Caparo v Dickman (1990) HL
Duties Owed to Others
Dickman (D) auditors of company accounts. Caparo (C) bought shares
and then discovered that the accounts did not show the company had
been making a loss. C alleged that in negligence a duty was owed to
Approving a dictum of the High Court of Australia (Brennan J) in
Sutherland Shire Council v Heyman (1985), that the law should
preferably develop novel categories of negligence incrementally and
by analogy with established categories, rather than by a massive
extension of a prima facie duty of care restrained only by
indefinable "considerations which ought to negative or limit the
scope of the duty or the class of person to whom it is owed". D wins
The common law duty of care owed by employers to their employees is
founded on the contractual relationship between them.
The duty owed to others that may be affected by the employer’s
activities is not defined with the same precision. It is based on
the principles of negligence in that a duty of care must first be
This used to be decided on the basis of the neighbour principle.
However, the notion of reasonable foresight is unquestionably too
wide and has caused problems in civil actions in many areas of tort
e.g. actions for nervous shock. It has therefore been further
Steps to establish duty of care are (at the time of writing);
a) Is there an existing case, which would hold there to be a duty of
care? If not then ask three questions.
1. Was loss to the claimant foreseeable?
2. Was there sufficient proximity between the parties?
3. Is it fair, just and reasonable to impose a duty of care?
The last step brings in the concept of policy in which the courts
have to balance the needs of an injured claimant against that of
opening the “floodgates” and creating an indeterminate liability.