of a conclusion arising from the relationship of the parties as pleaded and the giving of the information and advice in the circumstances. Counsel for the appellants raised no objection to this course. The presence of the allegation is no doubt due to an attempt to accommodate the pleading to some of the statements in the speeches in the House of Lords in Hedley Byrne &Co. Ltd. v. Heller &Partners Ltd. (1964) AC 465 . (at p562)

6. It is to be noted that the respondent does not assert in his pleading that there was any consideration given or promised by the respondent in respect of the giving of the information or advice or that the appellant generally held itself out as able to give the particular information or as skilled in the giving of advice on the subject matter of the respondent's inquiry. It is also clear that there is no allegation of dishonesty in the giving of the information and advice. (at p562)

7. Two questions arise in the first action, one of fundamental principle and of considerable import and the other, one of expression and content in pleading, which, whilst not of such major import, is not only related to the principal question but significant if for no other reason in that its resolution assists, I think, to clarify the practical consequence of the principal question. The first question is whether an action will lie at common law for negligence in the giving of information or advice where there is no relevant contractual right or obligation between the parties, nor any consideration provided nor any profession on the part of the informant or adviser, nor any element of deceit; and the second is whether, if such a cause of action is possible, the respondent has sufficiently alleged the necessary facts to support it against the appellant. Both of these questions also arise in the second action with the additional question whether Lord Tenterden's Act applies in relation to the cause of action asserted by the respondent. (at p562)

8. The principal submission behind the appellants' demurrers is in substance that there are no circumstances in which a duty of care in the giving of information or of advice can arise at common law, unless there is consideration moving to the informant or adviser in respect of the giving of such information or advice. A subsidiary submission is that if, contrary to the principal submission, such an action will lie without the presence of such consideration, it will only do so if the person giving the information or advice has held himself out as "professionally" expert in that connexion. But I have not understood this submission to go so far as to confine such cases to information or advice given by a person practising one of the traditionally recognized professions. (at p563)

9. The matter so far as this Court is concerned is free of any binding authority. The Court's task therefore is to declare the common law in this respect for Australia. There are indicative decisions in the courts of England ; these are to be regarded and respected. With the aid of these and of any decisions of courts of other countries which follow the common law and of its own understanding of the common law, its history and its development, the Court's task is to express what is the law on this subject as appropriate to current times in Australia. This will not necessarily be identical with the common law of England : see Australian Consolidated Press Ltd. v. Uren (1967) 117 C L R 221 , though it may always be preferable if substantial divergence between the two can be avoided. This inevitably means that the common law is what the Court, so informed, decides that it should be, subject of course to correction by the Judicial Committee in a case in which Her Majesty's Privy Council retains jurisdiction. For, where no authority binds or current of acceptable decision compels, it is not enough, nor indeed apposite, to say that the function of the Court in general is to declare what the law is and not to decide what it ought to be. In such a case, in my opinion, the common law is as much in gremio judicis as ever it was, assisted and instructed now no doubt by all that has happened through the years of its growth : and thus in such a case the two positions of what is and of what should be are in reality coincident. But, of course, the Court is not to depart from what it realizes the common law would provide in order to arrive at some idiosyncratic solution. So to do is to attempt to legislate and to tread forbidden ground. (at p563)

10. The House of Lords, as it seems to me, was in the position of being able thus to declare the common law when deciding Hedley Byrne &Co. Ltd. v. Heller &Partners Ltd. (1964) A C 465 even though at that time the Lord Chancellor's announcement of the year 1966 on behalf of the Law Lords had not been made : see (1966) 1 Weekly Law Reports 1234. In that case there was no need in order to arrive at its conclusion for the House to overrule any decision of its own by which at that time it would have been bound ; nor indeed was it necessary as their Lordships viewed the case to overrule any decision at all other than that in Le Lievre v. Gould (1893) 1 Q B 491 and that in Candler v. Crane, Christmas &Co. (1951) 2 K B 164 . (at p564)

11. For the future, even where an existing decision of the House of Lords currently governs a matter which comes before it, it would seem that the House of Lords will be in the same situation as is this Court where no precise decision of the Privy Council governs the matter in hand. It will be free to overrule its own decision in order properly to express the common law. The Lord Chancellor's statement of 26th July 1966, in my respectful opinion, is a useful indication of the balance which needs to be sought between the maintenance of a stable system of law and the provision of rules which are appropriate to do and to ensure justice in current situations. It recognizes rightly, if I may respectfully say so, that the perpetuation of error by an ultimate court of appeal is not an indispensable nor a desirable feature of a stable system of law grounded on judicial precedent. However, there is no need presently to explore further the situation because, as I have said, in the instant case, this Court is not bound by any authority which stands in the path of its resolution of the major question in either sense. (at p564)

12. Lord Reid, in his speech in Hedley Byrne &Co. Ltd. v. Heller &Partners Ltd. (1964) A C 465 , in my respectful opinion, convincingly demonstrated that, Le Lievre v. Gould (1893) 1 Q B 491 and Candler v. Crane, Christmas &Co. (1951) 2 K B 164 apart, no decision of an English court, properly understood, denied the possibility of an action for breach of a duty of care in the utterance of words, whether by way of giving information or of giving advice, or both. I would respectfully adopt his Lordship's recital and analysis of the earlier decisions of the English courts including those in Le Lievre v. Gould (1893) 1 Q B 491 and Candler v. Crane, Christmas &Co. (1951) 2 K B 164 , and I find no need to go over that ground in any respect. It is, to my mind, abundantly clear that Derry v. Peek (1889) 14 App Cas 337 did not decide that no action could be brought at law upon an incorrect statement whether by way of information or by way of advice made in breach of a duty of care, or that there were no circumstances short of contract or fiduciary relationship in which a duty to be careful in utterance could arise. Derry v. Peek (1889) 14 App Cas 337 was decided by the House of Lords in 1889 and there was built upon it the view that no action at law would lie in any circumstances for incorrect but honest statement. This view culminated in Candler v. Crane, Christmas &Co. (1951) 2 K B 164 founded proximately upon Le Lievre v. Gould (1893) 1 Q B 491 . I respectfully agree with Lord Reid and those members of the House of Lords who agree with him in this respect in Hedley Byrne &Co. Ltd. v. Heller &Partners Ltd. (1964) A C 465 that the former of those cases was not well decided and that at least the ratio decidendi of the latter was insupportable, though those who decided these cases felt that they were committed thus to decide because of what became the commonly held view of the common law as a result of Derry v. Peek (1889) 14 App Cas 337 . It seems to me that this view, despite the clear and repeated indications to the contrary by Lord Haldane, derived from the error of treating the course of reasoning in that case as constituting authority for more than the case itself decided on its own facts and circumstances bearing in mind the fundamental conclusion of law upon which the order of the Court was grounded. Derry v. Peek (1889) 14 App Cas 337 decided no more than that in an action at law for deceit, dishonesty must be proved and that carelessness in making the incorrect statement will not establish dishonesty for the purpose of such an action. Carelessness in this use of the term is not of course synonymous with negligence. Also, Derry v. Peek (1889) 14 App Cas 337 was decided in the area of representation which, to my mind, is not in exactly the same area of discourse as utterance in a special relationship, though such utterance is sometimes spoken of as representation or misrepresentation, as the case may be. In this connexion, passages in Banbury v. Bank of Montreal (1918) AC 626, at pp 640, 713 are of some interest. (at p565)

13. In considering the principal question which this appeal raises, I have derived great assistance from their Lordships' speeches in Hedley Byrne &Co. Ltd. v. Heller &Partners Ltd. (1964) AC 465 : but I do not think that a discussion in these reasons of their Lordships' several approaches to that question, though in the result it did not really fall for decision, is an appropriate course, as I see this matter, for me to follow. It is sufficient, in my opinion, that, with unfeigned gratitude and respect, I have had the benefit of the reasoning of those speeches, reasoning which I have most carefully considered and which as will appear has had considerable influence in the formation of the views I am about to express. (at p565)

14. The common law in its development has arrived at the point where a duty of care in relation to physical acts or omissions has come to arise out of the circumstance that one person is placed in some relationship to another. The duty is imposed by law because of the existence of that relationship. I think it can be said that these relationships and the specific duties to which they give rise have progressively become less categorized as the law of negligence has developed. Whilst special relationships and particular duties in relation to them still obtain in this connexion, the tendency of the law of negligence has been towards a more general expression of duty arising out of a more generally expressed relationship. In the case of acts or omissions the universal duty of care is said to be owed by the actor towards all those whom he ought reasonably to comtemplate as within the direct influence of his projected act or omission. It is said that proximity as a concept describes the relationship out of which this duty springs. The duty varies in extent but is radically the same in nature. It does not really derive from contract though a contractual relationship may create the relevant proximity. Indeed the person to whom the duty is owed is not necessarily in any conscious relationship to the actor. But, of course, there may none the less be a contractual duty to be careful, express or implied : see generally Donoghue v. Stevenson (1932) AC 562 . (at p566)

15. If one were to express this development of the common law in sociological terms, one could say, I think, that the society is treated as organized upon the basis of its members being bound in duty to one another to use reasonable care whenever the one is within the proximate influence of the conduct of the other. This basis, it seems to me, has been progressively found to be satisfactory in relation to physical acts and omissions and in relation to damage of a physical kind. The development is not complete in the sense that the occasions for the imposition of a duty of care do not constitute a closed list. Some notable increase in such occasions is to be observed. But the basic concept of a duty of care arising by operation of law out of some relationship of one person to another remains constant. The flexibility of that concept in operation in the ever varying circumstances of a modern community has been found satisfactory and conducive to justice in connexion with physical damage resulting from act or omission. But I think it is quite clear that the relationship of proximity, adequate for compensation of injury caused by physical acts or omissions, would be inappropriate in the case of utterance by way of information or advice which causes loss or damage. The necessary relationship in that connexion must needs be more specific. (at p566)

16. It is necessary as a step in deciding whether or not a duty of care in such utterance can arise out of any, and if so, what, relationships, to consider a question which has been raised in connexion with the relationship of any such utterance to loss or damage which is claimed to result from it. (at p566)

17. What then of financial loss - undoubtedly a form of damage - caused by utterance of words by way of information or advice as distinct from such loss and other damage arising from physical act or omission? Is there any radical difference between the two situations or any logical or other reason that the one should be the subject of compensation whilst the other may not? To take for instance an area in which physical damage caused by a want of care, even where the act performed is a gratuitous act, may be recovered by action, would it not be strange indeed if the physical harm done to a person by careless medical attention of a physical kind was in any different case to financial loss caused by careless erroneous medical advice, the parties standing in each case in the same relationship to each other? Would it not be odd that I may obtain redress in respect of gratuitous medical attention which by want of care causes me physical injury but not for loss of my wages if directly due to medical advice given without due care? (at p567)

18. It was suggested in argument that there is a significant difference in causation between injury and damage by a physical act or omission and loss and damage attributable to an utterance by way of information or advice. In the first, it is said that the injury and damage is direct and obvious without any intervening act whilst in the latter nothing results unless the hearer acts upon the utterance, the loss and damage in a real sense directly arising out of the hearer's own action. This indirection of the loss and damage was claimed to be definitive of the essential difference between the result of a physical act or omission and the result of such an utterance and to be a satisfactory reason for denying any relevant comparability between a lack of care in relation to such an act or omission and a lack of care in making of such an utterance. (at p567)

19. I am unable to accept this as a valid distinction. It has long been accepted that loss and damage caused by action taken upon careless professional advice given for consideration is recoverable: see, for example, Howell v. Young (1826) 5 B &C 259 (108 ER 97) and Harmer v. Cornelius (1858) 5 CB (NS) 236, (141 ER 94) , and this would be so it seems to me even if the professional adviser has given the careless advice gratuitously: see also Kitchen v. R.A.F. Association (1958) 1 WLR 563 . The indirection of the loss and damage has not been held to be a reason either for denying a cause of action or for holding that the loss or damage, albeit only occurring because of the advised person's action upon the advice, is irrecoverable. But though it may be indirect in this sense, the loss and damage must none the less be causally related to the want of care. Thus, it will not be recoverable if it flows entirely from an independent exercise of judgment on the part of the claimant uninfluenced by the information or advice given. Whether or not it does so in any given case may constitute a serious and difficult question of fact. It is no doubt easier to conclude that the advice caused the loss in the case of technical advice such as legal or medical advice, though even in these cases there are often considerable areas in which the person advised has room for personal judgment and decision. In less technical matters, the area for such judgment and decision may be greater and the question of causation correspondingly more difficult. But these difficulties would not seem to me to be a reason for denying the cause of action. After much consideration I cannot find any reason in what I have called the indirection of the loss and damage flowing from incorrect information or advice to deny the possibility of a cause of action for breach of a duty of care in the giving of such information or advice. (at p568)

20. Is there then such a radical difference between physical acts or omissions and the utterance of words by way of information and advice, injury and damage or loss and damage being caused in each case, that the concept of a duty of care arising by law out of a specific relationship should not be as appropriate and reasonable in connexion with such an utterance as it is in connexion with physical acts or omissions? I have been unable to find any such radical difference between the performance of physical acts or omissions and an utterance by way of information and advice as would require the common law to deny a cause of action in the case of the latter whilst conceding it in the case of the former. Of course, as I mentioned earlier, the general relationship of proximity which has been found appropriate in the case of physical acts or omission, is clearly not appropriate in the case of utterances by way of information or advice. But none the less, it seems to me that the concept of a duty to be careful in the utterance of words is as appropriate in the regulation of human affairs in a society as is a duty of care in the case of physical acts or omissions. In each case of course the duty would spring out of some relationship and the cause of action depend on loss and damage causally related to the breach of the duty. And in each case, in my opinion, the duty would be imposed by law and not arise out of any consensual or unilateral assumption of the duty. (at p568)

21. But of course there must be significant differences between the nature of the relationships out of which a duty of care in utterance can be said to arise and the nature of those relationships out of which a duty of care in relation to acts or omissions springs. Also there must be a much greater number of occasions in connexion with the utterance of words which will not give rise to any duty than is the case with physical acts or omissions. Discussion and communication upon a social occasion when no legal relationships could possibly be in contemplation or utterances on matters of no serious or business import are instances of such occasions. But even on social occasions legal responsibility for acts or omissions may not arise as, for example, in the case of some physical acts or omissions in the course of a sport or pastime: see Rootes v. Shelton (1967) 116 CLR 383 and there are other occasions and situations in which legal liability will not be attracted, cf. Balfour v. Balfour (1919) 2 KB 571 and Rose and Frank Co. v. J. R. Crompton &Bros. Ltd. (1925) AC 445 . (at p569)

22. Yet granted these differences, I am unable to see any reason why a duty of care in uttering words may not arise out of some particular relationship. That incorrect information or advice can cause loss and damage cannot, I think, be denied. I agree with respect with Lord Devlin in Hedley Byrne &Co. Ltd. v. Heller &Partners Ltd. (1964) AC 465 when he observes upon the grave defect there would be in the common law if recovery permitted in the case of physical acts or omissions were denied in the case of information and advice given with a lack of due care (1964) AC, at p 516 . In my opinion, the common law is not so defective. After a great deal of consideration, I am clearly of opinion that a duty of care in utterance can arise out of some relationships, which for want of a more precisely designated genus can be called "special". (at p569)

23. The critical question, however, undoubtedly is what are the relationships, or, rather, what are the elements of the relationship out of which a duty of care will arise, that is, will be imposed by law. As in the case of negligent acts, the relationship, though for emphasis as well as for lack of suitable nomenclature styled "special", ought not to be, and quite possibly cannot be, expressed in or confined to fixed and labelled categories. For my own part, I would prefer that no such attempt be made. Rather I would seek to state what seem to me to be the necessary elements or features of a relationship out of which the duty of care will arise. All else will be elucidated in the course of time as particular facts are submitted for consideration in cases coming forward for decision. (at p569)

24. However, in the case of utterance, though the duty will arise out of circumstances which create the requisite relationship, there is one distinguishing feature to which I ought to advert, a feature which is not present or rather certainly not universally present in the case of the relationships which give rise to a duty of care in the case of physical acts or omissions. The information or advice will be sought or accepted by a person on his own behalf or on behalf of another identified or identifiable person or on behalf of an identified or identifiable class of persons. The person giving the information or advice must do so willingly and knowingly in the sense that he is aware of the circumstances which create the relevant relationship. He must give the information or advice to some identified or identifiable person in the given circumstances of the implications of which he is, or ought to be, aware. The identity and position of the recipient of the utterance form part of the relevant circumstances. It is this seemingly "bilateral" aspect of the necessary relationship which, it seems to me, inclines the mind to the use of the expression "assumption of responsibility" to describe the source of the duty of care and to the employment of concepts of consensus and contract, in the explanation of the emergence of the duty of care in utterance. But, though the willingness of the speaker to give or the giving of the information or advice can be described as an acceptance of the duty to be careful in the sense that having in the circumstances a choice to speak or to remain silent, or perhaps to speak with reservation (a matter to which I will later revert), the speaker elects to speak and thus by his voluntary act attracts the duty to be careful both in preparing himself for what he says and in the manner of saying it, yet, in my opinion, the resulting cause of action is tortious and in no sense arises ex contractu, or by reason of any consensus, or any assumption of responsibility by the speaker. The duty of care, in my opinion, is imposed by law in the circumstances. (at p570)

25. Because it is so imposed, I doubt whether the speaker may always except himself from the performance of the duty by some express reservation at the time of his utterance. But the fact of such a reservation, particularly if acknowledged by the recipient, will in many instances be one of the circumstances to be taken into consideration in deciding whether or no a duty of care has arisen and it may be sufficiently potent in some cases to prevent the creation of the necessary relationship. Whether it is so or not must, in my opinion, depend upon all the circumstances of and surrounding the giving of the information or advice. (at p570)

26. As I do not think that it is either necessary or desirable to categorize the relationships which will give rise to the duty of care, and as I prefer to endeavour to state the essential elements which the relevant relationship must exhibit, I turn now to consider what are the features of the special relationship in which the law will import a duty of care in utterance by way of information or advice. (at p571)

27. First of all, I think the circumstances must be such as to have caused the speaker or be calculated to cause a reasonable person in the position of the speaker to realize that he is being trusted by the recipient of the information or advice to give information which the recipient believes the speaker to possess or to which the recipient believes the speaker to have access or to give advice, about a matter upon or in respect of which the recipient believes the speaker to possess a capacity or opportunity for judgment, in either case the subject matter of the information or advice being of a serious or business nature. It seems to me that it is this element of trust which the one has of the other which is at the heart of the relevant relationship. I should think that in general this element will arise out of an unequal position of the parties which the recipient reasonably believes to exist. The recipient will believe that the speaker has superior information, either in hand or at hand with respect to the subject matter or that the speaker has greater capacity or opportunity for judgment than the recipient. But I do not think it can be said that this must always be so, that inequality in these respects must necessarily in fact be present or be thought to be present if the special relationship is to exist. (at p571)

28. Then the speaker must realize or the circumstances be such that he ought to have realized that the recipient intends to act upon the information or advice in respect of his property or of himself in connexion with some matter of business or serious consequence. Of course, utterances in the course of social intercourse with no thought of legal consequence could not satisfy such a condition. (at p571)

29. Further, it seems to me that the circumstances must be such that it is reasonable in all the circumstances for the recipient to seek, or to accept, and to rely upon the utterance of the speaker. The nature of the subject matter, the occasion of the interchange, and the identity and relative position of the parties as regards knowledge actual or potential and relevant capacity to form or exercise judgment will all be included in the factors which will determine the reasonableness of the acceptance of, and of the reliance by the recipient upon, the words of the speaker. (at p571)

30. I have used throughout the description "recipient" to cover both the case where the incorrect utterance is sought by a question or inquiry and the case where it is volunteered by the speaker. Though it must be relatively rare that the latter case will give rise to a cause of action, the possibility cannot, in my opinion, be ruled out. (at p572)

31. Also, I have not differentiated information and advice in the treatment I have given to the subject matter. I have considered whether each can be the subject of the duty of care, and whether there is any valid reason to distinguish in this connexion between information and advice. After reflection, I can find none which would compel or require a different conclusion in connexion with the one from that drawn in respect of the other. In many instances the distinction between the two is very slight: on occasions "information" spills over and becomes inextricable from "advice": but, even where the separation of the two is quite substantial, I do not think each calls for separate treatment. Incorrect information can cause loss and damage as well as incorrect advice. Inequality in the possession of or capacity to obtain information upon a serious topic or a matter of business can exist as between speaker and recipient as well as it may in the capacity or opportunity to exercise judgment on such topics or matters. The possession of accurate information in a business matter can be as of much consequence as advice about that matter. As will later appear, I do not regard Low v. Bouverie (1891) 3 Ch 82 as requiring any relevant differentiation between the giving of information and the giving of advice. But, no doubt, it may be more difficult to make out all the essential elements of the necessary special relationships in connexion with the giving of information than it may be in connexion with the giving of advice. (at p572)

32. It seems to me, therefore, that whenever a person gives information or advice to another, whether that information is actively sought or merely accepted by that other upon a serious matter, and particularly a matter of business, and the relationship of the parties arising out of the circumstances is such that on the one hand the speaker realizes or ought to realize that he is being trusted, particularly if he is thought by the other to have, or to have particular access to, information or to have a capacity or opportunity to exercise judgment or both as to the matter in hand, to give the best of his information or advice as a basis for action on the part of the other party and it is reasonable in the circumstances for the other party to seek or accept and in either case to act upon that information and advice the speaker, choosing to give the information or advice in such circumstances, comes under a duty of care both to utilize with reasonable care the information and sources of information at his disposal and to employ with reasonable care what capacity he has for judgment in relation to the matter and to exercise reasonable care in the expression of what he is prepared to convey by way of information or advice. If he chooses not to speak, he is not merely because of the relationship bound to make any inquiries. But it does mean that, if he is being trusted because of the sources of information at his disposal, and he speaks on the footing of the information which might then be available to him, he will be in breach of his duty if he does not utilize these sources of information before speaking and if his communication is incorrect. But, it should be emphasized, the obligation of the speaker is no more than to use reasonable care in the circumstances. He is not in breach merely because his communicated information is incorrect or his proffered advice erroneous. Speaking in the relationship whose elements I have indicated does not mean that he warrants the accuracy of his utterance. He is merely required to exercise reasonable care in preparing himself to speak in conveying information, in exercise of his judgment and in expressing the information or advice which he chooses to convey. (at p573)

33. In this connexion, I would observe that it is, in my opinion, incorrect to limit the advice which may carry liability to advice about an existing situation. The exercise of judgment so often involves an element of prognosis. For this reason, the distinction and limitations which form the basis of the minority judgment in the Supreme Court in this case are, in my opinion, irrelevant to the matter which was in hand. It is, in my opinion, no answer to a claim for lack of care in the exercise of judgment that the result of that exercise was an opinion as to the future. It would indeed be strange that a medical practitioner could be sued for negligent diagnosis but not for a prognosis given with a lack of reasonable care. Each, the diagnosis and the prognosis, may reasonably be the basis of detrimental action by the person advised. (at p573)

34. It follows from what I have so far said that, in my opinion, the duty of care in utterance cannot be limited to the case of persons professing to have special access to information or special skill or judgment in some area. In my opinion, the profession of the speaker in such a case necessarily supplies some of the elements to which I have referred as requisite in the special relationship. For if he professes, or holds himself out in the relevant respect, it is both reasonable to seek and to accept his assistance and of necessity he must be taken to know that he and his judgment are being trusted in relation to the information or advice being sought or accepted: cf. the attribution of skill and competence in a lawyer or medical man or artisan from the fact that he is or puts himself forward as such. Also, as I have mentioned, it may be easier to establish the causal relation between the advice and the loss in such a case: see Shiells v. Blackburne (1789) 1 HB1 158 (126 ER 94) and Harmer v. Cornelius (1858) 5 CB (NS) 236 (141 ER 94) . But, in my opinion, the elements of the special relationship to which I have referred do not require either the actual possession of skill or judgment on the part of the speaker or any profession by him to possess the same. His willingness to proffer the information or advice in the relationship which I have described is, in my opinion, sufficient. (at p574)

35. I would now wish to advert briefly to Hedley Byrne &Co. Ltd. v. Heller &Partners Ltd. (1964) AC 465 . The question in that case was whether or not a banker owes a duty of care to the customer of another bank which seeks of him information and opinion as to the financial capacity of one of his customers. The House of Lords, as I read their Lordships' speeches, did seem to favour the view that a banker in such a situation did owe such a duty, though I do not think the House really decided that question. The question arose in that case as to the position of the inquiring bank's customer in relation to the answering bank and also the question whether, in any case, having regard to the relationship of a bank to its own customer, it was reasonable for the inquiring bank to expect complete frankness or to rely upon the expressions of opinion of the answering bank. In the present case, no such questions arise. I have therefore no need in this case to express any view as to what is the proper conclusion in the case of inquiries made by one banker to another with a view to passing the information or advice to its customer. For me, that remains an open question. (at p574)

36. Also, in Hedley Byrne &Co. Ltd. v. Heller &Partners Ltd. (1964) AC 465 the question of giving information or advice without recourse arose for consideration. It does not do so in this case. I have already indicated a view as to whether such a reservation ought only to be regarded as part of the circumstances out of which the requisite relationship is said to arise or whether it can effectively qualify an obligation to take care which the law would impose by reason of the circumstances. (at p574)

37. In writing the foregoing, I have not seen any necessity to discuss the authorities, this being fully done in the speeches in Hedley Byrne &Co. Ltd. v. Heller &Partners Ltd. (1964) AC 465 . But, having regard to what I have written I ought to say something about the decision and the reasoning in Low v. Bouverie (1891) 3 Ch 82 . (at p575)

38. Solicitors acting for an intending lender upon the security of an equitable life interest asked the trustee of the settlement under which the life interest arose whether the trustee held any mortgage or knew of any encumbrance upon the life tenant's interest under the settlement. The trustee said that the life interest was charged with the payment of premiums on two life policies and with the payment of interest for money advanced to the extent of 34 Pounds per annum. In fact the life interest was then subject to no less than six mortgages. But the trustee in the subsequent proceedings swore that, although he had had notice of these mortgages prior to answering the solicitor's inquiry, at the time of answering, he had forgotten that fact : and in this he was believed. The solicitor's client lent a sum against the security of the life interest relying on the trustee's reply. In the result, he paid out money in respect of the prior encumbrances to protect his security. (at p575)

39. In a suit by the lender claiming a declaration that the trustee was liable to pay him the amount of his advance and the moneys paid by him to protect his security, North J. made a declaration that the trustee was liable for the payment of the amount lent which had been wholly lost and for the payment of the moneys laid out in the attempt to protect the security. North J. relied upon the decisions in Burrowes v. Lock (1805) 10 Ves 470 (32 ER 927) and Slim v. Croucher (1860) 1 De GF &J 518 (ER 462) . But the Court of Appeal (Lindley, Bowen and Kay L.JJ.) allowed an appeal against the decree and dismissed the lender's suit. (at p575)

40. The case was decided under the shadow of Derry v. Peek (1889) 14 App Cas 337 which had been decided but two years earlier. The line of the reasoning of Lindley L.J. was, first, that the trustee was not bound to answer the inquiry : second, that if he chose to answer, he was not liable unless he was dishonest, or warranted the answer, or, by some means could be estopped from denying the truth of his answer. It is clear that Lindley L.J. took more from Derry v. Peek (4) than would now, in my opinion, be taken. He said (1891) 3 Ch, at p 100 :

". . . . but unless he does one or the other (i.e. warrants the answer, or acts so as to be estopped) I do not know on what principle consistent with Derry v. Peek (1889) 14 App Cas 337 he can, if he answer honestly, expose himself to liability. I say, 'consistent with Derry v. Peek (1889) 14 App Cas 337 , because, until that case was decided, it was generally supposed to be settled in equity that liability was incurred by a person who carelessly, although honestly, made a false representation to another about to deal in a matter of business upon the faith of such representation : Burrowes v. Lock (1805) 10 Ves 470 (32 ER 927) ; Slim v. Croucher

(1860) 1 De GF &J, at p 525 (45 ER, at p 465)

. This general proposition is, however, quite inconsistent with Derry v. Peek (1889) 14 App Cas 337 ." (at p576)

41. His Lordship examined the possibility of estopped being available against the trustee. He denied that there could be any estoppel on the facts because he treated the inquiry as seeking no more than the trustee's present (and unaided) memory as to the facts relating to encumbrances though the solicitors, mistakenly, took him to be stating that in fact there were no other encumbrances than those mentioned by him (1891) 3 Ch, at pp 103, 104 . He said (1891) 3 Ch, at p 103 :

"Knowledge and means of knowledge are very different things ; and if a person truly says he only knows or remembers so and so, is it right to treat him as saying that he knows more, even if it is his duty to inform himself accurately before he speaks? I do not think that so to hold would be consistent with Derry v. Peek. To treat him in the case supposed as saying more than he did, would be to resuscitate the doctrine condemned in Derry v. Peek, and to hold him liable in damages for a negligent misrepresentation."

It is fairly plain from the passages I have quoted that Lindley L.J. thought Derry v. Peek (1889) 14 App Cas 337 to have decided that no action would lie for a breach of a duty of care in the giving of information. (at p576)

42. It seems to me, with all due respect, that if his Lordship's view as to the effect of Derry v. Peek (1889) 14 App Cas 337 is put on one side, the conclusion he ultimately reached in the case can only be supported if it be decided - as perhaps his Lordship in a sense did decide (1891) 3 Ch, at p 104 - that it was unreasonable for the plaintiff to have relied in the circumstances upon the actual answer which the trustee gave. (at p576)

43. Bowen L.J. conceded that Derry v. Peek (1889) 14 App Cas 337 did not preclude an action for careless statement if a duty to be careful existed at law in the circumstances : but his Lordship, accepting the reasons of Lindley L.J., apparently found no duty to be careful to rest upon the trustee in the circumstances of that case. He came to the conclusion, so far as estoppel was concerned, that the trustee's answer "would be reasonably understood as conveying an intimation of the state of his belief, without an assertion that the fact was so apart from the limitation of his own knowledge" which is a possible though, with all due respect, to my mind, an unacceptable interpretation of the facts. (at p576)

44. Kay L.J., after examining a number of cases ranging through the years 1682 to 1850, said that they resulted in a number of conclusions, including the following (1891) 3 Ch, at p 111 :

"1. There has been from ancient time a jurisdiction in courts of equity in certain cases to enforce a personal demand against one who made an untrue representation upon which he knew that the person to whom it was made intended to act, if such person did act upon the faith of it and suffered loss by so acting. 2. This was readily done where the representation was fraudulently made, in which case an action of deceit would lie at law. 3. Relief will also be given at law and in equity, even though the representation was innocently made without fraud, in all cases where the suit will be effective if the defendant is estopped from denying the truth of his representation." (at p577)

45. Finally, his Lordship decided that the trustee's statement was not so clear and unambiguous as to form the basis of an estoppel against him. (at p577)

46. It is thus fairly plain that Low v. Bouverie (1891) 3 Ch 82 decided no more than that, on the footing that the trustee was under no duty to be careful in giving the information, his answer amounted to no more than a statement of his present unaided recollection which was not shown to be incorrect : indeed, it was found to be true. It was also decided that the trustee was under no duty to answer the inquiry made of him : and in that respect the decision was approved by Lord Haldane in Nocton v. Lord Ashburton (1914) AC 932, at p 950 . But that does not mean that, though under no duty to answer, if he chooses to do so, the trustee will not come under a duty of care, the performance of which may involve him in making inquiries which otherwise he may not have been bound to make. In my opinion, having regard to what I think is the right view of Derry v. Peek (1889) 14 App Cas 337 the question of whether on the facts of the case such a relationship had sprung up between the plaintiff's solicitor and the trustee that a duty of care had arisen towards the plaintiff would now need serious consideration and be approached somewhat differently from the way the Court of Appeal approached the question of estoppel. But whatever be the right view in that connexion, in my opinion, the case does not stand in the way of any of the propositions which I have adopted in these reasons. (at p577)

47. I conclude, therefore, in relation to the principal question arising in this case that a cause of action for breach of a duty of care in the gratuitous giving of information and advice by a person who does not profess a calling or particular capacity can be maintained and that loss and damage causally related to incorrect information or advice so given in breach of duty may be recovered at law. (at p578)

48. I now turn to the question whether the respondent in his pleadings has alleged facts which, if established, would support such a cause of action. At the outset, it could not be said that the pleading was exemplary. It is far from it : but I think its form has resulted from an attempt on the part of the pleader to accommodate his assertions to various portions of the speeches of their Lordships in Hedley Byrne &Co. Ltd. v. Heller &Partners Ltd. (1964) AC 465 . However, it is not enough to excuse its form : it is necessary to examine it closely to determine whether, though obscurely, it still sufficiently alleges enough to maintain the cause of action. (at p578)

49. After some hesitancy, I have come to the conclusion that it does. Again I deal with the declaration in the action against the assurance company ; for, in my opinion, if this declaration is supportable, so is that in the other action. Each no doubt have their difficulties of proof. As the appellants are corporate bodies, and as there are subjective elements in the necessary relationships, the identity and capacity of those natural persons whose acts are to satisfy the allegations against the appellants will doubtless loom largely and require close examination in the trial of the action which has yet to take place. But these difficulties are of no present moment. (at p578)

50. The declaration sufficiently alleges, as I think, as a fact and not merely as a conclusion from other facts, that the appellant had at its hand the requisite information to enable it to give the respondent the information and advice he wanted as to the financial stability of H. G. Palmer : and that the appellant knew that the respondent intended to act upon the information and advice he received. The information and advice was clearly upon a matter of business and of its nature involved both objective facts and subjective interpretations of them, calling no doubt for the exercise of judgment whether what resulted be called information or advice. I think the pleading should be approached on the footing that there was no benefit arising to any of the appellants from either the act of the respondent in retaining his investments in H. G. Palmer or from his act in investing further funds in that company. Consequently, as I have already indicated, the giving of the information or advice should be regarded as being wholly gratuitous. Now could it be inferred that the appellant knew or ought to have known that it was being trusted by the respondent to give to him the best information and advice it reasonably could? I have come to the conclusion, I am bound to say not without some lingering doubt, but on the whole with sufficient firmness, that such an inference could be made from the material in the declaration. The assumption from the pleading is that the respondent describing himself to the appellant as one with money already invested and as contemplating further investment in a company of whose affairs the appellant had sufficient knowledge in hand or at hand to enable it to know of the financial stability of that company, asked as to that stability with a view, as the appellant is said to have known, to determining his course of action in relation to investment in that company. I think it could be inferred that the appellant at least ought to have realized that it was being trusted in relation to its knowledge, actual or potential, and as to its judgment upon that information as to the financial stability of H. G. Palmer. Again, the identity and capacity of the officer or officers of the appropriate appellant whose acts are relied upon in satisfaction of the assumptions of the pleading may well prove critical at the trial : but, again, that is not a matter which presently arises. (at p579)

51. Could it be said upon the facts alleged in the pleading that it was reasonable for the respondent to seek of the appellant information and advice as to the stability of H. G. Palmer : and reasonable to accept and act upon what information and advice he got? If those facts would warrant the inference of reasonableness, I think the declaration would be sufficient : though, of course, an express allegation following a more detailed assertion as to the circumstances would undoubtedly have been preferable. Again, with some periods of hesitancy, I have come to the conclusion that it could be said upon the pleaded facts, that it was reasonable for the respondent to take the course he says he took. But again I say this, conscious of the possibilities of proof at the trial of facts which would fail to support or perhaps destroy the inference. (at p579)

52. Lastly, the declaration is silent as to the facts by the proof of which it is intended to establish that the appellant was in breach of its duty of care. The mere use of the word "negligently" is expected to do the complete work of denominating the extent of the duty and of specifying the manner of its breach. Perhaps particulars can aid the elucidation of these aspects of the pleading. I think on demurrer I ought to treat the word "negligently" as covering the matters which earlier I said were implicit in the declaration. The appellants chose the course of demurring to raise the principal question rather than of dealing in a minor key with the pleading deficiencies and obscurities of the declaration. My doubts and reservations as to its sufficiency have been indicated and no doubt the pleadings as they are made up as issues for trial may well bear little resemblance to those with which we have had perforce to deal at this stage. I have come to the conclusion that, on balance, the pleading with bare sufficiency alleges the cause of action which, in my opinion, the common law provides for incorrect information or advice given in breach of a duty of care arising out of the special relationship of the parties. (at p580)

53. In this connexion I ought to say that it was, I think, a real question when the matter first came before the Supreme Court whether the demurrer should be decided upon the pleadings as they stood rather than send the case for trial when the Court would be in a position to determine the issues of law which did then arise upon the actual facts. However, upon due consideration I have come to think the Supreme Court was right in entertaining those demurrers having regard to the fundamental nature of the questions involved in the decision and to the effect a decision thereon must have on the course of a trial. (at p580)

54. In my opinion, the appellants' demurrers ought to be overruled. (at p580)

55. I turn now to the respondent's demurrers to the appellants' pleas raising Lord Tenterden's Act as a defence. The demurrer invites the Court to depart from the decision in Banbury v. Bank of Montreal (1918) AC 626 . That case is precisely in point and distinguishes between an action for breach of duty and an action for "misrepresentation". It followed a long line of decisions which had treated s. 6 of Lord Tenterden's Act, which has its counterpart in s. 10 of the New South Wales statute, as confined to actions founded on deceit. The question basically is one of construction, bearing in mind, if ambiguity is met, what is known of the mischief with which the legislation was evidently intended to deal. I find the reasons given in Banbury v. Bank of Montreal (1918) AC 626 convincing and see no reason whatever to depart from the conclusions reached in that case. Accordingly, even if I felt that what the declaration alleges was an assurance as to the credit of H. G. Palmer and was given to the intent or purpose that H. G. Palmer might obtain money from the respondent, I would favour the allowance of the respondent's demurrer. But, in any case I am not convinced that what is set up by the pleading is such an assurance. What is alleged is information and advice as to the financial stability of H. G. Palmer given to the respondent with knowledge that he may act upon it. The respondent's case would be made out upon the cause of action he sets up without proof that the intent or purpose of the giving of that information or advice was that H. G. Palmer should obtain money from the respondent. In my opinion, s. 10 of the Usury, Bills of Lading, and Written Memoranda Act, 1902 (N.S.W.), does not afford the appellants a defence to this cause of action alleged by the respondent. The respondent's demurrer should be allowed. (at p581)

56. For all these reasons, the appeals, in my opinion, should be dismissed. (at p581)

KITTO J. There can be no doubt, at least since the Hedley Byrne Case (1964) AC 465 , that one who gives information or advice to another, being guilty of no fraud, breach of contract or breach of fiduciary duty but without having used reasonable care and skill to ensure that in the case of information it was correct and in the case of advice it was sound, is liable in tort for damages if the other incurs loss by acting in reliance upon the information or advice, provided that he stood in such a relation to the other that the law holds him to have owed a duty to the other to use care and skill in the giving of the information or advice, and that the other's loss was not too remote from the careless or unskilful giving of the information or advice to be treated in law as having been caused therby. (at p581)

2. The declaration which the judgment under appeal has sustained seeks in three counts damages against one or other or both of the appellants for having negligently given the respondent certain information and advice concerning the financial stability of a company called H. G. Palmer (Consolidated) Ltd. and as to the safety of investments therin. Each count was demurred to in the Supreme Court as disclosing no cause of action. The demurrers were overruled, and the appellants now seek from this Court a decision that none of the counts describes a relationship which imposed upon them or either of them a duty of care in giving the respondent such information and advice as he alleges was a cause of his loss. It is convenient to consider the first count by itself in the first instance. (at p581)

3. Lord Reid pointed out in the Hedley Byrne Case (1964) AC, at pp 482, 483 that claims for alleged negligence in the spoken or written word do not admit of decision by a simple application of the principle of Donoghue v. Stevenson (1932) AC 562 . In many cases, if it be asked whether, in reference to the giving of information or advice, the plaintiff was the defendant's neighbour, in the sense that the defendant could reasonably foresee that if he were to give information or advice carelessly he would be likely to cause loss to the plaintiff, a difficult question of remoteness will arise. This is not the case here, however, for the allegation is that the information and advice were given by the defendant The Mutual Life &Citizens' Assurance Co. Ltd. to the plaintiff directly and in answer to a request directly made, the defendant knowing that the plaintiff intended to act upon the information and advice in deciding whether to retain investments which he held in H. G. Palmer (Consolidated) Ltd. and whether to invest further in that company. The difficulty of the case arises from another point of difference between words and acts considered as causes of loss. It is in the nature of words that they cause nothing save by their influence upon the mind of a person whose ears or eyes they reach. Between the words and any loss they may be said to cause to a hearer or reader there must always be the hearer's or reader's decision to follow the course of conduct which proves injurious. Accordingly the question whether the words are properly to be described as a cause of the loss depends upon their potency as an influence upon that decision ; and the question whether the speaker or writer of the words could reasonably have foreseen a likelihood that his statement would cause the other to pursue the potentially injurious course becomes a question whether it was reasonable for that other to understand and accept the statement as intended to relieve him, so far as an exercise by the speaker or writer of reasonable care and skill in inquiry (as to facts) or judgment (as to opinions) would do it, from having to bear any loss that a decision to act in reliance upon the statement may bring about. But such an intention is not reasonably to be inferred unless the circumstances of the statement supply a context of the kind which normally characterizes matters of business. In the Hedley Byrne Case (1964) AC 465 various expressions are used to make this clear. In particular, reference is made to the speaker or writer undertaking, or agreeing to accept, "responsibility" for the carefulness and the skilfulness with which the words are uttered ; and this I take to mean that he shows that he is engaged in communication on a business level, intending to stand behind what he says or writes with the same accountability for the consequences of any lack of care or skill in checking facts or forming judgments as if he were being paid. Otherwise it would be unreasonable, according to ordinary human experience, for the hearer or reader to suppose that he was being relieved to any extent of the task of making up his own mind about the facts and about matters of opinion, and making a decision wholly upon his own responsibility. (at p582)

4. In the Hedley Byrne Case (1964) AC 465 , Lord Reid illustrated the problem which has to be solved in a case such as the present by pointing out the quite careful people often express definite opinions on "social or informal occasions", even when they see that others are likely to be influenced by them, and often do so without taking the care they would take if asked for their opinion "professionally or in a business connexion" (1964) AC, at pp 482, 483 . But the contrasting expressions are illustrative only. The relationships in which a legal duty of care in the giving of information and advice cannot reasonably be held to be incurred are of infinite variety ; and his Lordship's ultimate generalization was that a relationship which gives rise to such a duty exists where "it is plain that the party seeking information or advice was trusting the other to exercise such a degree of care as the circumstances required, where it was reasonable for him to do that, and where the other gave the information or advice when he knew or ought to have known that the inquirer was relying on him" (1964) AC, at p 486 . (at p583)

5. Lord Morris expressed the same notion when (1964) AC, at pp 494, 495 he spoke of A as assuming a responsibility to B to tender him deliberate advice ; and he expanded it in words not very different from those of Lord Reid (1964) AC, at p 503 :

". . . if in a sphere in which a person is so placed that others could reasonably rely upon his judgment or his skill or upon his ability to make careful inquiry, a person takes it upon himself to give information or advice to . . . another person who, as he knows or should know, will place reliance upon it, then a duty of care will arise." (at p583)

6. With this statement of principle Lord Hodson specifically agreed (1964) AC, at p 514 , and Lord Devlin expressed a view which seems to me not materially different. He considered : (1964) AC, at pp 528, 529

". . . that the categories of special relationships which may give rise to a duty of care in word as well as in deed are not limited to contractual relationships or to relationships of fiduciary duty, but include also relationships which in the words of Lord Shaw in Nocton v. Lord Ashburton (1914) AC 932, at p 972 , are 'equivalent to contract,' that is, where there is an assumption of responsibility in circumstances in which, but for the absence of consideration, there would be a contract."

Lord Shaw had used the expression "equivalent to contract" to describe a quality in the relationship which made it reasonable for the person to whom information or advice was given "to rely upon it as the basis of a transaction" ; and Lord Devlin adopted it, as I understand his Lordship, for the purpose of making plain the nature and serious quality that an occasion must possess if the inference is to be that the person giving the information or advice assumed responsibility for his statements in the sense that he took upon himself - took upon his conscience - the responsibility of making them as statements which the other might reasonably rely upon, and is likely to rely upon, as the basis for a decision exposing him to possible loss. (at p584)

7. Lord Pearce (1964) AC, at p 539 , expressed what I take to be the same view. His Lordship thought it necessary to look "normally" for "a business or professional transaction whose nature makes clear the gravity of the inquiry and the importance and influence attached to the answer", as contrasted with "a casual social approach to the inquiry". (at p584)

8. The need to exclude cases where parties are dealing with one another in circumstances inappropriate for the attribution of legal consequences to the words that pass between them is common to the law of contract, the law of negligence and the law as to the granting of equitable relief on the footing that a representation binds the conscience of the representor and obliges him to make it good. In the last-mentioned case, as Sir Roundell Palmer said in arguing Peek v. Gurney (1871) LR 13 Eq 79, at p 97 in a passage cited with approval by Lord Shaw in Nocton v. Lord Ashburton (1914) AC, at pp 971-972 :

". . . the representation in equity is equivalent to a contract and very nearly coincides with a warranty at law ; and in order that a person may avail himself of relief founded on it he must show that there was such a proximate relation between himself and the person making the representation as to bring them virtually into the position of parties contracting with each other."

Whether the relevant sphere of law be that of implied warranty, of responsibility in equity, or of liability in tort for want of care, the question whether a person who sought the information or advice was entitled as a matter of law to have care exercised by the person from whom he sought it is thus to be decided by considering whether the circumstances made it reasonable for the inquirer to suppose that the other was replying with an intention of accepting the full responsibility that is ordinarily appropriate to a business transaction. Just as words which would otherwise create a contract will be held to produce no legal results if accompanied by an expression of intention to keep to the field of informal and merely friendly arrangement, as in Rose and Frank Co. v. J. R. Crompton &Bros. Ltd. (1925) AC 445 , so, as the actual decision in the Hedley Byrne Case (1964) AC 465 shows, words giving information or advice accompanied by a disclaimer of responsibility which shows a like intention will be held not to have the legal consequences which they would have had if uttered in other circumstances. This is the extreme case of the class where the circumstances show that the person to whom information or advice is given could not reasonably have relied upon a belief that the other was dealing with him on a basis where questions of legal responsibility are relevant. Less extreme illustrations may be given also. Just as words which otherwise would create a contract (because the speaker or writer receives a quid pro quo) are held not to do so if the parties are dealing with one another on a plane where there is really no intention of altering legal relations - as in the case of purely domestic arrangements (see Balfour v. Balfour (1919) 2 KB 571 ; Cohen v. Cohen (1929) 42 CLR 91 ; Gage v. King (1961) 1 QB 188 ; In re Bishop ; National Provincial Bank v. Bishop (1965) Ch 450 ), or of casual discussions (see Booker v. Palmer (1942) 2 A11 ER 674 ), or of many kinds of arrangements with respect to government assistance (see Administration of Papua and New Guinea v. Leahy (1961) 105 CLR 6 ) - so words giving information or advice without any quid pro quo will be held to entail no legal responsibility for carelessness if the correct conclusion from the circumstances be that the person who acted upon them could not reasonably have understood them as uttered, as one might say, in the way of business, or (to express it more generally) as uttered on a plane to which legal liability naturally belongs. (at p585)

9. We are here concerned with a declaration under the common law system of pleading still in force in New South Wales. The pleader was not at liberty to content himself with an allegation that the defendant owed the plaintiff a duty of care. His task was to allege facts from which, if proved at the trial, the law will deduce the duty ; Seymour v. Maddox (1851) 16 QB 326 (117 ER 904) ; cf. Bullen &Leake's Precedents of Pleading, 3rd ed. (1868), p. 9121. He has alleged that the plaintiff sought the information and advice from the defendant and acted upon it to his loss. He has alleged that the defendant when giving the information and advice knew that the plaintiff intended to act upon it in the way that caused the loss. If the count contained nothing more bearing upon the question of the existence of a duty of care it would be demurrable as not showing that the defendant in giving the information and advice was acting in pursuance either of a general relationship to the plaintiff such as would need only to be stated to show that a duty of care existed (e.g., the relationship of stockbroker and his client) or of a special relationship exhibiting the features necessary to raise such a duty : see Fish v. Kelly (1864) 17 CB (NS) 194 (144 ER 78) . But the count contains allegations from which a special relationship appears, that is to say the relationship of persons dealing with one another in the circumstances of a special occasion ; and it seems to me that the requirements of each of the speeches delivered in the Hedley Byrne Case (1964) AC 465 are satisfied if, in the circumstances alleged, the defendant ought reasonably to have appreciated that its answers to the plaintiff's inquiry would be understood by him as made with the acceptance of responsibility that would have been implicit if the information and advice were being paid for. (at p586)

10. The count implies plainly enough that the defendant is a life assurance company and it expressly alleges that the plaintiff is a policy holder therein. It depicts the policy holder as seeking from his assurance company information and advice as to the present and prospective soundness of H. G. Palmer (Consolidated) Ltd. as a company in which to invest money, and the assurance company as giving the information and advice knowing that the policy holder intended to act upon it. There is no allegation that the defendant carried on any business, or followed any general practice, of giving information or advice of this kind to its policy holders ; but by alleging that the inquiry was made from and answered by the defendant itself, i.e., as a corporate body, with corporate knowledge that the policy holder intended to act upon its statement in adventuring his money, the count puts the plaintiff's case as high as that the information and advice were given by an agent or agents of the defendant acting in the course of his or their employment or within the ostensible scope of his or their authority, and that the giving of the information and advice was an act which the defendant might possibly be authorized by its constitution to do : see the cases cited in Halsbury's Laws of England, 3rd ed., vol. 6, p. 422, par. 818. Then the count alleges, in substance, that the defendant and H. G. Palmer (Consolidated) Ltd. were associated together in the sense that they were both subsidiaries of a third company ; that the association between them gave the defendant in fact special facilities for obtaining information concerning the financial affairs of H. G. Palmer (Consolidated) Ltd. and placed the defendant in a position to give the plaintiff reliable advice concerning the financial stability of that company ; that the plaintiff knew all these things ; and that the defendant supplied the information and advice without any disclaimer of responsibility. (Here I have accepted the meaning which the plaintiff's counsel put upon the allegation that the defendant "accepted the responsibility" of supplying the plaintiff with the information and advice.) It seems to me that nothing need be added to these allegations to show that the information and advice were given in circumstances in which the only reasonable conclusion for both parties was that the same care on the part of the defendant was demanded as if a contract for the giving of the information and advice had existed between them, and in which it was reasonable for the plaintiff to be induced to keep and increase his investments in H. G. Palmer (Consolidated) Ltd. by the defendant's implied assurance that it had taken that care. The count therefore seems to me to allege a cause of action according to the law as explained in Hedley Byrne (1964) AC 465 , though I am not prepared to say that substantial amendments might not be made with advantage. (at p587)

11. It remains to say something of the cases upon which the appellants have relied as decisions that in circumstances said to be comparable with those alleged in the present case no duty of care existed. (at p587)

12. Derry v. Peek (1889) 14 App Cas 337 undoubtedly stands in the respondent's way if it be regarded as authority for the proposition that the circumstances of that case did not impose upon the directors a duty to persons likely to act upon the prospectus to take care in respect of the statement that the company had the right to use steam power instead of horses. It must be conceded that that proposition was accepted by the learned Lords who decided the case, but later decisions seem to me to show conclusively that in this respect the case is out of line with the current of authority and ought not to be regarded as a precedent. As Lord Reid observed in the Hedley Byrne Case, "the question was never really considered whether the facts had imposed on the directors a duty to exercise care" (1964) AC, at p 484 ; and in so saying his Lordship was echoing Viscount Haldane's remark in Nocton v. Lord Ashburton (1914) AC, at p 947 , that the discussion of the case by those who took part in the decision appeared to him "to exclude the hypothesis that they considered any other question to be before them than what was the necessary foundation of an ordinary action for deceit". Lord Morris mentioned (1964) AC, at p 501 that Lord Shaw, agreeing with Viscount Haldane, had said (1914) AC, at pp 970-971 that "certain expressions by learned Lords may seem to have made incursions into the region of negligence, but Derry v. Peek (1889) 14 App Cas 337 as a decision was directed to the single and specific point" that "fraud must ex necessitate contain the element of moral delinquency". Lord Devlin said (1964) AC, at pp 518, 519 :

"There was in Derry v. Peek (1889) 14 App Cas 337 , as the report of the case shows, no plea of innocent or negligent misrepresentation and so their Lordships did not make any pronouncement on that. I am bound to say that had there been such a plea I am sure that the House would have rejected it. As Lord Haldane said, their Lordships must 'be taken to have thought' that there was no liability in negligence. But what your Lordships may be taken to have thought, though it may exercise great influence upon those who thereafter have to form their own opinion on the subject, is not the law of England. It is impossible to say how their Lordships would have formulated the principle if they had laid one down. They might have made it general or they might have confined it to the facts of the case. They might have made an exception of the sort indicated by Lord Herschell (1889) 14 App Cas 337, 360 , or they might not. This is speculation. All that is certain is that on this point the House laid down no law at all."

It seems to me, then, that it would be a mistake to treat Derry v. Peek (1889) 14 App Cas 337 as laying down or implying any general proposition applicable to the facts of a different case, except in so far as it dealt with the tort of deceit. (at p588)

13. Another decision relied upon was Low v. Bouverie (1891) 3 Ch 82 . Whether or not that case was rightly decided on its facts, one cannot, I think, read the judgments in the court of Appeal without seeing that the treatment of the case would have been different if the learned Lords Justices had had before them the speeches in Nocton v. Lord Ashburton (1914) AC 932 . I do not think that anything they said can be safely relied upon as a guide to the proper conclusion in such a case as the present. (at p588)

14. Finally there are cases concerning the giving of advice by a banker as to the financial position of his customer, notably Parsons v. Barclay &Co. Ltd. (1910) 103 LT 196 and Robinson v. National Bank of Scotland Ltd. (1916) SC (HL) 154 . The basis of these decisions, I think, is that in view of the degree of toil and trouble that would be involved for a banker if he were to accept a responsibility to be careful as well as honest in responding to the multitudinous inquiries of this kind that everyone knows are constantly made of bankers, it could not be reasonable for an inquirer to suppose that the banker was accepting so onerous an obligation. "Is he then expected", asked Pearson L.J. in the Court of Appeal in the Hedley Byrne Case (1962) 1 QB 396, at p 414 , "in business hours in the bank's time, to expend time and trouble in searching records, studying documents, weighing and comparing the favourable and unfavourable features and producing a well-balanced and well-worded report? That seems wholly unreasonable." Lord Hodson (1964) AC, at pp 512, 513 adopted the statement. Such a case as that which is now before us seems to me to be radically different. It is surely not sufficient to say that there is a resemblance between an inquiry made of one financial institution and an inquiry made of another. If we assume, as we must for the present purposes, that all the allegations in the first count are true the plaintiff's request for information and advice was a request to use the special means which the defendant possessed for the purpose of providing reliable guidance for the plaintiff in relation to his existing and contemplated investments in H. G. Palmer (Consolidated) Ltd. It faced the defendant with a choice between answering with as serious a sense of responsibility as a contractual relationship would have required, answering with a warning that responsibility had not been accepted, and refusing to answer at all (cf. per Lord Reid (1964) AC, at p 486 ). It seems to me that if all the facts here alleged are proved it will necessarily follow that the plaintiff was justified in inferring, from the defendant's action in giving him information and advice on the matter he put to it, that the defendant was choosing the first of the three courses above mentioned. (at p589)

15. For these reasons I am of opinion that the first count is good. The allegations in the second and third counts differ somewhat, but similar reasoning applies to them. I would accordingly hold that the judgment of the Supreme Court was right and that the appeal should be dismissed. (at p589)

TAYLOR J. This appeal is primarily concerned with an order of the Court of Appeal by which demurrers to the respondent's declaration were overruled. There were three counts in the declaration and the appellants had demurred to each of them. By the first count the plaintiff, now the respondent, sued to recover damages from the first-named appellant and, by the other two counts, he sued, respectively, to recover damages from the second-named appellant and from both appellants jointly. (at p589)

2. No question arose as to whether the joinder of these causes of action was permissible under s. 2 of the Law Reform (Miscellaneous Provisions) Act, 1946 (N.S.W.) and I do not, therefore, advert further to this matter. (at p590)

3. Broadly each of the counts claimed damages for losses alleged to have been sustained by the respondent as the result of negligence on the part of the appellants in voluntarily advising him as to the financial stability of a company, H.G. Palmer (Consolidated) Ltd. (Palmers), in which he had certain existing investments and in which he alleged he was contemplating a further investment. Needless to say the decision of the House of Lords in Hedley Byrne &Co. Ltd. v. Heller &Partners Ltd. (1964) AC 465 was the main topic of discussion upon this part of the appeal. (at p590)

4. For the purpose of the demurrers all allegations of fact contained in the respective counts of the declaration must be taken to be admitted and the narrow question before us is whether such allegations, if proved, would entitle the plaintiff to succeed in the action on any count. But before examining this question it is important to ascertain, as precisely as possible, what it was that Hedley Byrne's Case (1964) AC 465 decided and, in pursuing this inquiry, I find it necessary, first of all, to make some more or less general observations. The headnote to the case says that it decided :

"My Lords, I consider that it follows and that it should now be regarded as settled that if someone possessed of a special skill undertakes, quite irrespective of contract, to apply that skill for the assistance of another person who relies upon such skill, a duty of care will arise. The fact that the service is to be given by means of or by the instrumentality of words can make no difference. Furthermore, if in a sphere in which a person is so placed that others could reasonably rely upon his judgment or his skill or upon his ability to make careful inquiry, a person takes it upon himself to give information or advice to, or allows his information or advice to be passed on to, another person who, as he knows or should know, will place reliance upon it, then a duty of care will arise."

Lord Hodson accepted this statement. Lord Devlin's positive statements were as follows (1964) AC, at pp 528-532 :

"I think, therefore, that there is ample authority to justify your Lordships in saying now that the categories of special relationships which may give rise to a duty to take care in word as well as in deed are not limited to contractual relationships or to relationships of fiduciary duty, but include also relationships which in the words of Lord Shaw in Nocton v. Lord Ashburton (1914) AC 932, at p 972 , are 'equivalent to contract', that is, where there is an assumption of responsibility in circumstances in which, but for the absence of consideration, there would be a contract. . . . . I shall therefore content myself with the proposition that wherever there is a relationship equivalent to contract, there is a duty of care. Such a relationship may be either general or particular. . . . Where there is a general relationship of this sort, it is unnecessary to do more than prove its existence and the duty follows. Where, as in the present case, what is relied on is a particular relationship created ad hoc, it will be necessary to examine the particular facts to see whether there is an express or implied undertaking of responsibility. . . . . I am satisfied, for the reasons I have given, that a person for whose use a banker's reference is furnished is not, simply because no consideration has passed, prevented from contending that the banker is responsible to him for what he has said. The question is whether the appellants can set up a claim equivalent to contract and rely on an implied undertaking to accept responsibility."

Lord Pearce said (1964) AC, at p 539 :

"The true rule is that innocent misrepresentation per se gives no right to damages. If the misrepresentation was intended by the parties to form a warranty between two contracting parties, it gives on that ground a right to damages

(Heilbut, Symons &Co. v. Buckleton

(1913) AC 30 ). If an innocent misrepresentation is made between parties in a fiduciary relationship it may, on that ground, give a right to claim damages for negligence. There is also, in my opinion, a duty of care created by special relationships which, though not fiduciary, give rise to an assumption that care as well as honesty is demanded. . . . To import such a duty the representation must normally, I think, concern a business or professional transaction whose nature makes clear the gravity of the inquiry and the importance and influence attached to the answer." (at p614)

19. The actual decision in Hedley Byrne &Co. Ltd. v. Heller &Partners Ltd. (1964) AC 465 was that Heller &Partners Ltd. owed Hedley Byrne &Co. Ltd. no duty of care because the advice which was given by the former about the financial strength of Easipower Ltd. to the National Provincial Bank Ltd. and passed on to the latter, was given without due care it was nevertheless given "confidentially" and "without responsibility". Their Lordships were unanimous that this disclaimer prevented any duty of care from arising. This element of the decision is, I think, of great importance because it indicates that there can be no duty of care imposed upon a person who, in voluntarily advising, effectively disclaims responsibility. (at p615)

20. It is also clear that all their Lordships rejected the notion that there is "a general duty to exercise reasonable care not to injure others by false statements just as there is a duty not to injure them by harmful acts", to use the language of Dr. Goodhart in his article in the Yale Law Journal, vol. 74, p. 301. Their Lordships having decided that some special relationship was necessary before any duty of care could arise, were concerned to define the sort of special relationship which would give rise to a duty to advise carefully. (at p615)

21. There is one further point about the decision of the House of Lords. Candler v. Crane, Christmas &Co. (1951) 2 KB 164 was overruled and the dissenting judgment of Denning L.J. was preferred to the judgments of the majority. Denning L.J. was not only unwilling to accept the reasoning of Le Lievre v. Gould (1893) 1 QB 491 . His judgment rested on the proposition that accountants, exercising a calling requiring knowledge and skill, owed a duty to use care not only to their clients, but to third persons to whom they knew that the reports would be shown, when, to the knowledge of the accountants, the third persons would consider the reports with a view to the investment of money, or, taking other action to their gain or detriment. Since Candler v. Crane, Christmas &Co. (1951) 2 KB 164 was overruled it is apparent that their Lordships in Hedley Byrne &Co. Ltd. v. Heller &Partners Ltd. (1964) AC 465 accepted this conclusion. Denning L.J. added that other skilled persons, such as surveyors, valuers and analysts, are under a duty similar to that which he found rested upon the accountants who made the report which was the basis of the case. (at p615)

22. I do not wish to attempt the enunciation of a principle to be applied in all cases where the question is whether one person is liable in damages for loss suffered by another from acting upon advice carelessly given. "One step enough for me." My task, as I see it, is to ascertain whether the facts pleaded by the plaintiff would, if proved, give rise to a duty of care, owed by the defendants or one of them to the plaintiff, to advise without negligence, if, as is alleged, advice was given. Moreover it is not, I think, necessary to draw any fine distinction between the two defendants. (at p615)

23. The declaration is unsatisfactory and must, as the respondent's counsel conceded, be amended before there can be a proper trial of the action. However, it is, in effect, pleaded that H. G. Palmer (Consolidated) Ltd. (which I shall call "Palmer's") was a subsidiary of the defendant M.L.C. Ltd. (which I shall call "The M.L.C."), in which The M.L.C. had ninety per cent of the ordinary shares and had some directors in common with The M.L.C. ; that the other defendant, The Mutual Life &Citizens' Assurance Co. Ltd. (which I shall call "the assurance company") was also a subsidiary of The M.L.C. ; that the plaintiff was a policyholder in the assurance company ; that the plaintiff sought advice from the defendants about the financial stability of Palmer's ; that the defendants, by reason of their company relationship with Palmer's were in a position of special advantage to get and to give accurate information about its financial stability ; that the plaintiff relied upon the defendants to do so ; that the defendants elected to advise or accepted the responsibility of advising the plaintiff, knowing that the plaintiff intended to rely upon their advice in deciding whether to retain his investments in Palmer's and to make further investments ; that the defendants advised the plaintiff that Palmer's was and would continue financially stable and that investments therein were and would continue safe and that it would be safe to invest further in Palmer's ; that this advice was given negligently ; that, relying upon the advice so given, the plaintiff retained his investments in Palmer's and made further investments and thereby suffered loss. (at p616)

24. These being, in substance, the facts pleaded, the real point is whether the defendants were under a duty to the plaintiff to advise him carefully, if they advised him at all. Had there been consideration for the giving of the advice it would have been a breach of duty for the defendants to advise carelessly ; had the defendants held themselves out as expert advisers upon investments, the mere fact that the advice had not been given under a contract would not have excused them from the exercise of the skill which they held themselves out as having. So much, I think, follows from the decision of the House of Lords in Hedley Byrne &Co. Ltd. v. Heller &Partners Ltd. (1964) AC 465 , the dissenting judgment of Denning L.J. in Candler v. Crane, Christmas &Co. (1951) 2 KB 164 , and from the judgment of Mr. Justice Salmon in Woods v. Martins Bank Ltd. (1959) 1 QB 55 , which the House of Lords has, I think, approved. (at p616)

25. The novelty of this case seems to me that the special relationship giving rise to a duty of care which the plaintiff seeks to establish between himself and the defendants will depend, in part, upon proof of a particular relationship between the defendants and Palmer's. This is not, however, an insuperable obstacle to the establishment of a special relationship because if, for instance, a prospective lender to a private company sought the advice of the managing director and principal shareholder about the financial stability of the company in order to decide whether or not to make the loan, it is not difficult to envisage circumstances, outside contract, that would give rise in law to a duty to advise with care if advice were to be given. It is here alleged (1) that the defendants were in a position of special advantage to get and give accurate information about the financial stability of Palmer's and (2) that the defendants elected to advise and accepted the responsibility of advising the plaintiff upon his request for advice about Palmer's ; (3) that the defendants advised the plaintiff knowing that he would act upon their advice. As I have said, the pleadings are in need of amendment in order that there may be a proper trial, but it seems to me that we must here take them as they are and that, basically, what has been alleged would, if proved, establish the existence of a duty to take care in giving any advice that was given about the financial stability of Palmer's. It seems to me that every speech in the House of Lords in Hedley Byrne &Co. Ltd. v. Heller &Partners Ltd. (1964) AC 465 supports this conclusion, for all emphasize that a duty to use care in giving advice arises when, in relation to a matter of business concern, one person makes known to another that he is relying upon the other's advice on a matter within the special competence of that other and advice is then given without disclaimer of responsibility. See too W. B. Anderson &Sons Ltd. v. Rhodes (Liverpool) Ltd. (1967) 2 All ER 850 . Furthermore if, as has now been established, there is a duty to advise carefully outside contractual or fiduciary relationships, the allegations here would, if proved, give rise to such a duty unless some stopping point can be found such as a limitation that such a duty arises only when advice is given by a person being in business to advise or holding himself out generally as having some special skill to advise. I do not think that such limitations exist. The absence of allegations that it is part of the business of the defendants to advise policy-holders or others upon their investments or that the defendants hold themselves out generally as having some special skill to advise upon investments is nevertheless an important consideration here because it throws the plaintiff back upon proof that the advice upon which he relied was given by an officer with authority to commit, and one who did commit, the defendants to the obligation of advising the plaintiff with care. The existence of a special relationship is, therefore, obviously of critical importance in this case to found any duty of care. (at p618)

26. There is a second question to be considered ; namely whether the defendants' pleas based upon s. 10 of the Usury, Bills of Lading, and Written Memoranda Act, 1902 (N.S.W.), amount to a defence to the cause of action disclosed by the declarations. In my opinion they do not. I have found no reason for distinguishing the decisions in Banbury v. Bank of Montreal (1918) AC 626 that Lord Tenterden's Act has no application to an action, not for fraud, but for negligence. That powerful fifty-year-old decision of the House of Lords reversing the decision of the Court of Appeal is not, I think, open to question. See W. B. Anderson &Sons Ltd. v. Rhodes (Liverpool) Ltd. (1967) 2 All ER 850 . (at p618)

27. For the foregoing reasons I have come to the conclusion that the appeals should be dismissed. (at p618)

OWEN J. In the first count of his declaration in this action the plaintiff seeks to recover damages from The Mutual Life &Citizens' Assurance Co. Ltd. (which I will call "the assurance company"). The count alleges (a) that the plaintiff sought from the assurance company information and advice concerning the financial stability of a company, to which I will refer as Palmer, and as to the safety of investments therein ; (b) that the assurance company was associated with Palmer by reason of the fact that both companies were subsidiaries of The M.L.C. Ltd., the second-named defendant, and that by virtue of that fact the assurance company, as the plaintiff knew, had special facilities for obtaining full, complete and up-to-date information concerning the financial affairs of Palmer and was in a position to give the plaintiff reliable and up-to-date information concerning the financial affairs and financial stability of Palmer ; (c) that the defendant accepted the responsibility of supplying the plaintiff with the information and advice which he had sought, knowing that the plaintiff intended to act thereon in deciding whether to retain his existing investments in Palmer and whether to make further investments in that company ; (d) that the defendant by its servants and agents thereupon negligently informed and advised him that Palmer was and would continue to be financially stable and that investments in it were and would continue to be safe and that it would be safe to invest further moneys in it ; (e) that in reliance on the information and advice given by the defendant he did not realize his existing investments in Palmer and invested further moneys in that company ; and (f) that he thereby lost the value of his investments. (at p618)

2. Counsel for the plaintiff informed us that the allegation in (b) above that the defendant "was in a position" to give the information concerning Palmer's financial stability - a phrase which also appears in the other counts of the declaration - was intended to mean that the defendant "had in its employ officers who were capable of forming a reliable judgment upon information obtained concerning Palmer's financial affairs", and that the words "accepted the responsibility of supplying" in (c) above were intended to mean "supplied without disclaimer of responsibility". It is with the declaration as it stands at present that we have to deal but, as will appear later, in the view that I take of the case it is immaterial whether it is the declaration as framed that is to be considered or whether the demurrer is to be decided as though the counts had been amended so as to accord with what counsel told us. (at p619)

3. In his second count the plaintiff claims damages from the second-named defendant, The M.L.C. Ltd., alleging (a) that that company owned over ninety per cent of the ordinary shares in Palmer and that certain of the directors of The M.L.C. Ltd. were also directors of Palmer; (b) that the plaintiff had made unsecured loans to Palmer and knew that the defendant had, by virtue of its shareholding in Palmer and otherwise, special facilities for obtaining full, complete and up-to-date information concerning Palmer's financial affairs and was in a position to give the plaintiff reliable and up-to-date advice concerning that company's financial stability and as to the safety of loans made to Palmer; (c) that the plaintiff sought from the defendant information and advice concerning Palmer's financial stability and as to the safety of unsecured loans made to that company ; (d) that the defendant elected to supply the plaintiff with the information and advice sought from it by the plaintiff knowing that the latter intended to act thereon in deciding whether to "retain" his existing loans to Palmer and whether to make further loans to that company : (e) that the defendant thereupon negligently informed and advised the plaintiff that Palmer was and would continue to be financially stable and that existing loans made to that company were and would continue to be safe and that it would be safe to make further unsecured loans to it ; and (f) that the plaintiff in reliance upon this information and advice refrained from realizing his existing investments in Palmer and made further unsecured loans to that company so that when Palmer became insolvent the plaintiff lost the value of his investments in that company. (at p619)

4. In his third count the plaintiff claims damages from both defendants alleging (a) that The M.L.C. Ltd. owned over ninety per cent of the ordinary shares in Palmer and all the ordinary shares in the assurance company ; (b) that both defendants had the same directors and that some of those directors were also directors of Palmer ; (c) that the assurance company owned some of the ordinary shares in Palmer ; (d) that the plaintiff had made unsecured loans to Palmer and that he, with knowledge that the defendants, by virtue of their shareholdings in Palmer "and otherwise", had special facilities for obtaining full, complete and up-to-date information concerning Palmer's financial affairs and were in a position to give the plaintiff reliable and up-to-date advice concerning that company's financial stability, sought from the defendants information and advice concerning Palmer's financial stability and as to the safety of unsecured loans made to it ; (e) that the defendants, knowing that the plaintiff intended to act upon information and advice given by them in making a decision whether to retain his existing unsecured loans to Palmer and whether to make further unsecured loans to it, elected to supply the plaintiff with the information and advice sought by him ; (f) that the defendants thereupon negligently informed and advised the plaintiff that Palmer was and would continue to be financially stable and that existing unsecured loans were and would continue to be safe and that it would be safe to make further unsecured loans to that company ; and (g) that in reliance upon such information and advice the plaintiff refrained from realizing his existing investments in Palmer and made further unsecured loans to it so that when Palmer became insolvent the plaintiff lost the value of his investments in that company. To each of these counts demurrers were filed. The Court of Appeal overruled them and from its order this appeal is brought. (at p620)

5. It will be seen that in none of the counts is it alleged that the defendants or either of them acted fraudulently or that there was any contractual relationship between the parties under which the defendants or either of them agree to exercise care in advising the plaintiff or that any fiduciary relationship existed between the parties which would give rise to a duty of care owed by the defendants to the plaintiff. Nor is it alleged that either of the defendants carried on business as an investment adviser or held itself out as possessing special skill in advising on investments. What the plaintiff contends is that if some or all of various passages in the speeches in Hedley Byrne &Co. Ltd. v. Heller &Partners Ltd. (1964) AC 465 are applied, the facts alleged in each of the counts would, if proved, give rise to a relationship between the parties as a result of which the defendants and each of them owed to the plaintiff a duty to exercise reasonable care in forming an opinion as to Palmer's present and future financial stability and in advising the plaintiff that investments in that company were then and would continue to be safe. (at p621)

6. It has been said that, when regard is had to the actual decision in Hedley Byrne (1964) AC 465 , the passages relied upon were obiter (see, for example, Rondel v. Worsley (1967) 1 QB 443 , per Danckwerts L.J. at p. 514), but it would be wrong, in my opinion, to put them on one side for that reason since the views expressed by their Lordships were stated after hearing full argument. But they seem to me to have introduced into a branch of the common law which had previously been thought by lawyers, at least in Australia, to have been reasonably well settled a considerable degree of uncertainty and, with all respect, I am not prepared to accept them to their full extent as stating the common law of this country. (at p621)

7. Each of their Lordships was of opinion that, in addition to those cases in which there is a contractual obligation to exercise due care or some fiduciary relationship giving rise to a similar obligation, there are cases in which a "special relationship" may be found to exist between A and B under which a duty is owed by B to A to exercise reasonable care in advising A. With this very general proposition I respectfully agree. No doubt a doctor who gratuitously gives medical advice to a sick man is bound to exercise due care in giving that advice, and a person whose business it is to give skilled advice on financial matters to those who seek it, as was the case in Woods v. Martins Bank (1959) 1 QB 55 , and who, in the course of his business, gratuitously advises a person who seeks his opinion on financial matters may be held liable if the opinion given has been negligently formed or negligently expressed and the person to whom it is given acts in reliance upon it and suffers financial loss. (at p621)

8. The statement of the circumstances in which such a "special relationship" arises were necessarily expressed by each of their Lordships in very general terms. Lord Reid could (1964) AC, at p 486 :

". . . see no logical stopping place short of all those relationships where it is plain that the party seeking information or advice was trusting the other to exercise such a degree of care as the circumstances required, where it was reasonable for him to do that, and where the other gave the information or advice when he knew or ought to have known that the inquirer was relying on him. . . . . A reasonable man, knowing that he was being trusted or that his skill and judgment were being relied on, would, I think, have three courses open to him. He could keep silent or decline to give the information or advice sought : or he could give an answer with a clear qualification that he accepted no responsibility for it or that it was given without that reflection or inquiry which a careful answer would require : or he could simply answer without any such qualification. If he chooses to adopt the last course he must, I think, be held to have accepted some responsibility for his answer being given carefully, or to have accepted a relationship with the inquirer which requires him to exercise such care as the circumstances require."

Lord Morris said (1964) AC, at pp 502, 503 :

"My Lords, I consider that it follows and that it should now be regarded as settled that if someone possessed of a special skill undertakes, quite irrespective of contract, to apply that skill for the assistance of another person who relies upon such skill, a duty of care will arise. The fact that the service is to be given by means of or by the instrumentality of words can make no difference. Furthermore, if in a sphere in which a person is so placed that others could reasonably rely upon his judgment or his skill or upon his ability to make careful inquiry, a person takes it upon himself to give information or advice to, or allows his information or advice to be passed on to, another person who, as he knows or should know, will place reliance upon it, then a duty of care will arise."

Lord Hodson said (1964) AC, at p 514 :

"I do not think it is possible to catalogue the special features which must be found to exist before the duty of care will arise in a given case, but since preparing this opinion I have had the opportunity of reading the speech which my noble and learned friend, Lord Morris of Borth-y-Gest, has prepared. I agree with him that if in a sphere where a person is so placed that others could reasonably rely upon his judgment or his skill or upon his ability to make careful inquiry such person takes it upon himself to give information or advice to, or allows his information or advice to be passed on to, another person who, as he knows, or should know, will place reliance upon it, then a duty of care will arise."

Lord Devlin considered that (1964) AC, at pp 528-529 :

". . . the categories of special relationships which may give rise to a duty to take care in word as well as in deed are not limited to contractual relationships or to relationships of fiduciary duty, but include also relationships which in the words of Lord Shaw in Nocton v. Lord Ashburton (1914) AC, at p 972 , are 'equivalent to contract', that is, where there is an assumption of responsibility in circumstances in which, but for the absence of consideration, there would be a contract." (at p622)

9. Lord Pearce said (1964) AC, at p 539 :

"There is also, in my opinion, a duty of care created by special relationships which, though not fiduciary, give rise to an assumption that care as well as honesty is demanded."

and that :

"To import such a duty the representation must normally, I think, concern a business or professional transaction whose nature makes clear the gravity of the inquiry and the importance and influence attached to the answer."

But these broad propositions should, in my opinion, be read in the light of a number of well-known authorities which had been decided before Hedley Byrne (1964) AC 465 and to which references were made in that case, on occasions with approval and - as it seems to me - on no occasion with disapproval. They are cases in which advice or information was given by one person to another and in which it was held that the relationship between the parties was not such as to give rise to a duty of care owed by the person who gave the advice or information to the person who sought it and that the only duty owed by the former to the latter was one of honesty. (at p623)

10. The first is Derry v. Peek (1889) 14 App Cas 337 . The facts in that case are well known and I need not detail them. It is sufficient for present purposes to say that the directors of a company had issued a prospectus containing a false statement and on the faith of that statement the plaintiff had bought stock in the company. The directors believed the statement to be true, although they had no reasonable grounds for their belief, and it was held that in these circumstances an action for deceit could not be maintained since, although their conduct had been negligent, it was not fraudulent. I think it is plain that if the action had been framed in negligence and not in fraud it would have failed since their Lordships' opinion was that the only duty owed by the directors to those to whom the prospectus was addressed was a duty of honesty and there had been no breach of that duty. (at p623)

11. This was the view taken of the decision by several of those who heard the appeal to the House of Lords in Nocton v. Lord Ashburton (1914) AC 932 . Lord Haldane, with whom Lord Atkinson agreed, said of Derry v. Peek that their Lordships (1914) AC, at p 947 :

". . . must indeed be taken to have thought that the facts proved as to the relationship of the parties . . . were not enough to establish any special duty arising out of that relationship other than the general duty of honesty." (at p623)

12. And that (1914) AC, at p 956 :

"What was decided there was that from the facts proved in that case no such special duty to be careful in statement could be inferred, and that mere want of care therefore gave rise to no cause of action." (at p624)

13. To the same effect is a passage in the judgment of Bowen L.J. in Low v. Bouverie (1891) 3 Ch 82, at p 105 , which was quoted with approval by Lord Shaw in Nocton's Case (1914) AC 932, at p 971 . Bowen L.J. had said (1891) 3 Ch 82, at p 105 :

"Derry v. Peek (1889) 14 App Cas 337 decides . . . that in cases such as those of which that case was an instance, there is no duty enforceable at law to be careful in the representation which is made. Negligent misrepresentation does not certainly amount to deceit, and negligent misrepresentation can only amount to a cause of action if there exist a duty to be careful - not to give information except after careful inquiry. In Derry v. Peek, the House of Lords considered that the circumstances raised no such duty. It is hardly necessary to point out that, if the duty is assumed to exist, there must be a remedy for its non-performance, and that therefore the doctrine that negligent misrepresentation affords no cause of action is confined to cases in which there is no duty such as the law recognizes, to be careful."

And in Hedley Byrne (1964) AC, at p 484 , Lord Reid said of Derry v. Peek that : "It must be implied that on the facts of that case there was no such duty". Lord Morris (1964) AC, at p 500 quoted with approval, an extract from Lord Haldane's speech in Nocton's Case (1914) AC 932, at p 947 including the passage which I have set out above (on p. 623) and Lord Hodson (1964) AC, at p 508 said that Derry v. Peek (1889) 14 App Cas 337 had decided "inferentially" that the careless statements made in the prospectus would not be "actionable in negligence", while Lord Pearce (1964) AC, at p 534 , spoke of the decision as having "curbed" attempts to impose a duty of care as well as a duty of honesty in the case of representation by words. (at p624)

14. The next case to which I refer is Low v. Bouverie (1891) 3 Ch 82 . There the defendant was one of the trustees of a settlement. The life tenant under the settlement sought to borrow money from the plaintiff, a money-lender, upon the security of his life interest and referred the plaintiff to the defendant for information as to his, the life tenant's means and position. The plaintiff, through his solicitors, thereupon informed the defendant that he was "doing some business" with the life tenant and inquired whether the latter was "still entitled to the full benefit" of his life interest, adding that it was understood that he had not in any way mortgaged or parted with his life interest. The defendant replied that the life tenant's interest was subject to certain encumbrances which he mentioned. The plaintiff thereupon made a loan on the security of a mortgage of the life interest. The fact was that that interest was subject to six encumbrances in addition to those mentioned by the defendant. Notice of these additional encumbrances had been given to the defendant but he had forgotten about them when he answered the plaintiff's inquiry. The life tenant became bankrupt and the plaintiff's security proving to be insufficient, he sought to recover the amount of the deficiency from the defendant. After saying that a trustee was under no obligation to answer an inquiry such as had been made by the plaintiff, Lindley L.J. went on (1891) 3 Ch, at p 100 , to deal with the position where a trustee answers such an inquiry and held that his only duty was to give an honest answer. Bowen L.J. was of the same opinion. In Nocton's Case Lord Haldane (1914) AC, at p 950 , expressly agreed with the decision and reference was made to it in Hedley Byrne (1964) AC 465 without disapproval, by Lord Morris (1964) AC, at p 502 , while Lord Hodson (1964) AC, at pp 513, 514 , said of it :

"It was held in Low v. Bouverie (1891) 3 Ch 82 that if a trustee takes upon himself to answer the inquiries of a stranger about to deal with the cestui que trust, he is not under a legal obligation to do more than to give honest answers to the best of his actual knowledge and belief, he is not bound to make inquiries himself."

and added that he did not "think a banker giving references in the ordinary exercise of business should be in any worse position than the trustee". (at p625)

15. The next case is Parsons v. Barclay &Co. Ltd. (1910) 103 LT 196 . There a bank, as in Hedley Byrne (1964) AC 465 , had been asked for and had given advice regarding the financial standing of one of its customers. In the course of his judgment Cozens-Hardy M.R. expressed the opinion that in answering such an inquiry the only duty owed by the bank was one of honesty and what the Master of the Rolls then said was referred to in Hedley Byrne by Lord Morris (1964) AC, at pp 503, 504 , without any indication of disapproval. Lord Hodson, after expressing his agreement with a passage from the judgement of Pearson L.J. who had delivered the leading judgment in the Court of Appeal in Hedley Byrne, that (1964) AC, at pp 512-513 :

"Apart from authority, I am not satisfied that it would be reasonable to impose upon a banker the obligation suggested" - that is the obligation to take reasonable care - "if that obligation really adds anything to the duty of giving an honest answer. It is conceded by Mr. Cooke that the banker is not expected to make outside inquiries to supplement the information which he already has. Is he then expected, in business hours in the bank's time, to expend time and trouble in searching records, studying documents, weighing and comparing the favourable and unfavourable features and producing a well-balanced and well-worded report ? That seems wholly unreasonable. Then, if he is not expected to do any of those things, and if he is permitted to give an impromptu answer in the words that immediately come to his mind on the basis of the facts which he happens to remember or is able to ascertain from a quick glance at the file or one of the files, the duty of care seems to add little, if anything, to the duty of honesty. If the answer given is seriously wrong, that is some evidence - of course, only some evidence - of dishonesty. Therefore, apart from authority, it is far from clear, to my mind, that the banker, in answering such an inquiry, could reasonably be supposed to be assuming any duty higher than that of giving an honest answer."

went on (1964) AC, at p 513 :

"This is to the same effect as the opinion of Cozens-Hardy

M.R. in Parsons v. Barclay &Co. Ltd.

(1910) 103 LT, at p 199 : 'I desire for myself to repudiate entirely the suggestion that when one banker is asked by another for a customer such a question as was asked here, it is in any way the duty of the banker to make inquiries other than what appears from the books of account before him, or, of course, to give information other than what he is acquainted with from his own personal knowledge . . . I think that if we were to take the contrary view . . . we should necessarily be putting a stop to that very wholesome and useful habit by which the banker answers in confidence and answers honestly, to another banker.' It would, I think, be unreasonable to impose an additional burden on persons such as bankers who are asked to give references and might, if more than honesty were required, be put to great trouble before all available material had been explored and considered." (at p626)

16. In Robinson v. National Bank of Scotland Ltd. (1916) SC (HL) 154 their Lordships took a similar view of the duty of a banker in answering inquiries as to the financial standing of others. Lord Haldane said (1916) SC (HL), at p 157 :

"There is only one other point about which I wish to say anything, and that is the question which was argued by the appellant, as to there being a special duty of care under the circumstances here. I think the case of Derry v. Peek (1889) 14 App Cas 337 in this House has finally settled in Scotland, as well as in England and Ireland, the conclusion that in a case like this no duty to be careful is established. There is the general duty of common honesty, and that duty, of course, applies to the circumstances of this case as it applies to all other circumstances. But when a mere inquiry is made by one banker of another, who stands in no special relation to him, then, in the absence of special circumstances from which a contract to be careful can be inferred, I think there is no duty excepting the duty of common honesty to which I have referred."

This passage was quoted in Hedley Byrne by Lord Reid (1964) AC, at pp 491, 492 , and referred to by Lord Hodson (1964) AC, at pp 511, 512 . It is true that in Robinson's Case (1916) SC (HL) 154 the bank's letters contained a disclaimer of responsibility in terms similar to those which had been used by the defendant in Hedley Byrne but, as Lord Hodson pointed out (1964) AC, at p 512 , the conclusion reached by the House of Lords in Robinson's Case (1916) SC (HL) 154 that the bank owed no duty of care to the pursuer was in no way based upon the disclaimer. (at p627)

17. There are then authorities of great weight which lead me to the conclusion that on the facts alleged in each count of the declaration in the present case the only duty which lay upon the defendants was a duty to be honest in answering the plaintiff's inquiry. I can see no reason why an insurance company which, in answer to an inquiry, states its opinion of the financial stability of another company with which it is associated, should owe to the person who makes the inquiry any wider duty than was owed by the directors in Derry v. Peek (1889) 14 App Cas 337 to those to whom the prospectus was addressed, or was owed by the trustee in Low v. Bouverie (1891) 3 Ch 82 or the bankers in Parsons v. Barclay &Co. Ltd. (1910) 103 LT 196 and in Robinson v. National Bank of Scotland (1916) SC (HL) 154 to those who sought information and advice from them. (at p627)

18. I would allow the appeal, set aside the order of the Court of Appeal and in lieu thereof order that judgment in demurrer be entered for the assurance company on the first count of the declaration ; for The M.L.C. Ltd. on the second count and for both defendants on the third count. In these circumstances it is unnecessary to consider whether the defendant's pleas based upon s. 10 of the Usury, Bills of Lading, and Written Memoranda Act, 1902 (N.S.W.) would have afforded a defence had the declaration disclosed a cause of action. (at p627)

Orders

Appeal dismissed with costs.