Caparo Industries plc v Dickman [] UKHL 2 is a leading English tort law case in Caparo was the scope of the assumption of responsibility, and what the. Caparo Industries Plc v Dickman []. Facts. Caparo, a small investor purchased shares in a company, relying on the accounts prepared by. A company called Fidelity plc, manufacturers of electrical equipments, was the target of a takeover by Caparo Industries plc. Fidelity was not doing well. In March.

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In May Fidelity’s directors made a preliminary announcement in its annual profits for the year up to March.

The second requirement is more elusive. But the focus of the inquiry is on the closeness and directness of the relationship between the parties. Once it had control, Caparo found that Fidelity’s accounts were in an even worse state than had been revealed by the directors or the auditors.

Caparo reached a shareholding of Sometimes, as in the Hedley Byrne caseattention is concentrated on the existence of a special relationship.

But once it had control, Caparo found that Fidelity’s accounts were in an even worse state than had been revealed by the directors or the auditors. The majority of the Court of Appeal Bingham LJ and Taylor LJ, O’Connor LJ dissenting held that a duty was owed by the auditor to shareholders individually, and although it was not necessary to decide that in this case and the judgment was obiterthat a duty would not be owed to an outside investor who had no shareholding.

Caparo Industries v Dickman | Case Brief Wiki | FANDOM powered by Wikia

The inquiry involves a weighing of the relationship of the parties, the nature of the risk, and the public interest in the proposed solution. At this point Caparo had begun buying up shares in large numbers. In it he extrapolated from previously confusing cases what he thought were three main principles to be applied across the law of negligence for the duty of care. Contractors Ltd [] Q. From Wikipedia, the free encyclopedia. The question in Caparo was the scope of the assumption of responsibility, and what the limits of liability ought to be.


There could not be a duty owed in respect of “liability in an indeterminate amount for an indeterminate time to an indeterminate class” Ultramares Corp v Touche[5] per Cardozo C.

I believe this argument to be fallacious. So it would not be sensible or fair to say that the shareholder did either. In some cases, and increasingly, reference is made to the voluntary assumption of responsibility: Assuming for the purpose of the argument that the relationship between the auditor of a company and individual shareholders is of sufficient proximity to give rise to a duty of care, I do not understand how the scope of that duty can possibly extend beyond the protection of any individual shareholder from losses in the value of the shares which he holds.

His decision was, following O’Connor LJ’s dissent in the Court of Appeal, that no duty was owed at all, either to existing shareholders or to future investors by a negligent auditor.

It is usually described as proximity, which means not simple physical proximity but extends to “such close and direct relations that the act complained of directly affects a person whom the person alleged to be bound to take care would know would be directly affected by his careless act: Moreover, the loss in the case of the sale would be of a loss of part of the value of the shareholder’s existing holding, which, assuming a duty of care owed to individual shareholders, it might sensibly lie within the scope of the auditor’s duty to protect.


In June the annual accounts, which were done with the help of the accountant Dickman, were issued to the shareholders, which now included Caparo. But in practice no problem arises in this regard since the interest of the shareholders in the proper management of the company’s affairs is indistinguishable from the interest of the company itself and any loss suffered by the shareholders, e.

A loss, on the other hand, resulting from the purchase of additional shares would result from a wholly independent transaction having no connection with the existing shareholding. At this point Caparo had begun buying up shares in large numbers.

Caparo Industries Plc v Dickman [1990]

Had Caparo been a simple outside investor, with no stake in the company, it would have had no claim. In order for a duty of care to arise in negligence:. The first is foreseeability.

The decision arose in the context of a negligent preparation of accounts for a company. Contents [ show ]. inndustries

Caparo Industries plc v Dickman – Wikipedia

O’Connor LJ, in dissent, would have held that no duty was owed at all to either group. Sometimes the alternative expression “neighbourhood” is used, as by Lord Reid in the Hedley Byrne case [] A.

It is one upon which all dickma law jurisdictions can learn much from each other; because, apart from exceptional cases, no sensible distinction can be drawn in this respect between the various countries and the social conditions existing in them. This confirmed the position was bad. Bridge of Harwich, writing for a unanimous court, states that the two part test employed in Dobson should not be used, industrise subsequently it has been abandoned in England.