Mutual Life Citizens’ Assurance Co Ltd v Evatt [1971] A.C. 793

C was a policy holder within D. C sought information and advice from D concerning the financial stability of another company with intention to invest. By virtue of both companies being subsidiaries of a larger corporation, D had better facilities than C for obtaining complete and up-to-date information concerning the other company, but when C asked D was not in actual possession of this information. D by itself, its servants and agents advised C that the company would continue to be financially stable and that it would be safe to invest in. They supplied this information without disclaimer of responsibility and knowing C intended to act based on this advice. C did not realise on his existing investments within the company and invested further sums within. He subsequently lost the value of the investments altogether.

• Was D liable for giving negligent advice despite not being in the service of providing such advice?
• Did the appreciation that C is likely to or fully intends to act on advice given create a duty of care?

Held that, since D’s business did not include giving advice on investments, nor did it claim to have the necessary skill to give such advice, its duty towards C was merely the duty to give an honest answer. The facts alleged did not create a cause of action. Accepted English law has held that without contract, one making a statement owed to the inquirer whom they could reasonably foresee would rely upon it in economic matters had the duty of honesty. They did not owe any duty to be careful unless the relationship between parties was fiduciary. Hedley Byrne decided that a greater duty of care could extend to non-fiduciary relationships possessing other characteristics. One gratuitously performing an act requiring the exercise of some special skill and competence has the duty to conform to an ascertainable standard in relation to the subject-matter of the advice given.

The Privy Council majority in Evatt adopted a restrictive approach to responsibility for advice given outside the defendant's advisory expertise or business. It rejected the alleged duty on those facts. That approach is historically important but must be read alongside the broader assumption-of-responsibility analysis in later English authority.

Evatt is a Privy Council appeal from Australia, not a binding House of Lords statement that advice is actionable only when professionally sold. The majority and dissent disagreed over when a business taking on an advisory role assumes responsibility to a relying customer. Later English cases, including Howard Marine and Spring, make an absolute business-of-advising restriction unsafe. Use the decision to explain the development of negligent misstatement and the significance of expertise, undertaking, purpose and reasonable reliance.