Caparo three part test – revisited

In Robinson the Supreme Court laid to rest the proposition that there is a Caparo test which applies to all claims in the modern law of negligence.

This modern approach, which helps to establish whether a duty of care is owed, was revisited in Robinson (Appellant) v Chief Constable of West Yorkshire Police (Respondent)(2018) when it reached the Supreme Court on appeal from the Court of Appeal Civil Division.

In Robinson the Supreme Court laid to rest the proposition that there is a Caparo test which applies to all claims in the modern law of negligence.

Lord Reed gave the leading judgment when he opened his remarks about the use of the Caparo test by saying 'The proposition that there is a Caparo test which applies to all claims in the modern law of negligence, and that in consequence the court will only impose a duty of care where it considers it fair, just and reasonable to do so on the particular facts, is mistaken'.

Lord Reed went on to point out that, 'In the ordinary run of cases, courts consider what has been decided previously and follow the precedents (unless it is necessary to consider whether the precedents should be departed from). In cases where the question whether a duty of care arises has not previously been decided, the courts will consider the closest analogies in the existing law, with a view to maintaining the coherence of the law and the avoidance of inappropriate distinctions'.

In effect, Caparo only comes into its own, when considering new or extended applications of the law of negligence.

Lord Reed was equally clear that the Supreme Court did not need to consider an extension of the law of negligence in Robinson but that the answer would be found by applying established principles which govern liability to the circumstances of the case. As a result the Supreme Court allowed the appellant's appeal and found the police responsible for the injuries sustained by Mrs Robinson, aged 76 at the time, when they failed to take into account her presence nearby when they attempted to arrest an alleged drug dealer in public. Mrs Robinson was injured when she was knocked to the ground by the police officers and other men in the course of the arrest.

The question of whether a duty of care is owed is sometimes answered by what has now become known as the Caparo three part test. This modern approach comes from the case of Caparo Industries pIc v Dickman & Ors (1990). The case relates to a company, Fidelity, which was not doing well and was the target of a takeover by Caparo Industries plc. Fidelity's shares were halved in March 1984 after issuing a profit warning. A preliminary announcement in May of the same year confirmed that their position was bad and again their share price fell. Those of you who follow such things will know that profit warnings can have a tremendous affect on markets including share prices.

At this time Caparo Industries started buying shares in large numbers. The following month the accounts, prepared with the help of Dickman, were issued to the shareholders including Caparo. Caparo reached a shareolding of 29.9% of Fidelity and at this time made an offer for the remainder of the shares. Having taken over control, Caparo then realised that the accounts for Fidelity were in a worse state than the directors or auditors had revealed.

Caparo sued Dickman for negligence in preparing the accounts in an attempt to recover their losses. The case laid down something called the 'incremental approach' or what is known as the Caparo three part test. To establish whether a duty of care has been established three questions are raised:

Was the damage or loss forseeable?

Is the relationship between the wrongdoer and the victim sufficiently close?

Is it just and reasonable to impose a duty of care?

If the answer to these three questions is yes, then it can be said that a duty of care exists.

 

 

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