Law Society v KPMG Peat Marwick [2000] 4 All ER 540.
DUTY OF CARE – DISTINCTION BETWEEN PUBLIC AND PRIVATE PURPOSES
Facts
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.
Issues
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.
Decision/Outcome
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.
Updated 19 March 2026
This case summary remains legally accurate. Law Society v KPMG Peat Marwick [2000] 4 All ER 540 (also reported at [2000] 1 WLR 1921) is correctly described, and the Court of Appeal’s reasoning as summarised reflects the judgment. The application of the Caparo Industries plc v Dickman [1990] 2 AC 605 three-stage test (foreseeability, proximity, and whether it is fair, just and reasonable to impose a duty) as the governing framework for negligent misstatement and duty of care analysis is accurately stated for the period in which this case was decided.
Readers should note, however, that the broader Caparo framework has been significantly developed by the Supreme Court in Robinson v Chief Constable of West Yorkshire Police [2018] UKSC 4, which clarified that Caparo was not intended to be applied as a universal three-stage test in every novel case, but rather that the law develops incrementally by analogy with established categories. This does not affect the outcome or reasoning in Law Society v KPMG itself, but students should be aware that contemporary negligence analysis places greater emphasis on established precedent and incremental development than on direct application of the Caparo stages as a standalone test.
