| Spring v Guardian Assurance plc | |
|---|---|
 | |
| Court | House of Lords |
| Decided | 7 July 1994 |
| Citation(s) | [1994] UKHL 7, [1995] 2 AC 296 |
| Court membership | |
| Judges sitting | Lord Keith of Kinkel Lord Goff of Chieveley Lord Lowry Lord Slynn of Hadley Lord Woolf |
| Keywords | |
| Employee, reference | |
Spring v Guardian Assurance plc [1994] UKHL 7 , [1995] 2 AC 296 is a UK labour law and English tort law case, concerning the duty to provide accurate information when writing an employee reference.
The plaintiff was employed by a company that acted as estate agents and agents for the sale of insurance products by Guardian Insurance, the latter of which it was designated as an "appointed representative" [lower-alpha 1] under rules issued by LAUTRO. [lower-alpha 2] In that regard, the plaintiff was designated as a "company representative" of Guardian Assurance, [lower-alpha 3] and thus authorized to sell Guardian insurance policies and to advise on their merits.
When the plaintiff's employer was sold to Guardian, its new chief executive did not get on with the plaintiff, and the latter was subsequently dismissed without explanation. He then sought to form his own business selling insurance, and approached the Scottish Amicable Life Assurance Society to be appointed as one of their company representatives.
LAUTRO rules required its members to take "reasonable steps to satisfy itself that he is of good character and of the requisite aptitude and competence, and those steps shall ... include ... the taking up of references relating to character and experience." [1] Guardian Assurance sent unsatisfactory references for Mr Spring, not just to Scottish Amicable, but also to two other companies that were considering a similar appointment. He claimed this amounted to negligent misstatement, and that the company was liable for damages in tort. He accordingly sued for malicious falsehood, breach of contract and negligence.
By 4-1, the House of Lords held that Guardian Insurance owed the plaintiff a duty of care in tort, under the principle first expressed in Hedley Byrne & Co Ltd v Heller & Partners Ltd and later expanded upon in Anns v Merton LBC . By 3-2, it further held that, "Where the relationship between the parties is that of employer and employee, the duty of care could be expressed as arising from an implied term of the contract of employment."
The trial judge had also ruled that the claim for malicious falsehood had not been made out, and that was not subsequently appealed. All Lords noted that, in cases such as this, the defence of qualified privilege would defeat such an action unless the plaintiff proved malice, and it was justified on policy grounds first expressed by Lord Diplock in Horrocks v Lowe, [2] which was subsequently expanded upon in New Zealand jurisprudence [3] in a manner endorsed by Lord Keith.
The House of Lords held that sending a bad reference, if it contained inaccurate information, could be a breach of duty in tort for negligence.
Lord Woolf agreed that negligent misstatement causing economic loss is actionable, but dissented on the outcome, explaining that the importance should not be exaggerated for the reasons given in Caparo Industries plc v Dickman concerning the required degree of foreseeability and proximity.
Although the Anns test had been restricted by the Lords' 1990 ruling in Murphy v Brentwood DC , Spring was held to be a case where the second branch of the test could be properly applied.
While there is a duty of care in the preparation of a reference, the employer does not have a general duty to provide one [4] in cases other than where a subsequent employer is required to receive it, and it does not matter what form the reference might take. [5]
In the United Kingdom, references can be disclosed to the person about whom they are written, under the subject access provisions of the Data Protection Act 1998. As a result, together with the duty of care under Spring, many organizations have issued guidance as to best practice to be undertaken by reference providers. [6]
The duty of care has also been held to apply in non-reference situations, as noted in 2011 in McKie v Swindon College. [7] In another case, the Court of Appeal of England and Wales has held that "a reference must not give an unfair or misleading impression overall, even if its discrete components are factually correct." [8] However, while a reference must be accurate and fair, it is not necessary to report all material facts concerning an individual, [9] but it can be argued that, if an agreed reference arising from a settlement agreement is misleadingly incomplete, the employer can be sued by a subsequent employer for breaching its duty of care. [10] The Employment Appeal Tribunal, in an unfair dismissal case, ruled that, in preparing a reference, it was not reasonable to provide details of complaints against an employee of which the employee was not aware. [11]
The Court of Appeal has further held that, if an employee leaves when an investigation is ongoing but has not been concluded, or where issues arise after an employee leaves that have not been investigated, employers can disclose this information but should do so in a measured and fair way, which will be particularly important if to omit this information would mean providing a misleading reference. [12]
In Canada, the question of negligent misrepresentation had already been addressed in 1993 by the Supreme Court of Canada in Queen v Cognos, in which a five-part test was devised to determine where a claim could succeed: [13]
The SCC later adopted Spring for representations concerning those associated with the representor in Young v Bella, in which the Court declared, "There is no reason in principle why negligence actions should not be allowed to proceed where (a) proximity and foreseeability have been established, and (b) the damages cover more than just harm to the plaintiff’s reputation (i.e. where there are further damages arising from the defendant’s negligence)... In fact, all of the cases cited by the respondents as standing for the proposition that defamation had 'cornered the market' on reputation damages were cases in which (unlike here) there was no pre-existing relationship between the parties that gave rise to a duty of care." [14]
Negligence is a failure to exercise appropriate and/or ethical ruled care expected to be exercised amongst specified circumstances. The area of tort law known as negligence involves harm caused by failing to act as a form of carelessness possibly with extenuating circumstances. The core concept of negligence is that people should exercise reasonable care in their actions, by taking account of the potential harm that they might foreseeably cause to other people or property.
A tort is a civil wrong that causes a claimant to suffer loss or harm, resulting in legal liability for the person who commits the tortious act. Tort law can be contrasted with criminal law, which deals with criminal wrongs that are punishable by the state. While criminal law aims to punish individuals who commit crimes, tort law aims to compensate individuals who suffer harm as a result of the actions of others. Some wrongful acts, such as assault and battery, can result in both a civil lawsuit and a criminal prosecution in countries where the civil and criminal legal systems are separate. Tort law may also be contrasted with contract law, which provides civil remedies after breach of a duty that arises from a contract. Obligations in both tort and criminal law are more fundamental and are imposed regardless of whether the parties have a contract.
Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 is an English tort law case on economic loss in English tort law resulting from a negligent misstatement. Prior to the decision, the notion that a party may owe another a duty of care for statements made in reliance had been rejected, with the only remedy for such losses being in contract law. The House of Lords overruled the previous position, in recognising liability for pure economic loss not arising from a contractual relationship, applying to commercial negligence the principle of "assumption of responsibility".
English tort law concerns the compensation for harm to people's rights to health and safety, a clean environment, property, their economic interests, or their reputations. A "tort" is a wrong in civil, rather than criminal law, that usually requires a payment of money to make up for damage that is caused. Alongside contracts and unjust enrichment, tort law is usually seen as forming one of the three main pillars of the law of obligations.
In common law jurisdictions, a misrepresentation is a false or misleading statement of fact made during negotiations by one party to another, the statement then inducing that other party to enter into a contract. The misled party may normally rescind the contract, and sometimes may be awarded damages as well.
Bolam v Friern Hospital Management Committee [1957] 1 WLR 582 is an English tort law case that lays down the typical rule for assessing the appropriate standard of reasonable care in negligence cases involving skilled professionals such as doctors. This rule is known as the Bolam test, and states that if a doctor reaches the standard of a responsible body of medical opinion, they are not negligent. Bolam was rejected in the 2015 Supreme Court decision of Montgomery v Lanarkshire Health Board in matters of informed consent.
Volenti non fit iniuria is a common law doctrine which states that if someone willingly places themselves in a position where harm might result, knowing that some degree of harm might result, they are not able to bring a claim against the other party in tort or delict. Volenti applies only to the risk which a reasonable person would consider them as having assumed by their actions; thus a boxer consents to being hit, and to the injuries that might be expected from being hit, but does not consent to his opponent striking him with an iron bar, or punching him outside the usual terms of boxing. Volenti is also known as a "voluntary assumption of risk".
Ex turpi causa non oritur actio is a legal doctrine which states that a plaintiff will be unable to pursue legal relief and damages if it arises in connection with their own tortious act. Particularly relevant in the law of contract, tort and trusts, ex turpi causa is also known as the illegality defence, since a defendant may plead that even though, for instance, he broke a contract, conducted himself negligently or broke an equitable duty, nevertheless a claimant by reason of his own illegality cannot sue. The UK Supreme Court provided a thorough reconsideration of the doctrine in 2016 in Patel v Mirza.
In English tort law, an individual may owe a duty of care to another, in order to ensure that they do not suffer any unreasonable harm or loss. If such a duty is found to be breached, a legal liability will be imposed upon the tortfeasor to compensate the victim for any losses they incur. The idea of individuals owing strangers a duty of care – where beforehand such duties were only found from contractual arrangements – developed at common law, throughout the 20th century. The doctrine was significantly developed in the case of Donoghue v Stevenson, where a woman succeeded in establishing a manufacturer of ginger beer owed her a duty of care, where it had been negligently produced. Following this, the duty concept has expanded into a coherent judicial test, which must be satisfied in order to claim in negligence.
Causation in English law concerns the legal tests of remoteness, causation and foreseeability in the tort of negligence. It is also relevant for English criminal law and English contract law.
Loss of chance in English law refers to a particular problem of causation, which arises in tort and contract. The law is invited to assess hypothetical outcomes, either affecting the claimant or a third party, where the defendant's breach of contract or of the duty of care for the purposes of negligence deprived the claimant of the opportunity to obtain a benefit and/or avoid a loss. For these purposes, the remedy of damages is normally intended to compensate for the claimant's loss of expectation. The general rule is that while a loss of chance is compensable when the chance was something promised on a contract it is not generally so in the law of tort, where most cases thus far have been concerned with medical negligence in the public health system.
London Drugs Ltd v Kuehne & Nagel International Ltd, [1992] 3 SCR 299 is a leading decision of the Supreme Court of Canada on privity of contract.
Economic loss is a term of art which refers to financial loss and damage suffered by a person which is seen only on a balance sheet and not as physical injury to person or property. There is a fundamental distinction between pure economic loss and consequential economic loss, as pure economic loss occurs independent of any physical damage to the person or property of the victim. It has also been suggested that this tort should be called "commercial loss" as injuries to person or property can be regarded as "economic".
English contract law is the body of law that regulates legally binding agreements in England and Wales. With its roots in the lex mercatoria and the activism of the judiciary during the industrial revolution, it shares a heritage with countries across the Commonwealth, from membership in the European Union, continuing membership in Unidroit, and to a lesser extent the United States. Any agreement that is enforceable in court is a contract. A contract is a voluntary obligation, contrasting to the duty to not violate others rights in tort or unjust enrichment. English law places a high value on ensuring people have truly consented to the deals that bind them in court, so long as they comply with statutory and human rights.
Negligent entrustment is a cause of action in United States tort law which arises where one party is held liable for negligence because they negligently provided another party with a dangerous instrumentality, and the entrusted party caused injury to a third party with that instrumentality. The cause of action most frequently arises where one person allows another to drive their automobile.
Letang v Cooper[1964] EWCA Civ 5 is an English Court of Appeal judgment, by which it was decided that negligently caused personal injury cannot be recovered under the trespass to the person, but the tort of negligence must be tried instead.
South Australia Asset Management Corporation v York Montague Ltd and Banque Bruxelles Lambert SA v Eagle Star Insurance Co Ltd [1996] UKHL 10 is a joined English contract law case on causation and remoteness of damage. It arose out of the property crash in the early 1990s, whereby banks were suing valuers for overpricing houses in order to recover the lost market value. Owners themselves often had little or no money, since they had fallen victim to negative equity, so mortgage lenders would pursue a valuer instead to recover some losses. The legal principle arising from the case is often referred to as the "SAAMCO principle".
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