I) Foreseeable Reliance/Reasonable Reliance : The Prima Facie Duty of Care

The foreseeable and reasonable reliance necessary to establish a prima facie duty of care is not a precise or certain concept. It is highly fact- sensitive and dependent on a number of factors, none of which is, in itself, conclusive. There are a number of general indicia, most of which were mentioned in Hercules. [Note 74: See also Feldthusen, above note 68 at 37-77.]

aa) The Expertise and Knowledge of the Representor

The duty of care is not restricted to professional persons or those who are in the business of giving advice to others. Nevertheless, a duty of care most commonly arises where the defendant has some special expertise, knowledge, skill, information, or access to information that is not possessed by the ordinary person. The cases indicate that a duty of care has been placed on a wide range of professionals, those in trades and businesses, and those who work for private and public institutions including governmental officials. It is both readily foreseeable and reasonable that ordinary persons and business entities will rely on those with superior knowledge or special skills in accessing and evaluating information. An imbalance of information between the defendant and the plaintiff is, therefore, a reliable indicator of a prima facie duty of care.

A duty will also be placed on those who represent themselves as having a greater expertise than they, in fact, have. They cannot be heard to complain when the reliance that they have invited occurs. Conversely, it is normally unforeseeable and unreasonable for persons to rely on those who do not enjoy or represent themselves as having any special expertise. Everyone knows of people who have an answer for everything and an opinion on everyone, but, if it is clear that they have no special expertise, few of us rely on them.

bb) The Seriousness of the Occasion

The nature of the occasion is an important factor in establishing a duty of care. Reliance on information is foreseeable and reasonable when it is given on a business, professional, formal, or serious occasion. It is not normally reasonable to rely on information that is given in a casual, recreational, social, or informal setting. There is a world of difference between giving legal advice under a retainer and giving it in reply to a casual inquiry at a boisterous party. There may, however, be exceptional cases. An inquirer at a social event may put the defendant on guard by indicating the seriousness of the matter and her intention to rely on the advice. In such circumstances, there is no duty to reply, but, if the defendant does, he is likely be held to be under a duty of care.

cc) An Initial Request for Information

It is probably more reasonable to rely on information that was, at least initially, given at the request of some person. A request indicates to the defendant that the inquirer, and possibly others, have a real interest in receiving the information and that they are likely to rely on it. Like all factors, however, a request is not conclusive. If information is volunteered without a prior request to a person or to a small targeted group of persons who have special interest in the information and are likely to rely on it, there is no impediment to finding a duty of care. This situation may, however, be contrasted with information that is volunteered to the public at large through modern systems of mass communication. Reliance on information distributed by the media, supplied by governments to the public, or posted on the Internet may not be foreseeable or reasonable unless it is deliberately tailored to the special circumstances of individual persons or a special class of persons.

dd) Pecuniary Interest

Any direct or indirect financial benefit received by the representor, or anticipated by the representor, increases the cachet of the information and encourages reliance on it. The pecuniary interest of the defendant is, therefore, an influential factor in establishing a duty of care. This is particularly so where the information is provided under contract. Information and advice that is purchased is reasonably perceived as being more reliable than information that has been given gratuitously, and that probably holds true in respect of non-privity third parties such as those who rely on the financial reports that auditors prepare under contract for client corporations. [Note 75: The prima facie duty of care to third parties may, however, be restricted or negated on policy grounds because of indeterminacy concerns.] Even an indirect pecuniary interest may have some bearing on the issue of duty. It is not uncommon for businesses to provide assistance and information without payment as a public promotions gesture. There may be the hope of future business or a desire to cultivate relationships with existing customers. In those cases, it is not at all unreasonable for the recipients to expect that reasonable care has been taken to ensure the accuracy of the information provided.

ee) The Nature of the Statement

There is some difference in opinion about the importance of the nature of the statement on which the plaintiff relied. At one extreme, it is said that liability for a negligent statement is restricted to erroneous statements of fact, and that statements of prediction, opinion, forecast, and advice are never actionable under Hedley Byrne. The alternative view is that reliance upon facts may be more foreseeable and reasonable than reliance on more subjective and speculative statements but there is no hard and fast rule about it. [Note 76: This issue was recognized, but left unresolved, by the Supreme Court in Queen v. Cognos Inc., [1993] 1 S.C.R. 87 [Cognos].] This is an issue that does seem to call for a flexible approach. First, it is not easy to categorize representations. Many communications are an amalgam of fact, opinion, and conclusions. The credit report in Hedley Byrne, for example, would appear to contain as much opinion and prediction as fact. Second, many professionals and other experts are not relied on primarily to collect and communicate facts. Their essential task is to analyse facts and, on the basis of their expert skill and knowledge, provide advice, opinion, and projections to assist people and businesses to make informed decisions that are in their financial interests. This is the work of investment advisers, lawyers, accountants, real estate appraisers, and many more. To restrict the duty of care to factual statements unduly restricts the scope of responsibility. The issue is better resolved by a determination of whether or not the reliance was, in the circumstances, foreseeable and reasonable. The courts can then discriminate between, on the one hand, the responsibility of an investment adviser who recommends the purchase of shares in a corporation that he has not investigated and knows nothing about and, on the other, the responsibility of a fortune-teller informing the plaintiff of his financial destiny in the second millennium.

ff) Disclaimers

As a general rule, a disclaimer of responsibility for the accuracy or reliability of the representation will prevent the establishment of a duty of care. It is normally not foreseeable that a person will rely on information for which the defendant has disclaimed responsibility and any reliance on it is likely to be regarded as unreasonable. Nevertheless, there may be exceptional circumstances where disclaimers will not be operative. First, insufficient notice may have been given of the disclaimer and the plaintiff may, reasonably, have acted in ignorance of it. Second, there is no judicial enthusiasm for disclaimers and it can be expected that courts will construe them severely against the defendant. [Note 77: Cognos, ibid. ] Third, it may, occasionally, be reasonable to rely on information in spite of a known disclaimer. The information may not, for example, be available from any other source and it may not be possible to verify the information. A court may be sympathetic to the plaintiff when he had no choice but to rely on the information. A duty of care might also be imposed in respect of information supplied by a large corporation with an excellent reputation for accuracy and integrity. The corporation may use a boiler- plate provision in a standard form, which might not reasonably be interpreted as a real and substantial warning. A court might, for example, take a second look at a case like Hedley Byrne where reliance is placed more on the bank, its expertise, and its reputation and less on formulaic words of disclaimer, of which often little notice is taken and to which even less significance is attached.

The choice of the Supreme Court in Hercules of foreseeable and reasonable reliance as the ultimate touchstone of a prima facie duty of care may be of greatest importance in respect of disclaimers. A disclaimer will almost always be effective if the true test of duty is the defendant's voluntary assumption of responsibility because the disclaimer clearly indicates the contrary. The concept of reliance focuses on the plaintiff and the reasonableness of his conduct in the face of the disclaiming words. This gives a court more room to manoeuvre, room it may wish to explore if the disclaimer is perceived as being productive of unfairness.

Disclaimers may also be embodied in written contracts between the defendant and the plaintiff. As a general rule, a contractual relationship between the parties does not negate tort liability for statements that are made before the contract is entered into or during the performance of the contract. Tort and contract liability is concurrent, not mutually exclusive. The plaintiff generally, therefore, has a full and free choice to choose the most advantageous cause of action. Tort liability may not, however, subvert or contradict the terms of the contract, and if an exemption clause negates tort liability for a negligent misrepresentation, the contractual provision governs. At points of inconsistency and contradiction, the contract "trumps" tort. [Note 78: The relationship between tort and contract is covered more extensively in chapter 8.]