Legal & General Assurance Ltd v Kirk

A former employer’s duty to take care in preparing a reference does not create a cause of action where no reference was actually given. The principle in Spring v Guardian Assurance Plc is concerned with a reference that was provided and relied upon. Extending that principle to an unrequested and hypothetical reference would be a further development of the common law, unsupported by Hedley Byrne & Co Ltd v Heller & Partners or Spring. A disputed assertion of indebtedness, without a reference or reliance on one, therefore cannot found the pleaded negligent-misstatement claim. Article 1 of Protocol 1 is not engaged merely because a person’s ability to seek private employment may be adversely affected. The pleaded claim was consequently bound to fail.

The claimant sought money allegedly due under a financial consultancy agreement. The defendant amended his defence and counterclaim to allege that the claimant had negligently asserted that he owed an industry debt, thereby damaging his prospects of employment in the financial-services industry.

A county court judge struck out the relevant paragraphs under rule 3.4 of the Civil Procedure Rules 1998 and alternatively entered summary judgment under Part 24. Lloyd J dismissed the defendant’s appeal. The defendant appealed, relying on negligent misstatement, Spring v Guardian Assurance Plc, Hedley Byrne & Co Ltd v Heller & Partners, and Article 1 of Protocol 1. The central issues were whether a duty arose without an actual reference and whether the alleged employment opportunity was a possession.

1. Appeal dismissed. The court upheld the striking out of paragraphs 17A–17L of the amended defence and counterclaim. The pleaded case disclosed no reasonable cause of action and was bound to fail.
2. Negligent misstatement. Hedley Byrne & Co Ltd v Heller & Partners did not support the claim. The defendant was neither the recipient nor prospective recipient of a reference, and there had been no reliance on a reference causing loss.
3. Spring v Guardian Assurance Plc did not assist. Although the House of Lords recognised a duty owed by an employer to the subject of a reference, the case involved an actual reference which was relied upon. The pleaded claim required a further extension of the principle to a situation in which no reference had been requested or given. Neither Hedley Byrne nor Spring supplied a basis for that extension.
4. Article 1 of Protocol 1. The alleged right to seek employment as an insurance representative was not a possession. The cases concerning economic interests connected with licences granted by public authorities were distinguishable because this dispute concerned private-law rights and involved no public authority or trading licence. No Convention right was engaged.
5. Jonathan Parker LJ gave the leading judgment. Harrison J and Ward LJ agreed. The orders below were affirmed and the appeal was dismissed.

1. Court of Appeal (Civil Division): Appeal dismissed; the orders below were upheld.
2. Chancery Division: Lloyd J dismissed the appeal from the county court judge’s order.
3. Central London County Court: His Honour Judge Knight QC struck out paragraphs 17A–17L of the amended defence and counterclaim and alternatively granted summary judgment.