Spring v Guardian Assurance plc
| Spring v Guardian Assurance plc | |
|---|---|
.svg?lang=en) | |
| Court | House of Lords |
| Decided | 7 July 1994 |
| Citation | [1994] UKHL 7, [1995] 2 AC 296 |
| Court membership | |
| Judges sitting | Lord Keith of Kinkel Lord Goff of Chieveley Lord Lowry Lord Slynn of Hadley Lord Woolf |
| Keywords | |
| Employee, reference | |
Spring v Guardian Assurance plc [1994] UKHL 7, [1995] 2 AC 296 is a UK labour law and English tort law case, concerning the duty to provide accurate information when writing an employee reference.
Facts
The plaintiff was employed by a company that acted as estate agents and agents for the sale of insurance products by Guardian Insurance, the latter of which it was designated as a "company representative"[a] under rules issued by LAUTRO.[b] In that regard, the plaintiff was designated as a "company representative" of Guardian Assurance, and thus authorized to sell Guardian insurance policies and to advise on their merits.
When the plaintiff's employer was sold to Guardian, its new chief executive did not get on with the plaintiff, and the latter was subsequently dismissed without explanation. He then sought to form his own business selling insurance, and approached the Scottish Amicable Life Assurance Society to be appointed as one of their company representatives.
LAUTRO rules required its members to take "reasonable steps to satisfy itself that he is of good character and of the requisite aptitude and competence, and those steps shall ... include ... the taking up of references relating to character and experience."[1] Guardian Assurance sent unsatisfactory references for Mr Spring, not just to Scottish Amicable, but also to two other companies that were considering a similar appointment. He claimed this amounted to negligent misstatement, and that the company was liable for damages in tort. He accordingly sued for malicious falsehood, breach of contract and negligence.
Judgment
By 4-1, the House of Lords held that Guardian Insurance owed the plaintiff a duty of care in tort, under the principle first expressed in Hedley Byrne & Co Ltd v Heller & Partners Ltd and later expanded upon in Anns v Merton LBC. By 3-2, it further held that, "Where the relationship between the parties is that of employer and employee, the duty of care could be expressed as arising from an implied term of the contract of employment."
The trial judge had also ruled that the claim for malicious falsehood had not been made out, and that was not subsequently appealed. All Lords noted that, in cases such as this, the defence of qualified privilege would defeat such an action unless the plaintiff proved malice, and it was justified on policy grounds first expressed by Lord Diplock in Horrocks v Lowe.[2]
The House of Lords held that sending a bad reference, if it contained inaccurate information, could be a breach of duty in tort for negligence.
Lord Woolf agreed that negligent misstatement causing economic loss is actionable, but dissented on the outcome, explaining that the importance should not be exaggerated for the reasons given in Caparo Industries plc v Dickman.
Aftermath
In the United Kingdom, references can be disclosed to the person about whom they are written, under the subject access provisions of the Data Protection Act 1998. As a result, together with the duty of care under Spring, many organizations have issued guidance as to best practice to be undertaken by reference providers.[3]
The duty of care has also been held to apply in non-reference situations, as noted in 2011 in McKie v Swindon College.[4] In another case, the Court of Appeal of England and Wales has held that "a reference must not give an unfair or misleading impression overall, even if its discrete components are factually correct."[5] The Employment Appeal Tribunal, in an unfair dismissal case, ruled that, in preparing a reference, it was not reasonable to provide details of complaints against an employee of which the employee was not aware.[6]
The Court of Appeal has further held that, if an employee leaves when an investigation is ongoing but has not been concluded, or where issues arise after an employee leaves that have not been investigated, employers can disclose this information but should do so in a measured and fair way, which will be particularly important if to omit this information would mean providing a misleading reference.[7]
See also
Cases in other jurisdictions
- Austin v Torrington Co, 810 F.2d 416 (4th Cir. 1987).
- Young v Bella, 2006 SCC 3, [2006] 1 SCR 108 (27 January 2006)
Notes
- ^ within the meaning of s. 44 of the Financial Services Act 1986
- ^ The Life Assurance and Unit Trust Regulatory Organisation, a self-regulatory organization under the Financial Services Authority (since replaced by the Prudential Regulation Authority).
References
- ^ LAUTRO Rules 1988, rule 3.5(1)
- ^ Horrocks v Lowe, [1975] AC 133, 149.
- ^ "Data Classification: Issuing of Staff and Student References Advisory Note" (PDF). stir.ac.uk. University of Stirling. January 2015.
- ^ Salter, Michael; Bryden, Chris (24 June 2011). "Gone but not forgotten". New Law Journal. 161 (7471)., discussing McKie v Swindon College [2011] EWHC 469 (QB) (11 February 2011)
- ^ Bartholomew v London Borough Of Hackney & Anor [1998] EWCA Civ 1604 (23 October 1998)
- ^ TSB Bank Plc v Harris [1999] UKEAT 1145_97_0112 (1 December 1999)
- ^ Jackson v Liverpool City Council [2011] EWCA Civ 1068 (15 June 2011)
External links
- Magrath, Paul (11 July 1994). "Law Report: Employer liable to pay damages for 'kiss of death' job reference: Spring v Guardian Assurance and others". The Independent.
- Gowe, Gregory T. (May 2006). "Reference Letters" (PDF). greggowe.com. Vancouver: Lawson Lundell LLP.