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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But on this part of the case your Lordships were csparo pressed with the argument that such a loss might occur by a negligent undervaluation of the company’s assets in the auditor’s report relied on by the individual shareholder in deciding to sell his shares at an undervalue. So it would not be sensible or fair to say that the shareholder did either. B Bridge of Harwich who delivered the leading judgment restated the so-called “Caparo test” which Bingham LJ had formulated below.
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Caparo Industries v Dickman
A company called Fidelity plc, manufacturers of electrical equipment, was the target of a takeover by Caparo Industries plc. It follows, therefore, industfies the scope of the duty of care owed to him by the auditor extends to cover any loss sustained consequent on the purchase of additional shares in reliance on the auditor’s negligent report.
He reasons that when deeming if negligence has occurred one should compare cases to precedent cases with similar facts, rather than simply having an overarching test. Others have spoken to similar effect. In some cases, and increasingly, reference is made to the voluntary assumption of responsibility: It did not extend to the provision of information to assist shareholders in the making of dic,man as to future investment in the company.
As a purchaser of additional shares in reliance on the auditor’s report, he stands in no different position from any other investing industeies of the public to whom the auditor owes no duty.
On the other hand, a duty will be the more readily found if the defendant is voluntarily exercising a professional skill for reward, if the victim of his carelessness has in the absence of a duty no means of redress, if the duty contended for, as in McLoughlin v O’Brian  1 A. In March Dickmann had issued a profit warning, which had halved its share price. There can be no distinction in law between the shareholder’s investment decision to sell the shares he has or to buy additional shares.
The inquiry involves a weighing of the relationship of the parties, the nature of the risk, and inndustries public interest in the proposed solution. But the focus of the inquiry is on the closeness and directness of the relationship between the parties. It is incumbent upon the courts in different jurisdictions to be sensitive to each other’s industriex but what they are all searching for in others, and each of them striving to achieve, is a careful analysis and weighing of the relevant competing considerations.
Retrieved from ” https: Fidelity was not doing well. Sign In Don’t have an account? This confirmed the position was bad.
If he sells at an undervalue he is entitled to didkman the loss from the auditor. It is usually described as proximity, which means not simple physical proximity but extends to.
This page was last edited on 26 Novemberat The House of Lords, following the Court of Appeal, set out a “three-fold test”. It is not, and could not be, in issue between these parties that reasonable foreseeability industriew harm is a necessary ingredient of a relationship in which a duty of care will arise: In order for a duty of care to arise in negligence:.
Caparo Industries v Dickman
Leave was given to appeal. The content of the requirement of proximity, whatever language is used, is not, I think, capable of precise definition. In June the annual accounts, which were done with the help of the accountant Dickman, dickmwn issued to the shareholders, which now included Caparo. In March Fidelity had issued a profit warning, which had halved its share price.
The share price fell again.
Caparo Industries Plc v Dickman 
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.
The approach will vary according to ccaparo particular facts of the case, as is reflected in the varied language used. Heyman60 A.