Henderson+v.+Merrett+Syndicates+Ltd+1995+2+AC+145+-+Chris


 * Facts:** The plaintiffs, investment underwriters at Lloyd's (an investment house) brought an action against the underwriting agents who worked for them. The facts are very complex, but basically they boil down to groups of investors suing the people who invested their money, after the funds were negligently invested and the plaintiffs suffered a big loss.


 * Issue:** The investors had a K with their agents. Was a duty of care excluded by the K? (Did the presence of a K prevent them from suing in tort?)


 * Holding:** No: "A tortious duty of care may arise not only in cases where services are rendered gratuitously, but also where they are rendered under K"


 * Reasoning:** __Lord Goff of Chieveley__: Starts with reference to Hedley Byrne. Says that Hedley established that one could recover for negligence in words or deeds, and for pure economic loss. So there is authority for the __type__ of claim that's being made here.

Furthermore, he quotes Lord Morris in Hedley: "it should now be regarded as settled that if someone possessed of a special skill undertakes, __quite irrespective of K,__ to apply that skill for the assistance of another person who relies on that skill, a duty of care will arise." He quotes Devlin who said that you can recover in tort for actions undertaken gratuitously that were done negligently. Reasoning by analogy: he says that the Hedley principle quoted above has been applied to a number of different categories of service-performing people, including insurance brokers and lawyers. So it can be extended to Lloyd's agents. They hold themselves out as possessing special expertise and the investors relied on that expertise.

So the remaining issue is the problem of tort or K -- can you recover in tort where there is a K? Two options: insist he sue in K alone, or allow the PL to choose between K and tort?

Examination of jurisprudence: he says that at first courts held that liability for solicitor negligence had to be pursued in K. Ditto for architects, but in Bagot v. Stevens Scanlan and Co., Devlin noted that a different conclusion could be reached where the DF had a public calling (e.g. an innkeeper, common carrier, master of a servant).

Examination of effects: Goff doesn't like the idea that consequences of the negligence of professionals can take a while to come to light, and that they might come to light more than six years (prescription) after the date of the breach of K. If they couldn't sue in tort, the PLs would be left without a way to make a claim. There are other practical problems related to remoteness of damage and serving proceedings out of jurisdiction, and we can't rewrite the law to mitigate the effects of differing sets of rules -- it's "crying for the moon."

Esso v. Madron implied that concurrent liability in K and tort was possible -- the DFs were liable in K and negligence. But there was little discussion of why. Midland Bank v. Hett is more helpful -- an examination of jurisprudence there found no unanimity in the view that solicitor liability is purely contractual. In Midland, the court quoted the famous Candler and Crane passage that appears in Hedley, and then noted that Denning was "trying to find a general principle of liability arising from relationships created by the assumption of a particular work or responsibility, __quite regardless of how the relationship arose__." The Midland court said that it is wholly immaterial that the DFs' duty arose because they accepted a retainer that entitled them to a fee. A review of foreign (Commonwealth) authorities shows this is the rule in Canada (Central Trust Co and Rafuse), Ireland, and Australia.

Why? The tort law is "the general law." Parties can K out of it if they wish, but that doesn't change the fact that it is the "general" (default?) law. It is not distasteful that PFs be able to take advantage of the remedy most advantageous to them.

__Lord Browne-Wilkinson__: Agrees in large part, looks at the problem through lens of fiduciary duty. Says there are K responsibilities, and then fiduciary ones, which must be respected regardless of the presence of a K (unless the K explicitly eliminates them)