Law Society v KPMG Peat Marwick  4 All ER 540.
DUTY OF CARE – DISTINCTION BETWEEN PUBLIC AND PRIVATE PURPOSES
The Law Society sought a report from the defendant accountants for the purposes of making decisions about how to manage their funds, which was a regulatory function of the Law Society and a public rather than private function. The report was provided and the Law Society took action in reliance upon its contents. However, the report contained incorrect information due to the negligence of the defendant, and the Law Society suffered loss as a result.
The main issue was whether a duty of care was owed to the Law Society by the defendant accountants given that the Law Society engaged its services for the purpose of performing a public duty rather than for a commercial transaction.
Applying the test established in Caparo Industries plc v Dickman & Ors (1990) 2 AC 605, the Court of Appeal determined that a duty of care did exist on the facts of the case. The Court further held that, given that it was fair, just, and reasonable to impose a duty of care, it did not matter that the advice of the defendants had been sought for the purpose of performing its public duty rather than a private commercial transaction. There was no reason of policy or principle why the defendants could not owe a private law duty the performance of which assisted the Law Society in carrying out a public function.