In Canada, the policy analysis at stage two of the Anns duty of
care test has typically been limited to concerns about
indeterminate liability. By way of contrast, the
United Kingdom House of Lords has favoured a flexible
approach in determining whether to impose a duty of care generally
for negligence causing an economic loss. It allows for a
consideration of a greater number of policy factors in cases
involving auditors' liability to third parties.
In Customs Excise v. Barclays Bank,  UKHL 28
("Barclays Bank"), the Customs and Excise
Commissioners obtained a Mareva injunction freezing assets
of two customers of Barclays Bank. When the Bank allowed funds to
be withdrawn from the "frozen" bank accounts in error,
the Commissioners sued. The House of Lords found that the
Bank owed no duty of care to the Commissioners and, in doing so,
endorsed three distinct tests.
Firstly, the Court considered whether the Bank had assumed
responsibility to the Commissioners, a test derived from the
leading negligent misrepresentation case of Hedley Byrne v
Heller,  AC 465. Assumption of responsibility is
assessed by an objective view of the facts and can easily be
applied as a threshold test. If it is satisfied it is not
necessary to apply any other test.
Secondly, the Court considered the three-fold test from
Caparo Industries Plc v. Dickman,  2 AC 605: whether
the loss to the plaintiff is a reasonably foreseeable consequence
of the defendant's actions; whether sufficient proximity
between the parties can be established; and whether it is fair,
just, and reasonable to impose a duty of care when considering all
of the circumstances. This allowed for a consideration of a variety
of relevant policy considerations beyond indeterminate liability,
including whether the plaintiff had alternative means to
protect its interests, the availability of insurance to the
parties, and whether the imposition of a duty of care would
conflict with the defendants' other duties of care.
Thirdly, the Court considered an "incremental" test,
which permits the law the flexibility to develop new categories of
cases in which a duty of care will be found by analogy to cases in
which a duty of care has previously been found.
It can be easily seen that this approach allows for the
examination of numerous policy considerations other than
indeterminate liability, such as the amount of money paid to
auditors for the engagement versus the level of risk to which
auditors are exposed, or the opportunity for others, such as
shareholders, to oversee the work of the auditors or management to
prevent the economic loss. This greater flexibility can be lauded
for its ability to achieve fairness in a wide variety of
circumstances; however, it is arguable that it does so at the
expense of predictability.
It's not often that our little blog intersects with such titanic struggles as the U.S. presidential race – and by using the term "titanic" I certainly don't mean to suggest that anything disastrous is in the future.
J.J. v. C.C., is an interesting case in which the court held that an automotive garage owes a duty to minor children to secure the vehicles on the premises by locking the cars and safely storing the car keys...
In Irwin v. Alberta Veterinary Medical Association, 2015 ABCA 396, the Alberta Court of Appeal found that the "ABVMA" failed to afford procedural fairness to a veterinarian undergoing an incapacity assessment.
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