Henderson v Merrett Syndicates Ltd: HL 25 Jul 1994

Lloyds Agents Owe Care Duty to Member; no Contract

Managing agents conducted the financial affairs of the Lloyds Names belonging to the syndicates under their charge. It was alleged that they managed these affairs with a lack of due careleading to enormous losses.
Held: The assumption of responsibility principle enunciated in Hedley is not confined to statements but may apply to any assumption of responsibility for the provision of services. This extended Hedley Byrne principle is the rationalisation or technique adopted to provide a remedy for the recovery of damages in respect of economic loss caused by the negligent performance of services. Once a case falls within the extended Hedley Byrne principle, there is no need to embark on any further inquiry whether it is ‘fair, just and reasonable’ to impose liability for economic loss. Further ‘reliance upon [the assumption of responsibility] by the other party will be necessary to establish a cause of action (because otherwise the negligence will have no causative effect).’ The existence of a contractual duty of care between the parties does not preclude the concurrence of a tort duty in the same respect.
Professional advisers may owe to the same client a duty to exercise reasonable care and skill derived from both contract and tort law.
Lord Browne-Wilkinson said: ‘The phrase ‘fiduciary duties’ is a dangerous one, giving rise to a mistaken assumption that all fiduciaries owe the same duties in all circumstances. That is not the case. Although, so far as I am aware, every fiduciary is under a duty not to make a profit from his position (unless such profit is authorised), the fiduciary duties owed, for example, by an express trustee are not the same as those owed by an agent. Moreover, and more relevantly, the extent and nature of the fiduciary duties owed in any particular case fall to be determined by reference to any underlying contractual relationship between the parties. Thus, in the case of an agent employed under a contract, the scope of his fiduciary duties is determined by the terms of the underlying contract. Although an agent is, in the absence of contractual provision, in breach of his fiduciary duties if he acts for another who is in competition with his principal, if the contract under which he is acting authorises him so to do, the normal fiduciary duties are modified accordingly: see Kelly v. Cooper [1993] A.C. 205, and the cases there cited. The existence of a contract does not exclude the co-existence of concurrent fiduciary duties (indeed, the contract may well be their source); but the contract can and does modify the extent and nature of the general duty that would otherwise arise.’

Lord Goff of Chieveley, Lord Browne-Wilkinson
[1995] 2 AC 145, [1994] 3 All ER 506, Times 26-Jul-1994, [1994] UKHL 5, [1994] 3 WLR 761
Bailii
England and Wales
Citing:
CitedHedley Byrne and Co Ltd v Heller and Partners Ltd HL 28-May-1963
Banker’s Liability for Negligent Reference
The appellants were advertising agents. They were liable themselves for advertising space taken for a client, and had sought a financial reference from the defendant bankers to the client. The reference was negligent, but the bankers denied any . .
Appeal fromArbuthnott v Feltrim; Deeny v Gooda Walker; Henderson v Merrett CA 14-Dec-1993
Underwriters owe a professional duty of care to Lloyds names in underwriting, even though they were acting as agents. . .

Cited by:
CitedBellefield Computer Services and others v E Turner and Sons Limited and others CA 18-Dec-2002
The defendants had carried out works of construction on the premises. They subcontracted the design, but not the supervision, of the works to architects. Years later there was a fire, which spread rapidly because of negligence in the design of a . .
CitedDP Mann and others v Coutts and Co ComC 16-Sep-2003
The claimants were involved in litigation, They took certain steps on the understanding that the respondents had had deposited with them substantial sums in accounts under binding authorities. The bank had written a letter upon which they claim they . .
CitedSilven Properties Limited, Chart Enterprises Incorporated v Royal Bank of Scotland Plc, Vooght, Harris CA 21-Oct-2003
The claimants sought damages from mortgagees who had sold their charged properties as receivers. They said they had failed to sell at a proper value. They asked whether the express appointment in the mortgage of receivers as agents of the mortgagor . .
CitedNiru Battery Manufacturing Company, Bank Sepah Iran v Milestone Trading Limited CA 23-Oct-2003
The claimant had contracted to purchase lead from some of the defendants. There were delays in payment but when funds were made available they should have been repaid. An incorrect bill of lading was presented. The bill certified that the goods had . .
CitedOldham and others v Georgina Kyrris and Another CA 4-Nov-2003
The claimant sought to bring a claim against the administrators of a partnership alleging a duty of care to creditors.
Held: Such an administrator owed no greater duty to creditors than would a director. That duty was no different whether the . .
CitedCommissioners of Customs and Excise v Barclays Bank Plc ComC 3-Feb-2004
The claimant had obtained orders against two companies who banked with the respondent. Asset freezing orders were served on the bank, but within a short time the customer used the bank’s Faxpay national service to transfer substantial sums outside . .
CitedCommissioner of Police of the Metropolis v Lennon CA 20-Feb-2004
The claimant police officer considered being transferred to Northern Ireland. He asked and was incorrectly told that his housing allowance would not be affected by taking time off work.
Held: The break between employments had affected his . .
CitedMcLoughlin v Jones; McLoughlin v Grovers (a Firm) CA 2002
In deciding whether a duty of care is established the court must go to the ‘battery of tests which the House of Lords has taught us to use’, namely: ‘. . the ‘purpose’ test (Banque Bruxelles Lambert SA v Eagle Star Insurance Co Ltd); the ‘assumption . .
CitedPhelps v Mayor and Burgesses London Borough of Hillingdon CA 4-Nov-1998
The plaintiff claimed damages for the negligent failure of an educational psychologist employed by a local authority to identify that the plaintiff was dyslexic.
Held: An educational psychologist has no duty of care to a child, as opposed to . .
CitedJane Marianne Sandhar, John Stuart Murray v Department of Transport, Environment and the Regions CA 5-Nov-2004
The claimant’s husband died when his car skidded on hoar frost. She claimed the respondent was liable under the Act and at common law for failing to keep it safe.
Held: The respondent had not assumed a general responsibility to all road users . .
CitedCustoms and Excise v Barclays Bank Plc CA 22-Nov-2004
The claimant had obtained judgment against customers of the defendant, and then freezing orders for the accounts. The defendants inadvertently or negligently allowed sums to be transferred from the accounts. The claimants sought repayment by the . .
CitedFirst National Commercial Bank Plc v Loxleys (a Firm) CA 6-Nov-1996
The plaintiff claimed damages from the seller of land and from their solicitors for misrepresentation in the replies to enquiries before contract. He appealed a striking out of his claim.
Held: A lawyer’s disclaimer placed on his Replies to . .
CitedPrecis (521) Plc v William M Mercer Ltd CA 15-Feb-2005
Purchasers of a company sought to claim in negligence against the respondent actuaries in respect of a valuation of the company’s pension funds.
Held: There was a paucity of authority as to when a duty of care was assumed. The words used and . .
CitedRegina v Lam and Others (T/a ‘Namesakes of Torbay’) and Borough of Torbay CA 30-Jul-1997
The claimant sought damages after the planning authority allowed the first defendant to conduct a manufacturing business in the course of which spraying activities took place which caused them personal injuries and loss of business.
Held: The . .
CitedWest Bromwich Albion Football Club Ltd v El-Safty QBD 14-Dec-2005
The claimant sought damages from the defendant surgeon alleging negligent care of a footballer. The defendant argued that he had no duty to the club as employer of his patient who was being treated through his BUPA membership. It would have created . .
CitedHM Customs and Excise v Barclays Bank Plc HL 21-Jun-2006
The claimant had served an asset freezing order on the bank in respect of one of its customers. The bank paid out on a cheque inadvertently as to the order. The Commissioners claimed against the bank in negligence. The bank denied any duty of care. . .
CitedB and B v A County Council CA 21-Nov-2006
The claimants sought damages from the defendant local authority after their identities had been wrongfully revealed to the natural parents of the adoptees leading to a claimed campaign of harassment. The adopters has specifically requested that . .
CitedDeutsche Morgan Grenfell Group Plc v Inland Revenue and Another HL 25-Oct-2006
The tax payer had overpaid Advance Corporation Tax under an error of law. It sought repayment. The revenue contended that the claim was time barred.
Held: The claim was in restitution, and the limitation period began to run from the date when . .
CitedJohnson v Gore Wood and Co HL 14-Dec-2000
Shareholder May Sue for Additional Personal Losses
A company brought a claim of negligence against its solicitors, and, after that claim was settled, the company’s owner brought a separate claim in respect of the same subject-matter.
Held: It need not be an abuse of the court for a shareholder . .
CitedWhite and Another v Jones and Another HL 16-Feb-1995
Will Drafter liable in Negligence to Beneficiary
A solicitor drawing a will may be liable in negligence to a potential beneficiary, having unduly delayed in the drawing of the will. The Hedley Byrne principle was ‘founded upon an assumption of responsibility.’ Obligations may occasionally arise . .
CitedGrosvenor Casinos Ltd v National Bank of Abu Dhabi ComC 17-Mar-2008
Banker’s reference no guarantee
An Arab businessman lost pounds 18m at the claimant casino, and wrote scrip cheques against his account with the defendant. The claimant obtained judgment, but being unable to enforce that judgment pursued his bank. The club had used a system where . .
CitedTotal Network Sl v Revenue and Customs HL 12-Mar-2008
The House was asked whether an action for unlawful means conspiracy was available against a participant in a missing trader intra-community, or carousel, fraud. The company appealed a finding of liability saying that the VAT Act and Regulations . .
CitedWelton, Welton v North Cornwall District Council CA 17-Jul-1996
The defendant authority appealed a finding that it was liable in negligence from the conduct of one of its environmental health officers. The plaintiff had set out to refurbish and open a restaurant. He said the officer gave him a list of things he . .
CitedO’Donnell v Shanahan and Another CA 22-Jul-2009
The claimant appealed against dismissal of her petition for an order for the defendants to purchase her shares at a fair value, saying that they had acted unfairly toward her. Her co-directors had acquired, for another company of which they were . .
CitedRossetti Marketing Ltd v Diamond Sofa Company Ltd and Another QBD 3-Oct-2011
Rossetti_diamondQBD2011
The claimants sought compensation under the 1993 Rules. The defendants denied that the claimants were agents within the rules, since they also acted as agents for other furniture makers.
Held: Whether a party is a commercial agent within the . .
CitedGlaister and Others v Appelby-In-Westmorland Town Council CA 9-Dec-2009
The claimant was injured when at a horse fair. A loose horse kicked him causing injury. They claimed in negligence against the council for licensing the fair without ensuring that public liability insurance. The Council now appealed agaiinst a . .
CitedAspect Contracts (Asbetos) Ltd v Higgins Construction Plc SC 17-Jun-2015
Aspect had claimed the return of funds paid by it to the appellant Higgins under an adjudication award in a construction contract disute. The claimant had been asked to prpare asbestos surveys and reports on maisonettes which Higgins was to acquire . .
CitedHalton International Inc (Holding) and Another v Guernroy Ltd ChD 9-Sep-2005
Parties had entered into a shareholders’ agreement as to voting arrengemets within a company. Thay disputed whether votes had been used in reach of that agreement, particularly as to the issue of new shares and their allotment, but the court now . .
CitedSteel and Another v NRAM Ltd (Formerly NRAM Plc) SC 28-Feb-2018
The appellant solicitor acted in a land transaction. The land was mortgaged to the respondent bank. She wrote to the bank stating her client’s intention to repay the whole loan. The letter was negligently mistaken and the bankers allowed the . .
CitedBanca Nazionale Del Lavoro Spa v Playboy Club London Ltd and Others SC 26-Jul-2018
The Playboy casino required a reference for a customer, but asked for this through a third party. The bank was not aware of the agency but gave a good reference for a customer who had never deposited any money with them and nor to whom it had issued . .

Lists of cited by and citing cases may be incomplete.

Professional Negligence, Damages, Agency

Leading Case

Updated: 01 November 2021; Ref: scu.180462