Candler v Crane, Christmas & Co

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Candler v Crane, Christmas & Co
Lelant Engine.jpg
CourtCourt of Appeal
Citation(s)[1951] 2 KB 164; [1951] 1 All ER 426; 36 Digest (Rep 1) 17; [1951] 1 TLR 371
Case opinions
Cohen LJ, Asquith LJ and Denning LJ
Court membership
Judge(s) sittingLord Justice Cohen, Lord Justice Asquith and Lord Justice Denning
Keywords
negligent misstatement, duty of care

Candler v Crane, Christmas & Co [1951] 2 KB 164 is an English tort law case on negligent misstatement.

In the case, Denning LJ[1] delivered an important dissenting judgment, arguing that a duty of care arose when making negligent statements. His dissenting judgment was later upheld by the House of Lords in Hedley Byrne v Heller 1963 [2].

Facts[edit]

Donald Ogilvie was the director of a company called Trevaunance Hydraulic Tin Mines Ltd, which mined tin in Cornwall. He needed more capital, so he put an advertisement in The Times on July 8, 1946, which said,

"£10,000. Established Tin Mine (low capitalisation) in Cornwall seeks further capital. Install additional milling plant. Directorship and active participation open to suitable applicant - Apply"

Mr Candler responded, saying he was interested in investing £2000, provided he was shown the company's accounts. Mr Ogilvie instructed Crane, Christmas & Co, a firm of auditors, to prepare the company’s accounts and balance sheet. The draft accounts were shown to Mr Candler in the presence of the auditor's clerk, a Mr Fraser. Mr Candler relied on their accuracy and subscribed for £2,000 worth of shares in the company; but the company was actually in a very poor state. Ogilvie used the £2,000 on himself and then went bankrupt. Mr Candler lost all the money he invested. He brought an action against the accountants, Crane, Christmas & Co. for negligently misrepresenting the state of the company. As there was no contractual relationship between the parties, no case arose in misrepresentation,[3] and so the action was brought in tort for pure economic loss.

Judgment[edit]

The majority of the Court of Appeal (Cohen LJ and Asquith LJ) relied on the case of Derry v Peek to refuse a remedy to the plaintiff, holding that loss resulting from negligent misstatement was not actionable in the absence of any contractual or fiduciary relationship between the parties.

Denning LJ (as the Master of the Rolls then was) delivered a powerful dissent, in which he argued that any person in the reasonable contemplation of someone making a statement who might rely on that statement is owed a duty of care in tort.[4] He was asked to read his decision first.

See also[edit]

References[edit]

  1. ^ Denning was sitting as a Lord Justice of Appeal; he became Master of the Rolls 11 years later
  2. ^ Hedley Byrne & Co Ltd v Heller & Partners Ltd [1963] 2 All ER 575
  3. ^ Misrepresentation occurs when an untrue or misleading statement induces a person into a contract.
  4. ^ at pp.174-185
  5. ^ [1932] A. C. 562
  6. ^ (1860) 1 De G. F. & J. 518 , 527
  7. ^ (1801) 6 Ves. Jun. 173, 183.
  8. ^ (1860) 1 De G. F. & J. 518 , 523.
  9. ^ (1880) 5 App. Cas. 925 , 935-6.
  10. ^ (1889) 14 App. Cas. 337 , 360.
  11. ^ [1914] A. C. 932 , 972.
  12. ^ [1932] A. C. 562 , 580-1.
  13. ^ [1893] 1 Q. B. 491 .
  14. ^ [1949] 2 K. B. 500 , 514-17.
  15. ^ (1842) 10 M. & W. 109 .
  16. ^ (1865) 19 C. B. (N.S.) 213 .
  17. ^ 13th ed., 1929, at pp. 103-10; (1789) 3 Term. Rep. 51. in 2 Smith's Leading Cases
  18. ^ (1816) 5 M. & S. 198 .
  19. ^ [1893] 1 Q. B. 491 at p. 502.
  20. ^ [1891] 3 Ch 82
  21. ^ (1888) 39 Ch D 39 .
  22. ^ [1914] AC 932 .
  23. ^ [1914] A. C. 932 , 947.
  24. ^ (1703) 2 Ld. Raym. 938 .
  25. ^ (1789) 3 Term Rep. 51
  26. ^ (1762) 2 Wilson 145, 146.
  27. ^ [1932] A. C. 562 , 619.
  28. ^ [1941] 2 K. B. 343
  29. ^ (1939) 161 L. T. 227 .
  30. ^ (1789) 1 H Bl 159 , 162.
  31. ^ [1950] 1 All ER 1033 , 1042.
  32. ^ [1920] 3 K. B. 163 , 182, 217.
  33. ^ (1864) 17 CB (NS) 194
  34. ^ (1869) LR 5 Ex 1, 5.
  35. ^ (1888) 39 Ch. D. 39 .
  36. ^ (1869) L. R. 5 Ex. 1 , 5.
  37. ^ (1912) 106 L. T. 533
  38. ^ 39 Ch. D. 39 .
  39. ^ [1920] 3 KB 163 , 211, 217.
  40. ^ (1929) 45 T. L. R. 297 .
  41. ^ (1931) 255 N. Y. Rep. 170; 174 North Eastern Reporter 441.

External links[edit]