TON - Claims in negligence - Econ loss - Negligent Advice causing econ loss - professional capacity/special relationship + test
Caparo Industries v Dickman
CLMs owned shares in a company and DEFs were accountants who audited the co's accounts. CLM received copy of accounts, indicating the co was doing very well. Relying on this, CLM made successful takeover bid for Co and later discovered the accounts were inaccurate and overvalued the co. CLM suffered large fin losses and sued DEFS. Bc accounts were to allow shareh to exercise informed ctrl over the co, and not buy more shares, the DEF was found not liable. A duty would only owed if the accounts are knowingly prepared for a specific purpose.
- The Caparo Test:DOC is owed if
- 1 - Is the info from the DEF knowingly communicated to the CLM for a specific reason?
- 2 - Is it reas for the CLM to act on the advice without seeking further independent advice?
- 3 - Did the CLM act on the advice to his detriment?
- If all YES -> special relationship -> DOC