A Duty of Care Relating to Adviser to Advisee

MACHIN v. ADAMS and ORS [1995] EWCA Civ 3

This is the third appeal case reported by Bailii in the year. Appeal allowed.

Does a duty of care in tort exist relating to a advisor owing to a
advisee for the foreseeable loss?

The parties agreed: the Architect would issue a final certificate when
the works had been completed to his reasonable satisfaction (and were
sufficient to enable a care home registration certificate to be
obtained). Most of disputes result from the letters between the
parties. The facts of this case is sample, two preliminary issues were
tried before Judge Overend in the plaintiff's favor.

The judge's conclusion upon the issue was:

"I find that Mrs Machin did reasonably rely on the contents of

Mr Bannister's letter, which had been sent to her solicitors by Mr.
Adams' solicitors. She was probably influenced by its contents in
deciding what terms to negotiate when the final supplementary
agreement was drawn up. Although it is clear that she was having some
difficulty raising the necessary finance in order to meet the
completion date, she was not the only one who had delayed – the
building was not yet complete, and several major items had not been
started, including the three items that were eventually treated as the
Remaining Items. It is also not without significance that the
contractual provisions relating to a Final Certificate were not
complied with – in other words there was scope for negotiations
relating to the extent of any retention from the contract sum."

The following passage is important, viz., Lord Oliver in Caparo plc v
Dickman [1990] 2 AC 605 at 638:

"What can be deduced from the Hedley Byrne case, therefore, is that
the necessary relationship between the maker of a statement or giver
of advice ('the adviser') and the recipient who acts in reliance upon
it ('the advisee') may typically be held to exist where (1) the advice
is required for a purpose whether particularly specified or generally
described, which is made known, either actually or inferentially, to
the adviser at the time when the advice is given; (2) the adviser
knows, either actually or inferentially, that his advice will be
communicated to the advisee, either specifically or as a member of an
ascertainable class, in order that it should be used by the advisee
for that purpose; (3) it is known either actually or inferentially,
that the advice so communicated is likely to be acted upon by the
advisee for that purpose without independent inquiry; and (4) it is so
acted upon by the advisee to his detriment."

If these criteria are satisfied, there may be a duty of care in tort.

And the rules instructed by Lord Hoffmann in Banque Bruxelles SA v
Eagle Star [1997] AC 191: (1) the duty of care imposed on a valuer, or
other adviser in a similar situation, does not exist in the abstract.
(2) A distinction can be drawn between a duty to provide information
for the purpose of enabling someone else to decide upon a course of
action and a duty to advise someone as to what course of action he
should take. If the duty is to advise whether or not a course of
action should be taken, the adviser must take reasonable care to
consider all the potential consequences of that course of action and
will be responsible for the foreseeable loss which is a consequence of
that course of action having been taken. If, however, the adviser's
duty is only to supply information he is responsible only for the
consequences of the information being wrong. (3) If the duty on the
adviser is a duty only to supply information, he will not ordinarily
be privy to the other considerations which the advisee may take into
account before embarking on a particular course of action.