Date: Thu, 17 Apr 2003 15:54:08 +0100

From: Andrew Tettenborn

Subject: Reasonable Reliance and Contributory Negligence

English law started out, I think, after Hedley Byrne by assuming that contributory negligence apportionment couldn't apply to neg misrep for exactly the reason used by the Canadian court. But we abandoned that view some time ago. Most of the cases are like Grand, i.e. where the CN is over something different from the actual statement (eg Platform [1998] Ch 466, HL [1999] 2 WLR 518). But not all. For example, if you lend on property having received wildly discrepant valuations, you can recover from the over-valuers but subject to a reduction for CN (Cavendish v Spencer [1998] PNLR 123). Previously we'd been softened up by a holding that damages under our slightly odd Misrepresentation Act s.2(1) could be apportioned: Gran Gelato [1992] Ch 560.

I suspect this is right. There are degrees of (un)reasonableness available to plaintiffs: some will bar the action altogether on causation grounds (e.g. going up in a plane with a pal who's been drinking all afternoon & completely & obviously legless: Morris [1991] 2 QB 6), others won't. My suspicion is that, if push came to shove, our courts would say only the first kind of unreasonableness barred Hedley Byrne.

Happy Easter

Andrew

Jason Neyers wrote:

In a recent decision, (see http://www.ontariocourts.on.ca/decisions/2003/april/avcoC36836.htm) the Ont. C.A. has dealt with the issue of whether as a matter of law, a finding of negligent misrepresentation, which necessarily includes a finding of reasonable reliance on the part of a plaintiff, precludes a finding of contributory negligence against that same party.

The CA, largely based on the authority of Grand Restaurants of Canada Ltd. v. Toronto (City) (1981), 32 O.R. (2d) 757 (H.C.J.), aff'd (1982), 39 O.R. (2d) 752 (C.A.), found that in the appropriate circumstances, the defence can be raised even where the plaintiff has been successful in making out the necessary requirements of a negligent misrepresentation. In order to use the defence, however, they states that one must distinguish between the misrepresentation and the event that caused the loss. So on the facts of Grand, one could use the defence since the misrepresentation was to the work orders, but that the event that caused the loss was closing the of deal for the restaurant.

On the facts of the case at bar, however, the defence and the finding of reasonable reliance could not coexist since the misrepresentation and event were indistinguishable which meant that either the tort was successful or failed totally (in the end the court finding that it failed totally). Personally, I agree with the statement of principle- i.e. that you can have a finding of negligent misrepresentation and also a finding of contributory negligence against that same party- but disagree with the way the result was reached, or in any event I have great difficulty understanding the reasoning.

I think that the problem is that the Canadian courts are too focused on the 'factual aspects' when deciding whether reliance is reasonable. In my mind, reliance is reasonable, in a legal sense, when it has been requested by the other side. So even if you know that another person often lies, if they make a statement to you that can be reasonably interpreted as inviting you to rely on it, your reliance is reasonable in the sense required by Hedley Byrne. Given, however, that the person is known to be a liar, I would think that it would be open to the court to reduce your damages on the basis of contributory negligence since factually you were rather silly to have relied on the liar. I think that this is a better way to understand why reasonable reliance and contributory negligence can co-exist than that given by the CA. I realize, however, that this answer is made difficult in Canadian law by Hercules' mistaken transformation of reasonable reliance from a legal question into a statistical one.

In any event, I would be interested to know if anyone knows of any English/Australian authority of this matter.

--
Jason Neyers
Assistant Professor of Law
Faculty of Law
University of Western Ontario
N6A 3K7
(519) 661-2111 x. 88435

Andrew Tettenborn
Bracton Professor of Law, University of Exeter, England

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