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Most people who come to this page aren’t legal researchers. They’re people who trusted a professional — an accountant, a financial advisor, a solicitor — and got burned. They’ve started googling, and somewhere along the way, this case came up.
That makes sense. Hedley Byrne v Heller is the reason bad professional advice can be actionable in the first place. Before 1963, you could sue someone for knocking you over. Suing them for telling you something wrong was a different matter entirely.
● Case at a glance
| Full name Hedley Byrne & Co Ltd v Heller & Partners Ltd | Year 1963 | Court House of Lords, United Kingdom |
| Outcome No liability on the facts — but a duty of care for negligent advice was firmly established | ||
Why it matters in Australia | ||
THE CASE EXPLAINED
The facts are almost disappointingly ordinary for a case that changed the law.
Hedley Byrne & Co was an advertising agency. They were thinking about extending credit to a client — a company called Easipower — and wanted some reassurance about Easipower’s financial position before committing further. Through their own bank, they asked Heller & Partners, who were Easipower’s bankers, for a credit reference.
Heller responded. They said Easipower was a “respectably constituted company” and “considered good for its ordinary business engagements.” They also added a disclaimer — the reference was given “without responsibility.”
Hedley Byrne took the reference at face value and kept doing business with Easipower. Shortly afterwards, Easipower collapsed. Hedley Byrne lost a substantial sum of money and sued Heller, arguing the reference had been given carelessly.
The central legal question: can you sue someone in negligence for words alone — for a careless statement that caused you pure financial loss, with no physical damage and no contract between you? At the time, the conventional answer was no.
THE CASE EXPLAINED
Heller won the case on its facts. The disclaimer — “without responsibility” — meant no duty of care could arise. Hedley Byrne had been explicitly told not to rely on the reference legally. They had no basis to sue.
But that is not what made this case significant.
What mattered was what the Lords said next. All five Law Lords agreed that, had the disclaimer not been there, Heller would have owed Hedley Byrne a duty of care. The disclaimer was the only thing that broke the chain.
That single finding flipped the prevailing legal assumption on its head. The question was no longer whether negligent words could ever create liability. They could — provided the right relationship existed between the parties.
The principle the Lords identified is sometimes called voluntary assumption of responsibility, and it comes down to four things:
What pure economic loss means
Before Hedley Byrne, financial loss without accompanying physical damage was almost impossible to recover in negligence. This case opened a carefully bounded pathway to recovery — and that pathway is exactly what most professional negligence claims involving advice now travel through. If a financial advisor, accountant, or solicitor’s negligent advice cost you money, that is pure economic loss. Hedley Byrne is the reason it is recoverable.
Hedley Byrne is a House of Lords decision. It is not binding on Australian courts. But its influence here has been profound.
The Australian reception of the principle came through the High Court’s decision in Shaddock & Associates Pty Ltd v Parramatta City Council [1981] 150 CLR 225. A property developer had enquired about road-widening proposals before buying land. The council gave incorrect information. The High Court held that the Hedley Byrne principle applied — the council owed a duty of care in giving that information, and the developer’s reliance on it was reasonable. That case settled it: Hedley Byrne is part of Australian law.
Since Shaddock, the principle has been applied across an enormous range of professional relationships — solicitors, accountants, financial planners, engineers, valuers, real estate agents. The relationship between a professional and their client is, almost by definition, a Hedley Byrne-type relationship. The expertise differential is there. The reliance is built into the engagement.
The modern duty of care framework that Australian courts use today was set out in Sullivan v Moody (2001) 207 CLR 562, where the High Court asked whether imposing a duty would be coherent with the body of law as a whole, and whether the particular relationship justifies it. That analysis sits over the top of Hedley Byrne — it does not replace it.
Procedurally, claims in each state are governed by their Civil Liability Act — the Civil Liability Act 2002 (NSW), the Wrongs Act 1958 (VIC), the Civil Liability Act 2003 (QLD), and their equivalents elsewhere. These statutes shape how damages are assessed. But the underlying duty of care still runs back through Hedley Byrne and Shaddock.
When a court assesses whether a professional owed you a duty of care under the Hedley Byrne principle, it looks at the substance of the relationship — not just the label. A professional calling themselves an “advisor” does not automatically attract a duty. Equally, a professional who has been giving you de facto financial guidance for years may owe a duty even without a formal engagement letter.
The court will ask: what did this person actually do? What did they lead you to believe they were doing? What did you reasonably understand you were getting?
If you received advice from a professional — any professional — and that advice turned out to be wrong, incomplete, or given with less care than the situation demanded, Hedley Byrne is the reason you may have a claim worth pursuing.
You do not need to have had a formal contract. You do not need to have paid for the advice directly. What matters is whether the professional assumed responsibility for the accuracy of what they told you, and whether you reasonably relied on it to your financial detriment.
Some of the more common situations where Hedley Byrne-derived claims arise:
In each case the professional had relevant expertise, you relied on what they told you, they knew you would rely on it, and they assumed responsibility by taking on the engagement. Whether the facts of your particular situation satisfy the Hedley Byrne formula is something a specialist lawyer can assess.
Act before time runs out
In most Australian states, professional negligence claims must generally be commenced within three years of the date you became aware — or ought reasonably to have become aware — of the negligence. In some states the limitation period differs, but in no state is it unlimited. Missing this deadline can permanently end your right to claim. If you are unsure whether your window is still open, get legal advice now — not later.
If a professional’s advice caused you financial loss, the first step is understanding whether you have a claim worth pursuing. Our team works exclusively on professional negligence matters across Australia. We’ll give you an honest view of where you stand — no cost, no obligation, no pressure.
Common questions
Heller won — the disclaimer they included meant no duty of care arose on the facts. But the case is remembered for what the Lords said would have happened without that disclaimer: Heller would have owed Hedley Byrne a duty of care for the credit reference they provided. That finding established that negligent advice — not just negligent acts — can ground a legal claim, provided a sufficiently close relationship exists between the parties. It is one of the most consequential decisions in the history of negligence law.
Yes. The High Court of Australia confirmed the principle applies in this country in Shaddock & Associates Pty Ltd v Parramatta City Council [1981] 150 CLR 225. Since then it has been applied consistently across professional contexts — from solicitors and accountants to financial advisors and engineers. While the state-based Civil Liability Acts regulate how damages are assessed in each jurisdiction, the common law duty of care that Hedley Byrne established remains live and operative throughout Australia.
In the Hedley Byrne sense, a special relationship has nothing to do with how well you know someone personally. It is about expertise and reliance. If a professional has — or claims to have — relevant skill or knowledge, if you reasonably relied on what they told you, and if they knew or should have known you would rely on their advice when making decisions, the relationship is almost certainly a special one for these purposes. That describes the vast majority of professional engagements. The relationship between a client and their lawyer, accountant, financial advisor, or engineer will almost always qualify.
Pure economic loss is financial loss that is not the direct result of personal injury or property damage. Before Hedley Byrne, recovering this type of loss in negligence was extremely difficult. The concern was that opening the door to claims for careless statements could expose defendants to unlimited liability. Hedley Byrne resolved that concern by limiting recovery to situations where a special relationship exists. The result is that financial losses caused by negligent professional advice can be recovered in negligence, within the boundaries the case established.
Fair Go Australia — specialist professional negligence lawyers. Australia-wide. No win, no fee.
This page is general legal information only and does not constitute legal advice. For advice about your specific situation, please contact our team.
Our goal is to help people in the best way possible. this is a basic principle in every case and cause for success. contact us today for a free consultation.
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