England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE CCRTF 97/0192 CMS2

(HIS HONOUR JUDGE MEDAWAR )

Royal Courts of Justice

Strand

London WC2

Wednesday 25th March 1998

B e f o r e:

LORD JUSTICE KENNEDY

LORD JUSTICE MILLETT

LORD JUSTICE HUTCHISON

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KAPFUNDE

Plaintiff/Appellant

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ABBEY NATIONAL plc & DR D DANIEL

First and Second Respondents

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Handed-down judgment of Smith Bernal Reporting Limited

180 Fleet Street London EC4A 2HD

Tel: 0171 831 3183

(Official Shorthand Writers to the Court)

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MR T RAGGATT QC; MR R WILSON (Instructed by Messrs Makanda & Co, London N19) appeared on behalf of the Appellant

MR J JARVIS QC; MISS A WAKEFIELD (Instructed by Abbey National Legal Dept) appeared on behalf of the First Respondent

MR R SEABROOK QC; MR A CHOUDHURY (Instructed by Messrs Le Brasseur J Tickle, London WC2) appeared on behalf of the Second Respondent

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J U D G M E N T

(As approved by the Court )

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KENNEDY LJ:

1. This is a plaintiff’s appeal from a decision of Judge Medawar, sitting in the Central London County Court, who on 12th November 1996 dismissed the plaintiff’s claim for damages against both defendants.

2. Issues in Outline

In January 1991 the appellant, who was born on 17th April 1955, applied to Abbey National for a permanent post as a cashier at their Pitsea branch where she was at that time employed on a temporary basis. As part of the application procedure she was asked to complete Abbey National’s standard confidential medical questionnaire, and she did so. In section 2, which required her to list all absences from work for health reasons during the past two years, she wrote :-

“31.10.90 to 7.12.90 sickle cell anaemia and chest infection”.

She also ticked a box to indicate that she had at some time suffered from asthma/bronchitis, and another box to indicate that she or some member of her immediate family had suffered from eczema.

The completed questionnaire was returned as requested to Abbey National’s Occupational Health and Welfare services at Milton Keynes where it was referred to Dr Daniel, a London general practitioner who has worked part time for Abbey National since 1969. Dr Daniel recognised the condition of sickle cell anaemia, which is most common in people of African or West Indian descent. The appellant was born in the West Indies. The main symptoms of sickle cell anaemia are episodes of anaemia, pain or infection, called crises, but, as with most conditions, some sufferers are worse affected than others. According to a guide for general practitioners and other health professionals produced to us :-

“Some people get crises quite often, others may only have them once every several years. In between crises the person is usually quite well.”

Dr Daniel, as occupational health adviser to Abbey National, had to consider in particular whether this appellant’s medical history indicated that she was likely to have a higher than average absence level. In Dr Daniel’s opinion that was the case, and she so indicated on 19th March 1991 by assessing the appellant as not suitable for employment. Abbey National accepted that advice, and refused to give the appellant the vacant permanent post. The appellant was very upset, and, having failed to establish that Abbey National had been guilty of racial discrimination, she commenced these proceedings in the county court in 1994. In her Particulars of Claim she made allegations of breach of contract and negligence against Abbey National and Dr Daniel. The allegations of breach of contract are no longer a live issue in the case, but the case in negligence, as refined by Mr Raggatt, Q.C. for the appellant can be summarised thus :-

(1) Dr Daniel was a servant of Abbey National pursuant to a contract of service, not a contract for services:

(2) When the questionnaire was referred to Dr Daniel the doctor, in the circumstances, owed to the appellant a duty of care:

(3) Dr Daniel, by failing to exercise a proper degree of skill and care, was in breach of that duty, and -

(4) because Dr Daniel was a servant of Abbey National, Abbey National is vicariously liable for her negligence, and so both Abbey National and Dr Daniel are answerable to the appellant in tort.

3. Contract of Service?

(A) Law

Over the years there have been many cases dealing with the often difficult question of whether, in the particular circumstances of the case, the arrangement under consideration is a contract of service, or a contract for services, or neither. In Ready Mixed Concrete (South East) Ltd v MPNI (1968) 2 QB 497 McKenna J said at 512 G that :-

“whether the relation between the parties to a contract is that of master and servant or otherwise is a conclusion of law dependent upon the rights conferred and the duties imposed by the contract.”

At 515 C he continued :-

“A contract of service exists if these three conditions are fulfilled. (i) The servant agrees that, in consideration of a wage or other remuneration, he will provide his own work and skill in the performance of some service for his master. (ii) He agrees, expressly or appliedly, that in the performance of that service he will be subject to other’s control in a sufficient degree to make that other master. (iii) The other provisions of the contract are consistent with this being a contract of service.”

That has been to some extent refined over the years, and in Lee Ting Sang v Chung Chi-Keung (1990) 2 AC 374, a decision of the Privy Council, Lord Griffiths said at 384 F :-

“Whether or not a person is employed under a contract of service is often said in the authorities to be a mixed question of fact and law. Exceptionally, if the relationship is dependent solely upon the true construction of a written document it is regarded as a question of law: see Davies v Presbyterian Church of Wales (1986) 1 WLR 323. But where, as in the present case, the relationship has to be determined by an investigation and evaluation of the factual circumstances in which the work is performed, it must now be taken to be firmly established that the question of whether or not the work was performed in the capacity of an employee or as an independent contractor is to be regarded by an appellate court as a question of fact to be determined by the trial court.”

(B) Facts

In the present case, as Mr Raggatt accepted, the trial judge was fully alive to the legal principles which he had to apply. He cited not only the two authorities to which I have just referred but also three others. Mr Raggatt concedes that during the early years of her association with Abbey National Dr Daniel was not employed under a contract of service, but he submits that by 1986 at the latest the position had changed. On 11th November 1986 Abbey National wrote to Dr Daniel offering her a fee of £22,000 per annum payable quarterly “until the retainer is terminated by one year’s written notice” on either side. In consideration of the fee Dr Daniel was to provide at the request of Abbey National :-

(a) Medical examinations in respect of the Society’s staff.

(b) Pre-employment medical examinations in respect of candidates for employment by the Society.

(c) Diagnostic help and assistance in respect of staff experiencing health problems.

(d) Advice to the Society on medical and health matters generally.

The services to be provided were to include a weekly clinic at Milton Keynes and an emergency service at Baker Street. The arrangement was expressed to be “non-transferable and non-exclusive”. Dr Daniel agreed to the proposals and thereafter the annual fee was adjusted periodically by agreement to take account of inflation.

At the hearing before Judge Medawar there was evidence as to the relationship between Abbey National and Dr Daniel from both Dr Daniel and Mr Lambert, who was from 1988 to 1995 the Manager of Abbey National’s Occupational Health and Welfare Service. He described Dr Daniel as Abbey National’s Chief Medical Adviser, and he described how he used her services in that capacity. When he came to give judgment in relation to this issue, after referring to the authorities, the judge said:-

“It is of the essence of a contract of service that the servant undertakes to provide personal services to his master, to use the old terminology. Here Dr Daniel’s obligations could be performed by another chosen by her and paid by her, a locum. She had complete discretion over the way in which she performed any responsibility, including the choice of external blood tests and x-ray services and payment of them. She sometimes used her own premises and always her own medical bag. She was able to and did negotiate better fees where costs incurred (by her) became too high, which reflects an element of financial risk to her in doing what she did, and which had to be overcome and of course she managed her own tax and national insurance affairs. In my judgment she was engaged under a contract for services”.

(C) My Conclusion

Clearly, as it seems to me, the judge directed himself correctly as to the law and then, having looked at the relevant facts, reached a conclusion with which we, who have not seen or heard the witnesses, should not readily interfere. As Lord Griffiths said in Lee Ting Sang we must regard the judge’s conclusion as a question of fact to be determined by the trial court. I do so regard it, and although there were points to be made in favour of the argument that this was a contract of service as well as in favour of the argument that it was a contract for services I can see no reason whatsoever to interfere with the conclusion reached by the trial judge. If, as I understand to be the position, the other two members of this court are of the same opinion it follows that the appellant’s attempt to secure a finding of liability against Abbey National is at an end.

4. Did Dr Daniel owe the appellant a duty of care?

(A) Constraints applicable to this case

It is, in my judgment, important to stress at the outset when considering whether or not there was duty of care those factors which may be significant when it comes to distinguishing between this and other types of case. I have in mind particularly -

(1) the lack of any doctor/patient relationship. Dr Daniel never saw the appellant, who, when she submitted her questionnaire probably did not even know of the existence of Dr Daniel. No doubt the appellant expected that the questionnaire which, as Mr Raggatt pointed out, required disclosure of confidential information and made it very clear that frank answers were required, would be seen by someone with occupational health experience, such as a doctor or a nurse. But the evidence showed that, as one would expect, Dr Daniel was not troubled with questionnaires which disclosed nothing of any potential significance. The questionnaire did not authorise Abbey National’s O.H. and W. Service or Dr Daniel to approach the appellant’s general practitioner or consultant or authorise access to any medical records. If information from any of those sources was considered to be necessary or desirable such authorisation would had have to be sought.

(2) Leaving anti-discrimination law on one side (the appellant’s attempt to establish an infringement of such law having failed) the lack of any legal liability upon Abbey National, or any other potential employer, to exercise skill and care in processing applications for employment. As Mr Raggatt accepted at the outset of his submissions, it is still the law that an employer is free to choose who he wishes to employ, and may have quixotic reasons for rejecting apparently worthy candidates.

(3) That the claim here is only for economic loss, that is to say the salary and other benefits which the appellant says she would have enjoyed if she had obtained the post for which she applied.

(B) The appellant’s submissions

Mr Raggatt submitted that despite the three constraints to which I have just referred Dr Daniel did owe a duty of care to the appellant because -

(1) it was reasonably foreseeable that if Dr Daniel negligently over-assessed the risk of the appellant having a higher than average level of absence from work Abbey National would accept and act upon that assessment, with the result that the appellant would not obtain the permanent post she sought. As a result she might well suffer some economic loss.

(2) In the circumstances, vis-à-vis the appellant, Dr Daniel did assume responsibility in a relationship which was of sufficient proximity to give rise to liability, and -

(3) it is just, fair and reasonable for this court in these circumstances to impose a legal duty of care.

That legal duty, it is asserted, is no more than a duty to exercise the skill and care to be expected of a reasonably competent occupational health physician carrying out a medical assessment of a job applicant such as this appellant in the circumstances which I have outlined (c.f. Bolam v Friern H.M.C. (1957) 1 WLR 582).

There was no dispute before us as to the nature of Dr Daniel’s duty if she owed any duty of care at all, and Mr Jarvis Q.C. for Abbey National and Mr Seabrook Q.C. for Dr Daniel also accepted that if Dr Daniel negligently over-assessed the risk of the appellant having a higher than average level of absence from work, then it was reasonably foreseeable that the appellant might sustain financial loss, so the kernel of the dispute in relation to the existence or non-existence of a duty of care concerns proximity, assumption of responsibility, and the allegation that it is fair and reasonable for such a duty to be imposed.

(C) Authorities

We were helpfully invited to consider some of the leading authorities dealing with liability for negligent mis-statements, starting with the decision of the House of Lords in Hedley Byrne & Co Ltd v Heller & Partners (1964) AC 465. The earlier cases were re-examined in subsequent cases, so I can go straight to Caparo Industries v Dickman & others (1990) 2 AC 605, in which it was sought to render a company’s auditors liable to those who had purchased shares in reliance on the auditor’s report. Lord Bridge, at 617 G pointed to -

“The inability of any single general principle to provide a practical test which can be applied to every situation to determine whether a duty of care is owed and, if so, what is its scope.”

A few lines later, after referring to a number of authorities, he continued :-

“What emerges is that in addition to the foreseeability of damage, necessary ingredients in any situation giving rise to a duty of care are that there should exist between the party owing the duty and the party to whom it is owed a relationship characterised by the law as one of ‘proximity’ or ‘neighbourhood’ and that the situation should be one in which the court considers it fair, just and reasonable that the law should impose a duty of a given scope upon the one party for the benefit of the other. But ..... the concepts of proximity and fairness embodied in these additional ingredients are not susceptible of any such precise definition as would be necessary to give them utility as practical tests.”

Having expressed agreement with the view of Brennan J in the High Court of Australia that new categories of negligence should be developed incrementally and by analogy with established categories, Lord Bridge continued at 618 E -

“One of the most important distinctions always to be observed lies in the law’s essentially different approach to the different kinds of damages which one party may have suffered in consequence of the acts or omissions of another. It is one thing to owe a duty of care to avoid causing injury to the person or property of others. It is quite another to avoid causing others to suffer purely economic loss.”

Later in his speech Lord Bridge cited with approval the dissenting judgment of Denning L.J. in Candler v Crane Christmas & Co (1951) 2 KB 164. In that case, when dealing with the liability of professionals who make reports on which people other than that their clients relied, Denning L.J. said at 180 -

“To whom do these professional people owe this duty? I will take accountants, but the same reasoning applies to others. They owe the duty, of course, to their employer or client; and also I think to any third person to whom they themselves show the accounts, or to whom they know their employer is going to show the accounts, so as to induce him to invest money or take some other action on them. But I do not think the duty can be extended still further so as to include strangers of whom they have heard nothing and to whom their employer without their knowledge may choose to show their accounts. ..... the test of proximity in these cases is: did the accountants know that the accounts were required for submission to the plaintiff and use by him?”

Clearly that formulation is not such as to be of any assistance to the appellant in this case.

In Spring v Guardian Assurance plc & others (1995) 2 AC 296 those to whom the plaintiff applied for work in the financial services industry sought a reference from his former employers. The Lautro rules required that such a reference be sought and given. It was given, but it was unfavourable, and was found by the trial judge to constitute a negligent mis-statement. In the House of Lords it had to be considered whether a duty of care was owed in contract or in tort, and Lord Goff reached an affirmative conclusion by reference to the principle recognised in Hedley Byrne . At 318 F he said:-

“Where the plaintiff entrusts the defendant with the conduct of his affairs, in general or in particular, the defendant may be held to have assumed responsibility to the plaintiff, and the plaintiff to have relied on the defendant to exercise due skill and care, in respect of such conduct.”

Of course in the present case the appellant did not entrust Dr Daniel with the conduct of her affairs. Lord Goff held that because references were an essential common currency of the industry an employer was under a legal duty to take care when he agreed to provide a reference for a present or past employee, but that approach is not relevant in this case. Lord Woolf recognised that the House was being asked to make “a measured extension to the ambit to the law of negligence” and pointed to the degree of proximity engendered where “there is or has been a contract of employment or services”. He also noted that in an industry where full references are habitually sought and given it actually benefits an employer asked to give a reference to do as he is asked. As an alternative to liability in tort Lord Woolf, like Lord Goff and Lord Slynn, was prepared to imply a term in the contract of employment which had existed between the plaintiff and defendant (for simplicity I assume one defendant and a contract of employment) but he concluded his judgment by emphasising that the views which he had expressed were confined to the class of case with which he was dealing. The importance of that qualification is underlined by the fact that in Spring’s case both Lord Goff and Lord Woolf approved the decision of the New Zealand Court of Appeal in South Pacific Manufacturing Company Limited v New Zealand Security Consultants and Investigations Ltd (1992) 2 NZLR 282, where it was held that an investigator reporting on the causes of a fire to an insurance company owed no duty of care to the insured whose claim was rejected because of the allegedly inaccurate report. Lord Goff found that there had been no assumption of responsibility by the investigator to the insured, and Lord Woolf said that the report of the investigator was made pursuant to their contractual duty to the insurer. Obviously it can be said that in the present case Dr Daniel is in the position of the investigator.

A decision which at first sight seems to be a great assistance to the appellant is White v Jones (1995) 2 AC 207, in which the defendant’s solicitor neglected to comply with a testator’s instructions to make a new will including a legacy of £9000 to each of his two daughters. The testator died and the solicitor was held to have been under a duty of care to the proposed beneficiaries. Lord Goff made a notable reference to the impulse to do practical justice, but, for reasons which will become apparent in dealing with this case I prefer to concentrate on the speech of Lord Browne-Wilkinson.

At page 274 F he said :-

“The law of England does not impose any general duty of care to avoid negligent mis-statements or to avoid causing pure economic loss even if economic damage to the plaintiff was foreseeable. However, such a duty of care will arise if there is a special relationship between the parties. Although the categories of case in which such special relationship can be held to exist are not closed, as yet only two categories have been identified, viz (1) where there is a fiduciary relationship and (2) where the defendant has voluntarily answered a question or tendered skilled advice or services in circumstances where he knows or ought to know that an identified plaintiff will rely on his answers or advice.”

Obviously there is no question of a fiduciary relationship in the present case, and, as to the second category, the appellant - as opposed to Abbey National - did not rely on Dr Daniel’s advice. The same problem existed in White’s case. As Lord Browne-Wilkinson pointed out at 275 C, it did not fall within either of the two categories of special relationships so far recognised, but in the opinion of Lord Browne-Wilkinson it was appropriate for the categories of negligence to be incrementally developed so as to provide a remedy in that case. He said at 275 F :-

“In my judgment this is a case where such development should take place since there is a close analogy with existing categories of special relationship giving rise to a duty of care to prevent economic loss.”

It was also found to be fair and reasonable to impose liability on the defendant solicitor in that case, and one of the factors which Lord Browne-Wilkinson considered to be relevant in that context was that there could be no conflict between the solicitor’s duty to his client (the testator) and his duty to the intended beneficiary (276 D).

Mr Seabrook invited us to regard the decision in White v Jones as peculiar to its own facts, a side-alley in the development of the law which is also a dead end. For my part I am not disposed to look at the decision in quite that way, but it does seem to me that its true significance becomes apparent when one looks at X v Bedfordshire County Council (1995) 2 AC 633. There were five actions concerned with the care and treatment of children, the details of which for present purposes are irrelevant. In order to discharge their statutory functions the local authority engaged social workers and psychiatrists who were then brought into contact with the plaintiffs, at which point, it was alleged, the professionals owed to the plaintiffs a duty of care. Lord Browne-Wilkinson, with whom the other members of the House agreed, rejected that argument, saying at 752 G :-

“The social workers and psychiatrists were retained by the local authority to advise the local authority, not the plaintiffs. The subject matter of the advice and activities of the professionals is the child. Moreover the tendering of any advice will in many cases involve interviewing and, in the case of doctors, examining the child. But the fact that the carrying out of the retainer involves contact with and relationship with the child cannot alter the extent of duty owed by the professionals under the retainer from the local authority. The Court of Appeal drew a correct analogy with the doctor instructed by an insurance company to examine an applicant for life insurance. The doctor does not, by examining the applicant, come under any general duty of medical care to the applicant. He is under a duty not to damage the applicant in the course of the examination: but beyond that his duties are owed to the insurance company and not to the applicant.

The position is not the same as in the case of the purchaser of property who is owed a duty of care by the surveyor instructed by the building society which is going to advance the money: see Smith v Eric S. Bush (1991) AC 831. In such a case the surveyor is only liable to the purchaser in negligence because he is aware that the purchaser will regulate his (the purchaser’s) conduct by completing the purchase in reliance on the survey report. In the child abuse cases, if the advice tendered by the professionals to the local authority comes to the knowledge of the child or his parents, they will not regulate their conduct in reliance on the report. The effect of the report will be reflected in the way in which the local authority acts.”

A paragraph later he continued at 753 E :-

“In my judgment in the present cases the social workers and the psychiatrists did not, by accepting the instructions of the local authority, assume any general professional duty of care to the plaintiff children. The professionals were employed or retained to advise the local authority in relation to the well being of the plaintiffs but not to advise or treat the plaintiffs.”

It seems to me that the position of Dr Daniel is plainly comparable with that of the social workers and doctors in X v Bedfordshire County Council , or with that of a doctor examining for the purposes of life insurance, save that Dr Daniel was making simply an assessment on paper. Furthermore, the way in which Lord Browne-Wilkinson expressed himself in X v Bedfordshire County Council makes it absolutely clear that the incremental increase in the categories of negligence made by the decision in White v Jones , to which he expressly referred, was a small one, sufficient to cover the facts of that case, but not sufficient to indicate the existence of a duty of care in the sort of circumstances with which we are concerned.

In Baker v Kaye (1997) IRLR 219 Mr Robert Owen Q.C., sitting as a deputy judge, dismissed a claim for damages made against a doctor who had made a pre-employment assessment of the plaintiff which included a physical examination and the taking of blood samples. The deputy judge found that a duty of care was owed, but that there was no breach of that duty. White v Jones does not seem to have been referred to, and in my judgment, although the conclusion was right, it should have also been based upon a finding that there was no duty of care.

(B) Conclusion

In my judgment there was no special relationship between Dr Daniel and the appellant such as to give rise to a duty of care. I prefer that formulation to saying that there was no sufficient proximity, but it amounts to the same thing. Mr Seabrook submitted that even if proximity were to be established it would not be fair just and reasonable to impose legal liability because of the potential conflict between Dr Daniel’s contractual duty to Abbey National and her alleged duty to the appellant. I consider that there is force in that submission, but having regard to the conclusion which I have just expressed the point is not one which I need explore.

5. Breach of Duty.

On the facts of this case even if Mr Raggatt had been able to establish the existence of a duty of care I would have felt bound to uphold the Judge’s finding that there was no breach of that duty. On any view Dr Daniel was required to exercise no more than the degree of skill and care to be expected of an ordinary competent occupational health physician. The Judge had all the relevant material before him, which included the extent of Dr Daniel’s knowledge of sickle cell anaemia and the fact that she made a telephone call to Professor Stewart the day after she signed the medical assessment. As the Judge said, Professor Stewart was “a consultant haematologist with considerable experience of sickle cell anaemia” and he confirmed Dr Daniel’s view as to the increased risk of sickness absence from employment. At page 9 G of the judgment the Judge said :-

“Doctor Daniel was a person likely to take a great deal of care in everything she did, even to the extent of continuing to question herself afterwards about the correctness of any decision she made, and, as on the occasion in question, seeking support or confirmation for the view that she had taken before finally committing herself to it. She was, as I find, aware of the importance of any decision she made, both as regards Abbey National and any applicant for permanent employment. She was aware of the financial implications to Abbey National of early retirement on medical grounds, and the pension scheme where life expectancy may be reduced. The importance to any applicant of her decision was obvious and, as I find, she was well aware of that.”

In so far it was the appellant’s case that Dr Daniel should have made further enquiries, such as seeking access to the appellant’s general practitioner or her medical notes, the Judge had the benefit of expert evidence from Dr Scott, a forensic medical specialist called to give evidence on behalf of the plaintiff, and from Dr Wright, a specialist in occupational medicine who was called by the defence. The Judge was not impressed by Dr Scott, but was impressed by Dr Wright. Dr Wright would not himself have taken the precise course of action which Dr Daniel took, but “he expressed the considered view that her action was well within the range of reasonable responses” (Judgment 26 E). So the Judge had available to him from Dr Wright evidence which he was entitled to accept and which, if accepted, clearly demonstrated that even if there was a duty of care there was no breach. That was the judge’s conclusion and I regard it as both fully supported by the evidence and unassailable.

6. Final Conclusion.

In my judgment for reasons set out above this appeal fails and should be dismissed.

MILLETT LJ:

1 I have had the advantage of reading in draft the judgment of Kennedy LJ with which I am in complete agreement. Because of the general importance of the subject I add a brief judgment of my own limited to the question whether in assessing her suitability for employment by the Abbey National Dr. Daniel owed a duty of care to the appellant.

2 It is trite law that the fact that a person's actions are likely to cause damage to the plaintiff if he fails to take due care is not sufficient by itself to create a duty of care on his part. There must in addition be some relationship or degree of proximity between the plaintiff and the person alleged to be subject to such a duty from which the duty may be derived. As Lord Oliver pointed out in Caparo v Dickman [1990] AC 605, there is rarely any difficulty where the breach of such a duty causes physical damage to the plaintiff. In such cases it is seldom necessary to have resort to the concept of proximity in order to impose a reasonable limit on the ambit of the duty of care. The infliction of physical damage by the one party and the sustaining of the damage by the other is usually sufficient to provide the necessary nexus between them. Claims for damages for economic loss resulting from negligent mis-statements, however, are very different. There is a potential for foreseeable but indeterminate and possibly ruinous loss by a large and indeterminate number of plaintiffs. Foreseeability of loss is not an adequate limiting factor in these cases.

3 At first the response of the English Courts was to deny the existence of any duty not to make negligent mis-statements giving rise to economic loss: Candler v Crane, Christmas & Co. [1951] 2 KB 164 CA. This position proved impossible to defend, and the celebrated dissenting judgment of Denning LJ ultimately prevailed in Hedley Byrne & Co. Ltd. v Heller & Partners [1964] AC 46. The House of Lords held that a party who gave a reference would have owed a duty of care to the party who relied on it had such a duty not been expressly disclaimed.

4 Even so, it was not sufficient for the plaintiff to prove that he had relied upon the statement of which he complained. Such reliance by itself did not establish the necessary relationship between the party who made the statement and the person who relied upon it. As the cases developed, two further control mechanisms were introduced. The first was to limit the transaction in which the defendant’s statement might be relied upon to the transaction in which he intended it, or knew that it was intended, to be relied upon. The second was to limit the persons who might rely upon it to the persons or class of person to whom the defendant made the statement or to whom he intended or knew that it was intended to be communicated. For these limitations it is sufficient to refer to the decisions of the House of Lords in Smith v Eric Bush; Harris v Wyre Forest District Council [1990] AC 931 and Caparo Industries v Dickman ( supra).

5 The Appellant cannot bring herself within the scope of these decisions. She did not rely on Dr. Daniel’s report; it was not a report to her and she never even saw it.

6 In Spring v Guardian Assurance plc [1995] 2 AC 296 Lord Goff said that the fact that Hedley Byrne was concerned with the question whether the maker of a statement was liable to a person who received it and acted in reliance upon it might have given the impression that this was the only way in which liability for negligent misstatement could arise; but that if so this impression was mistaken. The House of Lords held that an employer who provided a reference for a former employee was potentially liable, if the reference was negligently prepared, to the person who was the subject of the reference. Moreover, Lord Goff made it clear that it did not necessarily follow that the employer also owed a duty of care to the person to whom the reference was given. Whether he did or not might depend on the facts of the particular case before the court.

7 That decision has encouraged the appellant to argue that Dr. Daniels is similarly liable to her if her report was prepared negligently. There is, it is submitted, no rational distinction between an employment reference which is provided to a prospective employer to assist him in deciding whether to employ the subject of the reference and a medical report provided to a prospective employer for the same purpose.

8 But the reasoning of their Lordships in Spring v Guardian Assurance, far from supporting the appellant’s case, is destructive of it. Their Lordships did not derive the duty of care from the relationship between the maker of a statement and the subject of the statement. They found it in the pre-existing relationship between an employer and his former employee. Three of their Lordships (Lord Goff, Lord Slynn and Lord Woolf) held that it was an implied term of the plaintiff's contract of employment that his employer would take reasonable care in the preparation and giving of a reference; that such a term might be implied despite the absence of any legal obligation to provide a reference; and that it applied even after the plaintiff had left his employment with the employer.

9 While all four of their Lordships who formed the majority in Spring were prepared to find a tortious duty to the same effect, Lord Goff and Lord Lowry considered that this was an application of the principle derived from Hedley Byrne, while Lord Slynn and Lord Woolf considered that it represented a measured extension of the principle. Lord Goff explained that the Hedley Byrne principle applies whenever the plaintiff entrusts the defendant with the conduct of his affairs, either in general or in a particular respect, so that the defendant may be held to have assumed responsibility to the plaintiff, and the plaintiff to have relied on the defendant to exercise due skill and care, in respect of such conduct.

10 The decision was firmly based on the pre-existing relationship of employer and employee. It was the existence of this relationship which made it possible for their Lordships to treat the reference as provided, not (or not solely) at the request of the prospective employer, but rather at the request of the former employee and as an incident of his former employment. Lord Goff described the provision of references as “a service regularly provided by employers to their employees ” (my emphasis).

11 The House of Lords revisited this area in X (Minors) v Bedfordshire County Council [1995] 2 AC 633, when it held that a psychiatrist owed no duty of care to a child when advising a local authority that the child should be taken into care. Lord Browne-Wilkinson, in a speech with which Lords Jauncey, Ackner and Lane agreed, said at p. 752:

“The social workers and the psychiatrist were retained by the local authority to advise the local authority, not the plaintiffs. The subject matter of the advice and activities of the professionals is the child. Moreover the tendering of any advice will in many cases involve interviewing, and in the case of doctors, examining the child. But the fact that the carrying out of the retainer involves contact with and relationship with the child cannot alter the extent of the duty owed by the professionals under the retainer from the local authority. The Court of Appeal drew a correct analogy with the doctor instructed by an insurance company to examine an applicant for life insurance. The doctor does not, by examining the applicant, come under any general duty of medical care to the applicant. He is under a duty not to damage the applicant in the course of the examination: but beyond that his duties are owed to the insurance company and not to the applicant ... In my judgment in the present cases, the social workers and the psychiatrist did not, by accepting the instructions of the local authority, assume any general professional duty of care to the plaintiff children. The professionals were employed or retained to advise the local authority in relation to the well-being of the plaintiffs but not to advise or treat the plaintiffs.”

12 The effect of these cases is that the existence of a duty of care on the part of the person who makes a negligent mis-statement and the identity of the person to whom the duty is owed depend upon the circumstances in which the statement is made. A duty of care will generally be owed to the person to whom it is made and who relies on it. In the case of a bank reference or medical report, this is normally the person who asks for it or commissions it. A reference by an employer, however, is likely to be regarded as provided to the former employee who is subject of the reference for his use as a passport to future employment rather than as a service to any particular prospective new employer.

13 This is sufficient to dispose of the appeal. The Appellant was required to complete a questionnaire and to provide it to Abbey National. Abbey National was not obliged to consider it with due care or at all. It was free to employ the Appellant or not to employ her as it chose, provided that it did not unlawfully discriminate against her on improper grounds. This apart, it could adopt whatever criteria for employment it liked however capricious and could apply or disapply its own criteria at will. It was under no duty to the Appellant to submit her questionnaire to professional assessment, but it chose to do so. Dr. Daniels was instructed by Abbey National to advise it on the Appellant’s suitability for employment. She was obliged to acquaint herself with Abbey National’s criteria for employment and to consider the questionnaire which the Appellant had completed with proper professional skill and care in order to give proper advice to Abbey National. But these duties were owed to Abbey National and not to the appellant. There was no pre-existing relationship between Dr. Daniels and the appellant from which a duty of care to the appellant could be derived. The only relationship between them was that between the giver of advice and the subject of the advice; and that is not enough. Dr. Daniels was in the same position as the social workers and the psychiatrist in X (Minors) v Bedforshire County Council and the insurance company’s doctor to whom Lord Browne-Wilkinson referred in his speech in that case.

14 In Baker v Kaye [1997] IRLR 219 Mr. Robert Owen QC held that a doctor retained by an employer to examine a potential employee for his medical suitability for employment owed a duty of care to the potential employee in making his assessment and reporting to the employer. In my judgment this was wrong. In the passage which I have cited from his speech in X (Minors) v Bedfordshire County Council Lord Browne- Wilkinson made it clear that it made no difference whether or not the doctor physically examined the applicant. Whether he does so or not, financial loss to the applicant employer is clearly foreseeable if a careless error in the doctor’s assessment leads to the loss of an opportunity of employment or insurance; but this is not enough. The critical facts are that the applicant is required by the prospective employer or insurer to submit himself to medical examination by a doctor who is instructed by the employer or insurer to advise it and not the applicant. The advice is given to the employer or insurer and not to the applicant, who is a patient only in the sense that he is the subject of the examination and advice. The doctor is taken to assume responsibility for his advice, but only to the employer or insurer who commissioned it and not to the “patient” who is the subject of the advice.

15 I agree that the appeal should be dismissed.

HUTCHISON LJ: I agree with both judgments.

MISS WAKEFIELD: I, on behalf of Abbey National, apply for costs against the Legal Aid Board. I do that because there has been some history. In all the circumstances, it would be just and equitable that an order should be made under section 18 of the Legal Aid Act.

My Lords, Mrs. Kapfunde commenced industrial tribunal proceedings against Abbey National in 1991, claiming she had been discriminated against on grounds of her race. There was a four day hearing of that application in May 1992 and, by written decision given in September 1992, the application was dismissed. In accordance with the usual procedure in Industrial Tribunals there was no order for costs.

Mrs. Kapfunde then filed a notice of appeal against that decision to the Employment Appeal Tribunal. She filed that in October 1992. Abbey National instructed Queen's Counsel to represent them on that appeal and a respondent's notice was settled and, in fact, Mrs. Kapfunde withdrew the appeal before the hearing. Again, there was no order for costs.

The summons in this action was issued in November 1994, and there was a trial at the Central London County Court of four days, as your Lordships know. There was a reserved judgment and again the claim was dismissed. The costs order there was that the means of Mrs. Kapfunde should be assessed to determine whether she should make any contribution, there having been an order for costs in favour of the successful defendants, but her contribution was assessed at nil. My Lord, there is then of course the two day hearing in this Court, and your Lordships may remember that two major planks against Abbey National which have been pleaded in the notice of appeal have been withdrawn very shortly before the hearing. Abbey National was represented here by Queen's Counsel which might not have been necessary had it been known further in advance that the only matter to be argued by the Abbey National was the issue of vicarious liability, on which your Lordships did not think it necessary to call Mr. Jarvis who was leading. My Lords, in those circumstances, I ask for legal aid for the costs of Abbey National.

MR CHOUDHURY: Dr Daniels, her position is somewhat different from Abbey National, in that her substantial involvement did not begin until the County Court action in 1994. Those are the reasons for the unusual order as to costs not to be enforced without leave against the plaintiff.

LORD JUSTICE KENNEDY: That, these days, is an unusual order. Is it worth anything to you in reality?

MR CHOUDHURY: No.

LORD JUSTICE KENNEDY: Why should we make it?

MR CHOUDHURY: It ought to be made. I duly rely on it, given the history of the matter. It may be a Pyrrhic statement for...

LORD JUSTICE KENNEDY: You are not seeking costs against the Legal Aid Board.

It does not really affect you, Mr. Wilson, does it? What is her contribution?

MR WILSON: Nil, my Lord.

LORD JUSTICE KENNEDY: Yes, very well.

The appeal will be dismissed with costs. So far as the first respondent is concerned, we are satisfied that it is just and equitable that the costs of the first respondent should be paid by the Legal Aid Board. We assess the appellant's liability to pay costs at nil. We make the order in the usual form, that is to say that it will not be drawn up for a period of 10 weeks during which time the legal aid authority, if so advised, may make representations as to why the order should not be in the form we envisage it should be. So far as the second respondent is concerned, this will simply be a bare order for costs in favour of the second respondent for what, if anything, it may be worth.

MR WILSON: My Lord, there is one further matter which arises, I make an application for leave to appeal to the House of Lords, against Dr Daniel's only, for four principal reasons. The first reason is this: whether a duty of care is owed to a job applicant by a doctor practising as an occupational health physician, is a point of general public importance. I pray in aid, if I may, the opening comments in the judgment of my Lord, Millett LJ, where his Lordship said "because the point was of general importance, general importance of the subject," I think the actual words. My second reason is this. The decision in this case we know has been followed closely by the medical profession and as indeed Baker and Kay has and was and has been. We suspect it has been closely followed by employers as well. Your Lordships' decision will have potential repercussions not only for every occupational health official but for every job applicant who is required to submit him or herself for or to a medical assessment. My Lord, the third reason is that your Lordships in reaching the decision in the instant case have indicated expressly that Baker and Kay , on the question of duty of care, should not be followed, and was wrongly decided. My Lord, we submit that Baker and Kay was a reasoned decision. It was one which up to this point since it was made has been followed by both the medical and legal professional in the conduct of their business and, my Lord, I can say this to this extent. The point is with respect to your Lordships' judgment, it is a difficult one and one which, in our submission, requires the certainty of a decision by the House of Lords. My Lord, my fourth point is really on the question of the facts. I would say the first three points on their own at this stage, ought to be sufficient in our submission for the matter to go to the Lords. The fourth point relates to your Lordships' decision on breach of duty.

I believe my Lord Kennedy LJ used the expression "unassailable". We would, with respect, seek to challenge that for two principal reasons. First, we maintain, in the words of the leading case on the subject, Watson Thomas 1947, on the subject of an appellant's court jurisdiction to review a judge's finding on the facts, we submit here that the trial judge was guilty of a material inconsistency, in receiving part of the evidence of Dr Wright, which he preferred but ignoring another crucially important part of that same witness's testimony, which heavily qualifies the doctor's view, that Dr Daniel had acted: "well within the range of reasonable response". Dr Wright did not only say he would not have acted as Dr Daniel did, but more importantly stated, and I quote from the transcript:

"I think there's a difference here really as to what a reasonable range might be for perhaps a GP and a specialist like myself. Dr Daniel is not a specialist and what a specialist might have done in full-time employment [that is an occupational physician] might be rather different. But the reasonable range of course of a GP might be more limited than the range that might be expected of a specialist."

That was in-chief, and then further on in cross-examination, at page 75 of the bundle, 22nd/23rd October 1996, Dr Wright stated that the full-time occupational health physician would, like himself, have been more cautious and would not have reached any concluding decision on the basis of the questionnaire alone. The judge, in our submission, wholly ignored that part of Dr Wright's evidence and we submit.....

LORD JUSTICE KENNEDY: I doubt you are going to get anywhere in the House of Lords on an issue of fact that you have failed on before this Court.

MR WILSON: My Lord, yes indeed, I am familiar with the approach of the Lords. It is the way I put it, that that was not a permissible option for the judge to take and it had this important consequence in law, by failing to consider that evidence, the judge also failed to properly consider the appropriate standard of care by which to judge Dr Daniel, and we say, that the proper standard is not that of a part-time occupational health physician, but that of the full-time experienced occupational health physician and we draw the analogy with those cases Metalship and Weston , where it is said the learner driver on driving on the road should reach the standard of the experienced and competent road user. Also, in the medical sphere, cases like Wiltshire.

My Lord, we submit that these are errors of law and, in those circumstances, it is a point which is well capable of being argued in the House of Lords. But my Lord, there is another reason, we say, and we put it in the alternative: we say the judge was wrong, but alternatively, we say that no court either below or indeed this Court, has considered whether there was a breach on the basis of a duty of care actually been found to exist. It may be, in those circumstances, the House of Lords would, whatever its view, if it did not go as far as we would seek on the question of (inaudible) plainly wrong as a matter of law might nonetheless take the view. This is an appropriate matter to be tried, that is the question of breach of duty.

My Lords, we submit that, taking all those reasons together, particularly the very important question of duty of care, that it is sufficient to merit this Court granting leave to appeal. My Lords, we do not seek leave to appeal against the Abbey National, not because we do not consider there to be any merit in the contrast of service point, but from a cost benefit analysis, and from the public purse point of view, we cannot see any advantage, with respect, in seeking to pursue the Abbey National. Clearly, if Mrs. Kapfunde were to be successful in the House, she would have a sufficient remedy against Dr Daniels. My Lords, those are my submissions. Unless I can assist any further.

LORD JUSTICE KENNEDY: No, I am afraid we are not prepared to grant leave. You have to persuade their Lordships' House.