Duty of Care I
UK Cases
Donoghue v Stevenson
[1932] UKHL 100 (26 May 1932)
M’ALISTER (OR DONOGHUE) (PAUPER) APPELLANT; AND STEVENSON RESPONDENT.
1932 May 26. LORD BUCKMASTER , LORD ATKIN , LORD TOMLIN , LORD THANKERTON , and LORD MACMILLAN.
The House took time for consideration.
1932. May 26. LORD BUCKMASTER (read by LORD TOMLIN). My Lords, the facts of this case are simple. On August 26, 1928, the appellant drank a bottle of ginger-beer, manufactured by the respondent, which a friend had bought from a retailer and given to her. The bottle contained the decomposed remains of a snail which were not, and could not be, detected until the greater part of the contents of the bottle had been consumed. As a result she alleged, and at this stage her allegations must be accepted as true, that she suffered from shock and severe gastro-enteritis. She accordingly instituted the proceedings against the manufacturer which have given rise to this appeal.
The foundation of her case is that the respondent, as the manufacturer of an article intended for consumption and contained in a receptacle which prevented inspection, owed a duty to her as consumer of the article to take care that there was no noxious element in the goods, that he neglected such duty and is consequently liable for any damage caused by such neglect. After certain amendments, which are now immaterial, the case came before the Lord Ordinary, who rejected the plea in law of the respondent and allowed a proof. His interlocutor was recalled by the Second Division of the Court of Session, from whose judgment this appeal has been brought.
Before examining the merits two comments are desirable: (1.) That the appellant’s case rests solely on the ground of a tort based not on fraud but on negligence; and (2.) that throughout the appeal the case has been argued on the basis, undisputed by the Second Division and never questioned by counsel for the appellant or by any of your Lordships, that the English and the Scots law on the subject are identical.
It is therefore upon the English law alone that I have considered the matter, and in my opinion it is on the English law alone that in the circumstances we ought to proceed.
The law applicable is the common law, and, though its principles are capable of application to meet new conditions not contemplated when the law was laid down, these principles cannot be changed nor can additions be made to them because any particular meritorious case seems outside their ambit.
Now the common law must be sought in law books by writers of authority and in judgments of the judges entrusted with its administration. The law books give no assistance, because the work of living authors, however deservedly eminent, cannot be used as authority, though the opinions they express may demand attention; and the ancient books do not assist. I turn, therefore, to the decided cases to see if they can be construed so as to support the appellant’s case. One of the earliest is the case of Langridge v. Levy. 2 M & W 519; 4 M & W 337 It is a case often quoted and variously explained. There a man sold a gun which he knew was dangerous for the use of the purchaser’s son. The gun exploded in the son’s hands, and he was held to have a right of action in tort against the gunmaker. How far it is from the present case can be seen from the judgment of Parke B., who, in delivering the judgment of the Court, used these words: “We should pause before we made a precedent by our decision which would be an authority for an action against the vendors, even of such instruments and articles as are dangerous in themselves, at the suit of any person whomsoever into whose hands they might happen to pass, and who should be injured thereby”; and in Longmeid v. Holliday 6 Ex 761 the same eminent judge points out that the earlier case was based on a fraudulent misstatement, and he expressly repudiates the view that it has any wider application. The case of Langridge v. Levy 2 M & W 519; 4 M & W 337 , therefore, can be dismissed from consideration with the comment that it is rather surprising it has so often been cited for a proposition it cannot support.
The case of Winterbottom v. Wright 10 M & W 109 is, on the other hand, an authority that is closely applicable. Owing to negligence in the construction of a carriage it broke down, and a stranger to the manufacture and sale sought to recover damages for injuries which he alleged were due to negligence in the work, and it was held that he had no cause of action either in tort or arising out of contract. This case seems to me to show that the manufacturer of any article is not liable to a third party injured by negligent construction, for there can be nothing in the character of a coach to place it in a special category. It may be noted, also, that in this case Alderson B. said 10 M & W 115 : “The only safe rule is to confine the right to recover to those who enter into the contract; if we go one step beyond that, there is no reason why we should not go fifty.”
Longmeid v. Holliday 6 Ex 761, 768 was the case of a defective lamp sold to a man whose wife was injured by its explosion. The vendor of the lamp, against whom the action was brought, was not the manufacturer, so that the case is not exactly parallel to the present, but the statement of Parke B. in his judgment covers the case of manufacturer, for he said: “It would be going much too far to say, that so much care is required in the ordinary intercourse of life between one individual and another, that, if a machine not in its nature dangerous, …. but which might become so by a latent defect entirely unknown, although discoverable by the exercise of ordinary care, should be lent or given by one person, even by the person who manufactured it, to another, the former should be answerable to the latter for a subsequent damage accruing by the use of it.” It is true that he uses the words “lent or given” and omits the word “sold,” but if the duty be entirely independent of contract and is a duty owed to a third person, it seems to me to be the same whether the article be originally given or sold. The fact in the present case that the ginger-beer originally left the premises of the manufacturer on a purchase, as was probably the case, cannot add to his duty, if such existed, to take care in its preparation.
It has been suggested that the statement of Parke B. does not cover the case of negligent construction, but the omission to exercise reasonable care in the discovery of a defect in the manufacture of an article where the duty of examination exists is just as negligent as the negligent construction itself.
The general principle of these cases is stated by Lord Sumner in the case of Blacker v. Lake & Elliot, Ld. 106 LT 533, 536 , in these terms: “The breach of the defendant’s contract with A. to use care and skill in and about the manufacture or repair of an article does not of itself give any cause of action to B. when he is injured by reason of the article proving to be defective.”
From this general rule there are two well known exceptions: (1.) In the case of an article dangerous in itself; and (2.) where the article not in itself dangerous is in fact dangerous, by reason of some defect or for any other reason, and this is known to the manufacturer. Until the case of George v. Skivington LR 5 Ex 1 I know of no further modification of the general rule.
As to (1.), in the case of things dangerous in themselves, there is, in the words of Lord Dunedin, “a peculiar duty to take precaution imposed upon those who send forth or install such articles when it is necessarily the case that other parties will come within their proximity”: Dominion Natural Gas Co., Ld. v. Collins & Perkins. [1909] AC 640, 646 And as to (2.), this depends on the fact that the knowledge of the danger creates the obligation to warn, and its concealment is in the nature of fraud. In this case no one can suggest that ginger-beer was an article dangerous in itself, and the words of Lord Dunedin show that the duty attaches only to such articles, for I read the words “a peculiar duty” as meaning a duty peculiar to the special class of subject mentioned.
Of the remaining cases, George v. Skivington LR 5 Ex 1 is the one nearest to the present, and without that case, and the statement of Cleasby B. in Francis v. Cockrell (1870) LR 5 QB 501, 515 and the dicta of Brett M.R. in Heaven v. Pender 11 QB D 503, 509 et seq , the appellant would be destitute of authority. George v. Skivington LR 5 Ex 1 related to the sale of a noxious hairwash, and a claim made by a person who had not bought it but who had suffered from its use, based on its having been negligently compounded, was allowed. It is remarkable that Langridge v. Levy 2 M & W 519 was used in support of the claim and influenced the judgment of all the parties to the decision. Both Kelly C.B. and Pigott B. stressed the fact that the article had been purchased to the knowledge of the defendant for the use of the plaintiff, as in Langridge v. Levy 2 M & W 519 , and Cleasby B., who, realizing that Langridge v. Levy 2 M & W 519 was decided on the ground of fraud, said: “Substitute the word ‘negligence’ for ‘fraud,’ and the analogy between Langridge v. Levy 2 M & W 519 and this case is complete.” It is unnecessary to point out too emphatically that such a substitution cannot possibly be made. No action based on fraud can be supported by mere proof of negligence.
I do not propose to follow the fortunes of George v. Skivington LR 5 Ex 1 ; few cases can have lived so dangerously and lived so long. Lord Sumner, in the case of Blacker v. Lake & Elliot, Ld. 106 LT 533, 536 , closely examines its history, and I agree with his analysis. He said that he could not presume to say that it was wrong, but he declined to follow it on the ground which is, I think, firm, that it was in conflict with Winterbottom v. Wright. 10 M & W 109
In Francis v. Cockrell LR 5 QB 501, 515 the plaintiff had been injured by the fall of a stand on a racecourse, for a seat in which he had paid. The defendant was part proprietor of the stand and acted as receiver of the money. The stand had been negligently erected by a contractor, though the defendant was not aware of the defect. The plaintiff succeeded. The case has no bearing upon the present, but in the course of his judgment Cleasby B. made the following observation: “The point that Mr. Matthews referred to last was raised in the case of George v. Skivington LR 5 Ex 1 , where there was an injury to one person, the wife, and a contract of sale with another person, the husband. The wife was considered to have a good cause of action, and I would adopt the view which the Lord Chief Baron took in that case. He said there was a duty in the vendor to use ordinary care in compounding the article sold, and that this extended to the person for whose use he knew it was purchased, and this duty having been violated, and he, having failed to use reasonable care, was liable in an action at the suit of the third person.” It is difficult to appreciate what is the importance of the fact that the vendor knew who was the person for whom the article was purchased, unless it be that the case was treated as one of fraud, and that without this element of knowledge it could not be brought within the principle of Langridge v. Levy. 2 M & W 519 Indeed, this is the only view of the matter which adequately explains the references in the judgments in George v. Skivington LR 5 Ex 1 to Langridge v. Levy 2 M & W 519 and the observations of Cleasby B. upon George v. Skivington. LR 5 Ex 1
The dicta of Brett M.R. in Heaven v. Pender 11 QB D 503, 509 et seq are rightly relied on by the appellant. The material passage is as follows: “The proposition which these recognized cases suggest, and which is, therefore, to be deduced from them, is that whenever one person is by circumstances placed in such a position with regard to another that every one of ordinary sense who did think would at once recognize that if he did not use ordinary care and skill in his own conduct with regard to those circumstances he would cause danger of injury to the person or property of the other, a duty arises to use ordinary care and skill to avoid such danger …… Let us apply this proposition to the case of one person supplying goods or machinery, or instruments or utensils, or the like, for the purpose of their being used by another person, but with whom there is no contract as to the supply. The proposition will stand thus: whenever one person supplies goods, or machinery or the like, for the purpose of their being used by another person under such circumstances that everyone of ordinary sense would, if he thought, recognize at once that unless he used ordinary care and skill with regard to the condition of the thing supplied or the mode of supplying it, there will be danger of injury to the person or property of him for whose use the thing is supplied, and who is to use it, a duty arises to use ordinary care and skill as to the condition or manner of supplying such thing. And for a neglect of such ordinary care or skill whereby injury happens a legal liability arises to be enforced by an action for negligence. This includes the case of goods, etc., supplied to be used immediately by a particular person or persons or one of a class of persons, where it would be obvious to the person supplying, if he thought, that the goods would in all probability be used at once by such persons before a reasonable opportunity for discovering any defect which might exist, and where the thing supplied would be of such a nature that a neglect of ordinary care or skill as to its condition or the manner of supplying it would probably cause danger to the person or property of the person for whose use it was supplied, and who was about to use it. It would exclude a case in which the goods are supplied under circumstances in which it would be a chance by whom they would be used or whether they would be used or not, or whether they would be used before there would probably be means of observing any defect, or where the goods would be of such a nature that a want of care or skill as to their condition or the manner of supplying them would not probably produce danger of injury to person or property. The cases of vendor and purchaser and lender and hirer under contract need not be considered, as the liability arises under the contract, and not merely as a duty imposed by law, though it may not be useless to observe that it seems difficult to import the implied obligation into the contract except in cases in which if there were no contract between the parties the law would according to the rule above stated imply the duty.”
“The recognised cases” to which the Master of the Rolls refers are not definitely quoted, but they appear to refer to cases of collision and carriage and the cases of visitation to premises on which there is some hidden danger — cases far removed from the doctrine he enunciates. None the less this passage has been used as a tabula in naufragio for many litigants struggling in the seas of adverse authority. It cannot, however, be divorced from the fact that the case had nothing whatever to do with the question of manufacture and sale. An unsound staging had been erected on premises to which there had been an invitation to the plaintiffs to enter, and the case really depended on the duty of the owner of the premises to persons so invited. None the less it is clear that Brett M.R. considered the cases of manufactured articles, for he examined Langridge v. Levy 2 M & W 519 , and says that it does not negative the proposition that the case might have been supported on the ground of negligence.
In the same case, however, Cotton L.J., in whose judgment Bowen L.J. concurred, said that he was unwilling to concur with the Master of the Rolls in laying down unnecessarily the larger principle which he entertained, inasmuch as there were many cases in which the principle was impliedly negatived. He then referred to Langridge v. Levy 2 M & W 519 , and stated that it was based upon fraudulent misrepresentation, and had been so treated by Coleridge J. in Blackmore v. Bristol and Exeter Ry. Co. (1858) 8 E & B 1035 , and that in Collis v. Selden (1868) LR 3 CP 495 Willes J. had said that the judgment in Langridge v. Levy 2 M & W 519 was based on the fraud of the defendant. The Lord Justice then proceeded as follows: “This impliedly negatives the existence of the larger general principle which is relied on, and the decisions in Collis v. Selden (1868) LR 3 CP 495 and in Longmeid v. Holliday 6 Ex 761 (in each of which the plaintiff failed), are in my opinion at variance with the principle contended for. The case of George v. Skivington LR 5 Ex 1 , and especially what is said by Cleasby B., in giving judgment in that case, seems to support the existence of the general principle. But it is not in terms laid down that any such principle exists, and that case was decided by Cleasby B. on the ground that the negligence of the defendant, which was his own personal negligence, was equivalent, for the purposes of that action, to fraud, on which (as he said) the decision in Langridge v. Levy 2 M & W 519 was based. In declining to concur in laying down the principle enunciated by the Master of the Rolls, I in no way intimate any doubt as to the principle that anyone who leaves a dangerous instrument, as a gun, in such a way as to cause danger, or who without due warning supplies to others for use an instrument or thing which to his knowledge, from its construction or otherwise, is in such a condition as to cause danger, not necessarily incident to the use of such an instrument or thing, is liable for injury caused to others by reason of his negligent act.”
With the views expressed by Cotton L.J. I agree.
In Le Lievre v. Gould [1893] 1 QB 491, 497 the mortgagees of the interest of a builder under a building agreement advanced money to him from time to time on the faith of certificates given by a surveyor that certain specified stages in the progress of the buildings had been reached. The surveyor was not appointed by the mortgagees and there was no contractual relationship between him and them. In consequence of the negligence of the surveyor the certificates contained untrue statements as to the progress of the buildings, but there was no fraud on his part. It was held that the surveyor owed no duty to the mortgagees to exercise care in giving his certificates, and they could not maintain an action against him by reason of his negligence. In this case Lord Esher seems to have qualified to some extent what he said in Heaven v. Pender 11 QB D 503, 509 , for he says this: “But can the plaintiffs rely upon negligence in the absence of fraud? The question of liability for negligence cannot arise at all until it is established that the man who has been negligent owed some duty to the person who seeks to make him liable for his negligence. What duty is there when there is no relation between the parties by contract? A man is entitled to be as negligent as he pleases towards the whole world if he owes no duty to them. The case of Heaven v. Pender 11 QB D 503, 509 has no bearing upon the present question. That case established that, under certain circumstances, one man may owe a duty to another even though there is no contract between them. If one man is near to another, or is near to the property of another, a duty lies upon him not to do that which may cause a personal injury to that other, or may injure his property.”
In that same case A. L. Smith L.J. said [1893] 1 QB 504 : “The decision of Heaven v. Pender 11 QB D 503, 509 was founded upon the principle, that a duty to take due care did arise when the person or property of one was in such proximity to the person or property of another that, if due care was not taken, damage might be done by the one to the other. Heaven v. Pender 11 QB D 503, 509 goes no further than this, though it is often cited to support all kinds of untenable propositions.”
In Earl v. Lubbock [1905] 1 KB 253 the plaintiff had been injured by a wheel coming off a van which he was driving for his employer and which it was the duty of the defendant under contract with the employer to keep in repair. The county court judge and the Divisional Court both held that, even if negligence was proved, the action would not lie. It was held by the Appeal Court that the defendant was under no duty to the plaintiff and that there was no cause of action. In his judgment Sir Richard Henn Collins M.R. said the case was concluded by the authority of Winterbottom v. Wright 10 M & W 109 , and he pointed out that the dictum of Lord Esher in Heaven v. Pender 11 QB D 503, 509 was not a decision of the Court, and that it was subsequently qualified and explained by Lord Esher himself in Le Lievre v. Gould. [1893] 1 QB 491, 497 Stirling L.J. said that in order to succeed in the action the plaintiff must bring his case within the proposition enunciated by Cotton L.J. and agreed to by Bowen L.J. in Heaven v. Pender 11 QB D 503, 509 , while Mathew L.J. made the following observation: “The argument of counsel for the plaintiff was that the defendant’s servants had been negligent in the performance of the contract with the owners of the van, and that it followed as a matter of law that anyone in their employment, or, indeed, anyone else who sustained an injury traceable to that negligence, had a cause of action against the defendant. It is impossible to accept such a wide proposition, and, indeed, it is difficult to see how, if it were the law, trade could be carried on. No prudent man would contract to make or repair what the employer intended to permit others to use in the way of his trade.”
In Bates v. Batey & Co., Ld. [1913] 3 KB 351 , the defendants, ginger-beer manufacturers, were held not liable to a consumer (who had purchased from a retailer one of their bottles) for injury occasioned by the bottle bursting as the result of a defect of which the defendants did not know, but which by the exercise of reasonable care they could have discovered. In reaching this conclusion Horridge J. stated that he thought the judgments of Parke B. in Longmeid v. Holliday 6 Ex 761 , of Cotton and Bowen L.JJ. in Heaven v. Pender 11 QB D 503 , of Stirling L.J. in Earl v. Lubbock [1905] 1 KB 253 , and of Hamilton J. in Blacker v. Lake & Elliot, Ld. 106 LT 533 , made it clear that the plaintiff was not entitled to recover, and that he had not felt himself bound by George v. Skivington. LR 5 Ex 1
So far, therefore, as the case of George v. Skivington LR 5 Ex 1 and the dicta in Heaven v. Pender 11 QB D 503, 509 are concerned, it is in my opinion better that they should be buried so securely that their perturbed spirits shall no longer vex the law.
One further case mentioned in argument may be referred to, certainly not by way of authority, but to gain assistance by considering how similar cases are dealt with by eminent judges of the United States. That such cases can have no close application and no authority is clear, for though the source of the law in the two countries may be the same, its current may well flow in different channels. The case referred to is that of Thomas v. Winchester. 6 NY 397 There a chemist issued poison in answer to a request for a harmless drug, and he was held responsible to a third party injured by his neglect. It appears to me that the decision might well rest on the principle that he, in fact, sold a drug dangerous in itself, none the less so because he was asked to sell something else, and on this view the case does not advance the matter.
In another case of MacPherson v. Buick Motor Co. (1916) 217 NY 382 , where a manufacturer of a defective motor-car was held liable for damages at the instance of a third party, the learned judge appears to base his judgment on the view that a motor-car might reasonably be regarded as a dangerous article.
In my view, therefore, the authorities are against the appellant’s contention, and, apart from authority, it is difficult to see how any common law proposition can be formulated to support her claim.
The principle contended for must be this: that the manufacturer, or indeed the repairer, of any article, apart entirely from contract, owes a duty to any person by whom the article is lawfully used to see that it has been carefully constructed. All rights in contract must be excluded from consideration of this principle; such contractual rights as may exist in successive steps from the original manufacturer down to the ultimate purchaser are ex hypothesi immaterial. Nor can the doctrine be confined to cases where inspection is difficult or impossible to introduce. This conception is simply to misapply to tort doctrine applicable to sale and purchase.
The principle of tort lies completely outside the region where such considerations apply, and the duty, if it exists, must extend to every person who, in lawful circumstances, uses the article made. There can be no special duty attaching to the manufacture of food apart from that implied by contract or imposed by statute. If such a duty exists, it seems to me it must cover the construction of every article, and I cannot see any reason why it should not apply to the construction of a house. If one step, why not fifty? Yet if a house be, as it sometimes is, negligently built, and in consequence of that negligence the ceiling falls and injures the occupier or any one else, no action against the builder exists according to the English law, although I believe such a right did exist according to the laws of Babylon. Were such a principle known and recognized, it seems to me impossible, having regard to the numerous cases that must have arisen to persons injured by its disregard, that, with the exception of George v. Skivington LR 5 Ex 1 , no case directly involving the principle has ever succeeded in the Courts, and, were it well known and accepted, much of the discussion of the earlier cases would have been waste of time, and the distinction as to articles dangerous in themselves or known to be dangerous to the vendor would be meaningless.
In Mullen v. Barr & Co. 1929 SC 461, 479 , a case indistinguishable from the present excepting upon the ground that a mouse is not a snail, and necessarily adopted by the Second Division in their judgment, Lord Anderson says this: “In a case like the present, where the goods of the defenders are widely distributed throughout Scotland, it would seem little short of outrageous to make them responsible to members of the public for the condition of the contents of every bottle which issues from their works. It is obvious that, if such responsibility attached to the defenders, they might be called on to meet claims of damages which they could not possibly investigate or answer.”
In agreeing, as I do, with the judgment of Lord Anderson, I desire to add that I find it hard to dissent from the emphatic nature of the language with which his judgment is clothed. I am of opinion that this appeal should be dismissed, and I beg to move your Lordships accordingly.
LORD ATKIN. My Lords, the sole question for determination in this case is legal: Do the averments made by the pursuer in her pleading, if true, disclose a cause of action? I need not restate the particular facts. The question is whether the manufacturer of an article of drink sold by him to a distributor, in circumstances which prevent the distributor or the ultimate purchaser or consumer from discovering by inspection any defect, is under any legal duty to the ultimate purchaser or consumer to take reasonable care that the article is free from defect likely to cause injury to health. I do not think a more important problem has occupied your Lordships in your judicial capacity: important both because of its bearing on public health and because of the practical test which it applies to the system under which it arises. The case has to be determined in accordance with Scots law; but it has been a matter of agreement between the experienced counsel who argued this case, and it appears to be the basis of the judgments of the learned judges of the Court of Session, that for the purposes of determining this problem the laws of Scotland and of England are the same. I speak with little authority on this point, but my own research, such as it is, satisfies me that the principles of the law of Scotland on such a question as the present are identical with those of English law; and I discuss the issue on that footing. The law of both countries appears to be that in order to support an action for damages for negligence the complainant has to show that he has been injured by the breach of a duty owed to him in the circumstances by the defendant to take reasonable care to avoid such injury. In the present case we are not concerned with the breach of the duty; if a duty exists, that would be a question of fact which is sufficiently averred and for present purposes must be assumed. We are solely concerned with the question whether, as a matter of law in the circumstances alleged, the defender owed any duty to the pursuer to take care.
It is remarkable how difficult it is to find in the English authorities statements of general application defining the relations between parties that give rise to the duty. The Courts are concerned with the particular relations which come before them in actual litigation, and it is sufficient to say whether the duty exists in those circumstances. The result is that the Courts have been engaged upon an elaborate classification of duties as they exist in respect of property, whether real or personal, with further divisions as to ownership, occupation or control, and distinctions based on the particular relations of the one side or the other, whether manufacturer, salesman or landlord, customer, tenant, stranger, and so on.
In this way it can be ascertained at any time whether the law recognizes a duty, but only where the case can be referred to some particular species which has been examined and classified. And yet the duty which is common to all the cases where liability is established must logically be based upon some element common to the cases where it is found to exist. To seek a complete logical definition of the general principle is probably to go beyond the function of the judge, for the more general the definition the more likely it is to omit essentials or to introduce non-essentials. The attempt was made by Brett M.R. in Heaven v. Pender 11 QB D 503, 509 , in a definition to which I will later refer. As framed, it was demonstrably too wide, though it appears to me, if properly limited, to be capable of affording a valuable practical guide.
At present I content myself with pointing out that in English law there must be, and is, some general conception of relations giving rise to a duty of care, of which the particular cases found in the books are but instances. The liability for negligence, whether you style it such or treat it as in other systems as a species of “culpa,” is no doubt based upon a general public sentiment of moral wrongdoing for which the offender must pay. But acts or omissions which any moral code would censure cannot in a practical world be treated so as to give a right to every person injured by them to demand relief. In this way rules of law arise which limit the range of complainants and the extent of their remedy. The rule that you are to love your neighbour becomes in law, you must not injure your neighbour; and the lawyer’s question, Who is my neighbour? receives a restricted reply. You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour. Who, then, in law is my neighbour? The answer seems to be — persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected when I am directing my mind to the acts or omissions which are called in question. This appears to me to be the doctrine of Heaven v. Pender 11 QB D 503, 509 , as laid down by Lord Esher (then Brett M.R.) when it is limited by the notion of proximity introduced by Lord Esher himself and A. L. Smith L.J. in Le Lievre v. Gould. [1893] 1 QB 491, 497, 504 Lord Esher says: “That case established that, under certain circumstances, one man may owe a duty to another, even though there is no contract between them. If one man is near to another, or is near to the property of another, a duty lies upon him not to do that which may cause a personal injury to that other, or may injure his property.” So A. L. Smith L.J.: “The decision of Heaven v. Pender 11 QB D 503, 509 was founded upon the principle, that a duty to take due care did arise when the person or property of one was in such proximity to the person or property of another that, if due care was not taken, damage might be done by the one to the other.” I think that this sufficiently states the truth if proximity be not confined to mere physical proximity, but be used, as I think it was intended, to extend to such close and direct relations that the act complained of directly affects a person whom the person alleged to be bound to take care would know would be directly affected by his careless act. That this is the sense in which nearness of “proximity” was intended by Lord Esher is obvious from his own illustration in Heaven v. Pender 11 QB D 503, 510 of the application of his doctrine to the sale of goods. “This” (i.e., the rule he has just formulated) “includes the case of goods, etc., supplied to be used immediately by a particular person or persons, or one of a class of persons, where it would be obvious to the person supplying, if he thought, that the goods would in all probability be used at once by such persons before a reasonable opportunity for discovering any defect which might exist, and where the thing supplied would be of such a nature that a neglect of ordinary care or skill as to its condition or the manner of supplying it would probably cause danger to the person or property of the person for whose use it was supplied, and who was about to use it. It would exclude a case in which the goods are supplied under circumstances in which it would be a chance by whom they would be used or whether they would be used or not, or whether they would be used before there would probably be means of observing any defect, or where the goods would be of such a nature that a want of care or skill as to their condition or the manner of supplying them would not probably produce danger of injury to person or property.” I draw particular attention to the fact that Lord Esher emphasizes the necessity of goods having to be “used immediately” and “used at once before a reasonable opportunity of inspection.” This is obviously to exclude the possibility of goods having their condition altered by lapse of time, and to call attention to the proximate relationship, which may be too remote where inspection even of the person using, certainly of an intermediate person, may reasonably be interposed. With this necessary qualification of proximate relationship as explained in Le Lievre v. Gould [1893] 1 QB 491 , I think the judgment of Lord Esher expresses the law of England; without the qualification, I think the majority of the Court in Heaven v. Pender 11 QB D 503 were justified in thinking the principle was expressed in too general terms. There will no doubt arise cases where it will be difficult to determine whether the contemplated relationship is so close that the duty arises. But in the class of case now before the Court I cannot conceive any difficulty to arise. A manufacturer puts up an article of food in a container which he knows will be opened by the actual consumer. There can be no inspection by any purchaser and no reasonable preliminary inspection by the consumer. Negligently, in the course of preparation, he allows the contents to be mixed with poison. It is said that the law of England and Scotland is that the poisoned consumer has no remedy against the negligent manufacturer. If this were the result of the authorities, I should consider the result a grave defect in the law, and so contrary to principle that I should hesitate long before following any decision to that effect which had not the authority of this House. I would point out that, in the assumed state of the authorities, not only would the consumer have no remedy against the manufacturer, he would have none against any one else, for in the circumstances alleged there would be no evidence of negligence against any one other than the manufacturer; and, except in the case of a consumer who was also a purchaser, no contract and no warranty of fitness, and in the case of the purchase of a specific article under its patent or trade name, which might well be the case in the purchase of some articles of food or drink, no warranty protecting even the purchaser-consumer. There are other instances than of articles of food and drink where goods are sold intended to be used immediately by the consumer, such as many forms of goods sold for cleaning purposes, where the same liability must exist. The doctrine supported by the decision below would not only deny a remedy to the consumer who was injured by consuming bottled beer or chocolates poisoned by the negligence of the manufacturer, but also to the user of what should be a harmless proprietary medicine, an ointment, a soap, a cleaning fluid or cleaning powder. I confine myself to articles of common household use, where every one, including the manufacturer, knows that the articles will be used by other persons than the actual ultimate purchaser — namely, by members of his family and his servants, and in some cases his guests. I do not think so in of our jurisprudence as to suppose that its principles are so remote from the ordinary needs of civilized society and the ordinary claims it makes upon its members as to deny a legal remedy where there is so obviously a social wrong.
It will be found, I think, on examination that there is no case in which the circumstances have been such as I have just suggested where the liability has been negatived. There are numerous cases, where the relations were much more remote, where the duty has been held not to exist. There are also dicta in such cases which go further than was necessary for the determination of the particular issues, which have caused the difficulty experienced by the Courts below. I venture to say that in the branch of the law which deals with civil wrongs, dependent in England at any rate entirely upon the application by judges of general principles also formulated by judges, it is of particular importance to guard against the danger of stating propositions of law in wider terms than is necessary, lest essential factors be omitted in the wider survey and the inherent adaptability of English law be unduly restricted. For this reason it is very necessary in considering reported cases in the law of torts that the actual decision alone should carry authority, proper weight, of course, being given to the dicta of the judges.
In my opinion several decided cases support the view that in such a case as the present the manufacturer owes a duty to the consumer to be careful. A direct authority is George v. Skivington. LR 5 Ex 1 That was a decision on a demurrer to a declaration which averred that the defendant professed to sell a hairwash made by himself, and that the plaintiff Joseph George bought a bottle, to be used by his wife, the plaintiff Emma George, as the defendant then knew, and that the defendant had so negligently conducted himself in preparing and selling the hairwash that it was unfit for use, whereby the female plaintiff was injured. Kelly C.B. said that there was no question of warranty, but whether the chemist was liable in an action on the case for unskilfulness and negligence in the manufacture of it. “Unquestionably there was such a duty towards the purchaser, and it extends, in my judgment, to the person for whose use the vendor knew the compound was purchased.” Pigott and Cleasby BB. put their judgments on the same ground. I venture to think that Cotton L.J., in Heaven v. Pender 11 QB D 517 , misinterprets Cleasby B.’s judgment in the reference to Langridge v. Levy. 4 M & W 337 Cleasby B. appears to me to make it plain that in his opinion the duty to take reasonable care can be substituted for the duty which existed in Langridge v. Levy 4 M & W 337 not to defraud. It is worth noticing that George v. Skivington LR 5 Ex 1 was referred to by Cleasby B. himself, sitting as a member of the Court of Exchequer Chamber in Francis v. Cockrell LR 5 QB 501, 515 , and was recognized by him as based on an ordinary duty to take care. It was also affirmed by Brett M.R. in Cunnington v. Great Northern Ry. Co. (1883) 49 LT 392 , decided on July 2 at a date between the argument and the judgment in Heaven v. Pender 11 QB D 517 , though, as in that case the Court negatived any breach of duty, the expression of opinion is not authoritative. The existence of the duty contended for is also supported by Hawkins v. Smith (1896) 12 Times LR 532 , where a dock labourer in the employ of the dock company was injured by a defective sack which had been hired by the consignees from the defendant, who knew the use to which it was to be put, and had been provided by the consignees for the use of the dock company, who had been employed by them to unload the ship on the dock company’s premises. The Divisional Court, Day and Lawrance JJ., held the defendant liable for negligence. Similarly, in Elliott v. Hall (1885) 15 QB D 315 , the defendants, colliery owners, consigned coal to the plaintiff’s employers, coal merchants, in a truck hired by the defendants from a wagon company. The plaintiff was injured in the course of unloading the coal by reason of the defective condition of the truck, and was held by a Divisional Court, Grove and A. L. Smith JJ., entitled to recover on the ground of the defendants’ breach of duty to see that the truck was not in a dangerous condition. It is to be noticed that in neither case was the defective chattel in the defendants’ occupation, possession or control, or on their premises, while in the latter case it was not even their property. It is sometimes said that the liability in these cases depends upon an invitation by the defendant to the plaintiff to use his chattel. I do not find the decisions expressed to be based upon this ground, but rather upon the knowledge that the plaintiff in the course of the contemplated use of the chattel would use it; and the supposed invitation appears to me to be in many cases a fiction, and merely a form of expressing the direct relation between supplier and user which gives rise to the duty to take care. A very recent case which has the authority of this House is Oliver v. Saddler & Co. [1929] AC 584 In that case a firm of stevedores employed to unload a cargo of maize in bags provided the rope slings by which the cargo was raised to the ship’s deck by their own men using the ship’s tackle, and then transported to the dockside by the shore porters, of whom the plaintiff was one. The porters relied on examination by the stevedores and had themselves no opportunity of examination. In these circumstances this House, reversing the decision of the First Division, held that there was a duty owed by the stevedore company to the porters to see that the slings were fit for use, and restored the judgment of the Lord Ordinary, Lord Morison, in favour of the pursuer. I find no trace of the doctrine of invitation in the opinions expressed in this House, of which mine was one: the decision was based upon the fact that the direct relations established, especially the circumstance that the injured porter had no opportunity of independent examination, gave rise to a duty to be careful.
I should not omit in this review of cases the decision in Grote v. Chester and Holyhead Ry. (1848) 2 Ex 251 That was an action on the case in which it was alleged that the defendants had constructed a bridge over the Dee on their railway and had licensed the use of the bridge to the Shrewsbury and Chester Railway to carry passengers over it, and had so negligently constructed the bridge that the plaintiff, a passenger of the last named railway, had been injured by the falling of the bridge. At the trial before Vaughan Williams J. the judge had directed the jury that the plaintiff was entitled to recover if the bridge was not constructed with reasonable care and skill. On a motion for a new trial the Attorney-General (Sir John Jervis) contended that there was misdirection, for the defendants were only liable for negligence, and the jury might have understood that there was an absolute liability. The Court of Exchequer, after consulting the trial judge as to his direction, refused the rule. This case is said by Kelly C.B., in Francis v. Cockrell LR 5 QB 505 in the Exchequer Chamber, to have been decided upon an implied contract with every person lawfully using the bridge that it was reasonably fit for the purpose. I can find no trace of such a ground in the pleading or in the argument or judgment. It is true that the defendants were the owners and occupiers of the bridge. The law as to the liability to invitees and licensees had not then been developed. The case is interesting, because it is a simple action on the case for negligence, and the Court upheld the duty to persons using the bridge to take reasonable care that the bridge was safe.
It now becomes necessary to consider the cases which have been referred to in the Courts below as laying down the proposition that no duty to take care is owed to the consumer in such a case as this.
In Dixon v. Bell 5 M & S 198 , the defendant had left a loaded gun at his lodgings and sent his servant, a mulatto girl aged about thirteen or fourteen, for the gun, asking the landlord to remove the priming and give it her. The landlord did remove the priming and gave it to the girl, who later levelled it at the plaintiff’s small son, drew the trigger and injured the boy. The action was in case for negligently entrusting the young servant with the gun. The jury at the trial before Lord Ellenborough had returned a verdict for the plaintiff. A motion by Sir William Garrow (Attorney-General) for a new trial was dismissed by the Court, Lord Ellenborough and Bayley J., the former remarking that it was incumbent on the defendant, who by charging the gun had made it capable of doing mischief, to render it safe and innoxious.
In Langridge v. Levy 2 M & W 519; 4 M & W 337 the action was in case, and the declaration alleged that the defendant, by falsely and fraudulently warranting a gun to have been made by Nock and to be a good, safe, and secure gun, sold the gun to the plaintiff’s father for the use of himself and his son, and that one of his sons, confiding in the warranty, used the gun, which burst and injured him. Plea not guilty and no warranty as alleged. The report is not very satisfactory. No evidence is reported of any warranty or statement except that the gun was an elegant twist gun by Nock. The judge left to the jury whether the defendant had warranted the gun to be by Nock and to be safe; whether it was in fact unsafe; and whether the defendant warranted it to be safe knowing that it was not so. The jury returned a general verdict for the plaintiff. It appears to have been argued that the plaintiff could recover wherever there is a breach of duty imposed on the defendant by contract or otherwise, and the plaintiff is injured by reason of its breach; by this is meant apparently that the duty need not be owed to the plaintiff, but that he can take advantage of the breach of a duty owed to a third party. This contention was negatived by the Court, who held, however, that the plaintiff could recover if a representation known to be false was made to a third person with the intention that a chattel should be used by the plaintiff, even though it does not appear that the defendant intended the false representation to be communicated to him; see per Parke B. 2 M & W 531 The same view was adopted by the Exchequer Chamber, the user by the plaintiff being treated by the Court as one of the acts contemplated by the fraudulent defendant. It is unnecessary to consider whether the proposition can be supported in its widest form. It is sufficient to say that the case was based, as I think, in the pleading, and certainly in the judgment, on the ground of fraud, and it appears to add nothing of value positively or negatively to the present discussion. Winterbottom v. Wright 10 M & W 109 was a case decided on a demurrer. The plaintiff had demurred to two of the pleas, as to which there was no decision by the Court; but on the hearing of the plaintiff’s demurrer the Court, in accordance with the practice of the day, were entitled to consider the whole record, including the declaration, and, coming to the conclusion that this declaration disclosed no cause of action, gave judgment for the defendant: see Sutton’s Personal Actions at Common Law, p. 113. The advantage of the procedure is that we are in a position to know the precise issue at law which arose for determination. The declaration was in case, and alleged that the defendant had contracted with the Postmaster-General to provide the mail-coach to convey mails from Hartford to Holyhead and to keep the mails in safe condition; that Atkinson and others, with notice of the said contract, had contracted with the Postmaster-General to convey the road mail-coach from Hartford to Holyhead; and that the plaintiff, relying on the said first contract, hired himself to Atkinson to drive the mail-coach; but that the defendant so negligently conducted himself and so utterly disregarded his aforesaid contract that the defendant, having the means of knowing, and well knowing, all the aforesaid premises, the mail-coach, being in a dangerous condition, owing to certain latent defects and to no other cause, gave way, whereby the plaintiff was thrown from his seat and injured. It is to be observed that no negligence apart from breach of contract was alleged — in other words, no duty was alleged other than the duty arising out of the contract; it is not stated that the defendant knew, or ought to have known, of the latent defect. The argument of the defendant was that, on the face of the declaration, the wrong arose merely out of the breach of a contract, and that only a party to the contract could sue. The Court of Exchequer adopted that view, as clearly appears from the judgments of Alderson and Rolfe BB. There are dicta by Lord Abinger which are too wide as to an action of negligence being confined to cases of breach of a public duty. The actual decision appears to have been manifestly right; no duty to the plaintiff arose out of the contract; and the duty of the defendant under the contract with the Postmaster-General to put the coach in good repair could not have involved such direct relations with the servant of the persons whom the Postmaster-General employed to drive the coach as would give rise to a duty of care owed to such servant. We now come to Longmeid v. Holliday 6 Ex 761 , the dicta in which have had considerable effect in subsequent decisions. In that case the declaration in case alleged that the plaintiff, Frederick Longmeid, had bought from the defendant, the maker and seller of “the Holliday lamp,” a lamp to be used by himself and his wife Eliza in the plaintiff’s shop; that the defendant induced the sale by the false and fraudulent warranty that the lamp was reasonably fit for the purpose; and that the plaintiff Eliza, confiding in the said warranty, lighted the lamp, which exploded, whereby she was injured. It is perhaps not an extravagant guess to suppose that the plaintiffs’ pleader had read the case of Langridge v. Levy. 2 M & W 519; 4 M & W 337 The jury found all the facts for the plaintiffs except the allegation of fraud; they were not satisfied that the defendant knew of the defects. The plaintiff Frederick had already recovered damages on the contract of sale for breach of the implied warranty of fitness. The declaration made no averment of negligence. Verdict was entered at the trial by Martin B. for the plaintiff, but with liberty to the defendant to move to enter the verdict for him. A rule having been obtained, plaintiff’s counsel sought to support the verdict on the ground that this was not an action for a breach of duty arising solely from contract, but for an injury resulting from conduct amounting to fraud. Parke B., who delivered the judgment of the Court, held that, fraud having been negatived, the action could not be maintained on that ground. He then went on to discuss cases in which a third person not a party to a contract may sue for damages sustained if it is broken. After dealing with the negligence of a surgeon, or of a carrier, or of a firm in breach of contract committing a nuisance on a highway, he deals with the case where any one delivers to another without notice an instrument in its nature dangerous, or under particular circumstances, as a loaded gun, and refers to Dixon v. Bell 5 M & S 198 , though what this case has to do with contract it is difficult to see. He then goes on: “But it would be going much too far to say that so much care is required in the ordinary intercourse of life between one individual and another, that, if a machine not in its nature dangerous — a carriage for instance — but which might become so by a latent defect entirely unknown although discoverable by the exercise of ordinary care, should be lent or given by one person, even by the person who manufactured it, to another, the former should be answerable to the latter for a subsequent damage accruing by the use of it.” It is worth noticing how guarded this dictum is. The case put is a machine such as a carriage, not in its nature dangerous, which might become dangerous by a latent defect entirely unknown. Then there is the saving, “although discoverable by the exercise of ordinary care,” discoverable by whom is not said; it may include the person to whom the innocent machine is “lent or given.” Then the dictum is confined to machines “lent or given” (a later sentence makes it clear that a distinction is intended between these words and “delivered to the purchaser under the contract of sale”), and the manufacturer is introduced for the first time, “even by the person who manufactured it.” I do not for a moment believe that Parke B. had in his mind such a case as a loaf negligently mixed with poison by the baker which poisoned a purchaser’s family. He is, in my opinion, confining his remarks primarily to cases where a person is seeking to rely upon a duty of care which arises out of a contract with a third party, and has never even discussed the case of a manufacturer negligently causing an article to be dangerous and selling it in that condition whether with immediate or mediate effect upon the consumer. It is noteworthy that he only refers to “letting or giving” chattels, operations known to the law, where the special relations thereby created have a particular bearing on the existence or non-existence of a duty to take care. Next in this chain of authority come George v. Skivington LR 5 Ex 1 and Heaven v. Pender 11 QB D 503 , which I have already discussed. The next case is Earl v. Lubbock. [1905] 1 KB 253 The plaintiff sued in the county court for personal injuries due to the negligence of the defendant. The plaintiff was a driver in the employ of a firm who owned vans. The defendant, a master wheelwright, had contracted with the firm to keep their vans in good and substantial repair. The allegation of negligence was that the defendant’s servant had negligently failed to inspect and repair a defective wheel, and had negligently repaired the wheel. The learned county court judge had held that the defendant owed no duty to the plaintiff, and the Divisional Court (Lord Alverstone L.C.J., Wills and Kennedy JJ.) and the Court of Appeal agreed with him. The Master of the Rolls, Sir R. Henn Collins, said that the case was concluded by Winterbottom v. Wright. 10 M & W 109 In other words, he must have treated the duty as alleged to arise only from a breach of contract; for, as has been pointed out, that was the only allegation in Winterbottom v. Wright 10 M & W 109 , negligence apart from contract being neither averred nor proved. It is true that he cites with approval the dicta of Lord Abinger in that case; but obviously I think his approval must be limited to those dicta so far as they related to the particular facts before the Court of Appeal, and to cases where, as Lord Abinger says, the law permits a contract to be turned into a tort. Stirling L.J., it is true, said that to succeed the plaintiff must bring his case within the proposition of the majority in Heaven v. Pender 11 QB D 503 , that any one who, without due warning, supplies to others for use an instrument which to his knowledge is in such a condition as to cause danger is liable for injury. I venture to think that the Lord Justice is mistakenly treating a proposition which applies one test of a duty as though it afforded the only criterion.
Mathew L.J. appears to me to put the case on its proper footing when he says [1905] 1 KB 259 the argument of the plaintiff was that the defendant’s servants had been negligent in the performance of the contract with the owners of the van, and that it followed as a matter of law that any one in this employment had a cause of action against the defendant. “It is impossible to accept such a wide proposition, and, indeed, it is difficult to see how, if it were the law, trade could be carried on.” I entirely agree. I have no doubt that in that case the plaintiff failed to show that the repairer owed any duty to him. The question of law in that case seems very different from that raised in the present case. The case of Blacker v. Lake & Elliot, Ld. 106 LT 533 , approaches more nearly the facts of this case. I have read and re-read it, having unfeigned respect for the authority of the two learned judges, Hamilton and Lush JJ., who decided it, and I am bound to say I have found difficulty in formulating the precise grounds upon which the judgment was given. The plaintiff had been injured by the bursting of a brazing lamp which he had bought from a shopkeeper who had bought it from the manufacturer, the defendant. The plaintiff had used the lamp for twelve months before the accident. The case was tried in the county court before that excellent lawyer the late Sir Howland Roberts. That learned judge had directed the jury that the plaintiff could succeed if the defendants had put upon the market a lamp not fit for use in the sense that a person working it with reasonable care would incur a risk which a properly constructed lamp would not impose upon him. The jury found that the lamp was defective by reason of an improper system of making an essential joint between the container and the vaporizer; that the defendants did not know that it was dangerous, but ought as reasonable men to have known it. Hamilton J. seems to have thought that there was no evidence of negligence in this respect. Lush J. expressly says so and implies — “I also think” — that Hamilton J. so thought. If so, the case resolves itself into a series of important dicta. Hamilton J. says 106 LT 536 that it has been decided in authorities from Winterbottom v. Wright 10 M & W 109 to Earl v. Lubbock [1905] 1 KB 253 that the breach of the defendants’ contract with A., to use care and skill in and about the manufacture or repair of an article, does not itself give any cause of action to B. when injured by the article proving to be defective in breach of that contract. He then goes on to say, how is the case of the plaintiffs any better when there is no contract proved of which there could be a breach. I think, with respect, that this saying does not give sufficient weight to the actual issues raised by the pleadings on which alone the older cases are an authority. If the issue raised was an alleged duty created by contract, it would have been irrelevant to consider duties created without reference to contract; and contract cases cease to be authorities for duties alleged to exist beyond or without contract. Moreover, it is a mistake to describe the authorities as dealing with the failure of care or skill in the manufacture of goods, as contrasted with repair. The only manufacturing case was Longmeid v. Holliday 6 Ex 761 , where negligence was not alleged. Hamilton J. recognizes that George v. Skivington LR 5 Ex 1 was a decision which, if it remained an authority, bound him. He says that, without presuming to say it was wrong, he cannot follow it, because it is in conflict with Winterbottom v. Wright. 10 M & W 109 I find this very difficult to understand, for George v. Skivington LR 5 Ex 1 was based upon a duty in the manufacturer to take care independently of contract, while Winterbottom v. Wright 10 M & W 109 was decided on demurrer in a case where the alleged duty was based solely on breach of a contractual duty to keep in repair, and no negligence was alleged. Lush J. says in terms that there are only three classes of cases in which a stranger to a contract can sue for injury by a defective chattel: one is that of fraud; the second of articles dangerous or noxious in themselves, where the duty is only to warn; the third of public nuisance. He does not bring the cases represented by Elliott v. Hall 15 QB D 315 (the defective coal wagon) within his classes at all. He says they belong to a totally different class, “where the control of premises or the management of a dangerous thing upon premises creates a duty.” I have already pointed out that this distinction is unfounded in fact, for in Elliott v. Hall 15 QB D 315 , as in Hawkins v. Smith 12 Times LR 532 (the defective sack), the defendant exercised no control over the article and the accident did not occur on his premises. With all respect, I think that the judgments in the case err by seeking to confine the law to rigid and exclusive categories, and by not giving sufficient attention to the general principle which governs the whole law of negligence in the duty owed to those who will be immediately injured by lack of care. The last case I need refer to is Bates v. Batey & Co., Ld. [1913] 3 KB 351 , where manufacturers of ginger-beer were sued by a plaintiff who had been injured by the bursting of a bottle of ginger-beer bought from a shopkeeper who had obtained it from the manufacturers. The manufacturers had bought the actual bottle from its maker, but were found by the jury to have been negligent in not taking proper means to discover whether the bottle was defective or not. Horridge J. found that a bottle of ginger-beer was not dangerous in itself, but this defective bottle was in fact dangerous; but, as the defendants did not know that it was dangerous, they were not liable, though by the exercise of reasonable care they could have discovered the defect. This case differs from the present only by reason of the fact that it was not the manufacturers of the ginger-beer who caused the defect in the bottle; but, on the assumption that the jury were right in finding a lack of reasonable care in not examining the bottle, I should have come to the conclusion that, as the manufacturers must have contemplated the bottle being handled immediately by the consumer, they owed a duty to him to take care that he should not be injured externally by explosion, just as I think they owed a duty to him to take care that he should not be injured internally by poison or other noxious thing. I do not find it necessary to discuss at length the cases dealing with duties where the thing is dangerous, or, in the narrower category, belongs to a class of things which are dangerous in themselves. I regard the distinction as an unnatural one so far as it is used to serve as a logical differentiation by which to distinguish the existence or non-existence of a legal right. In this respect I agree with what was said by Scrutton L.J. in Hodge & Sons v. Anglo-American Oil Co. (1922) 12 Ll LRep 183, 187 , a case which was ultimately decided on a question of fact. “Personally, I do not understand the difference between a thing dangerous in itself, as poison, and a thing not dangerous as a class, but by negligent construction dangerous as a particular thing. The latter, if anything, seems the more dangerous of the two; it is a wolf in sheep’s clothing instead of an obvious wolf.” The nature of the thing may very well call for different degrees of care, and the person dealing with it may well contemplate persons as being within the sphere of his duty to take care who would not be sufficiently proximate with less dangerous goods; so that not only the degree of care but the range of persons to whom a duty is owed may be extended. But they all illustrate the general principle. In the Dominion Natural Gas Co., Ld. v. Collins and Perkins [1909] AC 640, 646 the appellants had installed a gas apparatus and were supplying natural gas on the premises of a railway company. They had installed a regulator to control the pressure and their men negligently made an escape-valve discharge into the building instead of into the open air. The railway workmen — the plaintiffs — were injured by an explosion in the premises. The defendants were held liable. Lord Dunedin, in giving the judgment of the Judicial Committee (consisting of himself, Lord Macnaghten, Lord Collins, and Sir Arthur Wilson), after stating that there was no relation of contract between the plaintiffs and the defendants, proceeded: “There may be, however, in the case of anyone performing an operation, or setting up and installing a machine, a relationship of duty. What that duty is will vary according to the subject-matter of the things involved. It has, however, again and again been held that in the case of articles dangerous in themselves, such as loaded firearms, poisons, explosives, and other things ejusdem generis, there is a peculiar duty to take precaution imposed upon those who send forth or install such articles when it is necessarily the case that other parties will come within their proximity.” This, with respect, exactly sums up the position. The duty may exist independently of contract. Whether it exists or not depends upon the subject-matter involved; but clearly in the class of things enumerated there is a special duty to take precautions. This is the very opposite of creating a special category in which alone the duty exists. I may add, though it obviously would make no difference in the creation of a duty, that the installation of an apparatus to be used for gas perhaps more closely resembles the manufacture of a gun than a dealing with a loaded gun. In both cases the actual work is innocuous; it is only when the gun is loaded or the apparatus charged with gas that the danger arises. I do not think it necessary to consider the obligation of a person who entrusts to a carrier goods which are dangerous or which he ought to know are dangerous. As far as the direct obligation of the consignor to the carrier is concerned, it has been put upon an implied warranty: Brass v. Maitland (1856) 6 E & B 470 ; but it is also a duty owed independently of contract, e.g., to the carrier’s servant: Farrant v. Barnes. (1862) 11 CB (NS) 553, 563 So far as the cases afford an analogy they seem to support the proposition now asserted. I need only mention to distinguish two cases in this House which are referred to in some of the cases which I have reviewed. Caledonian Ry. Co. v. Mulholland or Warwick [1898] AC 216 , in which the appellant company were held not liable for injuries caused by a defective brake on a coal wagon conveyed by the railway company to a point in the transit where their contract ended, and where the wagons were taken over for haulage for the last part of the journey by a second railway company, on which part the accident happened. It was held that the first railway company were under no duty to the injured workmen to examine the wagon for defects at the end of their contractual haulage. There was ample opportunity for inspection by the second railway company. The relations were not proximate. In the second (Cavalier v. Pope [1906] AC 428 ), the wife of the tenant of a house let unfurnished sought to recover from the landlord damages for personal injuries arising from the non-repair of the house, on the ground that the landlord had contracted with her husband to repair the house. It was held that the wife was not a party to the contract, and that the well known absence of any duty in respect of the letting an unfurnished house prevented her from relying on any cause of action for negligence.
In the most recent case (Bottomley v. Bannister [1932] 1 KB 458; (1932) 101 LJ (KB) 46, 54 ), an action under Lord Campbell’s Act, the deceased man, the father of the plaintiff, had taken an unfurnished house from the defendants, who had installed a gas boiler with a special gas-burner which if properly regulated required no flue. The deceased and his wife were killed by fumes from the apparatus. The case was determined on the gound that the apparatus was part of the realty and that the landlord did not know of the danger; but there is a discussion of the case on the supposition that it was a chattel. Greer L.J. states with truth that it is not easy to reconcile all the authorities, and that there is no authority binding on the Court of Appeal that a person selling an article which he did not know to be dangerous can be held liable to a person with whom he has made no contract by reason of the fact that reasonable inquiries might have enabled him to discover that the article was in fact dangerous. When the danger is in fact occasioned by his own lack of care, then in cases of a proximate relationship the present case will, I trust, supply the deficiency.
It is always a satisfaction to an English lawyer to be able to test his application of fundamental principles of the common law by the development of the same doctrines by the lawyers of the Courts of the United States. In that country I find that the law appears to be well established in the sense in which I have indicated. The mouse had emerged from the ginger-beer bottle in the United States before it appeared in Scotland, but there it brought a liability upon the manufacturer. I must not in this long judgment do more than refer to the illuminating judgment of Cardozo J. in MacPherson v. Buick Motor Co. in the New York Court of Appeals 217 NY 382 , in which he states the principles of the law as I should desire to state them, and reviews the authorities in other States than his own. Whether the principle he affirms would apply to the particular facts of that case in this country would be a question for consideration if the case arose. It might be that the course of business, by giving opportunities of examination to the immediate purchaser or otherwise, prevented the relation between manufacturer and the user of the car being so close as to create a duty. But the American decision would undoubtedly lead to a decision in favour of the pursuer in the present case.
My Lords, if your Lordships accept the view that this pleading discloses a relevant cause of action you will be affirming the proposition that by Scots and English law alike a manufacturer of products, which he sells in such a form as to show that he intends them to reach the ultimate consumer in the form in which they left him with no reasonable possibility of intermediate examination, and with the knowledge that the absence of reasonable care in the preparation or putting up of the products will result in an injury to the consumer’s life or property, owes a duty to the consumer to take that reasonable care.
It is a proposition which I venture to say no one in Scotland or England who was not a lawyer would for one moment doubt. It will be an advantage to make it clear that the law in this matter, as in most others, is in accordance with sound common sense. I think that this appeal should be allowed.
LORD TOMLIN. My Lords, I have had an opportunity of considering the opinion (which I have already read) prepared by my noble and learned friend, Lord Buckmaster. As the reasoning of that opinion and the conclusions reached therein accord in every respect with my own views, I propose to say only a few words.
First, I think that if the appellant is to succeed it must be upon the proposition that every manufacturer or repairer of any article is under a duty to every one who may thereafter legitimately use the article to exercise due care in the manufacture or repair. It is logically impossible to stop short of this point. There can be no distinction between food and any other article. Moreover, the fact that an article of food is sent out in a sealed container can have no relevancy on the question of duty; it is only a factor which may render it easier to bring negligence home to the manufacturer.
Secondly, I desire to say that in my opinion the decision in Winterbottom v. Wright 10 M & W 109 is directly in point against the appellant.
The examination of the report makes it, I think, plain (1.) that negligence was alleged and was the basis of the claim, and (2.) that the wide proposition which I have indicated was that for which the plaintiff was contending.
The declaration averred (inter alia) that the defendant “so improperly and negligently conducted himself” that the accident complained of happened.
The plaintiff’s counsel said: “Here the declaration alleges the accident to have happened through the defendant’s negligence and want of care.”
The alarming consequences of accepting the validity of this proposition were pointed out by the defendant’s counsel, who said: “For example, every one of the sufferers by such an accident as that which recently happened on the Versailles Railway might have his action against the manufacturer of the defective axle.”
That the action, which was in case, embraced a cause of action in tort is, I think, implicit in its form, and appears from the concluding sentence of Lord Abinger’s judgment, which was in these terms: “By permitting this action, we should be working this injustice, that after the defendant had done everything to the satisfaction of his employer, and after all matters between them had been adjusted and all accounts settled on the footing of their contract, we should subject them to be ripped open by this action of tort being brought against him.”
I will only add to what has been already said by my noble and learned friend, Lord Buckmaster, with regard to the decisions and dicta relied upon by the appellant and the other relevant reported cases, that I am unable to explain how the cases of dangerous articles can have been treated as “exceptions” if the appellant’s contention is well founded. Upon the view which I take of the matter the reported cases — some directly, others impliedly — negative the existence as part of the common law of England of any principle affording support to the appellant’s claim, and therefore there is, in my opinion, no material from which it is legitimate for your Lordships House to deduce such a principle.
LORD THANKERTON. My Lords, in this action the appellant claims reparation from the respondent in respect of illness and other injurious effects resulting from the presence of a decomposed snail in a bottle of ginger-beer, alleged to have been manufactured by the respondent, and which was partially consumed by her, it having been ordered by a friend on her behalf in a café in Paisley.
The action is based on negligence, and the only question in this appeal is whether, taking the appellant’s averments pro veritate, they disclose a case relevant in law so as to entitle her to have them remitted for proof. The Lord Ordinary allowed a proof, but on a reclaiming note for the respondent the Second Division of the Court of Session recalled the Lord Ordinary’s interlocutor and dismissed the action, following their decision in the recent cases of Mullen v. Barr & Co. and M’Gowan v. Barr & Co. 1929 SC 461
The appellant’s case is that the bottle was sealed with a metal cap, and was made of dark opaque glass, which not only excluded access to the contents before consumption, if the contents were to retain their aerated condition, but also excluded the possibility of visual examination of the contents from outside; and that on the side of the bottle there was pasted a label containing the name and address of the respondent, who was the manufacturer. She states that the shopkeeper, who supplied the ginger-beer, opened it and poured some of its contents into a tumbler, which contained some ice-cream, and that she drank some of the contents of the tumbler; that her friend then lifted the bottle and was pouring the remainder of the contents into the tumbler when a snail, which had been, unknown to her, her friend, or the shopkeeper, in the bottle, and was in a state of decomposition, floated out of the bottle.
The duties which the appellant accuses the respondent of having neglected may be summarized as follows: (a) That the ginger-beer was manufactured by the respondent or his servants to be sold as an article of drink to members of the public (including the appellant), and that accordingly it was his duty to exercise the greatest care in order that snails would not get into the bottles, render the ginger-beer dangerous and harmful, and be sold with the ginger-beer; (b) a duty to provide a system of working his business which would not allow snails to get into the sealed bottles, and in particular would not allow the bottles when washed to stand in places to which snails had access; (c) a duty to provide an efficient system of inspection which would prevent snails from getting into the sealed bottles; and (d) a duty to provide clear bottles so as to facilitate the said system of inspection.
There can be no doubt, in my opinion, that equally in the law of Scotland and of England it lies upon the party claiming redress in such a case to show that there was some relation of duty between her and the defender which required the defender to exercise due and reasonable care for her safety. It is not at all necessary that there should be any direct contract between them, because the action is not based upon contract, but upon negligence; but it is necessary for the pursuer in such an action to show there was a duty owed to her by the defender, because a man cannot be charged with negligence if he has no obligation to exercise diligence: Kemp & Dougall v. Darngavil Coal Co. 1909 SC 1314, 1319 , per Lord Kinnear; see also Clelland v. Robb 1911 SC 253, 256 , per Lord President Dunedin and Lord Kinnear. The question in each case is whether the pursuer has established, or in the stage of the present appeal has relevantly averred, such facts as involve the existence of such a relation of duty.
We are not dealing here with a case of what is called an article per se dangerous, or one which was known by the defender to be dangerous, in which cases a special duty of protection or adequate warning is placed upon the person who uses or distributes it. The present case is that of a manufacturer and a consumer, with whom he has no contractual relation, of an article which the manufacturer did not know to be dangerous, and, unless the consumer can establish a special relationship with the manufacturer, it is clear, in my opinion, that neither the law of Scotland nor the law of England will hold that the manufacturer has any duty towards the consumer to exercise diligence. In such a case the remedy of the consumer, if any, will lie against the intervening party from whom he has procured the article. I am aware that the American Courts, in the decisions referred to by my noble and learned friend, Lord Macmillan, have taken a view more favourable to the consumer.
The special circumstances from which the appellant claims that such a relationship of duty should be inferred may, I think, be stated thus — namely, that the respondent, in placing his manufactured article of drink upon the market, has intentionally so excluded interference with, or examination of, the article by any intermediate handler of the goods between himself and the consumer that he has, of his own accord, brought himself into direct relationship with the consumer, with the result that the consumer is entitled to rely upon the exercise of diligence by the manufacturer to secure that the article shall not be harmful to the consumer. If that contention be sound, the consumer, on her showing that the article has reached her intact and that she has been injured by the harmful nature of the article, owing to the failure of the manufacturer to take reasonable care in its preparation prior to its enclosure in the sealed vessel, will be entitled to reparation from the manufacturer.
In my opinion, the existence of a legal duty under such circumstances is in conformity with the principles of both the law of Scotland and of the law of England. The English cases demonstrate how impossible it is to catalogue finally, amid the ever varying types of human relationships, those relationships in which a duty to exercise care arises apart from contract, and each of these cases relates to its own set of circumstances, out of which it was claimed that the duty had arisen. In none of these cases were the circumstances identical with the present case as regards that which I regard as the essential element in this case — namely, the manufacturer’s own action in bringing himself into direct relationship with the party injured. I have had the privilege of considering the discussion of these authorities by my noble and learned friend, Lord Atkin, in the judgment which he has just delivered, and I so entirely agree with it that I cannot usefully add anything to it.
An interesting illustration of similar circumstances is to be found in Gordon v. M’Hardy (1903) 6 F 210 , in which the pursuer sought to recover damages from a retail grocer on account of the death of his son by ptomaine poisoning, caused by eating tinned salmon purchased from the defender. The pursuer averred that the tin, when sold, was dented, but he did not suggest that the grocer had cut through the metal and allowed air to get in, or had otherwise caused injury to the contents. The action was held irrelevant, the Lord Justice-Clerk remarking: “I do not see how the defender could have examined the tin of salmon which he is alleged to have sold without destroying the very condition which the manufacturer had established in order to preserve the contents, the tin not being intended to be opened until immediately before use.” Apparently in that case the manufacturers’ label was off the tin when sold, and they had not been identified. I should be sorry to think that the meticulous care of the manufacturer to exclude interference or inspection by the grocer in that case should relieve the grocer of any responsibility to the consumer without any corresponding assumption of duty by the manufacturer.
My Lords, I am of opinion that the contention of the appellant is sound, and that she has relevantly averred a relationship of duty as between the respondent and herself, as also that her averments of the respondent’s neglect of that duty are relevant.
The cases of Mullen and M’Gowan 1929 SC 461 , which the learned judges of the Second Division followed in the present case, related to facts similar in every respect except that the foreign matter was a decomposed mouse. In these cases the same Court (Lord Hunter dissenting) held that the manufacturer owed no duty to the consumer. The view of the majority was that the English authorities excluded the existence of such a duty, but Lord Ormidale 1929 SC 471 would otherwise have been prepared to come to a contrary conclusion. Lord Hunter’s opinion seems to be in conformity with the view I have expressed above.
My conclusion rests upon the facts averred in this case and would apparently also have applied in the cases of Mullen and M’Gowan 1929 SC 461 , in which, however, there had been a proof before answer, and there was also a question whether the pursuers had proved their averments.
I am therefore of opinion that the appeal should be allowed and the case should be remitted for proof, as the pursuer did not ask for an issue.
LORD MACMILLAN. My Lords, the incident which in its legal bearings your Lordships are called upon to consider in this appeal was in itself of a trivial character, though the consequences to the appellant, as she describes them, were serious enough. It appears from the appellant’s allegations that on an evening in August, 1928, she and a friend visited a café in Paisley, where her friend ordered for her some ice-cream and a bottle of ginger-beer. These were supplied by the shopkeeper, who opened the ginger-beer bottle and poured some of the contents over the ice-cream, which was contained in a tumbler. The appellant drank part of the mixture, and her friend then proceeded to pour the remaining contents of the bottle into the tumbler. As she was doing so a decomposed snail floated out with the ginger-beer. In consequence of her having drunk part of the contaminated contents of the bottle the appellant alleges that she contracted a serious illness. The bottle is stated to have been of dark opaque glass, so that the condition of the contents could not be ascertained by inspection, and to have been closed with a metal cap, while on the side was a label bearing the name of the respondent, who was the manufacturer of the ginger-beer of which the shopkeeper was merely the retailer.
The allegations of negligence on which the appellant founds her action against the respondent may be shortly summarized. She says that the ginger-beer was manufactured by the respondent for sale as an article of drink to members of the public, including herself; that the presence of a decomposing snail in ginger-beer renders the ginger-beer harmful and dangerous to those consuming it; and that it was the duty of the respondent to exercise his process of manufacture with sufficient care to prevent snails getting into or remaining in the bottles which he filled with ginger-beer. The appellant attacks the respondent’s system of conducting his business, alleging that he kept his bottles in premises to which snails had access, and that he failed to have his bottles properly inspected for the presence of foreign matter before he filled them.
The respondent challenged the relevancy of the appellant’s averments, and taking them pro veritate, as for this purpose he was bound to do, pleaded that they disclosed no ground of legal liability on his part to the appellant.
The Lord Ordinary repelled the respondent’s plea to the relevancy and allowed the parties a proof of their averments, but on a reclaiming note their Lordships of the Second Division (Lord Hunter dissenting, or, perhaps more accurately, protesting) dismissed the action, and in doing so followed their decision in the previous cases of Mullen v. Barr & Co. and M’Gowan v. Barr & Co. 1929 SC 461 The only difference in fact between those cases and the present case is that it was a mouse and not a snail which was found in the ginger-beer. The present appeal is consequently in effect against the decision in these previous cases, which I now proceed to examine.
The two cases, being to all intents and purposes identical, were heard and decided together. In Mullen v. Barr & Co. 1929 SC 461 the Sheriff-Substitute allowed a proof, but the Sheriff, on appeal, dismissed the action as irrelevant. In M’Gowan v. Barr & Co. 1929 SC 461 the Sheriff-Substitute allowed a proof and the Sheriff altered his interlocutor by allowing a proof before answer — that is to say, a proof under reservation of all objections to the relevancy of the action. On the cases coming before the Second Division on the appeals of the pursuer and the defenders respectively their Lordships ordered a proof before answer in each case, and the evidence was taken before Lord Hunter. It will be sufficient to refer to Mullen’s case 1929 SC 461 , in which their Lordships gave their reasons for assoilzieing the defenders in both cases. The Lord Justice-Clerk held that negligence had not been proved, and therefore did not pronounce upon the question of relevancy. Lord Ormidale held that there was no relevant case against the defenders, but would have been prepared, if necessary, to hold that in any case negligence had not been established by the evidence. Lord Hunter held that the case was relevant and that negligence had been proved. Lord Anderson held that the pursuer had no case in law against the defenders, but that if this view was erroneous negligence had not been proved.
I desire to draw special attention to certain passages in the opinions of their Lordships. The learned Lord Justice-Clerk states 1929 SC 470 that he prefers “to base his judgment on the proposition that the pursuer has failed to prove fault on the part of the defenders,” and feels “absolved from expressing a concluded opinion on the thorny and difficult question of law whether, assuming fault to be proved on the part of the defenders, the pursuer has in law a right to sue them.” In the present case his Lordship, after pointing out that he had formally reserved his opinion on the point in Mullen v. Barr & Co. 1929 SC 461 , proceeds: “I think I indicated, not obscurely, the view which I entertained on a perusal of the English cases,” and to that view, in deference to the English cases which his Lordship has reconsidered, he has given effect adversely to the present appellant. That the opinions of the majority of the judges of the Second Division in Mullen’s case 1929 SC 461 on the question of relevancy are founded entirely on their reading of the series of English cases cited to them is made clear by Lord Ormidale. After stating the questions in the case, the first being “whether, in the absence of any contractual relation between the pursuers and the defenders, the latter owed a duty to the pursuers, as the consumers of the beer, of taking precautions to see that nothing of a poisonous or deleterious nature was allowed to enter and remain in the bottles,” his Lordship proceeds: “I recognize the difficulty of determining the first of these questions with either confidence or satisfaction; and were it not for the unbroken and consistent current of decisions beginning with Winterbottom v. Wright 10 M & W 109 , to which we were referred, I should have been disposed to answer it in the affirmative. The evidence shows that the greatest care is taken by the manufacturers to ensure by tab and label that the ginger-beer should pass, as it were, from the hand of the maker to the hand of the ultimate user uninterfered with by the retail dealer — who has little interest in, and no opportunity of, examining the contents of the containers. Accordingly it would appear to be reasonable and equitable to hold that, in the circumstances and apart altogether from contract, there exists a relationship of duty as between the maker and the consumer of the beer. Such considerations, however, as I read the authorities, have been held to be irrelevant in analogous circumstances.” Lord Ormidale thus finds himself constrained to reach a conclusion which appears to him to be contrary to reason and equity by his reading of what he describes as an “unbroken and consistent current of decisions beginning with Winterbottom v. Wright.” 10 M & W 109 In view of the deference thus paid to English precedents, it is a singular fact that the case of Winterbottom v. Wright 10 M & W 109 is one in which no negligence in the sense of breach of a duty owed by the defendant to the plaintiff was alleged on the part of the plaintiff. The truth, as I hope to show, is that there is in the English reports no such “unbroken and consistent current of decisions” as would justify the aspersion that the law of England has committed itself irrevocably to what is neither reasonable nor equitable, or require a Scottish judge in following them to do violence to his conscience. “In my opinion,” said Lord Esher, in Emmens v. Pottle (1885) 16 QB D 354, 357, 358 , “any proposition the result of which would be to show that the common law of England is wholly unreasonable and unjust, cannot be part of the common law of England.”
At your Lordships’ Bar counsel for both parties to the present appeal, accepting, as I do also, the view that there is no distinction between the law of Scotland and the law of England in the legal principles applicable to the case, confined their arguments to the English authorities. The appellant endeavoured to establish that according to the law of England the pleadings disclose a good cause of action; the respondent endeavoured to show that on the English decisions the appellant had stated no admissible case. I propose therefore to address myself at once to an examination of the relevant English precedents.
I observe, in the first place, that there is no decision of this House upon the point at issue, for I agree with Lord Hunter that such cases as Cavalier v. Pope [1906] AC 428 and Cameron v. Young [1908] AC 176; 1908 SC (HL) 7 , which decided that “a stranger to a lease cannot found upon a landlord’s failure to fulfil obligations undertaken by him under contract with his lessee,” are in a different chapter of the law. Nor can it by any means be said that the cases present “an unbroken and consistent current” of authority, for some flow one way and some the other.
It humbly appears to me that the diversity of view which is exhibited in such cases as George v. Skivington LR 5 Ex 1 on the one hand and Blacker v. Lake & Elliot, Ld. 106 LT 533 , on the other hand — to take two extreme instances — is explained by the fact that in the discussion of the topic which now engages your Lordships’ attention two rival principles of the law find a meeting place where each has contended for supremacy. On the one hand, there is the well established principle that no one other than a party to a contract can complain of a breach of that contract. On the other hand, there is the equally well established doctrine that negligence apart from contract gives a right of action to the party injured by that negligence — and here I use the term negligence, of course, in its technical legal sense, implying a duty owed and neglected. The fact that there is a contractual relationship between the parties which may give rise to an action for breach of contract, does not exclude the co-existence of a right of action founded on negligence as between the same parties, independently of the contract, though arising out of the relationship in fact brought about by the contract. Of this the best illustration is the right of the injured railway passenger to sue the railway company either for breach of the contract of safe carriage or for negligence in carrying him. And there is no reason why the same set of facts should not give one person a right of action in contract and another person a right of action in tort. I may be permitted to adopt as my own the language of a very distinguished English writer on this subject. “It appears,” says Sir Frederick Pollock, Law of Torts, 13th ed., p. 570, “that there has been (though perhaps there is no longer) a certain tendency to hold that facts which constitute a contract cannot have any other legal effect. The authorities formerly relied on for this proposition really proved something different and much more rational, namely, that if A. breaks his contract with B. (which may happen without any personal default in A. or A.’s servants), that is not of itself sufficient to make A. liable to C., a stranger to the contract, for consequential damage. This, and only this, is the substance of the perfectly correct decisions of the Court of Exchequer in Winterbottom v. Wright 10 M & W 109 and Longmeid v. Holliday. 6 Ex 761 In each case the defendant delivered, under a contract of sale or hiring, a chattel which was in fact unsafe to use, but in the one case it was not alleged, in the other was alleged but not proved, to have been so to his knowledge. In each case a stranger to the contract, using the chattel — a coach in the one case, a lamp in the other — in the ordinary way, came to harm through its dangerous condition, and was held not to have any cause of action against the purveyor. Not in contract, for there was no contract between these parties; not in tort, for no bad faith or negligence on the defendant’s part was proved.”
Where, as in cases like the present, so much depends upon the avenue of approach to the question, it is very easy to take the wrong turning. If you begin with the sale by the manufacturer to the retail dealer, then the consumer who purchases from the retailer is at once seen to be a stranger to the contract between the retailer and the manufacturer and so disentitled to sue upon it. There is no contractual relation between the manufacturer and the consumer; and thus the plaintiff, if he is to succeed, is driven to try to bring himself within one or other of the exceptional cases where the strictness of the rule that none but a party to a contract can found on a breach of that contract has been mitigated in the public interest, as it has been in the case of a person who issues a chattel which is inherently dangerous or which he knows to be in a dangerous condition. If, on the other hand, you disregard the fact that the circumstances of the case at one stage include the existence of a contract of sale between the manufacturer and the retailer, and approach the question by asking whether there is evidence of carelessness on the part of the manufacturer, and whether he owed a duty to be careful in a question with the party who has been injured in consequence of his want of care, the circumstance that the injured party was not a party to the incidental contract of sale becomes irrelevant, and his title to sue the manufacturer is unaffected by that circumstance. The appellant in the present instance asks that her case be approached as a case of delict, not as a case of breach of contract. She does not require to invoke the exceptional cases in which a person not a party to a contract has been held to be entitled to complain of some defect in the subject-matter of the contract which has caused him harm. The exceptional case of things dangerous in themselves, or known to be in a dangerous condition, has been regarded as constituting a peculiar category outside the ordinary law both of contract and of tort. I may observe that it seems to me inaccurate to describe the case of dangerous things as an exception to the principle that no one but a party to a contract can sue on that contract. I rather regard this type of case as a special instance of negligence where the law exacts a degree of diligence so stringent as to amount practically to a guarantee of safety.
With these preliminary observations I turn to the series of English cases which is said to compose the consistent body of authority on which we are asked to nonsuit the appellant. It will be found that in most of them the facts were very different from the facts of the present case, and did not give rise to the special relationship, and consequent duty, which in my opinion is the deciding factor here. Dixon v. Bell 5 M & S 198 is the starting-point. There a maid-servant was sent to fetch a gun from a neighbour’s house; on the way back she pointed it at a child, and the gun went off and injured the child. The owner of the gun was held liable for the injury to the child on the ground that he should have seen that the charge was drawn before he entrusted the gun to the maidservant. “It was incumbent on him who, by charging the gun, had made it capable of doing mischief, to render it safe and innoxious.” This case, in my opinion, merely illustrates the high degree of care, amounting in effect to insurance against risk, which the law extracts from those who take the responsibility of giving out such dangerous things as loaded firearms. The decision, if it has any relevance, is favourable to the appellant, who submits that human drink rendered poisonous by careless preparation may be as dangerous to life as any loaded firearm. Langridge v. Levy 2 M & W 519; 4 M & W 337 is another case of a gun, this time of defective make and known to the vendor to be defective. The purchaser’s son was held entitled to sue for damages in consequence of injuries sustained by him through the defective condition of the gun causing it to explode. The ground of the decision seems to have been that there was a false representation by the vendor that the gun was safe, and the representation appears to have been held to extend to the purchaser’s son. The case is treated by commentators as turning on its special circumstances, and as not deciding any principle of general application. As for Winterbottom v. Wright 10 M & W 109 and Longmeid v. Holliday 6 Ex 761 , neither of these cases is really in point, for the reason indicated in the passage from Sir Frederick Pollock’s treatise which I have quoted above. Then comes George v. Skivington LR 5 Ex 1 , which is entirely in favour of the appellant’s contention. There was a sale in that case by a chemist of some hairwash to a purchaser for the use of his wife, who suffered injury from using it by reason of its having been negligently compounded. As Kelly C.B. points out, the action was not founded on any warranty implied in the contract of sale between the vendor and the purchaser; and the plaintiff, the purchaser’s wife, was not seeking to sue on the contract to which she was not a party. The question, as the Chief Baron stated it, was “whether the defendant, a chemist, compounding the article sold for a particular purpose, and knowing of the purpose for which it was bought, is liable in an action on the case for unskilfulness and negligence in the manufacture of it whereby the person who used it was injured.” And this question the Court unanimously answered in the affirmative. I may mention in passing that Lord Atkinson in this House, speaking of that case and of Langridge v. Levy 2 M & W 519; 4 M & W 337 , observed that: “In both these latter cases the defendant represented that the article sold was fit and proper for the purposes for which it was contemplated that it should be used and the party injured was ignorant of its unfitness for these purposes”: Cavalier v. Pope. [1906] AC at p 433 It is true that George v. Skivington LR 5 Ex 1 has been the subject of some criticism, and was said by Hamilton J., as he then was, in Blacker v. Lake & Elliot, Ld. 106 LT 533 , to have been in later cases as nearly disaffirmed as is possible without being expressly overruled. I am not sure that it has been so severely handled as that. At any rate I do not think that it deserved to be, and certainly, so far as I am aware, it has never been disapproved in this House.
Heaven v. Pender 11 QB D 503 has probably been more quoted and discussed in this branch of the law than any other authority, because of the dicta of Brett M.R., as he then was, on the general principles regulating liability to third parties. In his opinion “it may, therefore, safely be affirmed to be a true proposition” that “whenever one person is by circumstances placed in such a position with regard to another, that everyone of ordinary sense who did think would at once recognize that if he did not use ordinary care and skill in his own conduct with regard to those circumstances he would cause danger of injury to the person or property of the other, a duty arises to use ordinary care and skill to avoid such danger.” The passage specially applicable to the present case is as follows 11 QB D 510 : “Whenever one person supplies goods …. for the purpose of their being used by another person under such circumstances that everyone of ordinary sense would, if he thought, recognize at once that, unless he used ordinary care and skill with regard to the condition of the thing supplied or the mode of supplying it, there will be danger of injury to the person or property of him for whose use the thing is supplied, and who is to use it, a duty arises to use ordinary care and skill as to the condition or manner of supplying such thing. And for a neglect of such ordinary care or skill whereby injury happens a legal liability arises to be enforced by an action for negligence.” Cotton L.J., with whom Bowen L.J. agreed, expressed himself 11 QB D 516 as “unwilling to concur with the Master of the Rolls in laying down unnecessarily the larger principle which he entertains, inasmuch as there are many cases in which the principle was impliedly negatived,” but the decision of the Court of Appeal was unanimously in the plaintiff’s favour. The passages I have quoted, like all attempts to formulate principles of law compendiously and exhaustively, may be open to some criticism, and their universality may require some qualification, but as enunciations of general legal doctrine I am prepared, like Lord Hunter, to accept them as sound guides. I now pass to the three modern cases of Earl v. Lubbock [1905] 1 KB 253 ; Blacker v. Lake & Elliot, Ld. 106 LT 533, 537 ; and Bates v. Batey & Co., Ld. [1913] 3 KB 351 The first of these cases related to a van which had recently been repaired by the defendant under contract with the owner of the van. A driver in the employment of the owner was injured in consequence of a defect in the van which was said to be due to the careless manner in which the repairer had done his work. It was held that the driver had no right of action against the repairer. The case turns upon the rule that a stranger to a contract cannot found an action of tort on a breach of that contract. It was pointed out that there was no evidence that the plaintiff had been invited by the defendant to use the van, and the van owner was not complaining of the way in which the van had been repaired. The negligence, if negligence there was, was too remote, and the practical consequences of affirming liability in such a case were considered to be such as would render it difficult to carry on a trade at all. “No prudent man,” says Mathew L.J., “would contract to make or repair what the employers intended to permit others to use in the way of his trade.” The species facti in that case seems to me to differ widely from the circumstances of the present case, where the manufacturer has specifically in view the use and consumption of his products by the consumer, and where the retailer is merely the vehicle of transmission of the products to the consumer, and by the nature of the products is precluded from inspecting or interfering with them in any way. The case of Blacker v. Lake & Elliot, Ld. 106 LT 533, 537 , is of importance because of the survey of previous decisions which it contains. It related to a brazing lamp which, by exploding owing to a latent defect, injured a person other than the purchaser of it, and the vendor was held not liable to the party injured. There appears to have been some difference of opinion between Hamilton J. and Lush J., who heard the case in the Divisional Court, as to whether the lamp was an inherently dangerous thing. The case seems to have turned largely on the question whether, there being a contract of sale of the lamp between the vendor and the purchaser, the article was of such a dangerous character as to impose upon the vendor, in a question with a third party, any responsibility for its condition. This question was answered in the negative. So far as negligence was concerned, it may well have been regarded as too remote, for I find that Hamilton J. used these words: “In the present case all that can be said is that the defendants did not know that their lamp was not perfectly safe, and had no reason to believe that it was not so, in the sense that no one had drawn their attention to the fact, but that had they been wiser men or more experienced engineers they would then have known what the plaintiff’s experts say that they ought to have known.” I should doubt indeed if that is really a finding of negligence at all. The case on its facts is very far from the present one; and if any principle of general application can be derived from it adverse to the appellant’s contention, I should not be disposed to approve of such principle. I may add that in White v. Steadman [1913] 3 KB 340, 348 I find that Lush J., who was a party to the decision in Blacker v. Lake & Elliot, Ld. 106 LT 533 , expressed the view “that a person who has the means of knowledge and only does not know that the animal or chattel which he supplies is dangerous because he does not take ordinary care to avail himself of his opportunity of knowledge is in precisely the same position as the person who knows.” As for Bates v. Batey & Co., Ld. [1913] 3 KB 351 , where a ginger-beer bottle burst, owing to a defect in it which, though unknown to the manufacturer of the ginger-beer, could have been discovered by him by the exercise of reasonable care, Horridge J. there held that the plaintiff, who bought the bottle of ginger-beer from a retailer to whom the manufacturer had sold it, and who was injured by its explosion, had no right of action against the manufacturer. The case does not advance matters, for it really turns upon the fact that the manufacturer did not know that the bottle was defective, and this, in the view of Horridge J., as he read the authorities, was enough to absolve the manufacturer. I would observe that, in a true case of negligence, knowledge of the existence of the defect causing damage is not an essential element at all.
This summary survey is sufficient to show, what more detailed study confirms, that the current of authority has by no means always set in the same direction. In addition to George v. Skivington LR 5 Ex 1 there is the American case of Thomas v. Winchester 6 NY 397 , which has met with considerable acceptance in this country and which is distinctly on the side of the appellant. There a chemist carelessly issued, in response to an order for extract of dandelion, a bottle containing belladonna which he labelled extract of dandelion, with the consequence that a third party who took a dose from the bottle suffered severely. The chemist was held responsible. This case is quoted by Lord Dunedin, in giving the judgment of the Privy Council in Dominion Natural Gas Co. v. Collins & Perkins [1909] AC 640 , as an instance of liability to third parties, and I think it was a sound decision.
In the American Courts the law has advanced considerably in the development of the principle exemplified in Thomas v. Winchester. 6 NY 397 In one of the latest cases in the United States, MacPherson v. Buick Motor Co. 217 NY 382 , the plaintiff, who had purchased from a retailer a motor-car manufactured by the defendant company, was injured in consequence of a defect in the construction of the car, and was held entitled to recover damages from the manufacturer. Cardozo J., the very eminent Chief Judge of the New York Court of Appeals and now an Associate Justice of the United States Supreme Court, thus stated the law 217 NY 385 : “There is no claim that the defendant knew of the defect and wilfully concealed it …… The charge is one, not of fraud, but of negligence. The question to be determined is whether the defendant owed a duty of care and vigilance to anyone but the immediate purchaser …… The principle of Thomas v. Winchester 6 NY 397 is not limited to poisons, explosives, and things of like nature, to things which in their normal operation are implements of destruction. If the nature of a thing is such that it is reasonably certain to place life and limb in peril when negligently made, it is then a thing of danger. Its nature gives warning of the consequences to be expected. If to the element of danger there is added knowledge that the thing will be used by persons other than the purchaser and used without new tests, then, irrespective of contract, the manufacturer of this thing of danger is under a duty to make it carefully. That is as far as we are required to go for the decision of this case. There must be knowledge of a danger, not merely possible, but probable …… There must also be knowledge that in the usual course of events the danger will be shared by others than the buyer. Such knowledge may often be inferred from the nature of the transaction …… The dealer was indeed the one person of whom it might be said with some approach to certainty that by him the car would not be used. Yet the defendant would have us say that he was the one person whom it [the defendant company] was under a legal duty to protect. The law does not lead us to so inconsequent a conclusion.”
The prolonged discussion of English and American cases into which I have been led might well dispose your Lordships to think that I had forgotten that the present is a Scottish appeal which must be decided according to Scots law. But this discussion has been rendered inevitable by the course of the argument at your Lordships’ Bar, which, as I have said, proceeded on the footing that the law applicable to the case was the same in England and Scotland. Having regard to the inconclusive state of the authorities in the Courts below and to the fact that the important question involved is now before your Lordships for the first time, I think it desirable to consider the matter from the point of view of the principles applicable to this branch of law which are admittedly common to both English and Scottish jurisprudence.
The law takes no cognizance of carelessness in the abstract. It concerns itself with carelessness only where there is a duty to take care and where failure in that duty has caused damage. In such circumstances carelessness assumes the legal quality of negligence and entails the consequences in law of negligence. What, then, are the circumstances which give rise to this duty to take care? In the daily contacts of social and business life human beings are thrown into, or place themselves in, an infinite variety of relations with their fellows; and the law can refer only to the standards of the reasonable man in order to determine whether any particular relation gives rise to a duty to take care as between those who stand in that relation to each other. The grounds of action may be as various and manifold as human errancy; and the conception of legal responsibility may develop in adaptation to altering social conditions and standards. The criterion of judgment must adjust and adapt itself to the changing circumstances of life. The categories of negligence are never closed. The cardinal principle of liability is that the party complained of should owe to the party complaining a duty to take care, and that the party complaining should be able to prove that he has suffered damage in consequence of a breach of that duty. Where there is room for diversity of view, it is in determining what circumstances will establish such a relationship between the parties as to give rise, on the one side, to a duty to take care, and on the other side to a right to have care taken.
To descend from these generalities to the circumstances of the present case, I do not think that any reasonable man or any twelve reasonable men would hesitate to hold that, if the appellant establishes her allegations, the respondent has exhibited carelessness in the conduct of his business. For a manufacturer of aerated water to store his empty bottles in a place where snails can get access to them, and to fill his bottles without taking any adequate precautions by inspection or otherwise to ensure that they contain no deleterious foreign matter, may reasonably be characterized as carelessness without applying too exacting a standard. But, as I have pointed out, it is not enough to prove the respondent to be careless in his process of manufacture. The question is: Does he owe a duty to take care, and to whom does he owe that duty? Now I have no hesitation in affirming that a person who for gain engages in the business of manufacturing articles of food and drink intended for consumption by members of the public in the form in which he issues them is under a duty to take care in the manufacture of these articles. That duty, in my opinion, he owes to those whom he intends to consume his products. He manufactures his commodities for human consumption; he intends and contemplates that they shall be consumed. By reason of that very fact he places himself in a relationship with all the potential consumers of his commodities, and that relationship which he assumes and desires for his own ends imposes upon him a duty to take care to avoid injuring them. He owes them a duty not to convert by his own carelessness an article which he issues to them as wholesome and innocent into an article which is dangerous to life and health. It is sometimes said that liability can only arise where a reasonable man would have foreseen and could have avoided the consequences of his act or omission. In the present case the respondent, when he manufactured his ginger-beer, had directly in contemplation that it would be consumed by members of the public. Can it be said that he could not be expected as a reasonable man to foresee that if he conducted his process of manufacture carelessly he might injure those whom he expected and desired to consume his ginger-beer? The possibility of injury so arising seems to me in no sense so remote as to excuse him from foreseeing it. Suppose that a baker, through carelessness, allows a large quantity of arsenic to be mixed with a batch of his bread, with the result that those who subsequently eat it are poisoned, could he be heard to say that he owed no duty to the consumers of his bread to take care that it was free from poison, and that, as he did not know that any poison had got into it, his only liability was for breach of warranty under his contract of sale to those who actually bought the poisoned bread from him? Observe that I have said “through carelessness,” and thus excluded the case of a pure accident such as may happen where every care is taken. I cannot believe, and I do not believe, that neither in the law of England nor in the law of Scotland is there redress for such a case. The state of facts I have figured might well give rise to a criminal charge, and the civil consequence of such carelessness can scarcely be less wide than its criminal consequences. Yet the principle of the decision appealed from is that the manufacturer of food products intended by him for human consumption does not owe to the consumers whom he has in view any duty of care, not even the duty to take care that he does not poison them.
My Lords, the recognition by counsel that the law of Scotland applicable to the case was the same as the law of England implied that there was no special doctrine of Scots law which either the appellant or the respondent could invoke to support her or his case; and your Lordships have thus been relieved of the necessity of a separate consideration of the law of Scotland. For myself, I am satisfied that there is no specialty of Scots law involved, and that the case may safely be decided on principles common to both systems. I am happy to think that in their relation to the practical problem of everyday life which this appeal presents the legal systems of the two countries are in no way at variance, and that the principles of both alike are sufficiently consonant with justice and common sense to admit of the claim which appellant seeks to establish.
I am anxious to emphasize that the principle of judgment which commends itself to me does not give rise to the sort of objection stated by Parke B. in Longmeid v. Holliday 6 Ex 761, 768 , where he said: “But it would be going much too far to say, that so much care is required in the ordinary intercourse of life between one individual and another, that, if a machine not in its nature dangerous — a carriage, for instance — but which might become so by a latent defect entirely unknown, although discoverable by the exercise of ordinary care, should be lent or given by one person, even by the person who manufactured it, to another, the former should be answerable to the latter for a subsequent damage accruing by the use of it.”
I read this passage rather as a note of warning that the standard of care exacted in human dealings must not be pitched too high than as giving any countenance to the view that negligence may be exhibited with impunity. It must always be a question of circumstances whether the carelessness amounts to negligence, and whether the injury is not too remote from the carelessness. I can readily conceive that where a manufacturer has parted with his product and it has passed into other hands it may well be exposed to vicissitudes which may render it defective or noxious, for which the manufacturer could not in any view be held to be to blame. It may be a good general rule to regard responsibility as ceasing when control ceases. So, also, where between the manufacturer and the user there is interposed a party who has the means and opportunity of examining the manufacturer’s product before he re-issues it to the actual user. But where, as in the present case, the article of consumption is so prepared as to be intended to reach the consumer in the condition in which it leaves the manufacturer, and the manufacturer takes steps to ensure this by sealing or otherwise closing the container so that the contents cannot be tampered with, I regard his control as remaining effective until the article reaches the consumer and the container is opened by him. The intervention of any exterior agency is intended to be excluded, and was in fact in the present case excluded. It is doubtful whether in such a case there is any redress against the retailer: Gordon v. M’Hardy. 6 F 210
The burden of proof must always be upon the injured party to establish that the defect which caused the injury was present in the article when it left the hands of the party whom he sues, that the defect was occasioned by the carelessness of that party, and that the circumstances are such as to cast upon the defender a duty to take care not to injure the pursuer. There is no presumption of negligence in such a case as the present, nor is there any justification for applying the maxim, res ipsa loquitur. Negligence must be both averred and proved. The appellant accepts this burden of proof, and in my opinion she is entitled to have an opportunity of discharging it if she can. I am accordingly of opinion that this appeal should be allowed, the judgment of the Second Division of the Court of Session reversed, and the judgment of the Lord Ordinary restored.
Interlocutor of the Second Division of the Court of Session in Scotland reversed and interlocutor of the Lord Ordinary restored. Cause remitted back to the Court of Session in Scotland to do therein as shall be just and consistent with this judgment. The respondent to pay to the appellant the costs of the action in the Inner House and also the costs incurred by her in respect of the appeal to this House, such last mentioned costs to be taxed in the manner usual when the appellant sues in forma pauperis.
Anns v Merton London Borough Council
[1977] UKHL 4 (12 May 1977)
Lord Wilberforcc
Lord Diplock
Lord Simon of Glaisdale
Lord Salmon
Lord Russell of Killowen
Lord Wilberforce
MY LORDS,
This appeal requires a decision on two important points of principle as to
the liability of local authorities for defects in dwellings constructed by builders
in their area namely:
1. Whether a local authority is under any duty of care towards owners
or occupiers of any such houses as regards inspection during the
building process.
2. What period of limitation applies to claims by such owners or occupiers
against the local authorities.
Before these questions are discussed it is necessary to explain at some tedious
length the procedural background which unfortunately complicates the
decision-making task.
Procedural issues
The present actions were begun on 21st February 1972. The plaintiffs
are lessees under long leases of seven flats or maisonettes in a two storey block
at 91, Devonshire Road, Wimbledon. The owners of the block and also the
builders were the first defendants, Walcroft Property Company Ltd.: after
its completion in 1962 they granted long leases of the maisonettes: the fifth
and sixth plaintiffs (O’Shea) are original lessees, having acquired their lease in
1962; the other plaintiffs acquired their leases by assignment at dates in 1967
and 1968.
The local authority at the time of construction was the Mitcham Borough
Council: on 9th February 1962 they passed building plans for the block,
which were deposited under the byelaws. Later this council was superseded
by the London Borough of Merton, the second defendants, which took over
their duties and liabilities.
In February 1970 structural movements began to occur resulting in cracks
in the walls, sloping of floors, etc. The plaintiffs’ case is that these were due
to the block being built on inadequate foundations, there being a depth of
2′ 6″ only instead of 3′ 0″ or deeper as shown on the deposited plans. On
21st February 1972 writs were issued against both defendants—the separate
proceedings were later consolidated. As against the first defendants (the
builders) the claims were for damages for breach of contract and also for
breach of the implied undertaking under section 6 of the Housing Act 1957.
As against the council the claims were for damages for negligence by their
servants or agents in approving the foundations upon which the block was
erected even though (sic) they had not been taken down to a sufficient depth
and/or in failing to inspect the said foundations. This claim was expressed
as follows:
” 5. Further or in the alternative the said damage has been caused by
” the negligence of the Second Defandants in allowing the First Defendants
” to construct the said dwelling house upon foundations which were only
” 2′ 6″ deep instead of 3 feet or deeper as required by the said plans,
” alternatively of failing to carry out the necessary inspections sufficiently
” carefully or at all, as a result of which the said structural movement
” occurred.”
2
As particulars given under this paragraph the plaintiffs stated:
” Under the Building Byelaws the Second Defendants were under a
” duty to ensure that the building was constructed in accordance with
” the plans, and the building should have been inspected inter alia before
” the foundations were covered.
” The Plaintiff’s case is that the Second Defendants should have carried
” out such inspections as would have revealed the defective condition of
” the said foundations, that if any inspection was made then it was carried
” out negligently, and that if no inspection was made that in itself was
” negligent.”
Both the allegations in the statement of claim and those in the particulars
were to some extent misconceived as I shall show later.
The first defendants did not put in any defence but undertook to carry out
certain work. They did not appear in the hearings to be mentioned or on
this appeal.
The second defendants filed a defence on 8th February 1973 and on 9th
October 1974 the consolidated actions were transferred to an official referee.
On 16th October 1975 an order was made,
” that the issue between the Plaintiffs and the 2nd Defendants whether
” claim is statute barred be tried on 24th October 1975 “.
On 24th October 1975 this issue was tried by His Honour Judge Edgar Fay,
Q.C., who decided that the claims, were statute barred. In a written judgment
His Honour held that time began to run from the date of the first conveyance
of each of the properties concerned: the latest of these dates was 5th November
1965, which was more than six years before the date of the writ. In so deciding
the judge (correctly) followed an observation (obiter) by Lord Denning,
M.R. in Button v. Bognor Regis U.D.C. [1972] 1 Q.B. 373, 376.
The plaintiffs appealed to the Court of Appeal from this decision on 17
February 1976. Before the appeal came on, namely on 10 February 1976 the
Court of Appeal (Lord Denning, M.R., Roskill and Geoffrey Lane, L.JJ.) in
Sparham-Souter v. Town and Country Developments (Essex) Ltd. [1976] 1 Q.B.
858 decided that the cause of action did not accrue before a person capable of
suing discovered, or ought to have discovered, the damage. Lord Denning,
M.R. in his judgment expressly disavowed his earlier dictum in Button’s case.
On this view of the matter none of the present plaintiffs’ claims would be
statute barred. On the appeals in the present case coming before the Court
of Appeal on 1st March 1976, that court, without further argument, following
Sparham-Souter’s case, allowed the plaintiffs’ appeal and gave leave to appeal
to this House. That appeal would, of course, have been confined to a pre-
liminary issue of limitation.
However before the appeal to this House came on, the second defendants
(the council) presented a petition, asking for leave to argue the question
whether the council was under any duty of care to the plaintiffs at all.
This question had not been considered by Judge Fay, or by the Court of
Appeal, because it was thought, rightly in my opinion, that it was concluded by
Button’s case. Thus the council wished to challenge the correctness of the
latter decision. In that case the defendant Council of Bognor Regis was held
liable for damages in negligence (viz., negligent inspection by one of its officers),
consisting of a breach of a duty at common law to take reasonable care to see
that the byelaws were complied with. On 21st October 1976 this House
acceded to the petition. The appellants thus have leave to argue that in the
circumstances the council owed no duty of care to the plaintiffs.
This being a preliminary point of law, as was the argument on limitation,
it has to be decided on the assumption that the facts are as pleaded. There is
some difference between those facts and those on which Button’s case was
based, and in the present case the plaintiffs rely not only upon negligent
inspection, but, in the alternative, upon a failure to make any inspections.
3
In these circumstances I take the questions in this appeal to be:
1. Whether the defendant council was under:
1. a duty of care to the plaintiffs to carry out an inspection of the
foundations (which did not arise in Button’s case
2. a duty, if any inspection was made, to take reasonable care to
see that the byelaws were complied with (as held in Dutton’s
case).
3. any other duty including a duty to ensure that the building was
constructed in accordance with the plans, or not to allow the
builder to construct the dwelling house upon foundations which
were only 2 ft. 6 in. deep instead of 3 ft. or deeper (as pleaded).
2. If the defendant council was under any such duty as alleged, and com-
mitted a breach of it, resulting in damage, at what date the cause of
action of the plaintiffs arose for the purposes of the Limitation Act
1939. No question arises directly at this stage as to the damages
which the plaintiffs can recover and no doubt there will be issues at
the trial as to causation and quantum which we cannot anticipate.
But it will be necessary to give some general consideration to the kind
of damages to which, if they succeed, the plaintiffs may become en-
titled. This matter was discussed in Button’s case and is closely
connected with that of the duty which may be owed and with the
arising of the cause of action.
The duty of care
Through the trilogy of cases in this House—Donoghue v. Stevenson [1932]
A.C. 562, Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd. [1964] AC 465,
and Dorset Yacht Co. Ltd. v. Home Office [1970] AC 1004, the position has
now been reached that in order to establish that a duty of care arises in a
particular situation, it is not necessary to bring the facts of that situation
within those of previous situations in which a duty of care has been held to
exist. Rather the question has to be approached in two stages. First one
has to ask whether, as between the alleged wrongdoer and the person who has
suffered damage there is a sufficient relationship of proximity or neighbourhood
such that, in the reasonable contemplation of the former, carelessness on his
part may be likely to cause damage to the latter—in which case a prima facie
duty of care arises. Secondly, if the first question is answered affirmatively,
it is necessary to consider whether there are any considerations which ought
to negative, or to reduce or limit the scope of the duty or the class of person
to whom it is owed or the damages to which a breach of it may give rise (see
Dorset Yacht case, loc. cit., p. 1027 per Lord Reid). Examples of this are
Hedley Byrne where the class of potential plaintiffs was reduced to those shown
to have relied upon the correctness of statements made, and Weller & Co. v.
Foot and Mouth Disease Research Institute [1966] 1 Q.B. 569; and (I cite
these merely as illustrations, without discussion) cases about ” economic loss ”
where, a duty having been held to exist, the nature of the recoverable damages
was limited. (See S.C.M. (U.K.) Ltd. v. W. J. Whittall & Son Ltd. [1971]
1 Q.B. 337, Spartan Steel & Alloys Ltd. v. Martin & Co. (Contractors) Ltd.
[1973] QB 27.
The factual relationship between the council and owners and occupiers of
new dwellings constructed in their area must be considered in the relevant
statutory setting—under which the council acts. That was the Public Health
Act 1936. I must refer to the relevant provisions.
Section 1 confers the duty of carrying the Act into execution upon specified
authorities which now include the appellant council. Part II of the Act is
headed ” Sanitation and Buildings ” and contains provisions in the interest
of the safety and health of occupiers of dwelling houses and other buildings
such as provisions about sewage, drains and sanitary conveniences. From
section 53 onwards, this part of the Act is concerned with such matters as the
construction of buildings, (section 53), the use of certain materials, construction
on ground filled up with offensive material (section 54), repair or removal of
4
dilapidated buildings (section 58) and fire escapes. The emphasis is throughout
on health and safety. The directly relevant provisions start with section 61.
That section provided (subsection (1)) that every local authority may, and if
required by the Minister, shall make byelaws for regulating (inter alia) the
construction of buildings, and (subsection (2)) that byelaws made under the
section may include provisions as to the giving of notices, the deposit of plans
and the inspection of work. Section 64 deals in a mandatory form with the
passing or rejection of deposited plans. The authority must pass plans unless
they are defective or show that the proposed work would contravene any
byelaws and in the contrary case must reject them. By section 65, if any
work to which building byelaws are applicable contravenes any byelaw, the
authority may require the owner to pull down the work, or, if he so elects,
to effect such alteration as may be necessary to make it comply with the
byelaws. However, if any work though infringing the byelaws, is in accord-
ance with approved plans, removal or alteration may only be ordered by a
court which then has power to order the authority to compensate the owner.
Building byelaws were duly made, under these powers, by the Borough of
Mitcham in 1953 and confirmed by the Minister in 1957.
Byelaw 2 imposes an obligation upon a person who erects any building to
comply with the requirements of the byelaws. It imposes an obligation
to submit plans.
Byelaw 6 requires the builder to give to the council not less than 24 hours
notice in writing:
(a) of the date and time at which an operation will be commenced, and
(b) before the covering up of any drain, private sewer, concrete or other
material laid over a site, foundation or damp-proof course.
Byelaws 18 and 19 contain requirements as to foundations. The relevant
provision (18(1)(b)) is that the foundations of every building shall be taken
down to such a depth, or be so designed and constructed as to safeguard
the building against damage by swelling or shrinking of the subsoil.
Acting under these byelaws, the builder/owners (first defendants) on 30th
January 1962 gave notice to the Mitcham Borough Council of their intention
to erect a new building (viz., the block of maisonettes) in accordance with
accompanying plans. The plans showed the base walls and concrete strip
foundations of the block and stated, in relation to the depth from ground
level to the underside of the concrete foundations, ” 3′ ” or deeper to the
approval ” of local authority “. These plans were approved on 8th February
1962. The written notice of approval dated 9th February 1962 drew attention
to the requirement of the byelaws that notice should be given to the surveyor
at each of the following stages: before the commencement of the work and
when the foundations were ready to be covered up.
The builders in fact constructed the foundations to a depth of only 2′ 6″
below ground level. It is not, at this stage, established when or whether any
inspection was made.
To summarise the statutory position. The Public Health Act 1936, in
particular Part II, was enacted in order to provide for the health and safety
of owners and occupiers of buildings, including dwelling houses, by (inter
alia) setting standards to be complied with in construction, and by enabling
local authorities, through building byelaws, to supervise and control the
operations of builders. One of the particular matters within the area of local
authority supervision is the foundations of buildings—clearly a matter of
vital importance, particularly because this part of the building comes to be
covered up as building proceeds. Thus any weakness or inadequacy will
create a hidden defect which whoever acquires the building has no means of
discovering: in legal parlance there is no opportunity for intermediate inspection.
So, by the byelaws, a definite standard is set for foundation work (see byelaw
18(1)(b) referred to above): the builder is under a statutory (sc. byelaw) duty
to notify the local authority before covering up the foundations: the local
authority has at this stage the right to inspect and to insist on any correction
5
necessary to bring the work into conformity with the byelaws. It must be in
the reasonable contemplation not only of the builder but also of the local
authority that failure to comply with the byelaws’ requirement as to foun-
dations may give rise to a hidden defect which in the future may cause damage
to the building affecting the safety and health of owners and occupiers. And
as the building is intended to last, the class of owners and occupiers likely to
be affected cannot be limited to those who go in immediately after construction.
What then is the extent of the local authority’s duty towards these persons?
Although, as I have suggested, a situation of ” proximity ” existed between
the council and owners and occupiers of the houses, I do not think that a
description of the council’s duty can be based upon the ” neighbourhood ”
principle alone or upon merely any such factual relationship as ” control”
as suggested by the Court of Appeal. So to base it would be to neglect an
essential factor which is that the local authority is a public body, discharging
functions under statute: its powers and duties are definable in terms of public
not private law. The problem which this type of action creates, is to define
the circumstances in which the law should impose, over and above, or perhaps
alongside, these public law powers and duties, a duty in private law towards
individuals such that they may sue for damages in a civil court. It is in this
context that the distinction sought to be drawn between duties and mere
powers has to be examined.
Most, indeed probably all, statutes relating to public authorities or public
bodies, contain in them a large area of policy. The courts call this ” discretion ”
meaning that the decision is one for the authority or body to make, and not
for the courts. Many statutes, also prescribe or at least presuppose the
practical execution of policy decisions: a convenient description of this is to
say that in addition to the area of policy or discretion, there is an operational
area. Although this distinction between the policy area and the operational
area is convenient, and illuminating, it is probably a distinction of degree;
many ” operational” powers or duties have in them some element of ” dis-
cretion “. It can safely be said that the more ” operational ” a power or duty
may be, the easier it is to superimpose upon it a common law duty of care.
I do not think that it is right to limit this to a duty to avoid causing extra
or additional damage beyond what must be expected to arise from the exercise
of the power or duty. That may be correct when the act done under the
statute inherently must adversely affect the interest of individuals. But many
other acts can be done without causing any harm to anyone—indeed may be
directed to preventing harm from occuring. In these cases the duty is the
normal one of taking care to avoid harm to those likely to be affected.
Let us examine the Public Health Act 1936 in the light of this. Undoubtedly
it lays out a wide area of policy. It is for the local authority, a public and
elected body, to decide upon the scale of resources which it can make available
in order to carry out its functions under Part II of the Act—how many
inspectors, with what expert qualifications, it should recruit, how often
inspections are to be made, what tests are to be carried out, must be for its
decision. It is no accident that the Act is drafted in terms of functions and
powers rather than in terms of positive duty. As was well said, public
authorities have to strike a balance between the claims of efficiency and thrift
(du Parcq L.J. in Kent v. East Suffolk Rivera Catchment Board [1940] 1 K.B.
319, 338): whether they get the balance right can only be decided through the
ballot box, not in the courts. It is said—there are reflections of this in the
judgments in Buttons case—that the local authority is under no duty to
inspect, and this is used as the foundation for an argument, also found in
some of the cases, that if it need not inspect at all, it cannot be liable for
negligent inspection: if it were to be held so liable, so it is said, councils
would simply decide against inspection. I think that this is too crude an
argument. It overlooks the fact that local authorities are public bodies
operating under statute with a clear responsibility for public health in their
area. They must, and in fact do, make their discretionary decisions responsibly
and for reasons which accord with the statutory purpose; c.f. Ayr Harbour
Trustees v. Oswald 8 A.C. 623, 639, per Lord Watson:
6
” The powers which [section 10] confers are discretionary . . . But it is
” the plain import of the clause that the harbour trustees . . . shall be
” vested with, and shall avail themselves of, these discretionary powers,
” whenever and as often as they may be of opinion that the public interest
” will be promoted by their exercise “.
If they do not exercise their discretion in this way they can be challenged in the
courts. Thus, to say that councils are under no duty to inspect, is not a
sufficient statement of the position. They are under a duty to give proper
consideration to the question whether they should inspect or not. Their
immunity from attack, in the event of failure to inspect, in other words,
though great is not absolute. And because it is not absolute, the necessary
premise for the proposition ” if no duty to inspect, then no duty to take
” care in inspection ” vanishes.
Passing then to the duty as regards inspection, if made. On principle there
must surely be a duty to exercise reasonable care. The standard of care must
be related to the duty to be performed—namely to ensure compliance with
the byelaws. It must be related to the fact that the person responsible for
construction in accordance with the byelaws is the builder, and that the
inspector’s function is supervisory. It must be related to the fact that once
the inspector has passed the foundations they will be covered up, with no
subsequent opportunity for inspection. But this duty, heavily operational
though it may be, is still a duty arising under the statute. There may be a
discretionary element in its exercise—discretionary as to the time and manner
of inspection, and the techniques to be used. A plaintiff complaining of
negligence must prove, the burden being on him, that action taken was not
within the limits of a discretion bona fide exercised, before he can begin to
rely upon a common law duty of care. But if he can do this, he should, in
principle, be able to sue.
Is there, then, authority against the existence of any such duty or any
reason to restrict it? It is said that there is an absolute distinction in the
law between statutory duty and statutory power—the former giving rise to
possible liability, the latter not; or at least not doing so unless the exercise
of the power involves some positive act creating some fresh or additional
damage.
My Lords, I do not believe that any such absolute rule exists: or perhaps,
more accurately, that such rules as exist in relation to powers and duties
existing under particular statutes, provide sufficient definition of the rights of
individuals affected by their exercise, or indeed their non-exercise, unless they
take account of the possibility that, parallel with public law duties there may
coexist those duties which persons—private or public—are under at common
law to avoid causing damage to others in sufficient proximity to them. This
is, I think, the key to understanding of the main authority relied upon by the
respondents—East Suffolk Rivers Catchment Board v. Kent [1941] AC 74.
The statutory provisions in that case were contained in the Land Drainage
Act 1930 and were in the form of a power to repair drainage works including
walls or banks. The facts are well known: there was a very high tide which
burst the banks protecting the respondent’s land. The Catchment Board,
requested to take action, did so with an allocation of manpower and resources
(graphically described by MacKinnon L.J.) which was hopelessly inadequate
and which resulted in the respondent’s land being flooded for much longer
than it need have been. There was a considerable difference of judicial
opinion. Hilbery J. who tried the case held the Board liable for the damage
caused by the extended flooding and his decision was upheld by a majority of
the Court of Appeal. This House, by majority of 4-1 reached the opposite
conclusion. The speeches of their Lordships contain discussion of earlier
authorities, which well illustrate the different types of statutory enactment
under which these cases may arise. There are private Acts conferring powers—
necessarily—to interfere with the rights of individuals: in such cases, an
action in respect of damage caused by the exercise of the powers generally
does not lie, but it may do so “for doing that which the legislature has
” authorised, if it be done negligently ” (Geddis v. Proprietors of Bann Reservoir
3 App. Cas. 430, 455 per Lord Blackburn). Then there are cases where a
7
statutory power is conferred, but the scale on which it is exercised is left to a
local authority, Sheppard v. Glossop Corporation [1921] 3 K.B. 132. That
concerned a power to light streets and the corporation decided, for economy
reasons, to extinguish the lighting on Christmas night. Clearly this was
within the discretion of the authority but Scrutton L. J. in the Court of Appeal
contrasted this situation with one where ” an option is given by statute to an
” authority to do or not to do a thing and it elects to do the thing and does
” it negligently ” (ibid. 145-6). (Compare Indian Towing Co. v. United States
350 U.S. 61, which makes just this distinction between a discretion to provide
a lighthouse, and at operational level, a duty, if one is provided, to use due
care to keep the light in working order). Other illustrations are given.
My Lords, a number of reasons were suggested for distinguishing the East
Suffolk case—apart from the relevant fact that it was concerned with a different
Act, indeed type of Act. It was said to be a decision on causation: I think
that this is true of at least two of their Lordships (Viscount Simon and Lord
Thankerton). It was said that the damage was already there before the
Board came on the scene: so it was but the Board’s action or inaction un-
doubtedly prolonged it, and the action was in respect of the prolongation. I
should not think it right to put the case aside on such arguments. To me the
two significant points about the case are, first, that it is an example, and a
good one, where operational activity—at the breach in the wall—was still well
within a discretionary area, so that the plaintiff’s task in contending for a duty
of care was a difficult one. This is clearly the basis on which Lord Romer,
whose speech is often quoted as a proposition of law, proceeded. Secondly,
although the case was decided in 1941, only one of their Lordships considered
it in relation to a duty of care at common law. It need cause no surprise that
this was Lord Atkin. His speech starts with this passage:
” On the first point ” [sc. whether there was a duty owed to the Plaintiff
and v/hat was its nature] ” I cannot help thinking that the argument
” did not sufficiently distinguish between two kinds of duties: (1) A
” statutory duty to do or abstain from doing something, (2) A common
” law duty to conduct yourself with reasonable care so as not to injure
” persons liable to be affected by your conduct ” (loc. cit. p. 88).
And later he refers to Donoghue v. Stevenson—the only one of their Lordships
to do so—though I think it fair to say that Lord Thankerton (who decided
the case on causation) in his formulation of the duty must have been thinking
in terms of that case. My Lords, I believe that the conception of a general
duty of care, not limited to particular accepted situations, but extending
generally over all relations of sufficient proximity, and even pervading the
sphere of statutory functions of public bodies, had not at that time become
fully recognised. Indeed it may well be that full recognition of the impact
of Donog/nie v. Stevenson in the latter sphere only came with the decision of
this House in Dorset Yacht Co. Ltd. v. Home Office [1970] AC 1004.
In that case the Borstal officers, for whose actions the Home Office was
vicariously responsible, were acting, in their control of the boys, under statutory
powers. But it was held that, nevertheless they were under a duty of care as
regards persons who might suffer damage as the result of their carelessness-
see per Lord Reid, p. 1030-1, Lord Morris of Borth-y-Gcst, p. 1036, Lord
Pearson, p. 1055 (” The existence of the statutory duties does not exclude
” liability at common law for negligence in the performance of the statutory
” duties “). Lord Diplock in his speech gives this topic extended consideration
with a view to relating the officers’ responsibility under public law to their
liability in damages to members of the public under private, civil law. (See
pp. 1064 ff). My noble and learned friend points out that the accepted
principles which are applicable to powers conferred by a private Act of
Parliament, as laid down in Geddis v. Proprietors of Bann Reservoirs, cannot
automatically be applied to public statutes which confer a large measure of
discretion upon public authorities. As regards the latter, for a civil action
based on negligence at common law to succeed, there must be acts or omissions
taken outside the limits of the delegated discretion: in such a case “its
” actionability falls to be determined by the civil law principles of negligence ”
(I.c. p. 1068).
8
It is for this reason that the law, as stated in some of the speeches in the
East Suffolk case, but not in those of Lord Atkin or Lord Thankerton, requires
at the present time to be understood and applied with the recognition that,
quite apart from such consequences as may flow from an examination of the
duties laid down by the particular statute, there may be room, once one is
outside the area of legitimate discretion or policy, for a duty of care, at common
law. It is irrelevant to the existence of this duty of care whether what is
created by the statute is a duty or a power: the duty of care may exist in
cither case. The difference between the two lies in this, that, in the case of a
power, liability cannot exist unless the act complained of lies outside the ambit
of the power. In the Dorset Yacht Co. case the officers may (on the assumed
facts) have acted outside any discretion delegated to them and having dis-
regarded their instructions as to the precautions which they should take to
prevent the trainees from escaping (see per Lord Diplock, I.c. p. 1069). So in
the present case, the allegations made are consistent with the council or its
inspector having acted outside any delegated discretion either as to the making
of an inspection, or as to the manner in which an inspection was made.
Whether they did so must be determined at the trial. In the event of a positive
determination, and only so, can a duty of care arise. I respectfully think that
Lord Denning, M.R. in Duttons case (p. 392) puts the duty too high.
To whom the duty is owed. There is, in my opinion, no difficulty about this.
A reasonable man in the position of the inspector must realise that if the
foundations arc covered in without adequate depth or strength as required by
the byelaws, injury to safety or health may be suffered by owners or occupiers
of the house. The duty is owed to them—not of course to a negligent building
owner, the source of his own loss. I would leave open the case of users, who
might themselves have a remedy against the occupier under the Occupiers
Liability Act 1957. A right of action can only be conferred upon an owner,
or occupier, who is such when the damage occurs (see below). This disposes of
the possible objection that an endless, indeterminate class of potential plaintiffs
may be called into existence.
The nature of the duty. This must be related closely to the purpose for
which powers of inspection are granted namely, to secure compliance with
the byelaws. The duty is to take reasonable care, no more, no less, to secure
that the builder docs not cover in foundations which do not comply with
byelaw requirements. The allegations in the statements of claim, in so far as
they are based upon non-compliance with the plans, are misconceived.
The position of the builder. I agree with the majority in the Court of Appeal
in thinking that it would be unreasonable to impose liability in respect of
defective foundations upon the council, if the builder, whose primary fault it
was, should be immune from liability. So it is necessary to consider this
point, although it does not directly arise in the present appeal. If there was
at one time a supposed rule that the doctrine of Donoghue v. Stevenson did not
apply to reality, there is no doubt under modern authority that a builder of
defective premises may be liable in negligence to persons who thereby suffer
injury. See Gallagher v. N. McDowell Ltd. (1961) N.I. 26 per Lord
MacDermott C.J.—a case of personal injury. Similar decisions have been
given in regard to architects—(Clayton v. Woodman & Son Ltd. [1962] 2 Q.B.
533, Clay v. A. J. Crump and Sons Ltd. [1964] 1 Q.B. 533). Gallagher’s case
expressly leaves open the question whether the immunity against action of
builder owners, established by older authorities (e.g. Bottomley v. Bannister
[1932] 1 K.B. 458) still survives.
That immunity, as I understand it, rests partly upon a distinction being
made between chattels and real property, partly upon the principle of ” caveat
emptor ” or, in the case where the owner leases the property, on the proposition
” that (fraud apart) there is no law against letting a ” tumbledown house ”
(Robbins v. Jones (1863) 15 C.B.N.S. 221 per Erie, C.J.). But leaving aside
such cases as arise between contracting parties, when the terms of the contract
have to be considered (see Voli v. Inglewood Shire Council 110 C.L.R. 74, 85,
per Windeyer J.), I am unable to understand why this principle or proposition
should prevent recovery in a suitable case by a person, who has subsequently
9
acquired the house, upon the principle of Donoghue v. Stevenson: the same
rules should apply to all careless acts of a builder: whether he happens also
to own the land or not. I agree generally with the conclusions of Lord
Denning, M.R. on this point (Button’s case, I.c., p. 392-4). In the alternative,
since it is the duty of the builder (owner or not) to comply with the byelaws,
I would be of opinion that an action could be brought against him, in effect,
for breach of statutory duty by any person for whose benefit or protection the
byelaw was made. So I do not think that there is any basis here for arguing
from a supposed immunity of the builder to immunity of the council. Nature
of the damages recoverable and arising of the cause of action. There are many
questions here which do not directly arise at this stage and which may never
arise if the actions are tried. But some conclusions are necessary if we are
to deal with the issue as to limitation. The damages recoverable include all
those which foreseeably arise from the breach of the duty of care which, as
regards the council, I have held to be a duty to take reasonable care to secure
compliance with the byelaws. Subject always to adequate proof of causation,
these damages may include damages for personal injury and damage to pro-
perty. In my opinion they may also include damage to the dwelling-house
itself; for the whole purpose of the byelaws in requiring foundations to be
of certain standard is to prevent damage arising from weakness of the foun-
dations which is certain to endanger the health or safety of occupants.
To allow recovery for such damage to the house follows, in my opinion,
from normal principle. If classification is required, the relevant damage is in
my opinion material, physical damage, and what is recoverable is the amount
of expenditure necessary to restore the dwelling to a condition in which it is
no longer a danger to the health or safety of persons occupying and possibly
(depending on the circumstances) expenses arising from necessary displacement.
On the question of damages generally I have derived much assistance from the
judgment (dissenting on this point, but of strong persuasive force) of Laskin
C.J. in the Canadian Supreme Court case of Rivtow Marine Ltd. v. Washington
Iron Works (1973) 6 W.W.R. 692, 715 and from the judgments of the New Zealand
Court of Appeal (furnished by courtesy of that Court) in Bowen v. Paramount
Builders (Hamilton) Ltd. and McKay, C.A. 69/75.
When does the cause of action arise? We can leave aside cases of personal
injury or damage to other property as presenitng no difficulty. It is only the
damage for the house which requires consideration. In my respectful opinion
the Court of Appeal was right when, in Sparham-Souter’s case it abjured the
view that the cause of action arose immediately upon delivery, i.e., conveyance
of the defective house. It can only arise when the state of the building is such
that there is present or imminent danger to the health or safety of persons
occupying it. We are not concerned at this stage with any issue relating to
remedial action nor are we called upon to decide upon what the measure of
the damages should be; such questions, possibly very difficult in some cases,
will be for the court to decide. It is sufficient to say that a cause of action
arises at the point I have indicated.
The Limitation Act 1939. If the fact is that defects to the maisonettes first
appeared in 1970, then, since the writs were issued in 1972, the consequence
must be that none of the present actions are barred by the Act.
Conclusion. I would hold:
1. that Dutton v. Bognor Regis was in the result rightly decided. The
correct legal basis for the decision must be taken to be that established
by your Lordships in this appeal.
2. that the question whether the defendant council by itself or its officers
came under a duty of care toward the plaintiffs must be considered
in relation to the powers, duties and discretions arising under the
Public Health Act 1936;
3. that the defendant council would not be guilty of a breach of duty in
not carrying out inspection of the foundations of the block unless it
were shown (a) not properly to have exercised its discretion as to
the making of inspections, and (b) to have failed to exercise reasonable
care in its acts or omissions to secure that the byelaws applicable to
the foundations of the block were complied with;
310530 A3
10
4. that the defendant council would be liable to the respondents for breach
of duty if it were proved that its inspector, having assumed the duty
of inspecting the foundations, and acting otherwise thanin the bona fide
exercise of any discretion under the statute, did not exercise reasonable
care to ensure that the byelaws applicable to the foundations were
complied with;
5. that on the facts as pleaded none of the actions are barred by the
Limitation Act 1939.
And consequently that the appeal should be dismissed with costs.
Lord Diplock
MY LORDS,
I have had the advantage of reading in draft the speech of my noble and
learned friend Lord Wilberforce. I agree with it and the order that he proposes.
Lord Simon of Glaisdale
MY LORDS,
I have had the privilege of reading in draft the speech delivered by my
noble and learned friend on the Woolsack. I agree with it, and I would
therefore dismiss the appeal.
Lord Salmon
MY LORDS,
The procedural issues, the undisputed facts, the relevant statutory provisions
and the byelaws made under them are fully and lucidly expounded in Part I
of the speech of my noble and learned friend Lord Wilberforce which I
gratefully adopt and need not repeat.
The one fact which is at present unknown and which may be of vital
importance at the trial is whether or not the foundations of the block of
maisonettes in question were ever examined by the council through one of its
building inspectors prior to their being covered up.
As I understand paragraph 5 of the statement of claim and the particulars
delivered under it, the gist of the claim is that it was the council’s duty through
one of its building inspectors to inspect the foundations of the building before
they were covered; that in breach of this duty the council negligently failed
to carry out any inspection of the foundations; alternatively that if it did so,
the inspection was carried out negligently; that as a result, the inspection failed
to reveal that the foundations did not comply with byelaw 18(1)(b) nor with the
deposited and approved plans in that they were only 2 ft. 6 deep instead of
3 ft. or deeper as shown on the plans; that if these defects in the foundations
had been detected by the council’s inspector (as they should have been) the
council would have been under a duty to insist that the foundations should
be taken down to a sufficient depth to give the building a sound base and that
if this had been done the structural movements and their resulting damage
to the building which began to occur in February 1970 would have been
avoided.
Since this appeal is being decided on preliminary points of law, all the facts
in the statement of claim, including those pleaded in the alternative, must be
assumed to be true. Accordingly, at least two different hypotheses need to be
examined:—
1. That no inspections of the foundations by the council took place.
11
2. That such an inspection did take place but because of the building
inspector’s failure to use reasonable care and skill, the inspection
failed to reveal the inadequacy of the foundations to which I have
referred.
As to 1. This hypothesis raises the question as to whether or not the
council owed a duty to the plaintiffs to inspect the foundations before the
building was erected. Obviously if no such duty existed, the failure to inspect
could not found a cause of action.
The Public Health Act 1936 and the building byelaws made under it confer
ample powers on the council for the purpose, amongst other things, of enabling
it to protect the health and safety of the public in its locality against what is
popularly known as jerry-building. We are concerned particularly with the
safeguards relating to building foundations; these foundations are clearly
of the greatest importance because the stability of the building depends upon
them and they are covered up at a very early stage.
Powers are undoubtedly conferred on the council in order to enable it to
inspect the foundations and ensure that any defects which the inspection may
reveal are remedied before the erection of the building begins. There is,
however, nothing in the Act of 1936 nor in the byelaws which explicitly provides
how the council shall exercise these powers. This, in my view, is left to the
council’s discretion—but I do not think that this is an absolute discretion.
It is a discretion which must be responsibly exercised.
The council could resolve to inspect the foundations of all buildings in its
locality before they are covered but certainly, in my view, it is under no
obligation to do so. It could e.g. resolve to inspect the foundations of a
proportion of all buildings or of all buildings of certain types in its locality.
During the course of argument it was suggested on behalf of the council
that if it were held to owe any duty to use reasonable care in carrying out an
inspection of foundations and could therefore be liable in damages for any
such inspections carried out negligently, it might well resolve to make no such
inspections at all. I find it impossible to conceive that any council could be
so irresponsible as to pass any such resolution. If it did, this would, in my
view, amount to an improper exercise of discretion which, I am inclined to
think, might be corrected by certlorari or mandamus. I doubt however whether
this would confer a right on any individual to sue the council for damages in
respect of its failure to have carried out an inspection.
This point has however little bearing on this appeal because the corres-
pondence makes it plain that the council had certainly not decided against
exercising its statutory powers of inspection. On 19th March 1971, we find
the Borough Surveyor writing to the tenants’ solicitors:
” I regret that I am unable to trace any record of statutory inspections . ..
” by officers of the former Borough of Mitcham, but do not doubt, for a
” moment, that all the proper inspections were made.”
On the 24th June 1971 the Borough Surveyor again wrote:—
” I have been unable to trace details of all inspections made to the
” above premises but have been assured that all statutory inspections have
” been carried out.”
If there was no inspection of the foundations before they were covered up,
the tenants’ claims would fail because the statute imposed no obligation upon
the council to inspect the foundations of these maisonettes nor of any other
particular building. It will be for the tenants, with the help of interrogatories,
discovery of documents and a search for fresh witnesses to establish, on a
balance of probabilities, that such an inspection did take place. The extracts
from the letters I have just read do not suggest that this is likely to impose any
insuperable difficulties upon them.
As to two. I now propose to examine the second hypothesis, namely that
an inspection of the foundations before they were covered up was carried out
12
by the council through one of its building inspectors. This immediately raises
the important question. Did the inspector, acting on behalf of the council,
owe a duty to future tenants to use reasonable care and skill in order to discover
whether the foundations conformed with the approved plans and with the
byelaws. Precisely the same point was raised in Dutton v. Bognor Regis
U.D.C. [1972] 1 Q.B. (C.A.) 373 and was answered in the affirmative. I agree
with that decision.
In Dorset Yacht Co. Ltd. v. Home Office [1970] AC 1004 Lord Reid at
p. 1027 said:—
” Donoghue v. Stevenson [1932] AC 562 may be regarded as a mile-
” stone, and the well-known passage in Lord Atkin’s speech should I think
” be regarded as a statement of principle. It is not to be treated as if it
” were a statutory definition. It will require qualification in new circum-
” stances. But I think that the time has come when we can and should
” say that it ought to apply unless there is some justification or valid
” explanation for its exclusion.”
He then set out some of the circumstances in which such a justification or
explanation would exist. He added:—
” But where negligence is involved the tendency has been to apply
” principles analogous to those stated by Lord Atkin: cf. Hedley Byrne
” and Company Ltd. v. Heller & Partners Ltd. [1964] AC 465 … I can see
” nothing to prevent our approaching the present case with Lord Atkin’s
” principles in mind.”
I respectfully agree with and adopt that passage in Lord Reid’s speech
which, to my mind, is just as apt in the instant case as it was in the Dorset
Yacht Ltd. Co. case.
The seven maisonettes which comprise the building were to be let on 999 year
leases at nominal rents and acquired for substantial capital sums. The building
inspector and the council who sent him to inspect the foundations must have
realised that the inspection was of great importance for the protection of
future occupants of the maisonettes who indeed might suffer serious damage
if the inspection was carried out negligently. The inspection should have
revealed that this block of maisonettes was about to be erected on insecure
foundations, that is to say, foundations which failed to comply with the
approved plans and the byelaws, and that therefore there was a serious risk
that within a decade the whole structure would suffer damage and might
indeed collapse. Nor was there any likelihood that any survey on behalf of
the original tenants or their assignees would include an inspection of the
foundations since they would be concealed by the building. The whole
purpose of the inspection on behalf of the council before the foundations
were covered up was to discover whether the foundations were secure and to
ensure that if they were not, they should be made so for the protection of
future tenants before the building was erected. It is impossible to think of
anyone more closely and directly affected by the inspection than the original
tenants of the maisonettes and their assignees. I have therefore come to the
clear conclusion that the council acting through their building inspector when
he inspected the foundations owed a duty to the plaintiffs to carry out the
inspection with reasonable care and skill. There can, I think, be no doubt
but that the building inspector failed to use reasonable care and skill because
the underside of the concrete foundations was only 2′ 6″ below ground level,
whereas the plans delivered to the Council showed the foundations as being
3 feet below ground level or deeper if required. A surveyor’s report on page
106 of the Record states that ” 3 feet is the accepted minimum depth for
” foundation excavations, always provided a reasonable bottom is found at
” that level and in this case we have found the sub-soil beneath the concrete
” to be of very doubtful and variable quality, consisting of a mixture of sand
” and gravel with traces of soft clay. We are therefore of the opinion that
” the defects in this property arise from inadequate foundation depth having
” regard to the site conditions, and that movement has probably been
” accentuated by all or any of the following factors “. These factors are then
13
enumerated and the report continues ” Whilst we are in some difficult in
” arriving at the most likely of the above causes, all of them could have been
” avoided had the foundations been taken down to an adequate depth
” according to site conditions, and in our view this is where the fault lies “.
At the trial, it will be for the court to decide, having heard the evidence,
whether if the foundations had been down to 3 feet instead of only to 2 feet
6 inches the damage would have been avoided, and if not whether the building
inspector, had he used reasonable care and skill, should have recognised that
the soil conditions required the foundations to have been taken down lower
than 3 feet in order to achieve security.
I must now refer to the East Suffolk Rivers Catchment Board v. Kent [1941]
A.C. 74 upon which the Council strongly relied in an attempt to negative
any duty of care on their part if and when they inspected the foundations.
The East Suffolk case, which is not very satisfactory, is certainly a very different
case from the present. Here, at the time the council elected to inspect the
foundations in the exercise of its statutory powers, no damage had occurred
nor could thereafter have occurred if the building inspector had noticed the
inadequacy of the foundations. It seems to me to be a fair inference that
probably he must have indicated to the builder by word or gesture that he
approved them. At any rate he could have made no report to the council as
to their inadequacy; otherwise the council would or certainly should have
ensured that the builders made the foundations conform with the bye-laws
before the council allowed the building to be erected upon them.
Even if the inspector did not give the builders any intimation as to his view
of the foundations, the builders would have naturally assumed from the
council’s silence after the inspection that they (the builders) had the council’s
blessing to build on the existing foundations.
” It is undoubtedly a well-settled principle of law that when statutory
” powers are conferred they must be exercised with reasonable care, so
” that if those who exercise them could by reasonable precaution have
” prevented an injury which has been occasioned … by their exercise,
” damage for negligence may be recovered.” Great Central Railway
Company b. Hewlett [1916] 2 A.C. 511 per Lord Parker at p. 519.
In my opinion a negligent inspection for which the council is vicariously
liable coupled with subsequent inaction by the council would amount to an
implicit approval of the foundations by the council and would have occasioned
the damage which ensued.
In the East Suffolk case, the damage had already occurred before the Catch-
ment Board arrived upon the scene and purported to carry out the work of
repairing a river wall under its statutory powers. The river close to its estuary
had burst through a breach it had made in the wall at high tide and swamped
about 50 acres of adjoining pasture which was below the level of the river bed.
At each high tide more salt water came into the pasture and the longer this
went on the greater was the risk of pasture being permanently ruined. The
Catchment Board attempted to repair the breach in the wall with one
man who had been in their employment for 18 months and was totally in-
experienced in this kind of work and four labourers from the Employment
Exchange and with practically no equipment. It took one hundred and seventy
eight days to close the breach which could have been closed in fourteen days
had the work been carried out with reasonable care and skill. It would
appear that there had been exceptionally high tides as well as gales and that
the Catchment Board had to cope with a number of similar problems with
limited funds and insufficient experienced men at their disposal.
In the instant case, as far as we know, the council was not faced, as was the
Catchment Board, with a task of any difficulty, nor with any damage because
nothing had been built on the foundations, nor with the lack of a reasonably
competent building inspector well able to measure the depth of the foundations
and, if necessary, assess whether they were deep enough, having regard to the
soil on which they rested.
14
It is, in my view, impossible to say that because in one set of circumstances
a body acting under statutory powers may not owe any duty to exercise
reasonable care and skill, therefore another body acting under statutory
powers in totally different circumstances cannot owe such a duty. I confess
that I am not at all sure what point of law the East Suffolk case is said to
decide. Viscount Simon L.C. seems to have based his decision against the
plaintiff on the ground that the Catchment Board did not cause the damage.
See his speech at pp. 87, 88. Lord Thankerton undoubtedly based his decision
on that ground alone. See his speech at page 96. He also stresses the
importance of the special circumstances of each case in deciding what amounts
to a failure to exercise reasonable care and skill by a body acting under a
statutory power and adds, having referred to the circumstances of the Catch-
ment Board ” I am unable to find that Hilbery J. was not entitled to hold
” that the appellants committed a breach of their duty to the respondents in
” adopting a method of repair which no reasonable man would have adopted “.
Lords Romer and Porter seem to have considered that, on the facts of the
case which they were deciding, no negligence could be attributed to the Catch-
ment Board. Lord Romer, however, observed at p. 97,
“… it has been laid down time and again that, in exercising a power which
” has been conferred upon it, a statutory authority is under an obligation
” not thereby (i.e., by the exercise of the power) to inflict upon others any
” damage that may be avoided by reasonable care.”
Lord Porter refers with approval to a passage from Scrutton L.J’s. judgment
in Sheppard v. Glossop Corporation [1921] 3 K.B. 132 at p. 145:
” But it is going far beyond Lord Blackburn’s dictum to say that because,
” when an option is given by statute to an authority to do or not to do a
” thing and it elects to do the thing and does it negligently, it is liable,
” therefore it is liable if it elects not to do the thing, which by the statute
” it is not bound to do at all.”
Lord Porter also referred to the celebrated passage in the speech of Lord
Blackburn in the Geddis case—see 3 App. Cas. at p. 455—a most lucid passage
which has been explained so often that I fear its true meaning is in some danger
of being explained away. Lord Blackburn said:
“… it is now thoroughly well established that no action will lie for doing
” that which the legislature has authorised, if it be done without negilgence,
” although it does occasion damage . . . but an action does lie for doing
” that which the legislature has authorised, if it be done negligently.”
If, which I doubt, Lords Romer and Porter intended to lay down that because
a local authority or other body endowed with statutory powers, owes no one
any duty to exercise those powers in a particular case, it cannot in circumstances
such as exist in the instant case, owe anyone a duty when it does exercise the
powers to exercise them with reasonable care and skill, then I cannot agree
with them.
Personally, I respectfully agree with the dissenting decision of Lord Atkin
in the East Suffolk case. His views as to the duty of care owed by anyone
exercising statutory powers did not differ from those of Lord Thankerton nor
I think from those of Viscount Simon L.C. and I have some doubt whether
they differed from the views of Lords Romer and Porter which seem to have
turned largely on the facts of that particular case. Lord Atkin said at page 89
” every person, whether discharging a public duty or not, is under a common
” law obligation to some persons in some circumstances to conduct himself
” with reasonable care so as not to injure those persons likely to be affected by
” his want of care. This duty exists whether a person is performing a public
” duty, or merely exercising a power which he possesses either under statutory
” authority or in pursuance of his ordinary rights as a citizen.”
For the reasons I have already indicated, I am convinced that if an inspection
of the foundations did take place, the council, through its building inspectors,
owed a duty to the future tenants and occupiers of the maisonettes to exercise
reasonable care and skill in carrying out that examination. The failure to
15
exercise such care and skill may be shown to have caused the damage which the
plaintiffs have suffered. The fact that the inspection was being carried out
under a statutory power does not exclude the common law duty of those
carrying it out to use reasonable care and skill—for it cannot in any way
diminish the obvious proximity between the inspectors and the prospective
tenants and their assignees.
It has, however, been argued on the council’s behalf that, since it was under
no obligation to inspect the foundations, had it failed to do so, it could not
be liable for the damage caused by the inadequacy of the foundations.
Accordingly, so the argument runs, if the council decided to inspect the
foundations in the exercise of its statutory powers, it owed the prospective
tenants and their assignees no duty to inspect carefully because, even if the
inspection was carried out negligently, the prospective tenants and their
assignees would be no worse off than if there had been no inspection. I
reject this argument and confess that I cannot detect that it has even any
superficial attraction. The council is given these statutory powers to inspect
the foundations and furnished with public funds to enable the powers to be
used for the protection of prospective purchasers of the buildings which are to
be built upon them. If, when the council exercises these powers, it does so
negligently, it must be obvious that those members of the public in the position
of the present plaintiffs are likely to suffer serious damage. The exercise of
power without responsibility is not encouraged by the law. I recognize that
it may not be practical to inspect the foundations of every new building.
This, however, is no excuse for a negligent inspection of such foundations as
are inspected. When a council exercises its powers of inspection, it should be
and I believe is responsible in law to those who suffer damage as a result of
that negligence.
I do not think that there is any danger that the responsibility which, in my
view, lies upon the council is likely to lead to any flood of litigation. It is
not a common occurrence for foundations to give way, nor for their inspection
to be negligently carried out. If the foundations do give way, there is no
warranty by the council which has inspected them that they are sound. The
council is responsible only if it has exercised its powers to inspect and the
defects in the foundations, should have been detected by reasonable care and
skill. It seems to me to be manifestly fair that any damage caused by negligence
should be borne by those responsible for the negligence rather than by the
innocents who suffer from it.
L recognise that it would be unjust if, in the circumstances of this case, the
whole burden should fall upon the council whilst the contractor who negligently
put in the faulty foundations remained free from liability. It has, however,
been decided in Gallacher v. N. McDowell Ltd. [1961] N.I. 26 that a building
contractor owes a duty of care to the lawful user of a house and that accord-
ingly the contractor is liable for any damage caused to a lawful user by the
contractor’s negligence in constructing the house. I agree with that decision
for the reasons given by Lord MacDermott C.J. in delivering the leading
judgment in the Northern Ireland Court of Appeal. I also adopt what Lord
Denning M.R. said on this topic in Duttons case: ” The distinction between
” chattels and real property is quite unsustainable [in relation to the principles
” laid down in Donoghue v. Stevenson [1932] AC 562]. If the manufacturer
” of an article is liable to a person injured by his negligence, so should the
” builder of a house be liable “. The contrary view seems to me to be entirely
irreconcilable with logic or common sense.
The instant case differs from Gallagher’s case in that the contractors were
also the owners of the land on which they built the block of maisonettes.
In Bottomley v. Bannister (1932) 1 K.B. 458 [decided just before Donoghue v.
Stevenson] Scrutton L.J. said at page 468 ” Now it is at present well established
” English law that, in the absence of express contract, a landlord of an
” unfurnished house is not liable to his tenant, or a vendor of real estate to
” his purchaser, for defects in the house or land rendering it dangerous or
” unfit for occupation, even if he has constructed the defects himself or is
16
” aware of their existence “. I certainly do not agree with the words in that
passage ” even if he has constructed the defects himself “. The immunity of
a landlord who sells or lets his house which is dangerous or unfit for habitation
is deeply entrenched in our law. I cannot, however, accept the proposition
that a contractor who has negligently built a dangerous house can escape
liability to pay damages for negligence to anyone who e.g. falls through a
shoddily constructed floor and is seriously injured, just because the contractor
happens to have been the owner of the land upon which the house stands.
If a similar accident had happened next door in a house which the contractor
had also negligently built on someone else’s land, he would not be immune from
liability. This does not make any sense. In each case the contractor would
be sued for his negligence as a contractor and not in his capacity as a land-
owner: the fact that he had owned one plot of land and not the other would
be wholly irrelevant. I would hold that in each case he would be liable to
pay damages for negligence. To the extent that Bottomley v. Bannister differs
from this proposition it should, in my view, be overruled. Cavalier v. Pope
[1906] AC 428, upon which the appellants also relied, is so far away from the
present case that I express no opinion about it.
It was also contended on behalf of the appellants that the plaintiffs do not
even allege that they relied upon the inspection of the foundations by the
council. Nor they did, and I daresay they never even knew about it. This,
however, is irrelevant. I think that the noble lords who decided Hedley
Byrne & Co. Ltd. v. Heller & Partners Ltd. [1964] AC 465 would have been
very surprised that what they said about reliance in that case would one day
be cited as relevant to a case such as the present. There are a wide variety
of instances in which a statement is negligently made by a professional man
which he knows will be relied upon by many people besides his client, e.g. a
well known firm of accountants certifies in a prospectus the annual profits of
the company issuing it and unfortunately, due to negligence on the part of the
accountants, the profits are seriously overstated. Those persons who invested
in the company in reliance on the accuracy of the accountants’ certificate
would have a claim for damages against the accountants for any money they
might have lost as a result of the accountants’ negligence, see the Hedley Byrne
case.
In the present case, however, the loss is caused not by any reliance placed
by the plaintiffs on the council or the building inspector but by the fact that
if the inspection had been carefully made, the defects in the foundations would
have been rectified before the erection of the building was begun. The
categories of negligence as Lord Macmillan said, are never closed and there are
now a great many of them. In a few, ” reliance ” is of importance. In the
present case reliance is not even remotely relevant.
The remaining question is whether this action is statute barred, as found by
the learned judge. In my view he had no real option except to find as he did.
In Dutton’s case the Master of the Rolls said, obiter, that ” The damage was
” done when the foundations were badly constructed. The period of limi-
” tation (six years) then began to run.” In Bagot v. Stevens Scanlan & Co. Ltd.
[1966] 1 Q.B. 197, 203, Diplock L.J. (as he then was) said, obiter, that if the
drains were not properly designed and built ” The damage from any breach
” of that duty must have occurred at the time when the drains were improperly
” built, because the plaintiff at that time was landed with property which had
” bad drains when he ought to have been provided with property which had
” good drains, and the damage, accordingly, occurred on that date “. There
may be a difference between the effect of badly constructed foundations and
improperly built drains, since badly constructed foundations may not for some
years cause any damage to the building or its occupiers; on the other hand,
improperly built drains may cause some damage to the amenities and health
of the occupier from the moment he occupies the building. In Higgins v.
Arfon Borough Council [1975] 1 W.L.R. 524 Mars-Jones J., founding his
judgment on the two obiter dicta to which I have referred, held that the erection
of a defective building without proper foundations was caused by the local
authority’s negligence, but the action against the authority was statute barred
because the damage occurred during the construction of the building and
17
time therefore began to run from 22nd March 1966 when the proprety was
purchased.” In the light of these authorities I think that it would have been
very difficult, if not impossible, for the learned Judge to have held that the
instant action was not Statute barred since the foundations were badly con-
structed and all the original conveyances were executed more than six years
before the writ was issued.
In Sparham-Souter v. Town and Country Developments (Essex) Lid. [1976]
1 Q.B. 858, Lord Denning, M.R. reconsidered and handsomely withdrew his
obiter dictum in Button’s case to the effect that the period of limitation began
to run from that date when the foundations were badly constructed. He
acknowledged that the true view is that the cause of action in negligence
accrued at the time when damage was sustained as a result of negligence,
i.e., when the building began to sink and the cracks appeared. He therefore
concluded that in Higgins v. Arfon Council and in the instant case, it had been
wrongly decided that the action was statute barred, and as I read their judgments
Roskill and Geoffrey Lane, L.JJ. agreed with that view; and I certainly do.
All the plaintiffs, other than Mrs. O’Shea, acquired their maisonettes sub-
stantially less than six years before their writs were issued. Accordingly their
claims cannot be affected by the statute since clearly they could suffer no
damage before they became the purchasers of the maisonettes. The duty of
care if and when the inspection of the foundations was carried out was owed
to all future tenants or assignees who might suffer damage as a result of the
negligent inspection. At the time of the inspection it was, of course, readily
foreseeable that if the inspection was carelessly carried out future tenants or
assignees would suffer damage but their identity was, of course, then unknown,
just as the identity of the plaintiff in Davie v. New Merton Board Mills Ltd. [1959]
A.C. 604 was unknown to the defendants at the time when they negligently
manufactured a defective tool seven years before a part of it broke off and
flew into the plaintiff’s eye. The plaintiff, Mrs. O’Shea, however acquired
her maisonette on 12th December 1962. The writ was issued on 22nd February
1972. If it could be proved that the building suffered damage prior to 22nd
February 1966 which endangers the safety of its occupants or visitors Mrs.
O’Shea’s claim would be statute barred. It seems to me, however, that since
in fact no damage manifested itself until February 1970 it may be very difficult
to prove that damage had in fact occurred four years previously, to the
unlikely event of the defendants overcoming this difficulty, the fact that the
damage went undetected for four years would not prevent the statute running
from the date when the damage first occurred, see Cartledge v. E. Jopling &
Sons Ltd. [1963] A.C. 758. In such circumstances Mrs. O’Shea could not
have recovered damages because her cause of action would have accrued more
than six years before the issue of her writ. Section 2(1) of the Limitation
Act 1939 bars any action in tort after the expiration of the six years (amended
by the Law Reform (Limitation of Actions, etc.) Act 1954 to three years in
actions for damages for personal injuries) from the date when the cause of
action accrued. Every member of this House in Jopling v. Cartledge expressed
the view that it was unreasonable and unjust that a cause of action should be
held to accrue before it is possible to discover any injury, and therefore before it is
possible to raise any action. A strong recommendation was made for the
Legislature to remedy this injustice and that recommendation was accepted
and carried into effect by the Limitation Act 1963: but that Act was confined
to actions for damages for personal injury. I do not think that if and when
this action comes to be tried, the defendants should be prevented from
attempting to prove that the claim by Mrs. O’Shea is statute barred. A
building may be able to stand undamaged on defective foundations for years
and then perhaps eight years or so later damage may occur. Whether it is
possible to prove that damage to the building had occurred four years before
it manifested itself is another matter, but it can only be decided by evidence.
I should perhaps add a word about the damages to which the plaintiffs
would in my view be entitled should they succeed in the action. Clearly the
damage to the building constitutes a potential danger to the plaintiffs’ safely
18
and the cost of underpinning the building and making it stable and safe would
be recoverable from the defendants. So would the costs of rectifying any
damage to the individual maisonettes and the reasonable expense incurred by
any of the plaintiffs should it be necessary for them to find alternative
accommodation whilst any of the structural repairs were being carried out. I
express no opinion as to what the measure of damages should be, if it proved
impossible to make the structure safe.
My Lords, for the reasons I have explained I would dismiss the council’s
appeal from the order of the Court of Appeal setting aside the judgment of
His Honour Judge Fay.
2. I would hold that the council was under no obligation to exercise its
power to inspect the foundations before or after the building now occupied
by the plaintiffs was constructed, but that if it did exercise such powers of
inspection before the building was constructed, it was under a legal duty to
the plaintiffs to use reasonable care and skill in making the inspection.
3. I would order the council to pay the costs of and incidental to this appeal.
Lord Russell of Killowcn
MY LORDS,
I was at one time attracted by the simple proposition that the case of East
Suffolk Rivers Catchment Board v. Kent [1941] AC 74 afforded a sufficient
shield for the appellant authority, even upon the assumption that there was
an inspection of the foundations which was so carelessly conducted that it
failed to reveal that the proposed depth was only 2′ 6″ below ground level
(which we are to assume was and should have been known to be inadequate
to cope with swelling or shrinkage of the sub-soil) and not 3′ (which we are
to assume would have been adequate for that purpose). Upon reflection I
do not adhere to that view.
I have, my Lords, had an opportunity to consider closely in draft the speech
delivered by my noble and learned friend on the Woolsack. I am in agreement
with it on all points and am content to add nothing of my own. Accordingly
I also would dismiss this appeal.
(310530) 260 5/77 StS
Caparo Industries Plc v Dickman
[1990] UKHL 2 (08 February 1990)
1989 Nov. 16, 20, 22, 23, 27, 28;
1990 Feb. 8 Lord Bridge of Harwich , Lord Roskill , Lord Ackner , Lord Oliver of Aylmerton and Lord Jauncey of Tullichettle
Their Lordships took time for consideration.
8 February 1990. LORD BRIDGE OF HARWICH. My Lords, the appellants are a well known firm of chartered accountants. At all times material to this appeal, they were the auditors of a public limited company, Fidelity Plc. (“Fidelity”), which carried on business as manufacturers and vendors of electrical equipment of various kinds and whose shares were quoted on the London Stock Exchange. On 22 May 1984 the directors of Fidelity announced the results for the year ended 31 March 1984. These revealed that profits for the year fell well short of the figure which had been predicted, and this resulted in a dramatic drop in the quoted price of the shares which had stood at 143p per share on 1 March 1984 and which, by the beginning of June 1984, had fallen to 63p. Fidelity’s accounts for the year to 31 March 1984 had been audited by the appellants and had been approved by the directors on the day before the results were announced. On 12 June 1984 they were issued to the shareholders, with notice of the annual general meeting, which took place on 4 July 1984 and at which the auditor’s report was read and the accounts were adopted.
Following the announcement of the result, the respondents Caparo Industries Plc. (“Caparo”) began to purchase shares of Fidelity in the market. On 8 June 1984 they purchased 100,000 shares but they were not registered as members of Fidelity until after 12 June 1984 when the accounts were sent to shareholders although they had been registered in respect of at least some of the shares which they purchased by the date of the annual general meeting, which they did not attend. On 12 June 1984, they purchased a further 50,000 shares, and by 6 July 1984 they had increased their holding in Fidelity to 29.9 per cent. of the issued capital. On 4 September 1984 they made a bid for the remainder at 120p per share, that offer being increased to 125p per share on 24 September 1984. The offer was declared unconditional on 23 October 1984, and two days later Caparo announced that it had acquired 91.8 per cent. of the issued shares and proposed to acquire the balance compulsorily, which it subsequently did.
The action in which this appeal arises is one in which Caparo alleges that the purchases of shares which took place after 12 June 1984 and the subsequent bid were all made in reliance upon the accounts and that those accounts were inaccurate and misleading in a number of respects and in particular in overvaluing stock and underproviding for after-sales credits, with the result that an apparent pre-tax profit of some £1.3m. should in fact have been shown as a loss of over £400,000. Had the true facts been known, it is alleged, Caparo would not have made a bid at the price paid or indeed at all. Caparo accordingly commenced proceedings on 24 July 1985 against two of the persons who were directors at the material time, claiming that the overvaluations were made fraudulently, and against the appellants, claiming that they were negligent in certifying, as they did, that the accounts showed a true and fair view of Fidelity’s position at the date to which they related. The substance of the allegation against the appellants is contained in paragraph 16 of the statement of claim which is in the following terms:
“Touche Ross, as auditors of Fidelity carrying out their functions as auditors and certifiers of the accounts in April and May 1984, owed a duty of care to investors and potential investors, and in particular to Caparo, in respect of the audit and certification of the accounts. In support of that duty of care Caparo will rely upon the following matters: (1) Touche Ross knew or ought to have known (a) that in early March 1984 a press release had been issued stating that profits for the financial year would fall significantly short of £2.2m., (b) that Fidelity’s share price fell from 143p per share on 1 March 1984 to 75p per share on 2 April 1984, (c) that Fidelity required financial assistance. (2) Touche Ross therefore ought to have foreseen that Fidelity was vulnerable to a take-over bid and that persons such as Caparo might well rely on the accounts for the purpose of deciding whether to take over Fidelity and might well suffer loss if the accounts were inaccurate.”
On 6 July 1987, Sir Neil Lawson, sitting as judge in chambers, made an order for the trial of a preliminary issue, as follows:
“Whether on the facts set out in paragraphs 4 and 6 and in sub-paragraphs (1) and (2) of paragraph 16 of the statement of claim herein, the third defendants, Touche Ross & Co., owed a duty of care to the plaintiffs, Caparo Industries Plc., (a) as potential investors in Fidelity Plc.; or (b) as shareholders in Fidelity Plc. from 8 June 1984 and/or from 12 June 1984; in respect of the audit of the accounts of Fidelity Plc. for the year ended 31 March 1984 published on 12 June 1984.”
Paragraphs 4 and 6 of the statement of claim are those paragraphs in which are set out the purchases of shares by Caparo to which I have referred and in which it is claimed that the purchases made after 12 June 1984 were made in reliance upon the information contained in the accounts. There is, however, one correction to be made. Paragraph 4 alleges that the accounts were issued on 12 June 1984 “to shareholders, including Caparo” but it is now accepted that at that date Caparo, although a purchaser of shares, had not been registered as a shareholder in Fidelity’s register of members.
On the trial of this preliminary issue Sir Neil Lawson, sitting as a judge of the Queen’s Bench Division [1988] B.C.L.C. 387, held (i) that the appellants owed no duty at common law to Caparo as investors and (ii) that, whilst auditors might owe statutory duties to shareholders as a class, there was no common law duty to individual shareholders such as would enable an individual shareholder to recover damages for loss sustained by him in acting in reliance upon the audited accounts.
Caparo appealed to the Court of Appeal [1989] Q.B. 653 which, by a majority (O’Connor L.J. dissenting) allowed the appeal holding that, whilst there was no relationship between an auditor and a potential investor sufficiently proximate to give rise to a duty of care at common law, there was such a relationship with individual shareholders, so that an individual shareholder who suffered loss by acting in reliance on negligently prepared accounts, whether by selling or retaining his shares or by purchasing additional shares, was entitled to recover in tort. From that decision the appellants now appeal to your Lordships’ House with the leave of the Court of Appeal, and the respondents cross-appeal against the rejection by the Court of Appeal of their claim that the appellants owed them a duty of care as potential investors.
In determining the existence and scope of the duty of care which one person may owe to another in the infinitely varied circumstances of human relationships there has for long been a tension between two different approaches. Traditionally the law finds the existence of the duty in different specific situations each exhibiting its own particular characteristics. In this way the law has identified a wide variety of duty situations, all falling within the ambit of the tort of negligence, but sufficiently distinct to require separate definition of the essential ingredients by which the existence of the duty is to be recognised. Commenting upon the outcome of this traditional approach, Lord Atkin, in his seminal speech in Donoghue v. Stevenson [1932] AC 562, 579–580, observed:
“The result is that the courts have been engaged upon an elaborate classification of duties as they exist in respect of property, whether real or personal, with further divisions as to ownership, occupation or control, and distinctions based on the particular relations of the one side or the other, whether manufacturer, salesman or landlord, customer, tenant, stranger, and so on. In this way it can be ascertained at any time whether the law recognises a duty, but only where the case can be referred to some particular species which has been examined and classified. And yet the duty which is common to all the cases where liability is established must logically be based upon some element common to the cases where it is found to exist.”
It is this last sentence which signifies the introduction of the more modern approach of seeking a single general principle which may be applied in all circumstances to determine the existence of a duty of care. Yet Lord Atkin himself sounds the appropriate note of caution by adding, at p. 580:
“To seek a complete logical definition of the general principle is probably to go beyond the function of the judge, for the more general the definition the more likely it is to omit essentials or to introduce non-essentials.”
Lord Reid gave a large impetus to the modern approach in Dorset Yacht Co. Ltd. v. Home Office [1970] AC 1004, 1026–1027, where he said:
“In later years there has been a steady trend towards regarding the law of negligence as depending on principle so that, when a new point emerges, one should ask not whether it is covered by authority but whether recognised principles apply to it. Donoghue v. Stevenson [1932] AC 562 may be regarded as a milestone, and the well known passage in Lord Atkin’s speech should I think be regarded as a statement of principle. It is not to be treated as if it were a statutory definition. It will require qualification in new circumstances. But I think that the time has come when we can and should say that it ought to apply unless there is some justification or valid explanation for its exclusion.”
The most comprehensive attempt to articulate a single general principle is reached in the well known passage from the speech of Lord Wilberforce in Anns v. Merton London Borough Council [1978] AC 728, 751–752:
“Through the trilogy of cases in this House — Donoghue v. Stevenson [1932] AC 562, Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd. [1964] AC 465, and Dorset Yacht Co. Ltd. v. Home Office [1970] AC 1004, the position has now been reached that in order to establish that a duty of care arises in a particular situation, it is not necessary to bring the facts of that situation within those of previous situations in which a duty of care has been held to exist. Rather the question has to be approached in two stages. First one has to ask whether, as between the alleged wrongdoer and the person who has suffered damage there is a sufficient relationship of proximity or neighbourhood such that, in the reasonable contemplation of the former, carelessness on his part may be likely to cause damage to the latter — in which case a prima facie duty of care arises. Secondly, if the first question is answered affirmatively, it is necessary to consider whether there are any considerations which ought to negative, or to reduce or limit the scope of the duty or the class of person to whom it is owed or the damages to which a breach of it may give rise: see Dorset Yacht case [1970] AC 1004 per Lord Reid at p. 1027.”
But since the Anns case a series of decisions of the Privy Council and of your Lordships’ House, notably in judgments and speeches delivered by Lord Keith of Kinkel, have emphasised the inability of any single general principle to provide a practical test which can be applied to every situation to determine whether a duty of care is owed and, if so, what is its scope: see Governors of Peabody Donation Fund v. Sir Lindsay Parkinson & Co. Ltd. [1985] AC 210, 239f–241c; Yuen Kun Yeu v. Attorney-General of Hong Kong [1988] A.C. 175, 190e–194f; Rowling v. Takaro Properties Ltd. [1988] AC 473, 501d–g; Hill v. Chief Constable of West Yorkshire [1989] AC 53, 60b–d. What emerges is that, in addition to the foreseeability of damage, necessary ingredients in any situation giving rise to a duty of care are that there should exist between the party owing the duty and the party to whom it is owed a relationship characterised by the law as one of “proximity” or “neighbourhood” and that the situation should be one in which the court considers it fair, just and reasonable that the law should impose a duty of a given scope upon the one party for the benefit of the other. But it is implicit in the passages referred to that the concepts of proximity and fairness embodied in these additional ingredients are not susceptible of any such precise definition as would be necessary to give them utility as practical tests, but amount in effect to little more than convenient labels to attach to the features of different specific situations which, on a detailed examination of all the circumstances, the law recognises pragmatically as giving rise to a duty of care of a given scope. Whilst recognising, of course, the importance of the underlying general principles common to the whole field of negligence, I think the law has now moved in the direction of attaching greater significance to the more traditional categorisation of distinct and recognisable situations as guides to the existence, the scope and the limits of the varied duties of care which the law imposes. We must now, I think, recognise the wisdom of the words of Brennan J. in the High Court of Australia in Sutherland Shire Council v. Heyman (1985) 60 A.L.R. 1, 43–44, where he said:
“It is preferable, in my view, that the law should develop novel categories of negligence incrementally and by analogy with established categories, rather than by a massive extension of a prima facie duty of care restrained only by indefinable ‘considerations which ought to negative, or to reduce or limit the scope of the duty or the class of person to whom it is owed.’”
One of the most important distinctions always to be observed lies in the law’s essentially different approach to the different kinds of damage which one party may have suffered in consequence of the acts or omissions of another. It is one thing to owe a duty of care to avoid causing injury to the person or property of others. It is quite another to avoid causing others to suffer purely economic loss. A graphic illustration of the distinction is embodied in the proposition that:
“In case of a wrong done to a chattel the common law does not recognise a person whose only rights are a contractual right to have the use or services of the chattel for purposes of making profits or gains without possession of or property in the chattel. Such a person cannot claim for injury done to his contractual right:” see Elliott Steam Tug Co. Ltd. v. Shipping Controller [1922] 1 K.B. 127, 139 per Scrutton L.J.
The proposition derives from Cattle v. Stockton Waterworks Co. (1875) L.R. 10 Q.B. 453. It has recently been reaffirmed in Candlewood Navigation Corporation Ltd. v. Mitsui O.S.K. Lines Ltd. [1986] AC 1 and Leigh & Sillavan Ltd. v. Aliakmon Shipping Co. Ltd. [1986] AC 785. In the former case Lord Fraser of Tullybelton, delivering the judgment of the Privy Council, said, at p. 25:
“Their Lordships consider that some limit or control mechanism has to be imposed upon the liability of a wrongdoer towards those who have suffered economic damage in consequence of his negligence. The need for such a limit has been repeatedly asserted in the cases, from Cattle’s case, L.R. 10 Q.B. 453, to Caltex [Oil (Australia) Pty. Ltd. v. Dredge “Willemstad”(1976)], 136 C.L.R. 529, and their Lordships are not aware that a view to the contrary has ever been judicially expressed.”
The damage which may be caused by the negligently spoken or written word will normally be confined to economic loss sustained by those who rely on the accuracy of the information or advice they receive as a basis for action. The question what, if any, duty is owed by the maker of a statement to exercise due care to ensure its accuracy arises typically in relation to statements made by a person in the exercise of his calling or profession. In advising the client who employs him the professional man owes a duty to exercise that standard of skill and care appropriate to his professional status and will be liable both in contract and in tort for all losses which his client may suffer by reason of any breach of that duty. But the possibility of any duty of care being owed to third parties with whom the professional man was in no contractual relationship was for long denied because of the wrong turning taken by the law in Le Lievre v. Gould [1893] 1 Q.B. 491 in overruling Cann v. Willson (1888) 39 Ch D. 39. In Candler v. Crane, Christmas & Co. [1951] 2 K.B. 164, Denning L.J., in his dissenting judgment, made a valiant attempt to correct the error. But it was not until the decision of this House in Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd. [1964] AC 465 that the law was once more set upon the right path.
Consistently with the traditional approach it is to these authorities and to subsequent decisions directly relevant to this relatively narrow corner of the field that we should look to determine the essential characteristics of a situation giving rise, independently of any contractual or fiduciary relationship, to a duty of care owed by one party to another to ensure that the accuracy of any statement which the one party makes and on which the other party may foreseeably rely to his economic detriment.
In Cann v. Willson, 39 Ch D. 39 mortgagees advanced money in reliance on a valuation of the mortgaged property supplied to them by a valuer employed by the mortgagor. On the mortgagor’s default, the property, having been negligently undervalued, proved insufficient to cover the mortgage loan. The mortgagees recovered their loss from the valuer. In his judgment, Chitty J. said, at pp. 42–43:
“In this case the document called a valuation was sent by the defendants direct to the agents of the plaintiff for the purpose of inducing the plaintiff and his co-trustee to lay out the trust money on mortgage. It seems to me that the defendants knowingly placed themselves in that position, and in point of law incurred a duty towards him to use reasonable care in the preparation of the document called a valuation.”
In Candler v. Crane, Christmas & Co. Ltd. [1951] 2 K.B. 164 the plaintiff invested money in a limited company in reliance on accounts of the company prepared by the company’s accountants at the request of the managing director, which were shown to the plaintiff and discussed with him by the accountants in the knowledge that he was interested as a potential investor in the company. The accounts were inaccurate and misleading and the plaintiff, having invested in the company in reliance upon them, lost his money. Denning L.J., in his dissenting judgment, held the plaintiff entitled to recover damages for the accountants’ negligence.
In Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd. [1964] AC 465 bankers were asked about the financial stability of a customer of the bank. They gave a favourable reference, albeit with a disclaimer of responsibility. The circumstances of the inquiry made it clear to the bankers that the party on whose behalf the inquiry was made wanted to know if they could safely extend credit to the bank’s customer in a substantial sum. Acting on the reference given, the plaintiffs extended credit to the bank’s customer who in due course defaulted. Although the House held that the bankers were protected by the disclaimer of responsibility, the case provided the opportunity to review the law, which led to the reinstatement of Cann v. Willson, the overruling of the majority decision in the Candler case and the approbation of the dissenting judgment of Denning L.J. in that case.
The most recent decision of the House, which is very much in point, is that of the two appeals heard together of Smith v. Eric S. Bush and Harris v. Wyre Forest District Council [1990] 1 AC 831. The plaintiffs in both cases were house purchasers who purchased in reliance on valuations of the properties made by surveyors acting for and on the instructions of the mortgagees proposing to advance money to the plaintiffs to enable them to effect their purchases. In both cases the surveyors’ fees were paid by the plaintiffs and in both cases it turned out that the inspections and valuations had been negligently carried out and that the property was seriously defective so that the plaintiffs suffered financial loss. In the case of Smith the mortgagees were a building society, the surveyors who carried out the inspection and valuation were a firm employed by the building society and their report was shown to the plaintiff. In the case of Harris the mortgagees were the local authority who employed a member of their own staff to carry out the inspection and valuation. His report was not shown to the plaintiff, but the plaintiff rightly assumed from the local authority’s offer of a mortgage loan that the property had been professionally valued as worth at least the amount of the loan. In both cases the terms agreed between the plaintiff and the mortgagee purported to exclude any liability on the part of the mortgagee or the surveyor for the accuracy of the mortgage valuation. The House held that in both cases the surveyor making the inspection and valuation owed a duty of care to the plaintiff house purchaser and that the contractual clauses purporting to exclude liability were struck down by section 2(2) and section 11(3) of the Unfair Contract Terms Act 1977.
The salient feature of all these cases is that the defendant giving advice or information was fully aware of the nature of the transaction which the plaintiff had in contemplation, knew that the advice or information would be communicated to him directly or indirectly and knew that it was very likely that the plaintiff would rely on that advice or information in deciding whether or not to engage in the transaction in contemplation. In these circumstances the defendant could clearly be expected, subject always to the effect of any disclaimer of responsibility, specifically to anticipate that the plaintiff would rely on the advice or information given by the defendant for the very purpose for which he did in the event rely on it. So also the plaintiff, subject again to the effect of any disclaimer, would in that situation reasonably suppose that he was entitled to rely on the advice or information communicated to him for the very purpose for which he required it. The situation is entirely different where a statement is put into more or less general circulation and may foreseeably be relied on by strangers to the maker of the statement for any one of a variety of different purposes which the maker of the statement has no specific reason to anticipate. To hold the maker of the statement to be under a duty of care in respect of the accuracy of the statement to all and sundry for any purpose for which they may choose to rely on it is not only to subject him, in the classic words of Cardozo C.J. to “liability in an indeterminate amount for an indeterminate time to an indeterminate class:” see Ultramares Corporation v. Touche (1931) 174 N.E. 441, 444; it is also to confer on the world at large a quite unwarranted entitlement to appropriate for their own purposes the benefit of the expert knowledge or professional expertise attributed to the maker of the statement. Hence, looking only at the circumstances of these decided cases where a duty of care in respect of negligent statements has been held to exist, I should expect to find that the “limit or control mechanism … imposed upon the liability of a wrongdoer towards those who have suffered economic damage in consequence of his negligence” *Reporter”s noteCandlewood Navigation Corporation Ltd v Mitsui OSKLines Ltd [1986] AC 1, 25 * rested in the necessity to prove, in this category of the tort of negligence, as an essential ingredient of the “proximity” between the plaintiff and the defendant, that the defendant knew that his statement would be communicated to the plaintiff, either as an individual or as a member of an identifiable class, specifically in connection with a particular transaction or transactions of a particular kind (e.g. in a prospectus inviting investment) and that the plaintiff would be very likely to rely on it for the purpose of deciding whether or not to enter upon that transaction or upon a transaction of that kind.
I find this expectation fully supported by the dissenting judgment of Denning L.J. in Candler v. Crane, Christmas & Co. [1951] 2 K.B. 164, 179, 180–181, 182–184 in the following passages:
“Let me now be constructive and suggest the circumstances in which I say that a duty to use care in statement does exist apart from a contract in that behalf. First, what persons are under such duty? My answer is those persons such as accountants, surveyors, valuers and analysts, whose profession and occupation it is to examine books, accounts, and other things, and to make reports on which other people — other than their clients — rely in the ordinary course of business.”
“Secondly, to whom do these professional people owe this duty? I will take accountants, but the same reasoning applies to the others. They owe the duty, of course, to their employer or client; and also I think to any third person to whom they themselves show the accounts, or to whom they know their employer is going to show the accounts, so as to induce him to invest money or take some other action on them. But I do not think the duty can be extended still further so as to include strangers of whom they have heard nothing and to whom their employer without their knowledge may choose to show their accounts. Once the accountants have handed their accounts to their employer they are not, as a rule, responsible for what he does with them without their knowledge or consent …. The test of proximity in these cases is: did the accountants know that the accounts were required for submission to the plaintiff and use by him?”
“Thirdly, to what transactions does the duty of care extend? It extends, I think, only to those transactions for which the accountants knew their accounts were required. For instance, in the present case it extends to the original investment of £2,000. which the plaintiff made in reliance on the accounts, because the accountants knew that the accounts were required for his guidance in making that investment; but it does not extend to the subsequent £200. which he made after he had been two months with the company. This distinction, that the duty only extends to the very transaction in mind at the time, is implicit in the decided cases …. It will be noticed that I have confined the duty to cases where the accountant prepares his accounts and makes his report for the guidance of the very person in the very transaction in question. That is sufficient for the decision of this case. I can well understand that it would be going too far to make an accountant liable to any person in the land who chooses to rely on the accounts in matters of business, for that would expose him to ‘liability in an indeterminate amount for an indeterminate time to an indeterminate class’: see Ultramares Corporation v. Touche, per Cardozo C.J. Whether he would be liable if he prepared his accounts for the guidance of a specific class of persons in a specific class of transactions, I do not say. I should have thought he might be, just as the analyst and lift inspector would be liable in the instances I have given earlier. It is perhaps worth mentioning that Parliament has intervened to make the professional man liable for negligent reports given for the purposes of a prospectus: see sections 40 and 43 of the Companies Act 1948. That is an instance of liability for reports made for the guidance of a specific class of persons — investors, in a specific class of transactions — applying for shares. That enactment does not help, one way or the other, to show what result the common law would have reached in the absence of such provisions; but it does show what result it ought to reach. My conclusion is that a duty to use care in statement is recognised by English law, and that its recognition does not create any dangerous precedent when it is remembered that it is limited in respect of the persons by whom and to whom it is owed and the transactions to which it applies.”
It seems to me that this masterly analysis, if I may say so with respect, requires little, if any, amplification or modification in the light of later authority and is particularly apt to point the way to the right conclusion in the present appeal.
Some of the speeches in the Hedley Byrne case derive a duty of care in relation to negligent statements from a voluntary assumption of responsibility on the part of the maker of the statements. In his speech in Smith v. Eric S. Bush [1990] 1 AC 831, 862, Lord Griffiths emphatically rejected the view that this was the true ground of liability and concluded that:
“The phrase ‘assumption of responsibility’ can only have any real meaning if it is understood as referring to the circumstances in which the law will deem the maker of the statement to have assumed responsibility to the person who acts upon the advice.”
I do not think that in the context of the present appeal anything turns upon the difference between these two approaches.
These considerations amply justify the conclusion that auditors of a public company’s accounts owe no duty of care to members of the public at large who rely upon the accounts in deciding to buy shares in the company. If a duty of care were owed so widely, it is difficult to see any reason why it should not equally extend to all who rely on the accounts in relation to other dealings with a company as lenders or merchants extending credit to the company. A claim that such a duty was owed by auditors to a bank lending to a company was emphatically and convincingly rejected by Millett J. in Al Saudi Banque v. Clarke Pixley [1990] Ch. 313. The only support for an unlimited duty of care owed by auditors for the accuracy of their accounts to all who may foreseeably rely upon them is to be found in some jurisdictions in the United States of America where there are striking differences in the law in different states. In this jurisdiction I have no doubt that the creation of such an unlimited duty would be a legislative step which it would be for Parliament, not the courts, to take.
The main submissions for Caparo are that the necessary nexus of proximity between it and the appellants giving rise to a duty of care stems (1) from the pleaded circumstances indicating the vulnerability of Fidelity to a take-over bid and from the consequent probability that another company, such as Caparo, would rely on the audited accounts in deciding to launch a take-over bid, or (2) from the circumstance that Caparo was already a shareholder in Fidelity when it decided to launch its take-over bid in reliance on the accounts. In relation to the first of these two submissions, Caparo applied, in the course of the hearing, for leave to amend paragraph 16(2) of the statement of claim by adding the words “or alternatively that it was highly probable that such persons would rely on the accounts for that purpose.”
The case which gives most assistance to Caparo in support of this submission is Scott Group Ltd. v. McFarlane [1978] 1 N.Z.L.R. 553. The audited consolidated accounts of a New Zealand public company and its subsidiaries overstated the assets of the group because of an admitted accounting error. Under the relevant New Zealand legislation its accounts were, as in England, accessible to the public. The circumstances of the group’s affairs were such as to make it highly probable that it would atttract a take-over bid. The plaintiffs made such a bid successfully and when the accounting error was discovered claimed from the auditors in respect of the shortfall in the assets. Quilliam J. held that the auditors owed the plaintiffs no duty of care. The majority of the New Zealand Court of Appeal (Woodhouse and Cooke JJ.) held that the duty of care arose from the probability that the company would attract a take-over bid and the bidder would rely on the audited accounts, although Cooke J. held that the shortfall in the assets below that erroneously shown in the accounts did not amount to a loss recoverable in tort. Richmond P. held that no duty of care was owed. He said, at p. 566:
“All the speeches in Hedley Byrne seem to me to recognise the need for a ‘special’ relationship: a relationship which can properly be treated as giving rise to a special duty to use care in statement. The question in any given case is whether the nature of the relationship is such that one party can fairly be held to have assumed a responsibility to the other as regards the reliability of the advice or information. I do not think that such a relationship should be found to exist unless, at least, the maker of the statement was, or ought to have been, aware that his advice or information would in fact be made available to and be relied on by a particular person or class of persons for the purposes of a particular transaction or type of transaction. I would especially emphasise that to my mind it does not seem reasonable to attribute an assumption of responsibility unless the maker of the statement ought in all the circumstances, both in preparing himself for what he said and in saying it, to have directed his mind, and to have been able to direct his mind, to some particular and specific purpose for which he was aware that his advice or information would be relied on. In many situations that purpose will be obvious. But the annual accounts of a company can be relied on in all sorts of ways and for many purposes.”
I agree with this reasoning, which seems to me to be entirely in line with the principles to be derived from the authorities to which I have earlier referred and not to require modification in any respect which is relevant for present purposes by reference to anything said in this House in Smith v. Eric S. Bush [1990] 1 AC 831. I should in any event be extremely reluctant to hold that the question whether or not an auditor owes a duty of care to an investor buying shares in a public company depends on the degree of probability that the shares will prove attractive either en bloc to a take-over bidder or piecemeal to individual investors. It would be equally wrong, in my opinion, to hold an auditor under a duty of care to anyone who might lend money to a company by reason only that it was foreseeable as highly probable that the company would borrow money at some time in the year following publication of its audited accounts and that lenders might rely on those accounts in deciding to lend. I am content to assume the high probability of a take-over bid in reliance on the accounts which the proposed amendment of the statement of claim would assert but I do not think it assists Caparo’s case.
The only other English authority to which I need refer in this context in JEB Fasteners Ltd. v. Marks, Bloom & Co. [1981] 3 All E.R. 289, a decision at first instance of Woolf J. This was another case where the plaintiffs, who had made a successful take-over bid for a company in reliance on audited accounts which had been negligently prepared, sued the accountants for damages. Woolf J. held that the auditors owed the plaintiffs a duty of care in the preparation of the accounts. He relied on both the Anns case [1978] AC 728 and Scott Group Ltd. v. McFarlane [1978] 1 N.Z.L.R. 553, in reaching the conclusion that the duty could be derived from foreseeability alone. For the reasons already indicated, I do not agree with this. It may well be, however, that the particular facts in the JEB case were sufficient to establish a basis on which the necessary ingredient of proximity to found a duty of care could be derived from the actual knowledge on the part of the auditors of the specific purpose for which the plaintiffs intended to use the accounts.
The position of auditors in relation to the shareholders of a public limited liability company arising from the relevant provisions of the Companies Act 1985 is accurately summarised in the judgment of Bingham L.J. in the Court of Appeal [1989] Q.B. 653, 680–681:
“The members, or shareholders, of the company are its owners. But they are too numerous, and in most cases too unskilled, to undertake the day to day management of that which they own. So responsibility for day to day management of the company is delegated to directors. The shareholders, despite their overall powers of control, are in most companies for most of the time investors and little more. But it would of course be unsatisfactory and open to abuse if the shareholders received no report on the financial stewardship of their investment save from those to whom the stewardship had been entrusted. So provision is made for the company in general meeting to appoint an auditor (section 384 of the Companies Act 1985), whose duty is to investigate and form an opinion on the adequacy of the company’s accounting records and returns and the correspondence between the company’s accounting records and returns and its accounts: section 237. The auditor has then to report to the company’s members (among other things) whether in his opinion the company’s accounts give a true and fair view of the company’s financial position: section 236. In carrying out his investigation and in forming his opinion the auditor necessarily works very closely with the directors and officers of the company. He receives his remuneration from the company. He naturally, and rightly, regards the company as his client. But he is employed by the company to exercise his professional skill and judgment for the purpose of giving the shareholders an independent report on the reliability of the company’s accounts and thus on their investment. ‘No doubt he is acting antagonistically to the directors in the sense that he is appointed by the shareholders to be a check upon them:’ In re Kingston Cotton Mill Co. [1896] 1 Ch. 6, 11, per Vaughan Williams J. The auditor’s report must be read before the company in general meeting and must be open to inspection by any member of the company: section 241. It is attached to and forms part of the company’s accounts: sections 238(3) and 239. A copy of the company’s accounts, including the auditor’s report, must be sent to every member: section 240. Any member of the company, even if not entitled to have a copy of the accounts sent to him, is entitled to be furnished with a copy of the company’s last accounts on demand and without charge: section 246.”
No doubt these provisions establish a relationship between the auditors and the shareholders of a company on which the shareholder is entitled to rely for the protection of his interest. But the crucial question concerns the extent of the shareholder’s interest which the auditor has a duty to protect. The shareholders of a company have a collective interest in the company’s proper management and in so far as a negligent failure of the auditor to report accurately on the state of the company’s finances deprives the shareholders of the opportunity to exercise their powers in general meeting to call the directors to book and to ensure that errors in management are corrected, the shareholders ought to be entitled to a remedy. But in practice no problem arises in this regard since the interest of the shareholders in the proper management of the company’s affairs is indistinguishable from the interest of the company itself and any loss suffered by the shareholders, e.g. by the negligent failure of the auditor to discover and expose a misappropriation of funds by a director of the company, will be recouped by a claim against the auditors in the name of the company, not by individual shareholders.
I find it difficult to visualise a situation arising in the real world in which the individual shareholder could claim to have sustained a loss in respect of his existing shareholding referable to the negligence of the auditor which could not be recouped by the company. But on this part of the case your Lordships were much pressed with the argument that such a loss might occur by a negligent undervaluation of the company’s assets in the auditor’s report relied on by the individual shareholder in deciding to sell his shares at an undervalue. The argument then runs thus. The shareholder, qua shareholder, is entitled to rely on the auditor’s report as the basis of his investment decision to sell his existing shareholding. If he sells at an undervalue he is entitled to recover the loss from the auditor. There can be no distinction in law between the shareholder’s investment decision to sell the shares he has or to buy additional shares. It follows, therefore, that the scope of the duty of care owed to him by the auditor extends to cover any loss sustained consequent on the purchase of additional shares in reliance on the auditor’s negligent report.
I believe this argument to be fallacious. Assuming without deciding that a claim by a shareholder to recover a loss suffered by selling his shares at an undervalue attributable to an undervaluation of the company’s assets in the auditor’s report could be sustained at all, it would not be by reason of any reliance by the shareholder on the auditor’s report in deciding to sell; the loss would be referable to the depreciatory effect of the report on the market value of the shares before ever the decision of the shareholder to sell was taken. A claim to recoup a loss alleged to flow from the purchase of overvalued shares, on the other hand, can only be sustained on the basis of the purchaser’s reliance on the report. The specious equation of “investment decisions” to sell or to buy as giving rise to parallel claims thus appears to me to be untenable. Moreover, the loss in the case of the sale would be of a loss of part of the value of the shareholder’s existing holding, which, assuming a duty of care owed to individual shareholders, it might sensibly lie within the scope of the auditor’s duty to protect. A loss, on the other hand, resulting from the purchase of additional shares would result from a wholly independent transaction having no connection with the existing shareholding.
I believe it is this last distinction which is of critical importance and which demonstrates the unsoundness of the conclusion reached by the majority of the Court of Appeal. It is never sufficient to ask simply whether A owes B a duty of care. It is always necessary to determine the scope of the duty by reference to the kind of damage from which A must take care to save B harmless. “The question is always whether the defendant was under a duty to avoid or prevent that damage, but the actual nature of the damage suffered is relevant to the existence and extent of any duty to avoid or prevent it:” see Sutherland Shire Council v. Heyman, 60 A.L.R. 1, 48, per Brennan J. Assuming for the purpose of the argument that the relationship between the auditor of a company and individual shareholders is of sufficient proximity to give rise to a duty of care, I do not understand how the scope of that duty can possibly extend beyond the protection of any individual shareholder from losses in the value of the shares which he holds. As a purchaser of additional shares in reliance on the auditor’s report, he stands in no different position from any other investing member of the public to whom the auditor owes no duty.
I would allow the appeal and dismiss the cross-appeal.
LORD ROSKILL. My Lords, I have had the advantage of reading in draft the speeches prepared by three of your Lordships. I agree with them and would allow the appeal and dismiss the cross-appeal for the reasons there given. I only add some observations of my own out of respect for the two Lords Justices from whom your Lordships are differing and because of the importance of this case in relation to the vexed question of the extent of liability of professional men, especially accountants, for putting into circulation allegedly incorrect statements whether oral or in writing which are claimed to have been negligently made or prepared and which have been acted on by a third party to that third party’s detriment.
That liability for such negligence if established can exist has been made clear ever since the decision of this House in Hedley Byrne & Co. v. Heller & Partners Ltd. [1964] AC 465 in which the well known dissenting judgment of Denning L.J. in Candler v. Crane, Christmas & Co. [1951] 2 K.B. 164 was held to have stated the law correctly. Thenceforth it was clear that such a duty of care could be owed by a professional man to third parties in cases where there was no contractual relationship between them, a view of the law long denied as the result of a succession of late 19th century cases of which this House then took the opportunity of disapproving.
But subsequent attempts to define both the duty and its scope have created more problems than the decisions have solved. My noble and learned friends have traced the evolution of the decisions from Anns v. Merton London Borough Council [1977] A.C. 728 until and including the most recent decisions of your Lordships’ House in Smith v. Eric S. Bush [1990] 1 AC 831. I agree with your Lordships that it has now to be accepted that there is no simple formula or touchstone to which recourse can be had in order to provide in every case a ready answer to the questions whether, given certain facts, the law will or will not impose liability for negligence or in cases where such liability can be shown to exist, determine the extent of that liability. Phrases such as “foreseeability,” “proximity,” “neighbourhood,” “just and reasonable,” “fairness,” “voluntary acceptance of risk,” or “voluntary assumption of responsibility” will be found used from time to time in the different cases. But, as your Lordships have said, such phrases are not precise definitions. At best they are but labels or phrases descriptive of the very different factual situations which can exist in particular cases and which must be carefully examined in each case before it can be pragmatically determined whether a duty of care exists and, if so, what is the scope and extent of that duty. If this conclusion involves a return to the traditional categorisation of cases as pointing to the existence and scope of any duty of care, as my noble and learned friend Lord Bridge of Harwich, suggests, I think this is infinitely preferable to recourse to somewhat wide generalisations which leave their practical application matters of difficulty and uncertainty. This conclusion finds strong support from the judgment of Brennan J. in Sutherland Shire Council v. Heyman, 60 A.L.R. 1, 43–44 in the High Court of Australia in the passage cited by my noble and learned friends.
My Lords, I confess that like my noble and learned friend, Lord Griffiths, in Smith v. Eric S. Bush [1990] 1 AC 831, 862, I find considerable difficulty in phrases such as “voluntary assumption of responsibility” unless they are to be explained as meaning no more than the existence of circumstances in which the law will impose a liability upon a person making the allegedly negligent statement to the person to whom that statement is made; in which case the phrase does not help to determine in what circumstances the law will impose that liability or indeed, its scope. The submission that there is a virtually unlimited and unrestricted duty of care in relation to the performance of an auditor’s statutory duty to certify a company’s accounts, a duty extending to anyone who may use those accounts for any purpose such as investing in the company or lending the company money, seems to me untenable. No doubt it can be said to be foreseeable that those accounts may find their way into the hands of persons who may use them for such purposes or indeed other purposes and lose money as a result. But to impose a liability in those circumstances is to hold, contrary to all the recent authorities, that foreseeability alone is sufficient, and to ignore the statutory duty which enjoins the preparation of and certification of those accounts.
I think that before the existence and scope of any liability can be determined, it is necessary first to determine for what purposes and in what circumstances the information in question is to be given. If a would-be investor or predator commissions a report which he will use, and which the maker of the report knows he will use, as a basis for his decision whether or not to invest or whether or not to make a bid, it may not be difficult to conclude that if the report is negligently prepared and as a result a decision is taken in reliance upon it and financial losses then follow, a liability will be imposed upon the maker of that report. But I venture to echo the caution expressed by my noble and learned friend, Lord Oliver of Aylmerton, that because different cases may display certain common features, they are necessarily all cases in which the same consequences regarding liability or the scope of liability will follow. Moreover, there may be cases in which the circumstances in which the report was commissioned justify the inclusion of and reliance upon a disclaimer such as succeeded in the Hedley Byrne case but by reason of subsequent statutory provisions failed in Smith v. Eric S. Bush.
My Lords it is for these reasons, in addition to those given by my noble and learned friends, that, as already stated, I would allow this appeal and dismiss the cross-appeal.
LORD ACKNER. My Lords, I have had the advantage of reading the speeches of Lord Bridge of Harwich, Lord Roskill, Lord Oliver of Aylmerton and Lord Jauncey of Tullichettle and for the reasons they give I, too, would allow this appeal and dismiss the cross-appeal.
LORD OLIVER OF AYLMERTON. My Lords, this appeal, having come to this House on a preliminary point, involves the making of a number of assumptions of fact which might or might not be substantiated at the trial of the action. To begin with, it is to be assumed against the appellants that they showed a lack of reasonable care in certifying that the accounts of Fidelity for the year ended 31 March 1984 gave a true and fair view of Fidelity’s position. It is also to be assumed that, when they certified the accounts, the appellants knew or would, if they had thought about it, have known that Fidelity was vulnerable to take-over bids, that a potential bidder would be likely to rely upon the accuracy of the accounts in making his bid and that investors in the market generally, whether or not already members of Fidelity, would also be likely to or might well rely upon the accounts in deciding to purchase shares in that company.
Your Lordships are not, however, either required or entitled to make any assumption that the purpose of the certification was anything other than that of fulfilling the statutory duty of carrying out the annual audit with a view to the circulation of the accounts to persons who were either registered shareholders or debenture-holders of Fidelity and the subsequent laying of the accounts before the annual general meeting of that company.
Thus, if and so far as the purpose for which the audit was carried out is a relevant consideration in determining the extent of any general duty in tort owed by the appellants to persons other than the company which is their immediate employer, that purpose was simply that of fulfilling the statutory requirements of the Companies Act 1985. That, in turn, raises the question — and it is one which lies at the threshold of the inquiry upon which your Lordships are invited to embark — of what is the purpose behind the legislative requirement for the carrying out of an annual audit and the circulation of the accounts. For whose protection were these provisions enacted and what object were they intended to achieve?
My Lords, the primary purpose of the statutory requirement that a company’s accounts shall be audited annually is almost self-evident. The structure of the corporate trading entity, at least in the case of public companies whose shares are dealt with on an authorised Stock Exchange, involves the concept of a more or less widely distributed holding of shares rendering the personal involvement of each individual shareholder in the day-to-day management of the enterprise impracticable, with the result that management is necessarily separated from ownership. The management is confided to a board of directors which operates in a fiduciary capacity and is answerable to and removable by the shareholders who can act, if they act at all, only collectively and only through the medium of a general meeting. Hence the legislative provisions requiring the board annually to give an account of its stewardship to a general meeting of the shareholders. This is the only occasion in each year upon which the general body of shareholders is given the opportunity to consider, to criticise and to comment upon the conduct by the board of the company’s affairs, to vote upon the directors’ recommendation as to dividends, to approve or disapprove the directors’ remuneration and, if thought desirable, to remove and replace all or any of the directors. It is the auditors’ function to ensure, so far as possible, that the financial information as to the company’s affairs prepared by the directors accurately reflects the company’s position in order, first, to protect the company itself from the consequences of undetected errors or, possibly, wrongdoing (by, for instance, declaring dividends out of capital) and, secondly, to provide shareholders with reliable intelligence for the purpose of enabling them to scrutinise the conduct of the company’s affairs and to exercise their collective powers to reward or control or remove those to whom that conduct has been confided.
The requirement of the appointment of auditors and annual audit of the accounts, now contained in sections 235 to 246 of the Companies Act 1985, was first introduced by the Companies Act 1879 (25 & 26 Vict.c. 76) in relation to companies carrying on the business of banking and was extended to companies generally by the Companies Act 1900. Section 23 of that Act required the auditors to make a report to the shareholders on the company’s balance sheet laid before the company in general meeting, stating whether the balance sheet exhibited a true and correct view of the state of the company’s affairs. By the same section, the report was required to be read before the company in general meeting. Section 19 of the Companies Act 1907 substituted a new section 23 which, whilst repeating the requirement that the auditors’ report should be read before the company in general meeting, added a requirement that it should be open to inspection by any shareholder, who was entitled, on payment of the fee, to be furnished with a copy of the balance sheet and report. The new section also made it an offence for any officer of the company to be party to issuing, circulating or publishing any copy of the balance sheet which did not either append or contain a reference to the auditors’ report. The matter was carried one stage further by section 130 of the Companies Act 1929 (consolidating provisions contained in sections 39 and 41 of the Companies Act 1928) which required the annual balance sheet and auditors’ report of a public company to be sent not less than seven days before the date of the meeting to every member of the company entitled to receive notice of the meeting and entitled any member of the company and any debenture holder to be furnished on demand and without charge with a copy of the last balance sheet and the auditors’ report. Finally, for relevant purposes, section 158 of the Companies Act 1948 required the accounts and report to be sent to every member of the company and to every debenture holder not less than 21 days before the general meeting before which the accounts are to be laid.
Thus the history of the legislation is one of an increasing availability of information regarding the financial affairs of the company to those having an interest in its progress and stability. It cannot fairly be said that the purpose of making such information available is solely to assist those interested in attending general meetings of the company to an informed supervision and appraisal of the stewardship of the company’s directors, for the requirement to supply audited accounts to, for instance, preference shareholders having no right to vote at general meetings and to debenture holders cannot easily be attributed to any such purpose. Nevertheless, I do not, for my part, discern in the legislation any departure from what appears to me to be the original, central and primary purpose of these provisions, that is to say, the informed exercise by those interested in the property of the company, whether as proprietors of shares in the company or as the holders of rights secured by a debenture trust deed, of such powers as are vested in them by virtue of their respective proprietary interests.
It is argued on behalf of the respondent that there is to be discerned in the legislation an additional or wider commercial purpose, namely that of enabling those to whom the accounts are addressed and circulated, to make informed investment decisions, for instance, by determining whether to dispose of their shares in the market or whether to apply any funds which they are individually able to command in seeking to purchase the shares of other shareholders. Of course, the provision of any information about the business and affairs of a trading company, whether it be contained in annual accounts or obtained from other sources, is capable of serving such a purpose just as it is capable of serving as the basis for the giving of financial advice to others, for arriving at a market price, for determining whether to extend credit to the company, or for the writing of financial articles in the press. Indeed, it is readily foreseeable by anyone who gives the matter any thought that it might well be relied on to a greater or less extent for all or any of such purposes. It is, of course, equally foreseeable that potential investors having no proprietary interest in the company might well avail themselves of the information contained in a company’s accounts published in the newspapers or culled from an inspection of the documents to be filed annually with the Registrar of Companies (which includes the audited accounts) in determining whether or not to acquire shares in the company. I find it difficult to believe, however, that the legislature, in enacting provisions clearly aimed primarily at the protection of the company and its informed control by the body of its proprietors, can have been inspired also by consideration for the public at large and investors in the market in particular.
The question is, I think, one of some importance when one comes to consider the existence of that essential relationship between the appellants and the respondent to which, in any discussion of the ingredients of the tort of negligence, there is accorded the description “proximity,” for it is now clear from a series of decisions in this House that, at least so far as concerns the law of the United Kingdom, the duty of care in tort depends not solely upon the existence of the essential ingredient of the foreseeability of damage to the plaintiff but upon its coincidence with a further ingredient to which has been attached the label “proximity” and which was described by Lord Atkin in the course of his speech in Donoghue v. Stevenson [1932] AC 562, 581 as:
“such close and direct relations that the act complained of directly affects a person whom the person alleged to be bound to take care would know would be directly affected by his careless act.”
It must be remembered, however, that Lord Atkin was using these words in the context of loss caused by physical damage where the existence of the nexus between the careless defendant and the injured plaintiff can rarely give rise to any difficulty. To adopt the words of Bingham L.J. in the instant case [1989] Q.B. 653, 686:
“It is enough that the plaintiff chances to be (out of the whole world) the person with whom the defendant collided or who purchased the offending ginger beer.”
The extension of the concept of negligence since the decision of this House in Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd. [1964] AC 465 to cover cases of pure economic loss not resulting from physical damage has given rise to a considerable and as yet unsolved difficulty of definition. The opportunities for the infliction of pecuniary loss from the imperfect performance of everyday tasks upon the proper performance of which people rely for regulating their affairs are illimitable and the effects are far reaching. A defective bottle of ginger beer may injure a single consumer but the damage stops there. A single statement may be repeated endlessly with or without the permission of its author and may be relied upon in a different way by many different people. Thus the postulate of a simple duty to avoid any harm that is, with hindsight, reasonably capable of being foreseen becomes untenable without the imposition of some intelligible limits to keep the law of negligence within the bounds of common sense and practicality. Those limits have been found by the requirement of what has been called a “relationship of proximity” between plaintiff and defendant and by the imposition of a further requirement that the attachment of liability for harm which has occurred be “just and reasonable.” But although the cases in which the courts have imposed or withheld liability are capable of an approximate categorisation, one looks in vain for some common denominator by which the existence of the essential relationship can be tested. Indeed it is difficult to resist a conclusion that what have been treated as three separate requirements are, at least in most cases, in fact merely facets of the same thing, for in some cases the degree of foreseeability is such that it is from that alone that the requisite proximity can be deduced, whilst in others the absence of that essential relationship can most rationally be attributed simply to the court’s view that it would not be fair and reasonable to hold the defendant responsible. “Proximity” is, no doubt, a convenient expression so long as it is realised that it is no more than a label which embraces not a definable concept but merely a description of circumstances from which, pragmatically, the courts conclude that a duty of care exists.
There are, of course, cases where, in any ordinary meaning of the words, a relationship of proximity (in the literal sense of “closeness”) exists but where the law, whilst recognising the fact of the relationship, nevertheless denies a remedy to the injured party on the ground of public policy. Rondel v. Worsley [1969] 1 AC 191 was such a case, as was Hill v. Chief Constable of West Yorkshire [1989] AC 53, so far as concerns the alternative ground of that decision. But such cases do nothing to assist in the identification of those features from which the law will deduce the essential relationship on which liability depends and, for my part, I think that it has to be recognised that to search for any single formula which will serve as a general test of liability is to pursue a will-o’-the wisp. The fact is that once one discards, as it is now clear that one must, the concept of foreseeability of harm as the single exclusive test — even a prima facie test — of the existence of the duty of care, the attempt to state some general principle which will determine liability in an infinite variety of circumstances serves not to clarify the law but merely to bedevil its development in a way which corresponds with practicality and common sense. In Sutherland Shire Council v. Heyman, 60 A.L.R. 1, 43–44, Brennan J. in the course of a penetrating analysis, observed:
“Of course, if foreseeability of injury to another were the exhaustive criterion of a prima facie duty to act to prevent the occurrence of that injury, it would be essential to introduce some kind of restrictive qualification — perhaps a qualification of the kind stated in the second stage of the general proposition in Anns [1978] AC 728. I am unable to accept that approach. It is preferable, in my view, that the law should develop novel categories of negligence incrementally and by analogy with established categories, rather than by a massive extension of a prima facie duty of care restrained only by indefinable ‘considerations which ought to negative, or to reduce or limit the scope of the duty or the class of person to whom it is owed.’”
The same approach is, I think, reflected in that passage in the speech of Lord Devlin in the Hedley Byrne case [1964] AC 465, 524–525 in which he considered the impact of Donoghue v. Stevenson on the facts of that case and in which he analysed and described the method by which the law develops:
“In his celebrated speech in that case Lord Atkin did two things. He stated what he described as a ‘general conception’ and from that conception he formulated a specific proposition of law. In between he gave a warning ‘against the danger of stating propositions of law in wider terms than is necessary, lest essential factors be omitted in the wider survey and the inherent adaptability of English law be unduly restricted.’
“What Lord Atkin called a ‘general conception of relations giving rise to a duty of care’ is now often referred to as the principle of proximity. You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour. In the eyes of the law your neighbour is a person who is so closely and directly affected by your act that you ought reasonably to have him in contemplation as being so affected when you are directing your mind to the acts or omissions which are called in question ….
“Now, it is not, in my opinion, a sensible application of what Lord Atkin was saying for a judge to be invited on the facts of any particular case to say whether or not there was ‘proximity’ between the plaintiff and the defendant. That would be a misuse of a general conception and it is not the way in which English law develops. What Lord Atkin did was to use his general conception to open up a category of cases giving rise to a special duty. It was already clear that the law recognised the existence of such a duty in the category of articles that were dangerous in themselves. What Donoghue v. Stevenson did may be described either as the widening of an old category or as the creation of a new and similar one. The general conception can be used to produce other categories in the same way. An existing category grows as instances of its application multiply until the time comes when the cell divides ….
“In my opinion, the appellants in their argument tried to press Donoghue v. Stevenson too hard. They asked whether the principle of proximity should not apply as well to words as to deeds. I think it should, but as it is only a general conception it does not get them very far. Then they take the specific proposition laid down by Donoghue v. Stevenson and try to apply it literally to a certificate or a banker’s reference. That will not do, for a general conception cannot be applied to pieces of paper in the same way as to articles of commerce or to writers in the same way as to manufacturers.
An inquiry into the possibilities of intermediate examination of a certificate will not be fruitful. The real value of Donoghue v. Stevenson to the argument in this case is that it shows how the law can be developed to solve particular problems. Is the relationship between the parties in this case such that it can be brought within a category giving rise to a special duty? As always in English law, the first step in such an inquiry is to see how far the authorities have gone, for new categories in the law do not spring into existence overnight.”
Perhaps, therefore, the most that can be attempted is a broad categorisation of the decided cases according to the type of situation in which liability has been established in the past in order to found an argument by analogy. Thus, for instance, cases can be classified according to whether what is complained of is the failure to prevent the infliction of damage by the act of the third party (such as Dorset Yacht Co. Ltd. v. Home Office [1970] AC 1004, P. Perl (Exporters) Ltd. v. Camden London Borough Council [1984] QB 342, Smith v. Littlewoods Organisation Ltd. [1987] AC 241 and, indeed, Anns v. Merton London Borough Council [1978] AC 728 itself), in failure to perform properly a statutory duty claimed to have been imposed for the protection of the plaintiff either as a member of a class or as a member of the public (such as the Anns case, Ministry of Housing and Local Government v. Sharp [1970] 2 Q.B. 223, Yuen Kun Yeu v. Attorney-General of Hong Kong [1988] A.C. 175) or in the making by the defendant of some statement or advice which has been communicated, directly or indirectly, to the plaintiff and upon which he has relied. Such categories are not, of course, exhaustive. Sometimes they overlap as in the Anns case, and there are cases which do not readily fit into easily definable categories (such as Ross v. Caunters [1980] Ch. 297). Nevertheless, it is, I think, permissible to regard negligent statements or advice as a separate category displaying common features from which it is possible to find at least guidelines by which a test for the existence of the relationship which is essential to ground liability can be deduced.
The damage which may be occasioned by the spoken or written word is not inherent. It lies always in the reliance by somebody upon the accuracy of that which the word communicates and the loss or damage consequential upon that person having adopted a course of action upon the faith of it. In general, it may be said that when any serious statement, whether it takes the form of a statement of fact or of advice, is published or communicated, it is foreseeable that the person who reads or receives it is likely to accept it as accurate and to act accordingly. It is equally foreseeable that if it is inaccurate in a material particular the recipient who acts upon it may suffer a detriment which, if the statement had been accurate, he would not have undergone. But it is now clear that mere foreseeability is not of itself sufficient to ground liability unless by reason of the circumstances it itself constitutes also the element of proximity (as in the case of direct physical damage) or unless it is accompanied by other circumstances from which that element may be deduced. One must, however, be careful about seeking to find any general principle which will serve as a touchstone for all cases, for even within the limited category of what, for the sake of convenience, I may refer to as “the negligent statement cases,” circumstances may differ infinitely and, in a swiftly developing field of law, there can be no necessary assumption that those features which have served in one case to create the relationship between the plaintiff and the defendant on which liability depends will necessarily be determinative of liability in the different circumstances of another case. There are, for instance, at least four and possibly more situations in which damage or loss may arise from reliance upon the spoken or written word and it must not be assumed that because they display common features of reliance and foreseeability they are necessarily in all respects analogous. To begin with, reliance upon a careless statement may give rise to direct physical injury which may be caused either to the person who acts on the faith of the statement or to a third person. One has only to consider, for instance, the chemist’s assistant who mis-labels a dangerous medicine, a medical man who gives negligent telephonic advice to a parent with regard the treatment of a sick child, or an architect who negligently instructs a bricklayer to remove the keystone of an archway (as in Clayton v. Woodman & Sons (Builders) Ltd. [1962] 2 Q.B. 533). In such cases it is not easy to divorce foreseeability simpliciter and the proximity which flows from the virtual inevitability of damage if the advice is followed. Again, economic loss may be inflicted upon a third party as a result of the act of the recipient of the advice or information carried out in reliance upon it (as, for instance, the testator in Ross v. Caunters [1980] Ch. 297 or the purchaser in Ministry of Housing and Local Government v. Sharp [1970] 2 Q.B. 223, both cases which give rise to certain difficulties of analysis). For present purposes, however, it is necessary to consider only those cases of economic damage suffered directly by a recipient of the statement or advice as a result of his personally having acted in reliance upon it.
In his dissenting judgment in Candler v. Crane, Christmas & Co. [1951] 2 K.B. 164, Denning L.J. suggested three conditions for the creation of a duty of care in tort in such cases. First, the advice must be given by one whose profession it is to give advice upon which others rely in the ordinary course of business, such as accountants, surveyors, valuers and the like: p. 179. Secondly, it must be known to the adviser that the advice would be communicated to the plaintiff in order to induce him to adopt a particular course of action: p. 180. Thirdly, the advice must be relied upon for the purpose of the particular transaction for which it was known to the advisers that the advice was required: p. 182. It is plain, however, from other passages in his judgment, that Denning L.J. did not consider these conditions as necessarily exhaustive criteria of the existence of a duty and the speeches in this House in the Hedley Byrne case [1964] AC 465, where his judgment was approved, indicate a number of directions in which such criteria are to be extended. To begin with, Lord Reid, at p. 486, would not have confined liability to statements made or advice given in the exercise of a profession involving the giving of such advice but would have extended it to:
“all those relationships where it is plain that the party seeking information or advice was trusting the other to exercise such a degree of care as the circumstances required, where it was reasonable for him to do that, and where the other gave the information or advice when he knew or ought to have known that the inquirer was relying on him.”
Lord Morris of Borth-y-Gest, with whom Lord Hodson agreed, whilst initially, at p. 502, referring to persons “possessed of a special skill” nevertheless went on to state the conditions in which a duty of care might arise in very much wider terms, at p. 503:
“Furthermore, if in a sphere in which a person is so placed that others could reasonably rely upon his judgment or his skill or upon his ability to make careful inquiry, a person takes it upon himself to give information or advice to, or allows his information or advice to be passed on to, another person who, as he knows or should know, will place reliance upon it, then a duty of care will arise.”
Nonetheless, the subsequent decision of the Privy Council in Mutual Life and Citizens’ Assurance Co. Ltd. v. Evatt [1971] AC 793, from which Lord Reid and Lord Morris dissented, would have confined the duty of care to cases where the advice relied upon was given in the course of a business or profession involving the giving of advice of the kind in question. For present purposes, it is unnecessary to attempt a resolution of the difference of opinion arising from the Mutual Life case, since there is no question here but that the certifying of the accounts was something done in the course of the ordinary business of the appellants.
Leaving this on one side, however, it is not easy to cull from the speeches in the Hedley Byrne case [1964] AC 465 any clear attempt to define or classify the circumstances which give rise to the relationship of proximity on which the action depends and indeed Lord Hodson, at p. 514, expressly stated (and I respectfully agree) that he did not think it possible to catalogue the special features which must be found to exist before the duty of care will arise in the given case. Lord Devlin, at p. 530, is to the same effect. The nearest that one gets to the establishment of a criterion for the creation of a duty in the case of a negligent statement is the emphasis to be found in all the speeches upon “the voluntary assumption of responsibility” by the defendant. This is a convenient phrase but it is clear that it was not intended to be a test for the existence of the duty for, on analysis, it means no more than that the act of the defendant in making the statement or tendering the advice was voluntary and that the law attributes to it an assumption of responsibility if the statement or advice is inaccurate and is acted upon. It tells us nothing about the circumstances from which such attribution arises.
The point that is, as it seems to me, significant in the present context, is the unanimous approval in this House of the judgment of Denning L.J. in Candler’s case [1951] 2 K.B. 164, 181 in which he expressed the test of proximity in these words: “did the accountants know that the accounts were required for submission to the plaintiff and use by him?” In so far as this might be said to imply that the plaintiff must be specifically identified as the ultimate recipient and that the precise purpose for which the accounts were required must be known to the defendant before the necessary relationship can be created, Denning L.J.’s formulation was expanded in the Hedley Byrne case, where it is clear that, but for an effective disclaimer, liability would have attached. The respondents there were not aware of the actual identity of the advertising firm for which the credit reference was required nor of its precise purpose, save that it was required in anticipation of the placing of advertising contracts. Furthermore, it is clear that “knowledge” on the part of the respondents embraced not only actual knowledge but such knowledge as would be attributed to a reasonable person placed as the respondents were placed. What can be deduced from the Hedley Byrne case, therefore, is that the necessary relationship between the maker of a statement or giver of advice (“the adviser”) and the recipient who acts in reliance upon it (“the advisee”) may typically be held to exist where (1) the advice is required for a purpose, whether particularly specified or generally described, which is made known, either actually or inferentially, to the adviser at the time when the advice is given; (2) the adviser knows, either actually or inferentially, that his advice will be communicated to the advisee, either specifically or as a member of an ascertainable class, in order that it should be used by the advisee for that purpose; (3) it is known either actually or inferentially, that the advice so communicated is likely to be acted upon by the advisee for that purpose without independent inquiry, and (4) it is so acted upon by the advisee to his detriment. That is not, of course, to suggest that these conditions are either conclusive or exclusive, but merely that the actual decision in the case does not warrant any broader propositions.
Those propositions are, I think, in accord with the two United States authorities which were referred to in the course of the speeches in the Hedley Byrne decision. In Glanzer v. Shepard (1922) 135 N.E. 275, where a public weigher negligently certified an overweight so that the purchaser of the goods paid too much for them, the identity of the recipient of the certificate was known, the purpose of the certificate was known, and the certificate was issued for the very purpose of enabling the price of the goods to be ascertained and with the knowledge that it would be acted upon by the recipient for that purpose. In Ultramares Corporation v. Touche, 174 N.E. 441, on the other hand — a case much nearer to the present — the action failed. There auditors, although aware generally that the certified accounts of the company would be shown to others by the company as the basis of financial dealings generally “according to the needs of the occasion,” were unaware of the company’s specific purpose of obtaining financial help from the plaintiff.
The most recent authority on negligent misstatement in this House — the two appeals in Smith v. Eric S. Bush and Harris v. Wyre Forest District Council [1990] 1 AC 831 which were heard together — does not, I think, justify any broader proposition than that already set out, save that they make it clear that the absence of a positive intention that the advice shall be acted upon by anyone other than the immediate recipient — indeed an expressed intention that it shall not be acted upon by anyone else — cannot prevail against actual or presumed knowledge that it is in fact likely to be relied upon in a particular transaction without independent verification. Both appeals were concerned with surveyors’ certificates issued to mortgagees in connection with the proposed purchases for which the mortgagees were contemplating making advances. In each case there was an express disclaimer of responsibility, but in each case it was known to the surveyor that the substance of the report (in the sense of what was important to a purchaser) — that is to say whether or not any repairs to the property were considered essential — would be made known by the mortgagee to the purchaser, the plaintiff in the action, and would be likely to be acted upon by him in entering into a contract to purchase the property. In so far as the case was concerned with the effects of the disclaimer, it does not require consideration in the present context, but there are important passages in the speeches in this House bearing upon the questions which arise on this appeal and indicative of the features which, in that case, led their Lordships to conclude that the necessary relationship of proximity existed between the surveyors and the purchasers of the respective properties. Lord Templeman deduced the relationship from a combination of factors. He said, at pp. 847–848:
“I agree that by obtaining and disclosing a valuation, a mortgagee does not assume responsibility to the purchaser for that valuation. But in my opinion the valuer assumes responsibility to both mortgagee and purchaser by agreeing to carry out a valuation for mortgage purposes knowing that the valuation fee has been paid by the purchaser and knowing that the valuation will probably be relied upon by the purchaser in order to decide whether or not to enter into a contract to purchase the house …. In general I am of the opinion that in the absence of a disclaimer of liability the valuer who values a house for the purpose of a mortgage, knowing that the mortgagee will rely and the mortgagor will probably rely on the valuation, knowing that the purchaser mortgagor has in effect paid for the valuation, is under a duty to exercise reasonable skill and care and that duty is owed to both parties to the mortgage for which the valuation is made.”
Lord Griffiths at p. 862, rejected the voluntary “assumption of responsibility” as a helpful formula for testing the existence of a duty of care observing that the phrase:
“can only have any real meaning if it is understood as referring to the circumstances in which the law will deem the maker of the statement to have assumed responsibility to the person who acts upon the advice.”
He continued, at pp. 862, 864–865:
“The essential distinction between the present case and the situation being considered in Hedley Byrne [1964] AC 465 and in the two earlier cases, is that in those cases the advice was being given with the intention of persuading the recipient to act upon it. In the present case, the purpose of providing the report is to advise the mortgagee but it is given in circumstances in which it is highly probable that the purchaser will in fact act on its contents, although that was not the primary purpose of the report. I have had considerable doubts whether it is wise to increase the scope of the duty for negligent advice beyond the person directly intended by the giver of the advice to act upon it to those whom he knows may do so.”
“I therefore return to the question in what circumstances should the law deem those who give advice to have assumed responsibility to the person who acts upon the advice or, in other words, in what circumstances should a duty of care be owed by the adviser to those who act upon his advice? I would answer — only if it is foreseeable that if the advice is negligent the recipient is likely to suffer damage, that there is a sufficiently proximate relationship between the parties and that it is just and reasonable to impose the liability. In the case of a surveyor valuing a small house for a building society or local authority, the application of these three criteria leads to the conclusion that he owes a duty of care to the purchaser. If the valuation is negligent and is relied upon damage in the form of economic loss to the purchaser is obviously foreseeable. The necessary proximity arises from the surveyor’s knowledge that the overwhelming probability is that the purchaser will rely upon his valuation, the evidence was that surveyors knew that approximately 90 per cent. of purchasers did so, and the fact that the surveyor only obtains the work because the purchaser is willing to pay his fee. It is just and reasonable that the duty should be imposed for the advice is given in a professional as opposed to a social context and liability for breach of the duty will be limited both as to its extent and amount. The extent of the liability is limited to the purchaser of the house — I would not extend it to subsequent purchasers. The amount of the liability cannot be very great because it relates to a modest house. There is no question here of creating a liability of indeterminate amount to an indeterminate class. I would certainly wish to stress that in cases where the advice has not been given for the specific purpose of the recipient acting upon it, it should only be in cases when the adviser knows that there is a high degree of probability that some other identifiable person will act upon the advice that a duty of care should be imposed. It would impose an intolerable burden upon those who give advice in a professional or commercial context if they were to owe a duty not only to those to whom they give the advice but to any other person who might choose to act upon it.”
Finally, in relation to the Smith appeal, Lord Jauncey of Tullichettle observed, at p. 871–872:
“The four critical facts are that the appellants knew from the outset: (1) that the report would be shown to Mrs. Smith; (2) that Mrs. Smith would probably rely on the valuation contained therein in deciding whether to buy the house without obtaining an independent valuation; (3) that if, in these circumstances, the valuation was, having regard to the actual condition of the house, excessive, Mrs. Smith would be likely to suffer loss; and (4) that she had paid the building society a sum to defray the appellants’ fee. In the light of this knowledge the appellants could have declined to act for the building society, but they chose to proceed. In these circumstances they must be taken not only to have assumed contractual obligations towards the building society but delictual obligations towards Mrs. Smith, whereby they became under a duty towards her to carry out their work with reasonable care and skill. It is critical to this conclusion that the appellants knew that Mrs. Smith would be likely to rely on the valuation without obtaining independent advice. In both Candler v. Crane, Christmas & Co. [1951] 2 K.B. 164 and Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd. [1964] AC 465, the provider of the information was the obvious and most easily available, if not the only available, source of that information. It would not be difficult therefore to conclude that the person who sought such information was likely to rely upon it. In the case of an intending mortgagor the position is very different since, financial considerations apart, there is likely to be available to him a wide choice of sources of information, to wit, independent valuers to whom he can resort, in addition to the valuer acting for the mortgagee. I would not therefore conclude that the mere fact that a mortgagee’s valuer knows that his valuation will be shown to an intending mortgagor of itself imposes upon him a duty of care to the mortgagor. Knowledge, actual or implied, of the mortgagor’s likely reliance upon the valuation must be brought home to him. Such knowledge may be fairly readily implied in relation to a potential mortgagor seeking to enter the lower end of the housing market but non constat that such ready implication would arise in the case of a purchase of an expensive property whether residential or commercial.”
Thus Smith v. Eric S. Bush [1990] 1 AC 831, although establishing beyond doubt that the law may attribute an assumption of responsibility quite regardless of the expressed intentions of the adviser, provides no support for the proposition that the relationship of proximity is to be extended beyond circumstances in which advice is tendered for the purpose of the particular transaction or type of transaction and the adviser knows or ought to know that it will be relied upon by a particular person or class of persons in connection with that transaction. The judgment of Millett J. in the recent case of Al Saudi Banque v. Clarke Pixley [1990] Ch. 313 (decided after the decision of the Court of Appeal in the instant case) contains an analysis of the decision of this House in Smith v. Eric S. Bush and concludes — and I agree — that it established a more stringent test of the requirements for proximity than that which had been applied by the Court of Appeal in the instant case. At p. 335–336 of his judgment, Millett J. gives what I find a helpful analysis of that case and of the features which distinguished it from the Hedley Byrne case and from the instant case:
“In each of the cases considered by the House of Lords, therefore, there was a tripartite transaction in which the valuation could realistically be regarded as provided by the valuer to the purchaser. In each of the cases the valuation was given to the mortgagee with the intention of being acted on by him in a specific transaction known to the valuer, viz: the making of a mortgage offer in connection with a specific transaction of house purchase, and in the knowledge that the valuation or the gist of the valuation would be communicated to the purchaser and would in all probability be relied upon by him in deciding whether to go ahead with the very transaction for which the mortgage offer was sought. This was a much more restricted context in which to found a duty of care than was present in the Caparo case, for there was in contemplation not only a particular and identified recipient of the information to whom the defendant knew that it would be communicated, but a particular and known purpose for which he could foresee that it would be relied on.
“In Hedley Byrne [1964] AC 465 and the cases which followed it, the statement was made directly to the plaintiff with the intention that the plaintiff should act upon it. The JEB Fasteners case [1983] 1 All E.R. 583 can be supported only on the basis that the statement was impliedly confirmed directly to the plaintiff without any such intention, but with a particular transaction in contemplation, and it was foreseeable that the plaintiff would rely upon it in that transaction. In Caparo’s case [1989] Q.B. 653 it was made to the plaintiff without any such intention and without any particular transaction in contemplation, but it was foreseeable that the plaintiff might rely upon it in some unknown future transaction. In Smith v. Eric S. Bush [1990] 1 AC 831 it was made to a third party with the intention that he should act upon it in a known and contemplated transaction, but in the knowledge that it would be communicated to the plaintiff and would almost certainly be relied upon by him in connection with a transaction without which the transaction of the third party could not proceed.”
My Lords, no decision of this House has gone further than Smith v. Eric S. Bush, but your Lordships are asked by the respondents to widen the area of responsibility even beyond the limits to which it was extended by the Court of Appeal in this case and to find a relationship of proximity between the adviser and third parties to whose attention the advice may come in circumstances in which the reliance said to have given rise to the loss is strictly unrelated either to the intended recipient or to the purpose for which the advice was required. My Lords, I discern no pressing reason of policy which would require such an extension and there seems to me to be powerful reasons against it. As Lord Reid observed in the course of his speech in Hedley Byrne [1964] AC 465, 483, words can be broadcast with or without the consent or foresight of the speaker or writer; and in his speech in the same case, Lord Pearce drew attention to the necessity for the imposition of some discernible limits to liability in such cases. He said, at p. 534:
“The reason for some divergence between the law of negligence in word and that of negligence in act is clear. Negligence in word creates problems different from those of negligence in act. Words are more volatile than deeds. They travel fast and far afield. They are used without being expended and take effect in combination with innumerable facts and other words. Yet they are dangerous and can cause vast financial damage. How far they are relied on unchecked … must in many cases be a matter of doubt and difficulty. If the mere hearing or reading of words were held to create proximity, there might be no limit to the persons to whom the speaker or writer could be liable.”
As I have already mentioned, it is almost always foreseeable that someone, somewhere and in some circumstances, may choose to alter his position upon the faith of the accuracy of a statement or report which comes to his attention and it is always foreseeable that a report — even a confidential report — may come to be communicated to persons other than the original or intended recipient. To apply as a test of liability only the foreseeability of possible damage without some further control would be to create a liability wholly indefinite in area, duration and amount and would open up a limitless vista of uninsurable risk for the professional man.
On the basis of the pleaded case, as amended, it has to be assumed that the appellants, as experienced accountants, were aware or should have been aware that Fidelity’s results made it vulnerable to take-over bids and that they knew or ought to have known that a potential bidder might well rely upon the published accounts in determining whether to acquire shares in the market and to make a bid. It is not, however, suggested that the appellants, in certifying the accounts, or Parliament, in providing for such certification, did so for the purpose of assisting those who might be minded to profit from dealings in the company’s shares. The respondents, whilst accepting that it is no part of the purpose of the preparation, certification and publication of the accounts of a public company to provide information for the guidance of predators in the market, nevertheless argue that the appellants’ knowledge that predators might well rely upon the accounts for this purpose sufficiently establishes between them and potential bidders that relationship of “proximity” which founds liability. On the face of it, this submission appears to equate “proximity” with mere foreseeability and to rely upon the very misinterpretation of the effect of the decision of this House in the Anns case [1978] AC 728 which was decisively rejected in the Governors of Peabody Donation Fund v. Sir Lindsay Parkinson & Co. Ltd. [1985] AC 210 and in Yuen Kun Yeu v. Attorney-General of Hong Kong [1988] A.C. 175. Your Lordships have been referred, however, to three authorities, one from New Zealand and two from the United Kingdom, which do undoubtedly support the respondents’ contention.
In Scott Group Ltd. v. McFarlane [1978] N.Z.L.R. 553, the defendants were the auditors of a company which had been successfully taken over in reliance upon certified consolidated accounts in which, as a result of double-counting, the assets were overstated. It was admitted that the failure of the defendants to discover the discrepancy was due to negligence. In the Supreme Court of New Zealand, Quilliam J. dismissed the plaintiffs’ claim on the ground that the appellants, though careless, owed them no duty of care. An appeal to the Court of Appeal failed but the court was divided as to the reasons. Richmond P. held that the appeal failed for the same reason as that stated by the trial judge. Woodhouse J. would have allowed the appeal. Cooke J., on the other hand, whilst concurring with Woodhouse J. that the respondents did in fact owe a duty of care to the appellants, held that the appeal failed because they had failed to show any recoverable loss.
The more restrictive view was expressed by Richmond P. in the following terms, at pp. 566–567:
“The question in any given case is whether the nature of the relationship is such that one party can fairly be held to have assumed a responsibility to the other as regards the reliability of the advice or information. I do not think that such a relationship should be found to exist unless, at least, the maker of the statement was, or ought to have been, aware that his advice or information would in fact be made available to and be relied on by a particular person or class of persons for the purposes of a particular transaction or type of transaction. I would especially emphasise that to my mind it does not seem reasonable to attribute an assumption of responsibility unless the maker of the statement ought in all the circumstances, both in preparing himself for what he said and in saying it, to have directed his mind, and to have been able to direct his mind, to some particular and specific purpose for which he was aware that his advice or information would be relied on. In many situations that purpose will be obvious. But the annual accounts of a company can be relied on in all sorts of ways and for many purposes. It would be going too far to treat accountants as assuming a responsibility towards all persons dealing with the company or its members, in reliance to some greater or lesser degree on the accuracy of the accounts, merely because it was reasonably foreseeable, in a general way, that a transaction of the kind in which the plaintiff happened to become involved might indeed take place. The relationship between the parties would, I think, be too general and not sufficiently ‘special’ to come within the principles underlying the decision in Hedley Byrne. As I have said, I believe it to be essential to the existence of a ‘special relationship’ that the maker of the statement was or should have been aware that his advice was required for use in a specific type of contemplated transaction. This requirement has not always required emphasis in the course of judicial discussion as to the nature of a special relationship. Probably this is because in most cases the purpose for which the information was required was, on the facts, quite obvious. But certainly this particular point was made very clear indeed in Denning L.J.’s judgment in Candler v. Crane, Christmas & Co. I would think that it must almost inevitably follow, once the maker of the statement is aware of a specific purpose for which his information will be used, that he will also have in direct contemplation a specific person or class of persons, even though unidentified by name.”
The New Zealand Companies Act 1955 contained provisions relating to the auditors’ report which is similar in substance to those contained in the United Kingdom legislation but with this variation, that the “true and fair view” which group accounts are certified to give are qualified by the words “so far as concerns members of the company.” In relation to these provisions, Richmond P. observed, at p. 568:
“The provisions of the Act to which I have just referred are aimed essentially at the protection of the members of the company and of course the auditors, whose contract of employment is with the company itself, are under a contractual duty of care to the company. These provisions do not encourage me to take the view that there is any reason why the auditors of a public company should thereby come under a common law duty of care to third persons dealing with the company or its members on the faith of their audit certificate, such liability being in some way based on a much wider principle than would apply, for example, in the case of auditors certifying the accounts of a private company. Like Quilliam J., I can also see no reason to differentiate between auditors as such and a firm of chartered accountants employed to prepare the accounts of the company. The only point which has given me some concern, so far as the statutory provisions are concerned, is the requirement of section 133(1) whereby a copy of the balance sheet and auditors’ report is required to be annexed to the annual return and thus becomes available to the public under section 9(1) of the Act. But on reflection, this only means that the auditor of the accounts of a public company knows that the accounts and his report will become available to the public generally and, consequently, may be relied on by one or more members of the public, to some greater or lesser degree, as the basis of some business transaction. It is not suggested, however, that the Companies Act imposes any statutory duty of care as between auditors and members of the public who rely on the accounts. In the case of a company whose shares are listed on the Stock Exchange the auditor will also know that under the Stock Exchange rules a copy of the accounts must be made available. He knows, too, that shareholders will receive copies of the accounts and that the company itself may well make copies available to business institutions and individuals for various purposes. In the end all these matters merely add up to the fact that the auditor of a public company will necessarily have in his contemplation the possibility that the accounts may be relied on in all sorts of ways by persons other than the company and its members. This, as I have said, is not sufficient to bring about a ‘special relationship.’”
Both Woodhouse and Cooke JJ., who favoured a wider view of responsibility, based themselves upon an interpretation of the speech of Lord Wilberforce in the Anns case [1978] AC 728 which required, as the first stage of the two-stage inquiry to which he there referred, no more than a consideration of whether harm was foreseeable, thus equating the “proximate relationship” as comprehending foresight and nothing more. This is made quite clear from the following passage in the judgment of Woodhouse J., at p. 574:
“In this regard it will be noticed that although the first part of the inquiry outlined by Lord Wilberforce is to ask whether ‘there is a sufficient relationship of proximity’ in order to decide whether there is a prima facie duty of care, he would test the sufficiency of proximity simply by the reasonable contemplation of likely harm. And, with respect, I do not think that there is any need for or any sound reason in favour of a more restrictive approach. The issue has been made increasingly complex by the successive and varying formulas that have been used in an effort to confine the general area of responsibility, in particular for negligent words or in respect of purely economic losses. At this initial stage at least it should be possible to remove some degree of uncertainty — in my opinion it is done by the comprehensible and straightforward test of foreseeability.”
Woodhouse J., again emphasised foreseeability as the relevant test for the creation of the relationship of proximity in his judgment where he said, at p. 575:
“Although an audit is undertaken on behalf of the members of a public company it must be within the reasonable contemplation of any auditor that confidence in its ability to handle its commercial arrangements would depend upon the authenticity of its accounts — a confidence that would disappear if reliance could not be put upon the audit report. So I think that when auditors deliberately undertake to provide their formal report upon the accounts of a public company they must be taken to have accepted not merely a direct responsbility to the shareholders but a further duty to those persons whom they can reasonably foresee will need to use and rely upon them when dealing with the company or its members in significant matters affecting the company assets and business. An example, no doubt, would be the banker asked to make substantial advances on the security of the company undertaking. On the other hand, there would seem to be formidable difficulties for a plaintiff who attempted to prove that an auditor should have foreseen the plaintiff’s likely reliance upon some newspaper or a Stock Exchange reference to a company’s accounts. However, it is sufficient for present purposes to restrict consideration to a take over offer related, as so frequently is the position, to the value of shareholders’ funds. In such a situation the need to rely upon audited accounts is, I think, quite obvious. As a matter of commercial reality I think the auditor and offeror are in a relationship of close proximity.”
Cooke J. was to the same effect. At p. 583 he adopted, as the first step of Lord Wilberforce’s two-stage approach, the formulation which equates the relationship of proximity with foreseeability, although at an earlier stage of his judgment he seemed to be disposed to regard the essential relationship as arising not simply from the foreseeability that a member of the public might rely on the accounts as a basis of some transaction but, for a reason which I confess I do not fully understand, from the foreseeability that some member of the public might rely on the accounts for the making of a take-over bid. He said, at p. 581:
“The learned judge in the Supreme Court was disposed to regard the requirement of filing audited accounts, which are available for public inspection, as not imposed by Parliament for the purpose of enabling people to deal confidently in reliance on the accuracy of the accounts. He thought it much more likely that the purpose was to enable a proper supervision to be exercised over the activities of companies, and to enable those concerned to ensure that the companies were not trading illegally or dishonestly. With respect, I am unable to agree with him on that point. The statutory requirements regarding the filing of financial information stem, I think, from the view that those dealing with or investing in a limited liability company have a legitimate interest in being afforded reasonable access to relevant information; and that this interest has to be balanced against the wish for confidentiality naturally entertained by family companies and the like which do not appeal to the public for funds …. I would agree, though, that the provisions are probably not aimed, or at least not primarily, at protecting purchasers of shares in the market.”
Thus the majority of the Court of Appeal favoured a more extensive view of the circumstances from which the essential relationship between plaintiff and defendant may be inferred in a negligent statement case than had yet emerged from any decision in the United Kingdom.
Now, of course, any decision of the Court of Appeal of New Zealand is entitled to the very greatest respect, but it has to be observed that the majority view was based upon an interpretation of Lord Wilberforce’s observations in the Anns case [1978] AC 728, 751–752 which has since been severely qualified by subsequent decisions of this House.
The Scott Group case [1978] N.Z.L.R. 553 has, however, since been referred to and accepted in two cases decided in the United Kingdom. In JEB Fasteners Ltd. v. Marks Bloom & Co. [1981] 3 All E.R. 289, the plaintiffs who had acquired the shares of the company as a result of a take-over, claimed damages against the company’s auditors who, it was claimed, had been negligent in certifying the accounts. Woolf J. dismissed the claim on the ground that the plaintiffs failed to show the causative connection between reliance on the erroneous accounts and the take-over and his decision was subsequently affirmed by the Court of Appeal [1983] 1 All E.R. 583. In the course of his judgment, however, Woolf J. made the following observation with regard to the auditors’ liability [1981] 3 All E.R. 289, 296–297:
“Without laying down any principle which is intended to be of general application, on the basis of the authorities which I have cited, the appropriate test for establishing whether a duty of care exists appears in this case to be whether the defendants knew or reasonably should have foreseen at the time the accounts were audited that a person might rely on those accounts for the purpose of deciding whether or not to take over the company and therefore could suffer loss if the accounts were inaccurate. Such an approach does place a limitation on those entitled to contend that there has been a breach of duty owed to them. First of all, they must have relied on the accounts and, second, they must have done so in circumstances where the auditors either knew that they would or ought to have known that they might. If the situation is one where it would not be reasonable for the accounts to be relied on, then, in the absence of express knowledge, the auditor would be under no duty. This places a limit on the circumstances in which the audited accounts can be relied on and the period for which they can be relied on. The longer the period which elapses prior to the accounts being relied on, from the date on which the auditor gave his certificate, the more difficult it will be to establish that the auditor ought to have foreseen that his certificate would, in those circumstances, be relied on.”
Now although he disclaimed any intention of laying down a general principle, it is clear that Woolf J., like Woodhouse and Cooke JJ., was interpreting Lord Wilberforce’s two-stage approach in the Anns case as establishing a test of proximity which depended on the foreseeability of harm alone and that he regarded the limits of liability as being set not by the need for any relationship other than such as might be inferred from such foreseeability but by the factual difficulties likely to be encountered in establishing foreseeability in cases in which the reliance essential to the cause of action was separated in time from the statement or advice relied upon. In the light, therefore, of the observations of Lord Keith of Kinkel in the Peabody case [1985] AC 210 and in the Yuen Kun Yeu case [1988] A.C. 175, this case provides no very convincing authority for the respondents’ proposition, although, as Bingham L.J. observed in the instant case, the facts were such as to justify a finding of a relationship of proximity without any extension of the criteria suggested by Denning L.J. in his judgment in Candler’s case [1951] 2 K.B. 164.
The third case upon which the respondents rely is the decision of the Outer House of the Court of Session in Twomax Ltd. v. Dickson, McFarlane & Robinson, 1982 S.C. 113, the facts in which have a broad similarity to those in the JEB Fasteners case and in the instant case. The court was concerned with three separate claims from investors (one of whom was a company and two of whom were individuals) who had acquired shares in a private company which, shortly after the investments were made, went into receivership and was subsequently wound up. All three investors claimed that their respective investments were made on the faith of the company’s audited accounts which had been negligently prepared and certified by the defenders, the company’s auditors, in the course of their statutory audit. The Lord Ordinary (Lord Stewart), at pp. 122–124, having contrasted the limitations appearing from the speeches of Lord Morris and Lord Hodson in the Hedley Byrne case with the broader formulation of general principle in the speech of Lord Wilberforce in the Anns case, accepted the latter as governing the proper approach to the question of whether or not the essential relationship between pursuers and defenders was established in a negligent statement case and followed the guidance of the majority judgments of the New Zealand Court of Appeal in the Scott Group case, save that he could not draw any sensible distinction between the case of the corporate pursuer, which had acquired the controlling interest, and that of the individual minority investors. He thus, by implication, rejected the suggestion that a potential bidder in the market is in some special position as compared with other investors such as to create between him and the auditors carrying out their statutory duties, a special relationship which does not arise in the case of an investor concerned to acquire only a minority interest. And this, with respect, must be correct, for there can be no logical distinction according to whether an investor is likely to acquire many shares or only a few. Such distinction as there is lies only in the scale of the potential loss which may be little or great according to the magnitude of the investment. Indeed, as he pointed out, it could legitimately be said that the smaller the investment the greater the likelihood of the investor accepting the audited accounts as the basis for his action without making any independent investigation. In the result, Lord Stewart held that the knowledge to be imputed to the defenders that there would or might well be potential investors in the market who would be interested in purchasing existing shares or subscribing for new shares and who might be influenced by the accounts was sufficient to create between them and such investors the relationship of proximity which gave rise to an enforceable duty of care.
This case, therefore, falls into the same category as the other two cases. All three were based upon the view of Lord Wilberforce’s exposition in the Anns case [1978] AC 728 which would result in foreseeability and proximity being treated as synonymous — a view which this House (and, indeed, Lord Wilberforce himself in McLoughlin v. O’Brian [1983] 1 AC 410) has now decisively rejected. That, of course, does not conclude the question for it would still be open to your Lordships to find in the circumstances of this case that a special relationship existed between the auditor conducting an annual audit in pursuance of his statutory duty and every potential investor in the market or, indeed, any other person who might do business with the company without relying solely upon the foreseeability of potential damage to such person. Just as, for instance, in Smith v. Eric S. Bush [1990] 1 AC 831, one of the factors giving rise to the relationship in that case was the circumstance that the plaintiff was the person who paid for the report upon which the reliance was placed, so here it might be said that a special relationship was to be found in the nature and extent of the statutory duties which the auditor is called upon to fulfil.
For my part, however, I can see nothing in the statutory duties of a company’s auditor to suggest that they were intended by Parliament to protect the interests of investors in the market and I see no reason in policy or in principle why it should be either desirable or appropriate that the ambit of the special relationship required to give rise to liability in cases such as the present should be extended beyond those limits which are deducible from the cases of Hedley Byrne and Smith v. Eric S. Bush. Those limits appear to me to be correctly and admirably stated in the passages from the judgment of Richmond P. in the Scott Group case to which I have already referred. In particular, I see no reason why any special relationship should be held to arise simply from the circumstance that the affairs of the company are such as to render it susceptible to the attention of predators in the market who may be interested in acquiring all or the majority of the shares rather than merely a parcel of shares by way of addition to a portfolio. It follows that I would dismiss the respondents’ cross-appeal.
I turn, therefore, to the question raised by the appellants’ appeal. The Court of Appeal, whilst rejecting unanimously the respondents’ contention that the appellants owed them a duty of care simply as potential investors in the market, nevertheless by a majority allowed their claim that a similar duty was owed to them in their capacity as shareholders from the date when they first became registered in respect of shares which they had purchased. Now it cannot be nor is it claimed that this event created for the appellants any new or greater risk of harm in relation to a certification which had already taken place; nor can it be claimed that it brought about some change in the quality or extent of the respondents’ reliance upon the (ex hypothesi) inaccurate information which they had previously received and digested. The only difference in their position before registration and their position afterwards was that, as registered shareholders, they now had the statutory right to receive the accounts on which they had already relied in acquiring their original shares and to receive notice of and attend the annual general meeting of Fidelity at which the accounts were to be read and, if thought fit, approved and passed. This change of position seems, on the face of it, less than momentous and in fact they did not trouble to appoint a representative to attend the meeting on their behalf. If a distinction is to be found at all, therefore, it can only be that the nature and purpose of the statutory provisions governing the appointment and duties of auditors and the certification and publication to shareholders and others of the accounts have the effect of creating, between the auditors and individual shareholders, as potential investors in that capacity, that special relationship of proximity which is required to give rise to the duty of care and which does not exist between the auditors and the investing public generally.
Now if it be right, as, for my part, I believe that it is and as the Court of Appeal has held, that no relationship of proximity and thus no duty of care exists between auditors and the investing public generally in relation to the statutory audit — I say nothing, of course, about a case where accounts are audited specifically for the purpose of submission to a potential investor — the attribution of such a duty arising from the receipt of exactly the same information by a person who happens to be the registered holder of a share in the company whose accounts are in question produces entirely capricious results. O’Connor L.J. [1989] Q.B. 653, 715, in his dissenting judgment, instanced the case of a shareholder who, having purchased further shares at an overvalue on the basis of the accounts, shows the accounts to a friend who has no existing shareholding but proceeds to make a similar purchase. Each receives exactly the same information; each relies upon it in exactly the same way and for the same purpose; and the loss sustained in both cases is identical and is equally foreseeable. Yet liability is said to exist in the one case but not in the other. One has indeed only to consider the circumstances of the instant case which must ultimately result in drawing a distinction between the loss sustained as a result of the initial purchase of shares (irrecoverable) and that sustained as a result of purchases made after the first registration (recoverable) although all purchases were made in reliance upon exactly the same information.
So unreasonable a distinction must call in question the analysis which leads to it. The majority in the Court of Appeal deduced the relationship from what Bingham L.J. described, at p. 684D, as “the degree of closeness between the parties.” It was pointed out that although the auditors are appointed and paid by the company that is the result of the vote of the shareholders in general meeting and their remuneration is paid out of funds which might otherwise be available for distribution to shareholders by way of dividend. Their duty is to report to the shareholders whether the accounts give a true and fair view of the company’s financial position and their report is sent to each shareholder as an identifiable individual. Thus, it was said, the relationship, although not a contractual one, was very close to being contractual and was moreover one in which a lack of care would be likely directly to affect the very person whose interest the auditor is engaged to protect, should that person choose to rely upon the accounts for the purpose of making or disposing of an investment. My Lords, of course I see the force of this, but, as I have already suggested, “proximity” in cases such as this is an expression used not necessarily as indicating literally “closeness” in a physical or metaphorical sense but merely as a convenient label to describe circumstances from which the law will attribute a duty of care. It has to be borne in mind that the duty of care is inseparable from the damage which the plaintiff claims to have suffered from its breach. It is not a duty to take care in the abstract but a duty to avoid causing to the particular plaintiff damage of the particular kind which he has in fact sustained. I cannot improve on the analysis which is to be found in the judgment of Brennan J. in the High Court of Australia in the Shire of Sutherland case, 60 A.L.R. 1 to which I have already referred. After citing the speech of Viscount Simonds in The Wagon Mound [1961] AC 388, 425, where he observed that it was vain to isolate the liability from its context and to say that B is or is not liable and then to ask for what damage he is liable, Brennan J. continued, at p. 48:
“The corollary is that a postulated duty of care must be stated in reference to the kind of damage that a plaintiff has suffered and in reference to the plaintiff or a class of which the plaintiff is a member. I venture to repeat what I said in John Pfeiffer Pty. Ltd. v. Canny (1981) 148 C.L.R. 218, 241–242: ‘His duty of care is a thing written on the wind unless damage is caused by the breach of that duty; there is no actionable negligence unless duty, breach and consequential damage coincide … for the purposes of determining liability in a given case, each element can be defined only in terms of the others.’ It is impermissible to postulate a duty of care to avoid one kind of damage — say, personal injury — and, finding the defendant guilty of failing to discharge that duty, to hold him liable for the damage actually suffered that is of another independent kind — say, economic loss. Not only may the respective duties differ in what is required to discharge them; the duties may be owed to different persons or classes of persons. That is not to say that a plaintiff who suffers damage of some kind will succeed or fail in an action to recover damages according to his classification of the damage he suffered. The question is always whether the defendant was under a duty to avoid or prevent that damage, but the actual nature of the damage suffered is relevant to the existence and extent of any duty to avoid or prevent it.”
In seeking to ascertain whether there should be imposed on the adviser a duty to avoid the occurrence of the kind of damage which the advisee claims to have suffered it is not, I think, sufficient to ask simply whether there existed a “closeness” between them in the sense that the advisee had a legal entitlement to receive the information upon the basis of which he has acted or in the sense that the information was intended to serve his interest or to protect him. One must, I think, go further and ask, in what capacity was his interest to be served and from what was he intended to be protected? A company’s annual accounts are capable of being utilised for a number of purposes and if one thinks about it it is entirely foreseeable that they may be so employed. But many of such purposes have absolutely no connection with the recipient’s status or capacity, whether as a shareholder, voting or non-voting, or as a debenture-holder. Before it can be concluded that the duty is imposed to protect the recipient against harm which he suffers by reason of the particular use that he chooses to make of the information which he receives, one must, I think, first ascertain the purpose for which the information is required to be given. Indeed the paradigmatic Donoghue v. Stevenson case of a manufactured article requires, as an essential ingredient of liability, that the article has been used by the consumer in the manner in which it was intended to be used: see Grant v. Australian Knitting Mills Ltd. [1936] AC 85, 104 and Junior Books Ltd. v. Veitchi Co. Ltd. [1983] 1 AC 520, 549, 552. I entirely follow that if the conclusion is reached that the very purpose of providing the information is to serve as the basis for making investment decisions or giving investment advice, it is not difficult then to conclude also that the duty imposed upon the adviser extends to protecting the recipient against loss occasioned by an unfortunate investment decision which is based on carelessly inaccurate information. Bingham L.J. did, indeed, conclude that the provision of guidance for the making of investment decisions was one of the purposes to be discerned in the statutory provisions. He observed [1989] Q.B. 653, 681–682:
“… I think these provisions also reflect a wider and more commercial intention. The growth and development of limited liability companies over a relatively very short period have been phenomenal. Their proliferation and expansion have depended on their acceptance by the investing public as an advantageous and (on the whole) reliable medium of investment. The statutory requirements that companies account to their members and that auditors express an independent opinion to shareholders on the truth and accuracy of company accounts are in my view designed (in part at least) to fortify confidence in the holding of shares as a medium of investment by enabling shareholders to make informed investment decisions. There are obvious reasons, both economic and social, why this end should be regarded as desirable.”
How far he regarded this as an essential feature of the relationship of proximity which he held to exist between the appellants and the respondents as shareholders is not, however, entirely clear, for he attributed the same intention to the legislature in relation to investors generally. He said, at p. 682:
“The publication of accounts must limit, if it cannot eliminate, the scope for rumour-inspired speculation and thus promote an informed and orderly market. It enables prospective investors, like shareholders, to make informed decisions. For such prospective investors the independent opinion of the auditor has the same significance as for existing shareholders.”
As I have already indicated, I am not, for my part, able to share this view of the intention of the legislature. I do not believe and I see no grounds for believing that, in enacting the statutory provisions, Parliament had in mind the provision of information for the assistance of purchasers of shares or debentures in the market, whether they be already the holders of shares or other securities or persons having no previous proprietary interest in the company. It is unnecessary to decide the point on this appeal, but I can see more force in the contention that one purpose of providing the statutory information might be to enable the recipient to exercise whatever rights he has in relation to his proprietary interest by virtue of which he receives it, by way, for instance, of disposing of that interest. I can, however, see no ground for supposing that the legislature was intending to foster a market for the existing holders of shares or debentures by providing information for the purpose of enabling them to acquire such securities from other holders who might be minded to sell.
For my part, I think that the position as regards the auditor’s statutory duty was correctly summarised by O’Connor L.J. in his dissenting judgment when he said, at p. 714:
“The statutory duty owed by auditors to shareholders is, I think, a duty owed to them as a body. I appreciate that it is difficult to see how the over-statement of the accounts can cause damage to the shareholders as a body; it will be the underlying reasons for the over-statement which cause damage, for example fraudulent abstraction of assets by directors or servants, but such loss is recoverable by the company. I am anxious to limit the present case to deciding whether the statutory duty operates to protect the individual shareholder as a potential buyer of further shares. If I am wrong in thinking that under the statute no duty is owed to shareholders as individuals, then I think the duty must be confined to transactions in which the shareholder can only participate because he is a shareholder. The Companies Act 1985 imposes a duty to shareholders as a class and the duty should not extend to an individual save as a member of the class in respect of some class activity. Buying shares in a company is not such an activity.”
In my judgment, accordingly, the purpose for which the auditors’ certificate is made and published is that of providing those entitled to receive the report with information to enable them to exercise in conjunction those powers which their respective proprietary interests confer upon them and not for the purposes of individual speculation with a view to profit. The same considerations as limit the existence of a duty of care also, in my judgment, limit the scope of the duty and I agree with O’Connor L.J. that the duty of care is one owed to the shareholders as a body and not to individual shareholders.
To widen the scope of the duty to include loss caused to an individual by reliance upon the accounts for a purpose for which they were not supplied and were not intended would be to extend it beyond the limits which are so far deducible from the decisions of this House. It is not, as I think, an extension which either logic requires or policy dictates and I, for my part, am not prepared to follow the majority of the Court of Appeal in making it. In relation to the purchase of shares of other shareholders in a company, whether in the open market or as a result of an offer made to all or a majority of the existing shareholders, I can see no sensible distinction, so far as a duty of care is concerned, between a potential purchaser who is, vis-à-vis the company, a total outsider and one who is already the holder of one or more shares. I accordingly agree with what has already fallen from my noble and learned friend, Lord Bridge of Harwich, and with the speech to be delivered by my noble and learned friend, Lord Jauncey of Tullichettle, which I have had the advantage of reading, and I, too, would allow the appeal and dismiss the cross-appeal.
LORD JAUNCEY OF TULLICHETTLE. My Lords, it no longer requires a detailed citation of authority to vouch the well-established proposition that a negligent statement may, in certain circumstances, render the maker thereof liable for economic loss occasioned thereby to another. It is sufficient to mention Cann v. Willson (1888) 39 Ch D. 39, the dissenting judgment of Denning L.J. in Candler v. Crane, Christmas & Co. [1951] 2 K.B. 164, and two cases in this House, Hedley Byrne & Co. Ltd v. Heller & Partners Ltd. [1964] AC 465 and Smith v. Eric S. Bush [1990] 1 AC 831. Whether liability exists in any particular case will depend upon whether the maker of the statement owes a duty of care to the person who has suffered loss. In this connection I cannot do better than quote the words of Lord Keith of Kinkel in Governors of Peabody Donation Fund v. Sir Lindsay Parkinson & Co. Ltd. [1985] AC 210, 240–241:
“The true question in each case is whether the particular defendant owed to the particular plaintiff a duty of care having the scope which is contended for, and whether he was in breach of that duty with consequent loss to the plaintiff. A relationship of proximity in Lord Atkin’s sense must exist before any duty of care can arise, but the scope of the duty must depend on all the circumstances of the case …. So in determining whether or not a duty of care of particular scope was incumbent upon a defendant it is material to take into consideration whether it is just and reasonable that it should be so.”
The relationship of proximity to which Lord Keith referred is not one which is created solely by the foreseeability of harm resulting from carelessness in the statement, but is one in which some further ingredient importing proximity is present. Thus in Hill v. Chief Constable of West Yorkshire [1989] AC 53, 60 Lord Keith said:
“It has been said almost too frequently to require repetition that foreseeability of likely harm is not in itself a sufficient test of liability in negligence. Some further ingredient is invariably needed to establish the requisite proximity of relationship between plaintiff and defendant, and all the circumstances of the case must be carefully considered and analysed in order to ascertain whether such ingredient is present.”
Once foreseeability of likely harm from a careless statement has been established, it becomes necessary to examine the circumstances in and the purposes for which the statement was made in order to determine whether there are also present the further ingredients necessary to establish the requisite proximity of relationship between the maker of the statement and the person who has acted upon it. As Bingham L.J. observed in the present case, the concept of proximity is somewhat elusive, extending as it does beyond mere physical proximity. It might be described as the circumstances in which the law considers it proper that a duty of care should be imposed on one person towards another. If in any given circumstances a relation of proximity is found to exist, consideration must still be given to the scope of the duty which arises therefrom. In the case of physical proximity, few problems will arise, but where there exists a duty of care in relation to the making of statements, written or oral, problems may arise if those statements are capable of being used for more than one purpose. It is not disputed in the present case that economic loss to the plaintiff as a shareholder was foreseeable by the auditors as a result of any failure on their part to exercise reasonable care in the conduct of the audit. What is disputed is whether the auditors owed any duty to individual shareholders, and if so, what was the scope of that duty.
Before examining the circumstances in this case which may be relevant to the existence of a relationship of proximity, it is helpful to look in a little more detail at the four cases dealing with negligent statements to which I have already referred. In Cann v. Willson, 39 Ch D. 39, valuers instructed by an intending mortgagor sent the valuation to solicitors acting for an intending mortgagee knowing that it was hoped thereby to induce the mortgagee to make a loan. Chitty J. held that in the circumstances the valuers owed a duty of care to the mortgagee. In Candler v. Crane, Christmas & Co. [1951] 2 K.B. 164, the accountants were aware that the accounts were to be shown by their employer to the plaintiff who was a potential investor, and indeed their clerk discussed those accounts with him. Denning L.J., in suggesting the circumstances in which a duty to use care in a statement by professional persons would exist apart from contract, posed three questions: first, what persons are under such duty? Secondly, to whom do those professional people owe this duty? And thirdly, to what transactions does the duty of care extend? In relation to the second question, he said, at pp. 180–181:
“I will take accountants, but the same reasoning applies to the others. They owe the duty, of course, to their employer or client; and also I think to any third person to whom they themselves show the accounts, or to whom they know their employer is going to show the accounts, so as to induce him to invest money or take some other action on them. But I do not think the duty can be extended still further so as to include strangers of whom they have heard nothing and to whom their employer without their knowledge may choose to show their accounts. Once the accountants have handed their accounts to their employer they are not, as a rule, responsible for what he does with them without their knowledge or consent …. But excluding such cases as those, there are some cases — of which the present is one — where the accountants know all the time, even before they present their accounts, that their employer requires the accounts to show to a third person so as to induce him to act on them: and then they themselves, or their employers, present the accounts to him for the purpose. In such cases I am of opinion that the accountants owe a duty of care to the third person. The test of proximity in these cases is: did the accountants know that the accounts were required for submission to the plaintiff and use by him?”
In relation to the third question, he said, at pp. 182–183, 183–184:
“[The duty of care] extends, I think, only to those transactions for which the accountants knew their accounts were required. For instance, in the present case it extends to the original investment of £2,000 which the plaintiff made in reliance on the accounts, because the accountants knew that the accounts were required for his guidance in making that investment; but it does not extend to the subsequent £200 which he made after he had been two months with the company. This distinction, that the duty only extends to the very transaction in mind at the time, is implicit in the decided cases”
“It will be noticed that I have confined the duty to cases where the accountant prepares his accounts and makes his report for the guidance of the very person in the very transaction in question. That is sufficient for the decision of this case. I can well understand that it would be going too far to make an accountant liable to any person in the land who chooses to rely on the accounts in matters of business, for that would expose him to ‘liability in an indeterminate amount for an indeterminate time to an indeterminate class’: see Ultramares Corporation v. Touche, per Cardozo C.J. Whether he would be liable if he prepared his accounts for the guidance of a specific class of persons in a specific class of transactions, I do not say.”
Denning L.J. clearly considered that the scope of any duty of care was limited to the precise transaction for which the accountants knew that the accounts were to be used. In Hedley Byrne [1964] AC 465, a company’s bankers were asked by the plaintiffs’ bankers whether the company “would be good for an advertising contract of £8,000 to £9,000.” The company’s bankers answered the question in the affirmative but, “without responsibility on the part of the bank.” When the company failed, the plaintiffs sought to recover damages from the bankers for negligence in making the statement. The action failed because of the express disclaimer of responsibility, but this House, after detailed review of authority, held that a negligent statement, oral or written, could give rise to an action of damages for economic loss apart from any contractual or fiduciary relationship subsisting between the parties. In the context of this case, Hedley Byrne is perhaps most important for its approval of the dissenting judgment of Denning L.J. in Candler v. Crane, Christmas & Co. After setting out the facts in Candler, Lord Reid said [1964] AC 465, 487:
“This seems to me to be a typical case of agreeing to assume a responsibility: [the accountants] knew why the plaintiff wanted to see the accounts and why their employers, the company, wanted them to be shown to him, and agreed to show them to him without even a suggestion that he should not rely on them.”
Lord Reid is again there emphasising the fact that the maker of the statement was aware of the purpose for which the accounts were required to be seen. Finally, in Smith v. Eric S. Bush [1990] 1 AC 831, the plaintiff applied for a mortgage to a building society which in pursuance of its statutory duty under the Building Societies Act 1962 instructed independent surveyors to prepare a written report as to the value of the house in question. The plaintiff paid to the building society a fee in respect of this report, and subsequently a copy thereof was provided to her. Without obtaining an independent valuation, the plaintiff bought the house which later turned out to be structurally defective. The surveyor was found to have been negligent in failing to discover the defect. This House held that, notwithstanding the presence of an exclusion clause in his report, he was thereby in breach of a duty of care owed to the plaintiff. It is clear from the speeches which were delivered that the facts which created the proximate relationship between the surveyor and the plaintiff were that the former knew that the valuation had been paid for by the plaintiff and would be shown to and probably relied upon by her in deciding whether or not to buy the house. Thus, Lord Templeman said, at p. 847:
“I agree that by obtaining and disclosing a valuation, a mortgagee does not assume responsibility to the purchaser for that valuation. But in my opinion the valuer assumes responsibility to both mortgagee and purchaser by agreeing to carry out a valuation for mortgage purposes knowing that the valuation fee has been paid by the purchaser and knowing that the valuation will probably be relied upon by the purchaser in order to decide whether or not to enter into a contract to purchase the house.”
Lord Templeman undoubtedly considered that one of the necessary ingredients of the relationship of proximity was the fact that the valuer knew of the particular transaction for the purposes of which reliance would probably be placed on his report.
Lord Griffiths, after setting out three criteria for the imposition of a duty of care on an adviser, namely, foreseeability of damage, proximity of relationship and reasonableness continued, at p. 865:
“The necessary proximity arises from the surveyor’s knowledge that the overwhelming probability is that the purchaser will rely upon his valuation, the evidence was that surveyors knew that approximately 90 per cent. of purchasers did so, and the fact that the surveyor only obtains the work because the purchaser is willing to pay his fee. It is just and reasonable that the duty should be imposed for the advice is given in a professional as opposed to a social context and liability for breach of the duty will be limited both as to its extent and amount. The extent of the liability is limited to the purchaser of the house — I would not extend it to subsequent purchasers.”
Here Lord Griffiths is limiting the existence and scope of the duty of care to the very person and the very transaction which were in the contemplation of the surveyor at the material time.
My Lords, in each of these cases where a duty of care has been held to exist, the statement in question has, to the knowledge of its maker, been made available to the plaintiff for a particular purpose upon which he has relied. In the present case, the auditors, by accepting office, came under a statutory duty to make their report to the members of the company. The crucial issue is the purpose for which the report was made. To quote the words of Denning L.J. in the Candler case [1951] 2 K.B. 164, 183, what was the “very transaction” for which it was provided? To answer this question, it is necessary to look at the relevant provisions of Part VII of the Companies Act 1985.
Section 221 requires every company to cause accounting records to be kept which should be sufficient to show and explain the company’s transactions, and should be such as (a) to disclose with reasonable accuracy the financial position of the company at the time, and (b) to enable the directors to ensure that any profit and loss account complies with the requirements of the Act. If a company’s business involves dealing in goods, the accounting records require to contain statements of stock at the end of each financial year and all statements of stocktaking from which such statements of stock derive. Section 227 requires that the directors, by subsection (1) prepare a profit and loss account for the financial year in respect of each accounting reference period of the company and, by subsection (3), prepare a balance sheet as at the last day of the financial year. Section 228(2) is in the following terms:
“The balance sheet shall give a true and fair view of the state of affairs of the company as at the end of the financial year; and the profit and loss account shall give a true and fair view of the profit or loss of the company for the financial year.”
In terms of section 235 the directors are required to prepare a report “containing a fair review of the development of the business of the company and its subsidiaries during the financial year and of their position at the end of it,” and giving particulars of, inter alia, changes in asset values, directors’ shareholdings and other interests and contributions for political and charitable purposes. Section 236 makes provision for an auditors’ report in the following, inter alia, terms:
“(1) A company’s auditors shall make a report to its members on the accounts examined by them, and on every balance sheet and profit and loss account, and on all group accounts, copies of which are to be laid before the company in general meeting during the auditors’ tenure of office. (2) The auditors’ report shall state — ( a) whether in the auditors’ opinion the balance sheet and profit and loss account and (if it is a holding company submitting group accounts) the group accounts have been properly prepared in accordance with this Act; and ( b) without prejudice to the foregoing, whether in their opinion a true and fair view is given — (i) in the balance sheet, of the state of the company’s affairs at the end of the financial year; (ii) in the profit and loss account (if not framed as a consolidated account), of the company’s profit or loss for the financial year ….”
Section 237(1) defines auditors’ duties as follows:
“It is the duty of the company’s auditors, in preparing their report, to carry out such investigations as will enable them to form an opinion as to the following matters — ( a) whether proper accounting records have been kept by the company and proper returns adequate for their audit have been received from branches not visited by them, ( b) whether the company’s balance sheet and (if not consolidated) its profit and loss account are in agreement with the accounting records and returns.”
Section 241 provides, inter alia:
“(1) In respect of each financial year of a company the directors shall lay before the company in general meeting copies of the accounts of the company for that year. (2) The auditors’ report shall be read before the company in general meeting, and be open to the inspection of any member of the company. (3) In respect of each financial year the directors — ( a) shall deliver to the registrar of companies a copy of the accounts for the year ….”
The accounts of a company are defined by section 239 to include, inter alia, the company’s profit and loss account and balance sheet, and the directors’ and auditors’ reports. In terms of section 240, a copy of the company’s accounts must be sent to every member not less than 21 days before the date of the meeting referred to in section 241(1). Finally, section 245 imposes penalties on directors whose defective accounts are laid before the company or delivered to the Registrar of Companies.
Three matters emerge from the statutory provisions, namely: (1) that the responsibility for the preparation of accounts giving a true and fair view of the company’s financial state is placed fairly and squarely on the shoulders of the directors; (2) that the role of the auditors is to provide an independent report to the members on the proper preparation of the balance sheet and profit and loss account, and as to whether those documents give a true and fair view respectively of the state of the company’s affairs at the end of the financial year and of the company’s profit and loss for that year. Their role is thus purely investigative rather than creative; (3) that the company’s accounts, including the auditors’ report, will be furnished to all members of the company as well as to debenture holders and any other persons entitled to receive notice of general meeting. The accounts will, of course, also be available to any member of the public who chooses to examine the company file in the office of the Registrar of Companies.
So much for the circumstances in which company accounts reach the members. Circumstances which render it inevitable that auditors will be aware that their reports will be seen and relied upon by the members. However, that does not answer the fundamental question of the purpose, and hence the very transactions, for which the annual accounts of a company are prepared and distributed to its members. Mr. Goldsmith, for the auditors, submitted that the principal purpose was to provide an account of the stewardship of the directors to the shareholders as a body, and not to provide individual investors, whether shareholders or members of the public, with comparative information. Mr. Bathurst, for Caparo, on the other hand, argued that the purpose was to enable shareholders to make such individual decisions as they wished in relation to the company, including decisions as to investment, they already being investors, and decisions as to voting in general meetings.
In the Court of Appeal [1989] Q.B. 653, 685d–690f Bingham L.J. concluded that the auditors had voluntarily assumed direct responsibility to individual shareholders to whom they owed a duty to exercise reasonable care in carrying out their audit. He further concluded that such duty was owed to a shareholder in respect of any loss sustained by him in selling, retaining, or buying shares in the company. Bingham L.J. referred to the approval by Cardozo C.J. in Ultramares Corporation v. Touche, 174 N.E. 441, 447 of an earlier statement that:
“‘negligent words are not actionable unless they are uttered directly, with knowledge or notice that they will be acted on, to one to whom the speaker is bound by some relation of duty, arising out of public calling, contract or otherwise, to act with care if he acts at all.’”
He then said, at p. 686:
“This formulation would not exclude the finding of a sufficiently proximate relationship in the present case if the words ‘will be acted upon’ are replaced, as in English law I think they should be, by ‘may be acted upon.’”
Taylor L.J. said, at p. 703g:
“once proximity to the shareholder is established, the auditor ought prima facie to be liable for any loss suffered in foreseeable reliance upon the report; …”
In my view these observations go too far. Possibility of reliance on a statement for an unspecified purpose will not impose a duty of care on the maker to the addressee. More is required. In Smith v. Eric S. Bush [1990] 1 AC 831 it was probable, if not highly probable, that the potential purchaser would rely on the valuer’s report. This probable reliance was an essential ingredient in establishing proximity. Had it merely been a possibility that the purchaser would rely on the report I very much doubt whether this House would have decided that the valuer owed a duty of care to the purchaser. Furthermore, reliance, even if probable, thereby establishing proximity, does not establish a duty of care of unlimited scope. Regard must be had to the transaction or transactions for the purpose of which the statement was made. It is loss arising from such transaction or transactions rather than “any loss” to which the duty of care extends.
I do not understand that either Bingham L.J. or Taylor L.J., in reaching their conclusions, relied to any material extent upon the purpose for which accounts of a company, including the auditors’ report, are provided to members or consequentially upon the transactions for which the members were expected to use them. O’Connor L.J., in a dissenting judgment, considered that the statutory duty owed by auditors to shareholders was owed to them as a body and not as individuals.
My Lords, Part VII of the Companies Act 1985 provides that the accounts of a company for each financial year shall be laid before the company’s general meeting, that is to say before the members in general meeting. Copies of the accounts must be sent to the members at least 21 days in advance, and it is obvious that the reason for this is to enable the members to prepare themselves for attendance at and participation in the meeting. The annual general meeting provides the opportunity for members to question the stewardship of the company during the preceding year, to vote for or against election or re-election of directors, to approve or disapprove the appointment or re-appointment of auditors and to take other decisions affecting the company as a whole or themselves as members of a particular class of shareholders. There is nothing in Part VII which suggests that the accounts are prepared and sent to members for any purpose other than to enable them to exercise class rights in general meeting. I therefore conclude that the purpose of annual accounts, so far as members are concerned, is to enable them to question the past management of the company, to exercise their voting rights, if so advised, and to influence future policy and management. Advice to individual shareholders in relation to present or future investment in the company is no part of the statutory purpose of the preparation and distribution of the accounts. It follows that I am in agreement with the views of O’Connor L.J. as to the nature of the statutory duty owed by auditors to shareholders.
If the statutory accounts are prepared and distributed for certain limited purposes, can there nevertheless be imposed upon auditors an additional common law duty to individual shareholders who choose to use them for another purpose without the prior knowledge of the auditors? The answer must be no. Use for that other purpose would no longer be use for the “very transaction” which Denning L.J. in the Candler case [1951] 2 K.B. 164, 183 regarded as determinative of the scope of any duty of care. Only where the auditor was aware that the individual shareholder was likely to rely on the accounts for a particular purpose such as his present or future investment in or lending to the company would a duty of care arise. Such a situation does not obtain in the present case.
The Court of Appeal unanimously rejected a submission by Caparo that an auditor owed a duty to a potential investor who held no shares. In this House it was argued that the relationship of the unwelcome bidder in a potential takeover situation was nearly as proximate to the auditor as was the relationship of a shareholder to whom the report was directed. Since I have concluded that the auditor owed no duty to an individual shareholder, it follows that this argument must also fail. The fact that a company may at a time when the auditor is preparing his report be vulnerable to a take-over bid cannot per se create a relationship of proximity between the auditor and the ultimate successful bidder. Not only is the auditor under no statutory duty to such a bidder but he will have reason at the material time to know neither of his identity nor of the terms of his bid. In this context the recent case of Al Saudi Banque v. Clarke Pixley [1990] Ch. 313 is in point. There Millett J. held that the auditors of a company owed no duty of care to a bank which lent money to the company, regardless of whether the bank was an existing creditor or a potential one, because no sufficient proximity of relationship existed in either case between the auditor and the bank. I have no doubt that this case was correctly decided and I would only add that I am in entire agreement with the careful process of reasoning whereby the judge reached his decision.
It only remains to mention Twomax Ltd. v. Dickson, McFarlane & Robinson, 1982 S.C. 113 to which your Lordships were referred. The Lord Ordinary (Lord Stewart) held that auditors owed a duty of care to potential investors who were not shareholders by applying the test of whether the defenders knew or reasonably should have foreseen at the time the accounts were audited that a person might rely on those accounts for the purpose of deciding whether or not to take over the company, and therefore would suffer loss if the accounts were inaccurate. There were in that case no such findings in fact as would support the existence of a relationship of proximity between the auditor and the unknown potential investor. I therefore consider that the reasoning of the Lord Ordinary was unsound and that the decision cannot be supported.
For the foregoing reasons, I would allow the appeal.
Appeal allowed with costs.
Cross-appeal dismissed with costs.
Solicitors: Freshfields; Berwin Leighton.
Murphy v Brentwood District Council
[1991] UKHL 2 (26 July 1990)
Die Jovis 26° Julii 1990
Upon Report from the Appellate Committee to whom was
referred the Cause Murphy against Brentwood District Council,
That the Committee had heard Counsel on Monday the 14th,
Tuesday the 15th, Wednesday the 16th, Tuesday the 17th, Monday
the 21st, Tuesday the 22nd and Wednesday the 23rd days of May
last, upon the Petition and Appeal of Brentwood District
Council of Council Offices, Brentwood, Essex, praying that the
matter of the Order set forth in the Schedule thereto, namely
an Order of Her Majesty’s Court of Appeal of the 21st day of
December 1989, might be reviewed before Her Majesty the Queen
in Her Court of Parliament and that the said Order might be
reversed, varied or altered or that the Petitioners might have
such other relief in the premises as to Her Majesty the Queen
in Her Court of Parliament might seem meet; as upon the case
of Thomas Murphy lodged in answer to the said Appeal; and due
consideration had this day of what was offered on either side
in this Cause:
It is Ordered and Adjudged, by the Lords Spiritual and
Temporal in the Court of Parliament of Her Majesty the Queen
assembled, That the said Order of Her Majesty’s Court of
Appeal of the 21st day of December 1989 complained of in the
said Appeal be, and the same is hereby, Set Aside and that the
Order o£ His Honour Judge Esyr Lewis of the 25th day of
February 1988 be and the same is hereby Set Aside: And it is
further Ordered, That the Respondent do pay or cause to be
paid to the said Appellants the Costs incurred by them in the
Courts below and also the Costs incurred by them in respect of
the said Appeal to this House, the amount of such last-
mentioned Costs to be certified by the Clerk of the
Parliaments if not agreed between the parties: And it is also
further Ordered, That the Cause be, and the same is hereby,
remitted back to the Queen’s Bench Division of the High Court
of Justice to do therein as shall be just and consistent with
this Judgment.
Cler: Parliamentor:
Judgment: 26.7.90
HOUSE OF LORDS
MURPHY
(RESPONDENT)
v.
BRENTWOOD DISTRICT COUNCIL
(APPELLANTS)
Lord Chancellor
Lord Keith of Kinkel
Lord Bridge of Harwich
Lord Brandon of Oakbrook
Lord Ackner
Lord Oliver of Aylmerton
Lord Jauncey of Tullichettle
LORD MACKAY OF CLASHFERN L.C.
My Lords,
I have had the advantage of reading in draft the speeches
of my noble and learned friends Lord Keith of Kinkel and Lord
Bridge of Harwich. They have comprehensively analysed the issues
arising in this appeal and in consequence I am able to express my
conclusion briefly.
We are asked to depart from the judgment of this House in
Anns v. Merton London Borough Council [1978] AC 728 under the
practice statement of 1966 (Practice Statement (Judicial
Precedent) [1966] 1 W.L.R. 1234). That decision was taken after
very full consideration by a committee consisting of most eminent
members of this House. In those circumstances I would be very
slow to accede to the suggestion that we should now depart from
it. However, the decision was taken as a preliminary issue of law
and accordingly the facts had not at that stage been examined in
detail and the House proceeded upon the basis of the facts stated
in the pleadings supplemented by such further facts and documents
as had been agreed between the parties. Under the head “Nature
of the damages recoverable and arising of the cause of action”
Lord Wilberforce said, at p. 759:
“There are many questions here which do not directly arise
at this stage and which may never arise as the actions are
tried. But some conclusions are necessary if we are to deal
with the issue as to limitation.”
When one attempts to apply the proposition established by the
decision to detailed factual situations difficulties arise and this
was clearly anticipated by Lord Wilberforce when he said, at p.
760:
“We are not concerned at this stage with any issue relating
to remedial action nor are we called upon to decide upon
what the measure of the damages should be; such questions,
possibly very difficult in some cases, will be for the court
– 1 –
to decide. It is sufficient to say that a cause of action
arises at the point I have indicated.”
That point was when damage to the house had occurred resulting
in there being a present or imminent danger to the health or
safety of persons occupying it.
As I read the speech of Lord Wilberforce the cause of
action which he holds could arise in the circumstances of that
case can only do so when damage occurs to the house in question
as a result of the weakness of the foundations and therefore no
cause of action arises before that damage has occurred even if as
a result of information obtained about the fundations it may
become apparent to an owner that such damage is likely.
The person to whom the duty is owed is an owner or
occupier of the house who is such when the damage occurs. And
therefore an owner or occupier who becomes aware of the
possibility of damage arising from a defective foundation would not
be within the class of persons upon whom the right of action is
conferred.
As had been demonstrated in the speeches of my noble and
learned friends, the result of applying these qualifications to
different factual circumstances is to require distinctions to be
made which have no justification on any reasonable principle and
can only be described as capricious. It cannot be right for this
House to leave the law in that state.
Two options call for consideration. The first is to remove
altogether the qualifications on the cause of action which Anns
held to exist. This would be in itself a departure from Anns since
these qualifications are inherent in the decision. The other option
is to go back to the law as it was before Anns was decided and
this would involve also overruling Dutton v. Bognor Regis Urban
District Council [1972] 1 Q.B. 373.
Faced with the choice I am of the opinion that it is
relevant to take into account that Parliament has made provisions
in the Defective Premises Act 1972 imposing on builders and
others undertaking work in the provision of dwellings obligations
relating to the quality of their work and the fitness for habitation
of the dwelling. For this House in its judicial capacity to create
a large new area of responsibility on local authorities in respect of
defective buildings would in my opinion not be a proper exercise
of judicial power. I am confirmed in this view by the
consideration that it is not suggested, and does not appear to have
been suggested in Anns, that the Public Health Act 1936, in
particular Part n, manifests any intention to create statutory
rights in favour of owners or occupiers of premises against the
local authority charged with responsibility under the Act. The
basis of the decision in Anns is that the common law will impose
a duty in the interests of the safety and health of owners and
occupiers of buildings since that was the purpose for which the
Act of 1936 was enacted. While of course I accept that duties at
common law may arise in respect of the exercise of statutory
powers or the discharge of statutory duties I find difficulty in
reconciling a common law duty to take reasonable care that plans
should conform with byelaws or regulations with the statute which
– 2 –
has imposed on the local authority the duty not to pass plans
unless they comply with the byelaws or regulations and to pass
them if they do.
In these circumstances I have reached the clear conclusion
that the proper exercise of the judicial function requires this
House now to depart from Anns in so far as it affirmed a private
law duty of care to avoid damage to property which causes
present or imminent danger to the health and safety of owners, or
occupiers, resting upon local authorities in relation to their
function of supervising compliance with building byelaws or
regulations, that Dutton v. Bognor Regis Urban District Council
should be overruled and that all decisions subsequent to Anns
which purported to follow it should be overruled. I accordingly
reach the same conclusion as do my noble and learned friends.
I should make it clear that I express no opinion upon the
question whether, if personal injury were suffered by an occupier
of defective premises as a result of a latent defect in those
premises, liability in respect of that personal injury would attach
to a local authority which had been charged with the public law
duty of supervising compliance with the relevant building byelaws
or regulations in respect of a failure properly to carry out such
duty.
LORD KEITH OF KINKEL
My Lords,
This appeal raises directly the question whether Anns v.
Merton London Borough Council [1978] AC 728 was in all respects
correctly decided.
The facts are that over a period ending in 1969 a concern
called ABC Homes constructed an estate of 160 dwelling houses on
a site in Brentwood. Two of these houses, nos. 36 and 38
Vineway, were built over filled ground upon a concrete raft
foundation. The raft was designed by a firm of civil engineers
called Grahame Rudkins Associates. The design, which included
certain steel reinforcement, was submitted to the appellant
council, together with supporting calculations, for approval under
section 64 of the Public Health Act 1936. The council, whose
building control staff did not include any persons qualified to judge
the suitability of the design, sought the advice of independent
consulting engineers, Messrs. S. D. Mayer & Partners. Their
advice was to the effect that the design was appropriate to the
conditions and could properly be approved. The council accordingly
approved it on 1 January 1969. The plaintiff purchased 38,
Vineway from ABC Homes in 1970 and took up residence there.
From 1981 onwards serious cracks started appearing in the internal
walls of the house. In addition, wet patches appeared in the lawn.
The plaintiff dug a hole in front of the house and exposed part of
the foundation raft. He observed a crack in it about three-
quarters of an inch wide at the bottom tapering to nothing at the
top. The plaintiff contacted his insurance company, Norwich
Union, which caused investigations to be made by consulting
– 3 –
engineers. These revealed that the concrete raft had subsided
differentially, so causing distortion and cracking. In July 1985 the
gas pipe leading to a fire in the living room cracked and was
replaced at a cost of £48. It was found that the soil pipe leading
to the main drain had cracked and was leaking into the
foundations. The plaintiff’s neighbour at 36, Vineway also suffered
damage to his house through the settlement, and made a claim on
his insurers. Liability was not accepted, and accordingly the
neighbour was unable to afford any contribution to the cost of
remedial work to the joint structure of the two houses. The
plaintiff’s insurers, Norwich Union, were not prepared to pay the
whole cost. The plaintiff therefore decided to sell his house and
move elsewhere. He sold it in July 1986 for £30,000 to a builder
who was aware of the structural defects, and who has since
occupied it with his family without carrying out any remedial
work. The value of the house had it been free from defect was
agreed to have been at the time £65,000. Norwich Union paid the
plaintiff £35,000 in settlement of his claim for subsidence damage.
There was evidence that the cost of remedial work on the
foundations of the house would have been in the region of £45,000.
The damages claimed by the plaintiff against the council, in
proceedings commenced in September 1983, included the sum of
£35,000 and also the sum of £3,631.25 in respect of costs incurred
in selling 38, Vineway and buying a new house and moving there,
£98 for refitting carpets in the new house, and £48 for replacing
the fractured gas pipe.
The case was tried before Judge Esyr Lewis Q.C. as official
referee. He gave judgment on 18 March 1988 awarding the
plaintiff damages of £38,777.25, made up of the four items
mentioned above, together with interest of £7,173.75. In the
course of his judgment he made the following findings: (a) The
design of the concrete raft was defective in that it did not
provide for sufficient steel reinforcement and was therefore
unsuitable for the site. (b) Messrs. Mayer were competent
engineers and the council were entitled to rely on their skill and
experience. (c) Messrs. Mayer were negligent in approving the
design of the concrete raft as suitable for the site, (d) As a
result of its defective design the raft cracked and became
distorted so that differential settlement occurred and cracks were
caused in some walls and a gas pipe and a soil pipe were
fractured, (e) Sporadic and unpredictable settlement of the raft
would occur in the future though the total amount of future
settlement might be small, (f) There was a risk that the main
gas pipe might fracture and that water pipes might also fracture
causing water to leak into electrical fittings. This, together with
leakage of sewage into the foundations from the fractured soil
pipe, constituted an imminent danger to the health and safety of
occupants of the house.
In the light of these findings Judge Esyr Lewis held that the
council were liable to the plaintiff in negligence under the
principle of Anns v. Merton London Borough Council. He further
held that the council’s duty to take reasonable care in considering
the suitability of the design of the concrete raft had not been
discharged by obtaining and acting upon the advice of competent
independent consulting engineers. He also decided against the
council a limitation point which is no longer a live issue.
– 4 –
An appeal by the council to the Court of Appeal was
dismissed by that court (Fox, Ralph Gibson and Nicholls L.JJ.)
[1990] 2 W.L.R. 944 on 21 December 1989. The council now
appeals, with leave given in the Court of Appeal, to your
Lordships’ House.
Both Judge Esyr Lewis and the Court of Appeal proceeded
on the basis that the plaintiff had a good cause of action by
virtue of the decision in Anns. It was held that the diminution in
the value of the plaintiff’s house by reason of the state of its
foundations formed an item of damages recoverable in law. Ralph
Gibson L.J. said, at pp. 966-967:
“In this case, upon the facts as the plaintiff contended that
they were on the evidence, the plaintiff’s loss on sale as
awarded was substantially less than the cost of eliminating
the danger found by the judge to exist. Full effect is given
to the nature of the cause of action as established in Anns,
and to any limitations necessarily imposed upon that cause
of action by the nature of the statutory purposes of the
[Public Health Act 1936], if the damages awarded are
justified by proof of imminent danger to health and safety,
by proof of the fact that the loss on sale was caused by
the existence of that danger, and proof that the amount
awarded does not exceed the cost of eliminating that
danger.”
Before your Lordship’s House it was argued on behalf of the
council that Anns was wrongly decided and should be departed
from under the practice statement of 26 July 1966 (Practice
Statement (Judicial Precedent) [1966] 1 W.L.R. 1234). The
speeches of my noble and learned friends Lord Bridge of Harwich
and Lord Oliver of Aylmerton in D. & F. Estates Ltd v. Church
Commissioners for England [1989] AC 177 contain some passages
expressing doubts as to the extent to which the decision in Anns is
capable of being reconciled with pre-existing principle. It is
therefore appropriate to subject the decision to careful
reconsideration.
As is well known, it was held in Anns that a local authority
might be liable in negligence to long lessees occupying maisonettes
built on inadequate foundations not complying with relevant
building regulations, on the ground of failure by the authority to
discover by inspection the inadequacy of the foundations before
they were covered over. The proceedings arose out of the trial of
a preliminary issue as to whether or not the plaintiffs had any
cause of action against the local authority, and the damages
claimed by them were not specified in the pleadings. It appeared,
however, that such damages would include the cost of repairing
cracks in the structure and of underpinning the foundations of the
block of maisonettes.
The leading speech was that of Lord Wilberforce. His
examination of law started with the formulation of the two stage
test of liability in negligence which, though it has since become
very familiar, I venture to quote again [1978] AC 728, 751-752:
‘Through the trilogy of cases in this House – Donoghue v.
Stevenson [1932] AC 562, Hedley Byrne & Co. Ltd. v.
– 5 –
Heller & Partners Ltd. [1964] AC 465, and Dorset Yacht
Co. Ltd. v. Home Office [1970] AC 1004, the position has
now been reached that in order to establish that a duty of
care arises in a particular situation, it is not necessary to
bring the facts of that situation within those of previous
situations in which a duty of care has been held to exist.
Rather the question has to be approached in two stages.
First one has to ask whether, as between the alleged
wrongdoer and the person who has suffered damage there is
a sufficient relationship of proximity or neighbourhood such
that, in the reasonable contemplation of the former,
carelessness on his part may be likely to cause damage to
the latter – in which case a prima facie duty of care arises.
Secondly, if the first question is answered affirmatively, it
is necessary to consider whether there are any
considerations which ought to negative, or to reduce or limit
the scope of the duty or the class of person to whom it is
owed or the damages to which a breach of it may give rise:
see Dorset Yacht case [1970] AC 1004, per Lord Reid at
p. 1027. Examples of this are Hedley Byrne’s case [1964]
A.C. 465 where the class of potential plaintiffs was reduced
to those shown to have relied upon the correctness of
statements made, and Weller & Co. v. Foot and Mouth
Disease Research Institute [1966] 1 Q.B. 569; and (I cite
these merely as illustrations, without discussion) cases about
“economic loss” where, a duty having been held to exist, the
nature of the recoverable damages was limited: see S.C.M.
(United Kingdom) Ltd. v. W. J. Whittall & Son Ltd. [1971] 1
Q.B. 337 and Spartan Steel & Alloys Ltd. v. Martin & Co.
(Contractors) Ltd. [1973] QB 27.”
I observe at this point that the two-stage test has not been
accepted as stating a universally applicable principle. Reservations
about it were expressed by myself in Governors of the Peabody
Donation Fund v. Sir Lindsay Parkinson & Co. Ltd. [1985] A.C.
210, 240, by Lord Brandon of Oakbrook in Leigh and Sillavan Ltd.
v. Aliakmon Shipping Co. Ltd. [1986] AC 785, 815 and by Lord
Bridge of Harwich in Curran v. Northern Ireland Co-ownership
Housing Association Ltd. [1987] A.C. 718. In Council of the Shire
of Sutherland v. Heyman (1985) 157 C.L.R. 424, where the High
Court of Australia declined to follow Anns, Brennan J. expressed
his disagreement with Lord Wilberforce’s approach, saying, at p.
481:
“It is preferable, in my view, that the law should develop
novel categories of negligence incrementally and by analogy
with established categories, rather than by a massive
extension of a prima facie duty of care restrained only by
indefinable ‘considerations which ought to negative, or to
reduce or limit the scope of the duty or the class of person
to whom it is owed.'”
In the Privy Council case of Yuen Kun Yeu v. Attorney-
General of Hong Kong [1988] A.C. 175, 191 that passage was
quoted with approval and it was said, at p. 194:
“In view of the direction in which the law has since been
developing, their Lordships consider that for the future it
should be recognised that the two-stage test … is not to
– 6 –
be regarded as in all circumstances a suitable guide to the
existence of a duty of care.”
Finally, in Yuen Kun Yeu 193, and in Hill v. Chief
Constable of West Yorkshire [1989] AC 53, 63, I expressed the
opinion, concurred in by the other members of the House who
participated in the decisions, that the second stage of the test
only came into play where some particular consideration of public
policy excluded any duty of care. As regards the ingredients
necessary to establish such a duty in novel situations, I consider
that an incremental approach on the lines indicated by Brennan J.
in the Shire of Sutherland case is to be preferred to the two-stage
test.
Lord Wilberforce thereafter went on to consider the
purposes of the Act of 1936, to hold that the local authority were
under a duty to give proper consideration to the question whether
they should inspect or not and to hold further that in relation to
an inspection which it was decided to make there was a duty to
exercise reasonable care in making it. Having considered East
Suffolk Rivers Catchment Board v. Kent [1941] AC 74 and Dorset
Yacht Co. Ltd. v. Home Office [1970] AC 1004, he continued, at
p. 758:
“To whom the duty is owed. There is, in my opinion,
no difficulty about this. A reasonable man in the position
of the inspector must realise that if the foundations are
covered in without adequate depth or strength as required
by the byelaws, injury to safety or health may be suffered
by owners or occupiers of the house. The duty is owed to
them – not of course to a negligent building owner, the
source of his own loss. I would leave open the case of
users, who might themselves have a remedy against the
occupier under the Occupiers’ Liability Act 1957. A right
of action can only be conferred upon an owner or occupier,
who is such when the damage occurs (see below). This
disposes of the possible objection that an endless,
indeterminate class of potential plaintiffs may be called into
existence.
“The nature of the duty. This must be related
closely to the purpose for which powers of inspection are
granted, namely, to secure compliance with the byelaws.
The duty is to take reasonable care, no more, no less, to
secure that the builder does not cover in foundations which
do not comply with byelaw requirements. The allegations in
the statements of claim, in so far as they are based upon
non-compliance with the plans, are misconceived.”
Lord Wilberforce went on, at pp. 758-759, to consider the
position of the builder, upon the view that it would be
unreasonable to impose liability in respect of defective foundations
upon the council if the builder, whose primary fault it was, should
be immune from liability. This consideration was, I think, a
necessary part of the reasoning which led to his conclusion about
the liability of the local authority. The Dorset Yacht case, upon
which Lord Wilberforce was proceeding, was concerned with the
liability of prison officers for failing to take reasonable care to
prevent the Borstal boys in their charge from acting tortiously
– 7 –
towards the owners of yachts moored in the vicinity of their
encampment. If the conduct of the boys had not been tortious
there would have been no liability on the prison officers. So,
likewise, if the builder of defective foundations had been under no
liability in tort, the local authority could have been under no
liability for not taking reasonable care to see that he did not
construct defective foundations. Lord Wilberforce took the view
that the principle of Donoghue v. Stevenson [1932] AC 562
applied to the builder of defective premises, there being no sound
reason why that principle should be limited to defective chattels.
I see no reason to doubt that the principle of Donoghue v.
Stevenson does indeed apply so as to place the builder of premises
under a duty to take reasonable care to avoid injury through
defects in the premises to the person or property of those whom
he should have in contemplation as likely to suffer such injury if
care is not taken. But it is against injury through latent defects
that the duty exists to guard. I shall consider this aspect more
fully later.
Lord Wilberforce went on, at pp. 759-760:
“Nature of the damages recoverable and arising of the
cause of action. There are many questions here which do
not directly arise at this stage and which may never arise if
the actions are tried. But some conclusions are necessary if
we are to deal with the issue as to limitation. The
damages recoverable include all those which foreseeably
arise from the breach of the duty of care which, as regards
the council, I have held to be a duty to take reasonable
care to secure compliance with the byelaws. Subject always
to adequate proof of causation, these damages may include
damages for personal injury and damage to property. In my
opinion they may also include damage to the dwelling house
itself; for the whole purpose of the byelaws in requiring
foundations to be of a certain standard is to prevent
damage arising from weakness of the foundations which is
certain to endanger the health or safety of occupants.
“To allow recovery for such damage to the house
follows, in my opinion, from normal principle. If
classification is required, the relevant damage is in my
opinion material, physical damage, and what is recoverable
is the amount of expenditure necessary to restore the
dwelling to a condition in which it is no longer a danger to
the health or safety of persons occupying and possibly
(depending on the circumstances) expenses arising from
necessary displacement. On the question of damages
generally I have derived much assistance from the judgment
(dissenting on this point, but of strong persuasive force) of
Laskin J. in the Canadian Supreme Court case of Rivtow
Marine Ltd. v. Washington Iron Works [1973] 6 W.W.R. 692,
715 and from the judgments of the New Zealand Court of
Appeal (furnished by courtesy of that court) in Bowen v.
Paramount Builders (Hamilton) Ltd.[1975] 2 N.Z.L.R. 546.
“When does the cause of action arise? We can leave
aside cases of personal injury or damage to other property
as presenting no difficulty. It is only the damage for the
– 8 –
house which requires consideration. In my respectful opinion
the Court of Appeal was right when, in Sparham-Souter v.
Town and Country Developments (Essex) Ltd. [1976] Q.B. 858
it abjured the view that the cause of action arose
immediately upon delivery, i.e., conveyance of the defective
house. It can only arise when the state of the building is
such that there is present or imminent danger to the health
or safety of persons occupying it. We are not concerned at
this stage with any issue relating to remedial action nor are
we called upon to decide upon what the measure of the
damages should be; such questions, possibly very difficult in
some cases, will be for the court to decide. It is sufficient
to say that a cause of action arises at the point I have
indicated.”
Counsel for the council did not seek to argue that a local
authority owes no duty at all to persons who might suffer injury
through a failure to take reasonable care to secure compliance
with building byelaws. He was content to accept that such a duty
existed but maintained that its scope did not extend beyond injury
to person or health and (possibly) damage to property other than
the defective building itself. Not having heard argument upon the
matter, I prefer to reserve my opinion on the question whether
any duty at all exists. So far as I am aware, there has not yet
been any case of claims against a local authority based on injury
to person or health through a failure to secure compliance with
building byelaws. If and when such a case arises, that question
may require further consideration. The present problem is
concerned with the scope of the duty. The question is whether
the appellant council owed the respondent a duty to take
reasonable care to safeguard him against the particular kind of
damage which he has in fact suffered, which was not injury to
person or health nor damage to anything other than the defective
house itself (see Overseas Tankship (U.K.) Ltd. v. Morts Dock and
Engineering Co. Ltd., (The Wagon Mound) [1961]) A.C. 388, 425,
per Viscount Simonds: Caparo Industries Plc, v. Dickman [1990] 2
W.L.R. 358, 373, 396 per Lord Bridge of Harwich and Lord Oliver
of Aylmerton, quoting the judgment of Brennan J. in the Shire of
Sutherland case; 157 C.L.R. 424, 487). 60 A.L.R. 1, 48.
Lord Wilberforce, in the passage last quoted from his speech
in Anns, does not devote precise consideration to the scope of the
duty owed by a local authority as regards securing compliance with
building byelaws. The question whether recovery could be allowed
for damage to the house and for the cost putting it in such a
state as to be no longer a danger to health or safety was treated
in the context of the measure of damages and the answer was said
to follow from normal principle. It appears that the normal
principle concerned was that which emerged from Donoghue v.
Stevenson, as extended to the sphere of statutory functions of
public bodies in Dorset Yacht Co. Ltd. v. Home Office. However,
an essential feature of the species of liability in negligence
established by Donoghue v. Stevenson was that the carelessly
manufactured -product should be intended to reach the injured
consumer in the same state as that in which it was put up with
no reasonable prospect of intermediate examination (see per Lord
Atkin, at p. 599; also Grant v. Australian Knitting Mills Ltd.
[1936] AC 85, per Lord Wright, at pp. 103-105). It is the latency
of the defect which constitutes the mischief. There may be room
– 9 –
for disputation as to whether the likelihood of intermediate
examination and consequent actual discovery of the defect has the
effect of negativing a duty of care or of breaking the chain of
causation (compare Farr v. Butters Brothers & Co. [1932] 2 K.B.
606 with Denny v. Supplies & Transport Co. Ltd. [1950] 2 K.B.
374). But there can be no doubt that, whatever the rationale, a
person who is injured through consuming or using a product of the
defective nature of which he is well aware has no remedy against
the manufacturer. In the case of a building, it is right to accept
that a careless builder is liable, on the principle of Donoghue v.
Stevenson, where a latent defect results in physical injury to
anyone, whether owner, occupier, visitor or passer-by, or to the
property of any such person. But that principle is not apt to
bring home liability towards an occupier who knows the full extent
of the defect yet continues to occupy the building. The Dorset
Yacht case was concerned with the circumstances under which one
person might come under a duty to another to take reasonable
care to prevent a third party from committing a tort against that
other. So the case had affinities with Anns where a local
authority was held to be under a duty to take reasonable care to
prevent a builder from causing damage through carelessness to
subsequent occupiers of houses built by him. In Dorset Yacht,
however, the damage caused was physical damage to property, and,
as I explained in Hill v. Chief Constable of West Yorkshire [1989]
A.C. 53, 61, the prison officers in charge of the Borstal boys had
created a potential situation of danger for the owners of yachts
moored in the vicinity of the encampment by bringing the boys
into that locality. No such feature was present in Anns.
In Anns the House of Lords approved, subject to explanation,
the decision of the Court of Appeal in Dutton v. Bognor Regis
Urban District Council [1972] 1 Q.B. 373. In that case Lord
Denning M.R. said, at p. 396:
“Mr Tapp [for the council] submitted that the liability of
the council would, in any case, be limited to those who
suffered bodily harm: and did not extend to those who only
suffered economic loss. He suggested, therefore, that
although the council might be liable if the ceiling fell down
and injured a visitor, they would not be liable simply
because the house was diminished in value. … I cannot
accept this submission. The damage done here was not
solely economic loss. It was physical damage to the house.
If Mr Tapp’s submission were right, it would mean that if
the inspector negligently passes the house as properly built
and it collapses and injures a person, the council are liable:
but if the owner discovers the defect in time to repair it –
and he does repair it – the council are not liable. That is
an impossible distinction. They are liable in either case. I
would say the same about the manufacturer of an article.
If he makes it negligently, with a latent defect (so that it
breaks to pieces and injures someone), he is undoubtedly
liable. Suppose that the defect is discovered in time to
prevent the injury. Surely he is liable for the cost of
repair.”
The jump which is here made from liability under the Donoghue v.
Stevenson principle for damage to person or property caused by a
latent defect in a carelessly manufactured article to liability for
– 10 –
the cost of rectifying a defect in such an article which is ex
hypothesi no longer latent is difficult to accept. As Stamp L.J.
recognised in the same case, at pp. 414-415, there is no liability
in tort upon a manufacturer towards the purchaser from a retailer
of an article which turns out to be useless or valueless through
defects due to careless manufacture. The loss is economic. It is
difficult to draw a distinction in principle between an article
which is useless or valueless and one which suffers from a defect
which would render it dangerous in use but which is discovered by
the purchaser in time to avert any possibility of injury. The
purchaser may incur expense in putting right the defect, or, more
probably, discard the article. In either case the loss is purely
economic. Stamp L.J. appears to have taken the view that in the
case of a house the builder would not be liable to a purchaser
where the defect was discovered in time to prevent injury but that
a local authority which had failed to discover the defect by
careful inspection during the course of construction was so liable.
Batty v. Metropolitan Property Realisations Ltd. [1978] Q.B.
554 was a case where a house which suffered no defects of
construction had been built on land subject to the danger of
slippage. A landslip carried away part of the garden but there
was no damage to the house itself. Due to the prospect, however,
that at some future time the house might be completely carried
away, it was rendered valueless. There was no possibility of
remedial works such as might save the house from being carried
away. The Court of Appeal allowed recovery in tort against the
builder of damages based on loss of the value of the house. That
again was purely economic loss.
Consideration of the nature of the loss suffered in this
category of cases is closely tied up with the question of when the
cause of action arises. Lord Wilberforce in Anns [1978] AC 728,
760 as regarded it as arising when the state of the building is
such that there is present an imminent danger to the health or
safety of persons occupying it. That state of affairs may exist
when there is no actual physical damage to the building itself,
though Lord Wilberforce had earlier referred to the relevant
damage being material physical damage. So his meaning may have
been that there must be a concurrence of material physical
damage and also present or imminent danger to the health or
safety of occupants. On that view there would be no cause of
action where the building had suffered no damage (or possibly,
having regard to the word “material,” only very slight damage) but
a structural survey had revealed an underlying defect, presenting
imminent danger. Such a discovery would inevitably cause a fall
in the value of the building, resulting in economic loss to the
owner. That such is the nature of the loss is made clear in cases
where the owner abandons the building as incapable of being put in
a safe condition (as in Batty), or where he choses to sell it at the
lower value rather than undertake remedial works. In Pirelli
General Cable Works Ltd. v. Oscar Faber & Partners [1983] 2 A.C.
1 it was held that the cause of action in tort against consulting
engineers who had negligently approved a defective design for a
chimney arose when damage to the chimney caused by the
defective design first occurred, not when the damage was
discovered or with reasonable diligence might have been
discovered. The defendants there had in relation to the design
been in contractual relations with the plaintiffs, but it was
– 11 –
:
common ground that a claim in contract was time-barred. If the
plaintiffs had happened to discover the defect before any damage
had occurred there would seem to be no good reason for holding
that they would not have had a cause of action in tort at that
stage, without having to wait until some damage had occurred.
They would have suffered economic loss through having a defective
chimney upon which they required to expend money for the
purpose of removing the defect. It would seem that in a case
such as Pirelli where the tortious liability arose out of a
contractual relationship with professional people, the duty extended
to take reasonable care not to cause economic loss to the client
by the advice given. The plaintiffs built the chimney as they did
in reliance on that advice. The case would accordingly fall within
the principle of Medley Byrne & Co. Ltd. v. Heller & Partners
Ltd. [1964] AC 465. I regard Junior Books Ltd. v. Veitchi Co.
Ltd. [1983] 1 AC 520 as being an application of that principle.
In my opinion it must now be recognised that, although the
damage in Anns was characterised as physical damage by Lord
Wilberforce, it was purely economic loss. In Council of the Shire
of Sutherland v. Heyman, 157 C.L.R. 424 where, as observed
above, the High Court of Australia declined to follow Anns when
dealing with a claim against a local authority in respect of a
defectively constructed house, Deane J. said, at pp. 503-505:
“Nor is the respondents’ claim in the present case for
ordinary physical damage to themselves or their property.
Their claim, as now crystallized, is not in respect of
damage to the fabric of the house or to other property
caused by collapse or subsidence of the house as a result of
the inadequate foundations. It is for the loss or damage
represented by the actual inadequacy of the foundations,
that is to say, it is for the cost of remedying a structural
defect in their property which already existed at the time
when they acquired it. In Anns v. Merton London Borough
Council [1978] AC 728, it was held by the House of Lords
that a local government authority owed a relevant duty of
care, in respect of inspection of the foundations of a
building, to persons who subsequently became long term
lessees (either as original lessees or as assignees) of parts of
the building. Lord Wilberforce, at p. 759, in a speech with
which three of the other four members of the House of
Lords agreed, expressed the conclusion that the appropriate
classification of damage sustained by the lessees by reason
of the inadequacy of the foundations of the completed
building was ‘material, physical damage, and what is
recoverable is the amount of expenditure necessary to
restore the dwelling to a condition in which it is no longer
a danger to the health or safety of persons occupying and
possibly (depending on the circumstances) expenses arising
from necessary displacement.’ While, in a case where a
subsequent purchaser or long term tenant reasonably elects
to retain the premises and to reinforce the foundations, one
possible measure of the damages involved in the actual
inadequacy would (if such damages were recoverable) be that
suggested by his Lordship, I respectfully disagree with the
classification of the loss sustained in such circumstances as
‘material, physical damage.’ Whatever may be the position
with respect to consequential damage to the fabric of the
– 12 –
building or to other property caused by susequent collapse or
subsidence, the loss or Injury involved in the actual
inadequacy of . the foundations cannot, in the case of a
person who purchased or leased the property after the
inadequacy existed but before it was known or manifest,
properly be seen as ordinary physical or material damage.
The only property which could be said to have been
damaged in such a case is the building. The building itself
could not be said to have been subjected to “material,
physical damage” by reason merely of the inadequacy of its
foundations since the building never existed otherwise than
with its foundations in that state. Moreover, even if the
inadequacy of the foundations could be seen as material,
physical damage to the building, it would be damage to
property in which a future purchaser or tenant had no
interest at all at the time when it occurred. Loss or injury
could only be sustained by such a purchaser or tenant on or
after the acquisition of the freehold or leasehold estate
without knowledge of the faulty foundations. It is arguable
that any such loss or injury should be seen as being
sustained at the time of acquisition when, because of
ignorance of the inadequacy of the foundations, a higher
price is paid (or a higher rent is agreed to be paid) than is
warranted by the intrinsic worth of the freehold or leasehold
estate that is being acquired. Militating against that
approach is the consideration that, for so long as the
inadequacy of the foundations is neither known nor manifest,
no identifiable loss has come home: if the purchaser or
tenant sells the freehold or leasehold estate within that
time, he or she will sustain no loss by reason of the
inadequacy of the foundations. The alternative, and in my
view preferable, approach is that any loss or injury involved
in the actual inadequacy of the foundations is sustained only
at the time when that inadequacy is first known or
manifest. It is only then that the actual diminution in the
market value of the premises occurs. On either approach,
however, any loss involved in the actual inadequacy of the
foundations by a person who acquires an interest in the
premises after the building has been completed is merely
economic in its nature.”
I find myself in respectful agreement with the reasoning
contained in this passage, which seems to me to be
incontrovertible.
It being recognised that the nature of the loss held to be
recoverable in Anns was pure economic loss, the next point for
examination is whether the avoidance of loss of that nature fell
within the scope of any duty of care owed to the plaintiffs by the
local authority. On the basis of the law as it stood at the time
of the decision the answer to that question must be in the
negative. The right to recover for pure economic loss, not flowing
from physical injury, did not then extend beyond the situation
where the Joss had been sustained through reliance on negligent
mis-statements, as in Hedley Byrne. There is room for the view
that an exception is to be found in The Greystoke Castle [1947]
A.C. 265. That case, which was decided by a narrow majority,
may, however, be regarded as turning on specialties of maritime
Jaw concerned in the relationship of joint adventurers at sea.
– 13 –
Further, though the purposes of the Act of 1936 as regards
securing compliance with building byelaws covered the avoidance of
injury to the safety or health of inhabitants of houses and of
members of the public generally, these purposes did not cover the
avoidance of pure economic loss to owners of buildings (see
Governors of the Peabody Donation Fund v. Sir Lindsay Parkinson
& Co. Ltd. [1985] AC 210, 241). Upon analysis, the nature of
the duty held by Anns to be incumbent upon the local authority
went very much further than a duty to take reasonable care to
prevent injury to safety or health. The duty held to exist may be
formulated as one to take reasonable care to avoid putting a
future inhabitant owner of a house in a position in which he is
threatened, by reason of a defect in the house, with avoidable
physical injury to person or health and is obliged, in order to
continue to occupy the house without suffering such injury, to
expend money for the purpose of rectifying the defect.
The existence of a duty of that nature should not, in my
opinion, be affirmed without a careful examination of the
implications of such affirmation. To start with, if such a duty is
incumbent upon the local authority, a similar duty must necessarily
be incumbent also upon the builder of the house. If the builder of
the house is to be so subject, there can be grounds in logic or in
principle for not extending liability upon like grounds to the
manufacturer of a chattel. That would open on an exceedingly
wide field of claims, involving the introduction of something in the
nature of a transmissible warranty of quality. The purchaser of an
article who discovered that it suffered from a dangerous defect
before that defect had caused any damage would be entitled to
recover from the manufacturer the cost of rectifying the defect,
and presumably, if the article was not capable of economic repair,
the amount of loss sustained through discarding it. Then it would
be open to question whether there should not also be a right to
recovery where the defect renders the article not dangerous but
merely useless. The economic loss in either case would be the
same. There would also be a problem where the defect causes the
destruction of the article itself, without causing any personal
injury or damage to other property. A similar problem could
arise, if the Anns principle is to be treated as confined to real
property, where a building collapses when unoccupied.
In America the courts have developed the view that in the
case of chattels damage to the chattel itself resulting from
careless manufacture does not give a cause of action in negligence
or in product liability. Thus in East River Steamship Corporation
v. Transamerica Delaval Inc. (1986) 106 S.Ct. 2295 charterers of a
supertanker were denied recovery on either of these grounds,
against the manufacturers of turbines which had suffered damage
through design or manufacturing defect and which had had to be
replaced. Blackmun J. delivering the judgment of the Supreme
Court expressed the opinion, at pp. 2302-2304, that a claim of this
character fell properly into the sphere of warranty under contract
law. This judgment was followed by the United States Court of
Appeals, Third Circuit, in Aloe Coal Co. v. Clark Equipment Co.
(1987) 816 F.2d 110, where recovery in negligence was refused in
respect of damage to a tractor shovel which caught fire and was
destroyed, allegedly due to careless manufacture. The view of
these courts is in line with the dissenting judgment of Lord
Brandon of Oakbrook in Junior Books Ltd. v. Veitchi Co. Ltd.
[1983] 1 AC 520.
– 14 –
These American cases would appear to destroy the authority
of the earlier decision in Quackenbush v. Ford Motor Co. (1915)
153 N.Y.S. 131 founded on by the New Zealand Court of Appeal in
Bowen v. Paramount Builders (Hamilton) Ltd. [1977] 1 N.Z.L.R.
394. from which Lord Wilberforce in Anns [1978] AC 728, 759-760
said he had derived assistance. He referred similarly to the
dissenting judgment of Laskin J. in the Canadian Supreme Court
case of Rivtow Marine Ltd. v. Washington Iron Works [1973] 6
W.W.R. 692, 715. That was a case where a crane installed on the
plaintiffs’ barge was revealed as being dangerously defective as a
result of a similar crane having collapsed and killed a man while
being operated elsewhere. The manufacturers and the suppliers
were aware of this occurrence but delayed considerably in warning
the plaintiffs so that they were placed under the necessity of
taking the crane out of service for rectification at the height of
the logging season instead of in the slack season. The majority of
the Supreme Court held the manufacturers and suppliers liable for
the loss of profit sustained by the plaintiffs through not having
been given earlier warning of the defect. This was upon the
Hedley Byrne principle. They did not allow recovery for the cost
of putting right the defect. The minority, Laskin and Hall JJ.,
were in favour of allowing recovery of that cost. For my part, I
consider that the decision of the majority was correct. The
defect in the crane was discovered before it had done any damage,
so that there could be no question of application of the Donoghue
v. Stevenson [1932] AC 562 principle. The cost of rectifying the
defect was incurred for the purpose of enabling the crane to be
profitably operated. The danger of injury from the defect, once it
was known, could have been averted simply by laying up the crane.
The loss was purely economic.
In D. & F. Estates Ltd. v. Church Commissioners for
England [1989] AC 177 both Lord Bridge of Harwich and Lord
Oliver of Aylmerton expressed themselves as having difficulty in
reconciling the decision in Anns with pre-existing principle and as
being uncertain as to the nature and scope of such new principle
as it introduced. Lord Bridge, at p. 206, suggested that in the
case of a complex structure such as a building one element of the
structure might be regarded for Donoghue v. Stevenson purposes as
distinct from another element, so that damage to one part of the
structure caused by a hidden defect in another part might qualify
to be treated as damage to “other property.” I think that it
would be unrealistic to take this view as regards a building the
whole of which had been erected and equipped by the same
contractor. In that situation the whole package provided by the
contractor would, in my opinion, fall to be regarded as one unit
rendered unsound as such by a defect in the particular part. On
the other hand where, for example, the electric wiring had been
installed by a subcontractor and due to a defect caused by lack of
care a fire occurred which destroyed the building, it might not be
stretching ordinary principles too far to hold the electrical
subcontractor liable for the damage. If in the East River case the
defective turbine had caused the loss of the ship the manufacturer
of it could consistently with normal principles, I would think,
properly have been held liable for that loss. But even if Lord
Bridge’s theory were to be held acceptable, it would not seem to
extend to the founding of liability upon a local authority,
considering that the purposes of the Act of 1936 are concerned
– 15 –
with averting danger to health and safety, not danger or damage
to property. Further, it would not cover the situation which might
arise through discovery, before any damage had occurred, of a
defect likely to give rise to damage in the future.
Liability under the Anns decision is postulated upon the
existence of a present or imminent danger to health or safety.
But considering that the loss involved in incurring expenditure to
avert the danger is pure economic loss, there would seem to be no
logic in confining the remedy to cases where such danger exists.
There is likewise no logic in confining it to cases where some
damage (perhaps comparatively slight) has been caused to the
building, but refusing it where the existence of the danger has
come to light in some other way, for example through a structural
survey which happens to have been carried out, or where the
danger inherent in some particular component or material has been
revealed through failure in some other building. Then there is the
question whether the remedy is available where the defect is
rectified, not in order to avert danger to an inhabitant occupier
himself, but in order to enable an occupier, who may be a
corporation, to continue to occupy the building through its
employees without putting those employees at risk.
In my opinion it is clear that Anns did not proceed upon
any basis of established principle, but introduced a new species of
liability governed by a principle indeterminate in character but
having the potentiality of covering a wide range of situations,
involving chattels as well as real property, in which it had never
hitherto been thought that the law of negligence had any proper
place.
The practice statement of 26 July 1966 (Practice Statement
(Judicial Precedent) [1966] 1 W.L.R. 1234) leaves it open to this
House to depart from a previous decision of its own if it so
chooses. In Reg. v. National Insurance Commmissioner, Ex parte
Hudson [1972] A.C. 944, 966 Lord Reid said:
“The old view was that any departure from rigid adherences
to precedent would weaken [the certainty of the law]. I did
not and do not accept that view. It is notorious that where
an existing decision is disapproved but cannot be overruled
courts tend to distinguish it on inadequate grounds. I do
not think that they act wrongly in so doing: they are only
adopting the less bad of the only alternatives open to them.
But this is bound to add to uncertainty for no one can say
in advance whether in a particular case the court will or
will not feel bound to follow the old unsatisfactory decision.
On balance it seems to me that overruling such a decision
will promote and not impair the certainty of the law.”
In my opinion there can be no doubt that Anns has for long
been widely regarded as an unsatisfactory decision. In relation to
the scope of the duty owed by a local authority it proceeded upon
what must, with due respect to its source, be regarded as a
somewhat superficial examination of principle and there has been
extreme difficulty, highlighted most recently by the speeches in D.
& F. Estates, in ascertaining upon exactly what basis of principle
it did proceed. I think it must now be recognized that it did not
proceed on any basis of principle at all, but constituted a
– 16 –
remarkable example of judicial legislation. It has engendered a
vast spate of litigation, and each of the cases in the field which
have reached this House has been distinguished. Others have been
distinguished in the Court of Appeal. The result has been to keep
the effect of the decision within reasonable bounds, but that has
been achieved only by applying strictly the words of Lord
Wilberforce and by refusing to accept the logical implications of
the decision itself. These logical implications show that the case
properly considered has potentiality for collision with long-
established principles regarding liability in the tort of negligence
for economic loss. There can be no doubt that to depart from the
decision would re-establish a degree of certainty in this field of
law which it has done a remarkable amount to upset.
So far as policy considerations are concerned, it is no doubt
the case that extending the scope of the tort of negligence may
tend to inhibit carelessness and improve standards of manufacture
and construction. On the other hand, overkill may present its own
disadvantages, as was remarked in Rowling v. Takaro Properties
Ltd. [1988] AC 473, 502. There may be room for the view that
Anns-type liability will tend to encourage owners of buildings found
to be dangerous to repair rather than run the risk of injury. The
owner may, however, and perhaps quite often does, prefer to sell
the building at its diminished value, as happened in the present
case.
It must, of course, be kept in mind that the decision has
stood for some 13 years. On the other hand, it is not a decision
of the type that is to a significant extent taken into account by
citizens or indeed local authorities in ordering their affairs. No
doubt its existence results in local authorities having to pay
increased insurance premiums, but to be relieved of that necessity
would be to their advantage, not to their detriment. To overrule
it is unlikely to result in significantly incurred insurance premiums
for householders. It is perhaps of some significance that most
litigation involving the decision consists in contests between
insurance companies, as is largely the position in the present case.
The decision is capable of being regarded as affording a measure
of justice, but as against that the impossibility of finding any
coherent and logically based doctrine behind it is calculated to put
the law of negligence into a state of confusion defying rational
analysis. It is also material that Anns has the effect of imposing
upon builders generally a liability going far beyond that which
Parliament thought fit to impose upon house builders alone by the
Defective Premises Act 1972, a statute very material to the policy
of the decision but not adverted to in it. There is much to be
said for the view that in what is essentially a consumer protection
field, as was observed by Lord Bridge of Harwich in D. & F.
Estates, at p. 207, the precise extent and limits of the liabilities
which in the public interest should be imposed upon builders and
local authorities are best left to the legislature.
My Lords, I would hold that Anns was wrongly decided as
regards the scope of any private law duty of care resting upon
local authorities in relation to their function of taking steps to
secure compliance with building byelaws or regulations and should
be departed from. It follows that Dutton v. Bognor Regis Urban
District Council [1972] 1 Q.B. 373 should be overruled, as should
all cases subsequent to Anns which were decided in reliance on it.
– 17 –
In the circumstances I do not consider it necessary to deal
with the question whether, assuming that the council were under a
duty of the scope contended for by the plaintiff, they discharged
that duty by acting on the advice of competent consulting
engineers.
My Lords, for these reasons I would allow the appeal.
LORD BRIDGE OF HARWICH
My Lords,
The speech of my noble and learned friend Lord Keith of
Kinkel addresses comprehensively all the issues on which the
outcome of this appeal depends. I find myself in full agreement
with it and would not think it necessary to say more if we were
not proposing to take the important step of departing, under the
practice statement of 1966 (Practice Statement (Judicial
Precedent) [1966] 1 W.L.R. 1234, from propositions of law laid
down by this House in Anns v. Merton Borough London Council
[1978] AC 728, which have had a profound influence throughout
the common law world. In the circumstances I think it right to
explain in my own words, as briefly as I may, my reasons for
thinking it right to take that step.
The origin of the Anns doctrine
The Anns doctrine, expressed in its most general form, holds
a local authority which exercises statutory control over building
operations liable in tort to a building owner or occupier for the
cost of remedying a dangerous defect in a building which results
from the negligent failure by the authority to ensure that the
building was erected in conformity with applicable standards
prescribed by building byelaws or regulations. The liability arises
not from the breach of any statutory duty, but from the breach of
a common law duty of care said to arise from the performance of
the statutory functions. The doctrine, as propounded in the speech
of Lord Wilberforce in this House, was, with some modifications,
an adoption of principles of law first enunciated by the Court of
Appeal in Dutton v. Bognor Regis Urban District Council [1972] 1
Q.B. 373. That decision was certainly without precedent and was,
I think, widely regarded as judicial legislation. If one reads the
passage in the judgment of Lord Denning M.R., at pp. 397-398,
under the rubric “Policy,” it is difficult to think that he would
have demurred to that criticism.
Development of the Anns doctrine in the Commonwealth
The doctrine arises from statutory provisions of a kind to be
found in any developed society. The relevant statutes which
operate in various Commonwealth jurisdictions differ in detail but
have sufficient in common in their general structure and operation
to make it legitimate and instructive to compare the fate of the
Anns doctrine in those jurisdictions. The High Court of Australia
declined to follow Anns in Council of the Shire of Sutherland v.
Heyman. 157 C.L.R. 424. In Canada and New Zealand, however,
the Anns doctrine has been both followed and further developed.
– 18 –
In City of Kamloops v. Nielsen (1984) 10 D.L.R. (4th) 641, the
Supreme Court of Canada, by a majority of three to two, held the
municipal authority liable in damages in the following
circumstances. When a dwelling house was in course of
construction, the authority discovered that the foundations were
defective. They issued a “stop work” order to prevent further
building until proper foundations had been provided. The builder
and the building owner ignored the order and when the building
was completed the owner went into occupation without the
requisite occupancy permit. Three years later he sold the house
to the plaintiff who, after acquisition, discovered the defects in
the foundation and sued the original owner in fraud and the
authority in negligence. The only fault of the authority was their
failure to take the appropriate legal proceedings to enforce the
“stop work” order or to prevent occupation of the house without
an occupancy permit. They were held liable jointly with the
original owner. The majority of the court held in terms that the
plaintiff was entitled to recover his purely economic loss
represented by the cost of making good the foundations. The
decision of the New Zealand Court of Appeal in Stieller v. Porirua
City Council [1986] 1 N.Z.L.R. 84 is no less striking. In that case
the plaintiffs had bought a house under construction. It was found
in due course that the weather-boards on the exterior of the house
were not of the standard required by the building byelaws. The
court held the local authority liable in damages for their failure to
discover this on inspection notwithstanding that the condition of
the weather-boards never represented in any sense a danger to
persons or property.
The present position in our own jurisdiction
Here, as Lord Keith of Kinkel has pointed out, we have
shown a marked inclination to confine the Anns doctrine within
narrow limits, as in Governors of the Peabody Donation Fund v.
Sir Lindsay Parkinson & Co. Ltd. [1985] AC 210 and Curran v.
Northern Ireland Co-ownership Housing Association Ltd. [1987] A.C.
718, and most recently, in examining the liability in tort of a
builder for defects in the quality of a building which presented no
danger, the reasoning of the speeches in D. & F. Estates Ltd. v.
Church Commissioners for England [1989] AC 177 has gone far to
question the principles on which the doctrine rests. Meanwhile,
uncertainty in the law has inevitably been a fertile breeding
ground for litigation and the Court of Appeal have grappled as
best they could with the problem of seeking to determine where
the limits of the doctrine are to be drawn: see for example
Investors in Industry Commercial Properties Ltd. v. South
Bedfordshire District Council [1986] Q.B. 1034 and Richardson v.
West Lindsey District Council [1990] 1 W.L.R. 522. Sooner or
later, in this unhappy situation, a direct challenge to the authority
of Anns was inevitable. Perhaps it is unfortunate that it did not
come sooner, but the House could not, I think, have contemplated
departing from the decision of an Appellate Committee so
eminently constituted unless directly invited to do so. Now that
the challenge has to be faced, I believe, for reasons which I hope
will become apparent, that the choice before the House lies
between following Australia and rejecting Anns altogether or
following Canada and New Zealand in carrying the Anns doctrine a
large, legislative step forward to its logical conclusion and holding
that the scope of the duty of care, imposed by the law on local
– 19 –
authorities for the negligent performance of their functions under
the relevant statutes, embraces all economic loss sustained by the
owner or occupier of a building by reason of defects in it arising
from construction in breach of building byelaws or regulations.
Dangerous defects and defects of quality
If a manufacturer negligently puts into circulation a chattel
containing a latent defect which renders it dangerous to persons or
property, the manufacturer, on the well known principles
established by Donoghue v. Stevenson [1932] AC 562, will be
liable in tort for injury to persons or damage to property which
the chattel causes. But if a manufacturer produces and sells a
chattel which is merely defective in quality, even to the extent
that it is valueless for the purpose for which it is intended, the
manufacturer’s liability at common law arises only under and by
reference to the terms of any contract to which he is a party in
relation to the chattel; the common law does not impose on him
any liability in tort to persons to whom he owes no duty in
contract but who, having acquired the chattel, suffer economic loss
because the chattel is defective in quality. If a dangerous defect
in a chattel is discovered before it causes any personal injury or
damage to property, because the danger is now known and the
chattel cannot be safely be used unless the defect is repaired, the
defect becomes merely a defect in quality. The chattel is either
capable of repair at economic cost or it is worthless and must be
scrapped. In either case the loss sustained by the owner or hirer
of the chattel is purely economic. It is recoverable against any
party who owes the loser a relevant contractual duty. But it is
not recoverable in tort in the absence of a special relationship of
proximity imposing on the tortfeasor a duty of care to safeguard
the plaintiff from economic loss. There is no such special
relationship between the manufacturer of a chattel and a remote
owner or hirer.
I believe that these principles are equally applicable to
buildings. If a builder erects a structure containing a latent
defect which renders it dangerous to persons or property, he will
be liable in tort for injury to persons or damage to property
resulting from that dangerous defect. But if the defect becomes
apparent before any injury or damage has been caused, the loss
sustained by the building owner is purely economic. If the defect
can be repaired at economic cost, that is the measure of the loss.
If the building cannot be repaired, it may have to be abandoned as
unfit for occupation and therefore valueless. These economic
losses are recoverable if they flow from breach of a relevant
contractual duty, but, here again, in the absence of a special
relationship of proximity they are not recoverable in tort. The
only qualification I would make to this is that, if a building stands
so close to the boundary of the building owner’s land that after
discovery of the dangerous defect it remains a potential source of
injury to persons or property on neighbouring land or on the
highway, the building owner ought, in principle, to be entitled to
recover in tort from the negligent builder the cost of obviating
the danger, whether by repair or by demolition, so far as that cost
is necessarily incurred in order to protect himself from potential
liability to third parties.
– 20 –
The fallacy which, in my opinion, vitiates the judgments of
Lord Denning M.R. and Sachs L.J. in Dutton [1972] 1 Q.B. 373 is
that they brush these distinctions aside as of no consequence: see
per Lord Denning M.R., at p. 396D-F, and per Sachs L.J., at pp.
403H-404B. Stamp L.J., on the other hand, fully understood and
appreciated them and his statement of the applicable principles as
between the building owner and the builder, at p. 414D-H, seems
to me unexceptionable. He rested his decision in favour of the
plaintiff against the local authority on a wholly distinct principle
which will require separate examination.
The complex structure theory
In my speech in D. & F. Estates at pp. 206G-207H I mooted
the possibility that in complex structures or complex chattels one
part of a structure or chattel might, when it caused damage to
another part of the same structure or chattel, be regarded in the
law of tort as having caused damage to “other property” for the
purpose of the application of Donoghue v. Stevenson principles. I
expressed no opinion as to the validity of this theory, but put it
forward for consideration as a possible ground on which the facts
considered in Anns [1978] AC 728 might be distinguishable from
the facts which had to be considered in D. & F. Estates itself. I
shall call this for convenience “the complex structure theory” and
it is, so far as I can see, only if and to the extent that this
theory can be affirmed and applied that there can be any escape
from the conclusions I have indicated above under the rubric
“Dangerous defects and defects of quality.”
The complex structure theory has, so far as I know, never
been subjected to express and detailed examination in any English
authority. I shall not attempt a review of the numerous
authorities which bear upon it in the different state jurisdictions in
the United States of America. However, some significant
landmarks must be mentioned. In Quackenbush v. Ford Motor Co.,
153 N.Y.S. 131, a decision of the Appellate Division of the
Supreme Court of New York, the plaintiff recovered damages in
tort from the manufacturer for damage to her Ford motor car
caused by an accident attributable to faulty manufacture of the
brakes. It is at least highly doubtful if the reasoning of this
decision can now be supported consistently with the unanimous
opinion of the United States Supreme Court in East River
Steamship Corporation v. Transamerica Delaval Inc., (1986) 106 S.
Ct. 2295 that a manufacturer incurs no liability in tort for damage
occasioned by a defect in a product which injures itself.
Blackmun J., delivering the opinion of the court, said, at p. 2302:
“We realize that the damage may be qualitative, occurring
through gradual deterioration or internal breakage. Or it
may be calamitous. . . . But either way, since by definition
no person or other property is damaged, the resulting loss is
purely economic. Even when the harm to the product itself
occurs through an abrupt, accident-like event, the resulting
loss due to repair costs, decreased value, and lost profits is
essentially the failure of the purchaser to receive the
benefit of its bargain – traditionally the core concern of
contract law.”
– 21 –
Quackenbush is, in any event, no authority for the
proposition that, once a defect in a complex chattel is discovered,
there is a remedy in tort against the manufacturer on the ground
that the cost of repairing the defect was necessarily incurred in
order to prevent further damage to other parts of the chattel. A
striking illustration of this is Transworld Airlines Inc. v. Curtiss-
Wright Corporation (1955) 148 N.Y.S. 2d 284 in which the airline,
having discovered defects in the engines fitted to some of their
planes, fortunately before any accident occurred, chose not to sue
the plane manufacturer in contract, but sued the engine
manufacturer in tort. The manufacturer was held not liable. This
and other relevant American authorities are extensively reviewed
in the illuminating judgment of the British Columbia Court of
Appeal delivered by Tysoe J.A. in Rivtow Marine Ltd v.
Washington Iron Works [1972] 3 W.W.R. 735. The court held that
the manufacturers were not liable in tort to the hirers of a crane
for the cost of repair rendered necessary when the crane was
found to be dangerously defective in use. This decision was
affirmed by the Supreme Court of Canada by a majority of seven
to two [1973] 6 W.W.R. 692. Since Lord Wilberforce in Anns
referred with approval to the dissenting judgment of Laskin J. in
that case, which he described, at p. 760, as “of strong persuasive
force,” I have read and re-read that judgment with the closest
attention. I have to say, with all respect, that I find it wholly
unconvincing. It depends on the same fallacy as that which
vitiates the judgments of Lord Denning M.R. and Sachs L3 in
Dutton. In particular, in equating the damage sustained in
repairing the chattel to make it safe with the damage which would
have been suffered if the latent defect had never been discovered
and the chattel had injured somebody in use, the judgment ignores
the circumstance that once a chattel is known to be dangerous it
is simply unusable. If I buy a second hand car and find it to be
faulty, it can make no difference to the manufacturer’s liability in
tort whether the fault is in the brakes or in the engine, i.e.
whether the car will not stop or will not start. In either case the
car is useless until repaired. The manufacturer is no more liable
in tort for the cost of the repairs in the one case than in the
other.
Bowen v. Paramount Builders (Hamilton) Ltd. [1977] 1
N.Z.L.R. 394 was a case where the plaintiff building owner sued
the builder in tort for the cost of making good damage caused by
subsidence caused by inadequate foundations. The trial judge
dismissed the claim on the ground that the principle of Donoghue
v. Stevenson did not apply to entitle the plaintiff to recover in
tort for a defect in the quality of the building. The judgments of
the New Zealand Court of Appeal to the opposite effect were
referred to with approval by Lord Wilberforce in Anns. The
critical paragraph from the judgment of Richmond P., at p. 410,
reads:
“Does damage to the house itself give rise to a cause of
action? As I have already said, I agree with Speight J. that
the principles laid down in Donoghue v. Stevenson [1932]
A.C. 562 apply to a builder erecting a house under a
contract with the owner. He is under a duty of care not to
create latent sources of physical danger to the person or
property of third persons whom he ought reasonably to
foresee as likely to be affected thereby. If the latent
– 22 –
defect causes actual physical damage to the structure of the
house then I can see no reason in principle why such
damage should not give rise to a cause of action, at any
rate if that damage occurs after the house has been
purchased from the original owner. This was clearly the
view of Lord Denning M.R. and of Sachs L.J. in Dutton v.
Bognor Regis Urban District Council [1972] 1 Q.B. 373, 396,
403-404. In the field of products liability this has long been
the law in the United States: see Prosser’s Law of Torts, p.
665, sec. 101, and Quackenbush v. Ford Motor Co., 167
Appellate Division 433, 153 N.Y.S. 131 (1915). For the
purposes of the present case it is not necessary to deal with
the question of ‘pure’ economic loss, that is to say
economic loss which is not associated with a latent defect
which causes or threatens physical harm to the structure
itself.”
Richmond P. goes on to hold that the measure of damages
would include the whole cost of remedial works plus any
diminution in value of the house in so far as it was impossible to
effect a complete remedy.
I cannot see any way in which the reasoning in the
paragraph quoted and the consequences in relation to the measure
of damages can in principle be supported except by an extreme
application of the complex structure theory treating each part of
the entire structure as a separate item of property. But such an
application of the theory seems to me quite unrealistic. The
reality is that the structural elements in any building form a
single indivisible unit of which the different parts are essentially
interdependent. To the extent that there is any defect in one
part of the structure it must to a greater or lesser degree
necessarily affect all other parts of the structure. Therefore any
defect in the structure is a defect in the quality of the whole and
it is quite artificial, in order to impose a legal liability which the
law would not otherwise impose, to treat a defect in an integral
structure, so far as it weakens the structure, as a dangerous
defect liable to cause damage to “other property.”
A critical distinction must be drawn here between some part
of a complex structure which is said to be a “danger” only because
it does not perform its proper function in sustaining the other
parts and some distinct item incorporated in the structure which
positively malfunctions so as to inflict positive damage on the
structure in which it is incorporated. Thus, if a defective central
heating boiler explodes and damages a house or a defective
electrical installation malfunctions and sets the house on fire, I
see no reason to doubt that the owner of the house, if he can
prove that the damage was due to the negligence of the boiler
manufacturer in the one case or the electrical contractor on the
other, can recover damages in tort on Donoghue v. Stevenson
[1932] AC 562 principles. But the position in law is entirely
different where, by reason of the inadequacy of the foundations of
the building to support the weight of the superstructure,
differential settlement and consequent cracking occurs. Here, once
the first cracks appear, the structure as a whole is seen to be
defective and the nature of the defect is known. Even if,
contrary to my view, the initial damage could be regarded as
damage to other property caused by a latent defect, once the
– 23 –
defect is known the situation of the building owner is analogous to
that of the car owner who discovers that the car has faulty
brakes. He may have a house which, until repairs are effected, is
unfit for habitation, but, subject to the reservation I have
expressed with respect to ruinous buildings at or near the boundary
of the owner’s property, the building no longer represents a source
of danger and as it deteriorates will only damage itself.
For these reasons the complex structure theory offers no
escape from the conclusion that damage to a house itself which is
attributable to a defect in the structure of the house is not
recoverable in tort on Donoghue v. Stevenson principles, but
represents purely economic loss which is only recoverable in
contract or in tort by reason of some special relationship of
proximity which imposes on the tortfeasor a duty of care to
protect against economic loss.
The relative positions of the builder and the local authority
I have so far been considering the potential liability of a
builder for negligent defects in the structure of a building to
persons to whom he owes no contractual duty. Since the relevant
statutory function of the local authority is directed to no other
purpose than securing compliance with building byelaws or
regulations by the builder, I agree with the view expressed in Anns
[1978] AC 728 and by the majority of the Court of Appeal in
Dutton [1972] 1 Q.B. 373 that a negligent performance of that
function can attract no greater liability than attaches to the
negligence of the builder whose fault was the primary tort giving
rise to any relevant damage. I am content for present purposes to
assume, though I am by no means satisfied that the assumption is
correct, that where the local authority, as in this case or in
Dutton, have in fact approved the defective plans or inspected the
defective foundations and negligently failed to discover the defect,
their potential liability in tort is coextensive with that of the
builder.
Only Stamp L.J. in Dutton was prepared to hold that the
law imposed on the local authority a duty of care going beyond
that imposed on the builder and extending to protection of the
building owner from purely economic loss. I must return later to
consider the question of liability for economic loss more generally,
but here I need only say that I cannot find in Hedley Byrne & Co.
Ltd. v. Heller & Partners Ltd. [1964] AC 465 or Dorset Yacht
Co. Ltd. v. Home Office [1970] AC 1004 any principle applicable
to the circumstances of Dutton or the present case that provides
support for the conclusion which Stamp L.J. sought to derive from
those authorities.
Imminent danger to health or safety
A necessary element in the building owner’s cause of action
against the negligent local authority, which does not appear to
have been contemplated in Dutton but which, it is said in Anns,
must be present before the cause of action accrues, is that the
state of the building is such that there is present or imminent
danger to the health or safety of persons occupying it.
Correspondingly the damages recoverable are said to include the
amount of expenditure necessary to restore the building to a
– 24 –
condition in which it is no longer such a danger, but presumably
not any further expenditure incurred in any merely qualitative
restoration. I find these features of the Anns doctrine very
difficult to understand. The theoretical difficulty of reconciling
this aspect of the doctrine with previously accepted legal principle
was pointed out by Lord Oliver of Aylmerton in D. & F. Estates
[1989] AC 177, 212D-213D. But apart from this there are, as it
appears to me, two insuperable difficulties arising from the
requirement of imminent danger to health or safety as an
ingredient of the cause of action which lead to quite irrational and
capricious consequences in the application of the Anns doctrine.
The first difficulty will arise where the relevant defect in the
building, when it is first discovered, is not a present or imminent
danger to health or safety. What is the owner to do if he is
advised that the building will gradually deteriorate, if not repaired,
and will in due course become a danger to health and safety, but
that the longer he waits to effect repairs the greater the cost will
be? Must he spend £1,000 now on the necessary repairs with no
redress against the local authority? Or is he entitled to wait until
the building has so far deteriorated that he has a cause of action
and then to recover from the local authority the £5,000 which the
necessary repairs are now going to cost? I can find no answer to
this conundrum. A second difficulty will arise where the latent
defect is not discovered until it causes the sudden and total
collapse of the building, which occurs when the building is
temporarily unoccupied and causes no damage to property except
to the building itself. The building is now no longer capable of
occupation and hence cannot be a danger to health or safety. It
seems a very strange result that the building owner should be
without remedy in this situation if he would have been able to
recover from the local authority the full cost of repairing the
building if only the defect had been discovered before the building
fell down.
Liability for economic loss
All these considerations lead inevitably to the conclusion
that a building owner can only recover the cost of repairing a
defective building on the ground of the authority’s negligence in
performing its statutory function of approving plans or inspecting
buildings in the course of construction if the scope of the
authority’s duty of care is wide enough to embrace purely
economic loss. The House has already held in D. & F. Estates
that a builder, in the absence of any contractual duty or of a
special relationship of proximity introducing the Hedley Byrne
principle of reliance, owes no duty of care in tort in respect of
the quality of his work. As I pointed out in D. & F. Estates, to
hold that the builder owed such a duty of care to any person
acquiring an interest in the product of the builder’s work would be
to impose upon him the obligations of an indefinitely transmissible
warranty of quality.
By section 1 of the Defective Premises Act 1972 Parliament
has in fact imposed on builders and others undertaking work in the
provision of dwellings the obligations of a transmissible warranty
of the quality of their work and of the fitness for habitation of
the completed dwelling. But besides being limited to dwellings,
liability under the Act is subject to a limitation period of six
years from the completion of the work and to the exclusion
– 25 –
provided for by section 2. It would be remarkable to find that
similar obligations in the nature of a transmissible warranty of
quality, applicable to buildings of every kind and subject to no
such limitations or exclusions as are imposed by the Act of 1972,
could be derived from the builder’s common law duty of care or
from the duty imposed by building byelaws or regulations. In Anns
Lord Wilberforce expressed the opinion that a builder could be held
liable for a breach of statutory duty in respect of buildings which
do not comply with the byelaws. But he cannot, I think, have
meant that the statutory obligation to build in conformity with the
byelaws by itself gives rise to obligations in the nature of
transmissible warranties of quality. If he did mean that, I must
respectfully disagree. I find it impossible to suppose that anything
less than clear express language such as is used in section 1 of
the Act of 1972 would suffice to impose such a statutory
obligation.
As I have already said, since the function of a local
authority in approving plans or inspecting buildings in course of
construction is directed to ensuring that the builder complies with
building byelaws or regulations, I cannot see how, in principle, the
scope of the liability of the authority for a negligent failure to
ensure compliance can exceed that of the liability of the builder
for his negligent failure to comply.
There may, of course, be situations where, even in the
absence of contract, there is a special relationship of proximity
between builder and building owner which is sufficiently akin to
contract to introduce the element of reliance so that the scope of
the duty of care owed by the builder to the owner is wide enough
to embrace purely economic loss. The decision in Junior Books
Ltd v. Veitchi Co. Ltd. [1983] 1 AC 520 can, I believe, only be
understood on this basis.
In Council of the Shire of Sutherland v. Heyman 157 C.L.R.
424 the critical role of the reliance principle as an element in the
cause of action which the plaintiff sought to establish is the
subject of close examination, particularly in the judgment of Mason
J. The central theme of his judgment, and a subordinate theme in
the judgments of Brennan and Deane JJ, who together with Mason
J formed the majority rejecting the Anns doctrine, is that a duty
of care of a scope sufficient to make the authority liable for
damage of the kind suffered can only be based on the principle of
reliance and that there is nothing in the ordinary relationship of a
local authority, as statutory supervisor of building operations, and
the purchaser of a defective building capable of giving rise to such
a duty. I agree with these judgments. It cannot, I think, be
suggested, nor do I understand Anns or the cases which have
followed Anns in Canada and New Zealand to be in fact
suggesting, that the approval of plans or the inspection of a
building in the course of construction by the local authority in
performance of their statutory function and a subsequent purchase
of the building by the plaintiff are circumstances in themselves
sufficient to introduce the principle of reliance which is the
foundation of a duty of care of the kind identified in Hedley
Byrne.
In Dutton Lord Denning M.R. said, at pp. 397-398:
– 26 –
“Mrs. Dutton has suffered a grievous loss. The house fell
down without any fault of hers. She is in no position
herself to bear the loss. Who ought in justice to bear it?
I should think those who were responsible. Who are they?
In the first place, the builder was responsible. It was he
who laid the foundations so badly that the house fell down.
In the second place, the council’s inspector was responsible.
It was his job to examine the foundations to see if they
would take the load of the house. He failed to do it
properly. In the third place, the council should answer for
his failure. They were entrusted by Parliament with the
task of seeing that houses were properly built. They
received public funds for the purpose. The very object was
to protect purchasers and occupiers of houses. Yet they
failed to protect them. Their shoulders are broad enough to
bear the loss.”
These may be cogent reasons of social policy for imposing liability
on the authority. But the shoulders of a public authority are only
“broad enough to bear the loss” because they are financed by the
public at large. It is pre-eminently for the legislature to decide
whether these policy reasons should be accepted as sufficent for
imposing on the public the burden of providing compensation for
private financial losses. If they do so decide, it is not difficult
for them to say so.
I would allow the appeal.
LORD BRANDON OF OAKBROOK
My Lords,
I have had the advantage of reading in draft the speech
prepared by my noble and learned friend, Lord Keith of Kinkel. I
agree with it, and for the reasons which he gives I consider that
the House should depart from its previous decision in Anns v.
Merton London Borough Council [1978] AC 728 to the extent
proposed by him, and that the appeal should be allowed
accordingly.
LORD ACKNER
My Lords,
I have had the advantage of reading in draft the speeches
of my noble and learned friends Lord Keith of Kinkel, Lord Bridge
of Harwich, Lord Oliver of Aylmerton and Lord Jauncey of
Tullichettle. For the reasons which they have given, I too would
allow this appeal.
– 27 –
LORD OLIVER OF AYLMERTON
My Lords,
I have had the advantage of reading in draft the speeches
prepared by my noble and learned friends, Lord Keith of Kinkel
and Lord Bridge of Harwich. For the reasons which they have
given I too would allow this appeal. Since, however, this involves
departing from a seminal decision of this House which has stood
for a considerable period and which has had the most profound
influence on the development of the law of negligence both in the
United Kingdom and in other jurisdictions it is, I think, only right
that I should also state my reasons independently.
In the 13 years which have elapsed since the decision of
this House in Anns v. Merton London Borough Council [1978] A.C.
728 the anomalies which arise from its literal application and the
logical difficulty in relating it to the previously established
principles of the tort of negligence have become more and more
apparent. This appeal and the appeal in the case of Department
of the Environment v. Thomas Bates and Sons Ltd. which was
heard shortly before it, have highlighted some of the problems
which Anns has created and underline the urgent need for it now
to be re-examined.
In approaching such a re-examination there are number of
points to be made at the outset. First, it has to be borne in
mind that neither in Anns nor in Dutton v. Bognor Regis Urban
District Council [1972] 1 Q.B. 373, which preceded it, was the
liability of the local authority based upon the proposition that the
Public Health Act 1936 gave rise to an action by a private
individual for breach of statutory duty of the type contemplated in
Cutler v. Wandsworth Stadium Ltd. [1949] A.C. 398, a type of
claim quite distinct from a claim in negligence (see London
Passenger Transport Board v. Upson [1949] A.C. 155, 168, per Lord
Wright.) The duty of the local authority was, as Lord Wilberforce
stressed in the course of his speech in Anns, at p. 758, the
ordinary common law duty to take reasonable care, no more and
no less.
Secondly, in neither case was it possible to allege
successfully that the plaintiffs had relied upon the proper
performance by the defendant of its Public Health Act duties so
as to invoke the principles expounded in Hedley Byrne & Co. Ltd.
v. Heller & Partners Ltd. [1964] AC 465. In the course of his
speech in Anns, at p.p. 768-769, Lord Salmon was at pains to
emphasise that the claim had nothing to do with reliance.
Thirdly, the injury of which the plaintiffs complained in
Anns was not “caused” by the defendant authority in any accepted
sense of the word. The complaint was not of what the defendant
had done but of what it had not done. It had failed to prevent
the builder of the flats from erecting a sub-standard structure. It
is true that in Dutton the basis for liability was said, by both
Lord Denning M.R. and Sachs L.J., to rest on the defendant’s
ability to control the building operation, from which it might be
inferred that it was so involved in the operation as to be directly
responsible for the defective foundations. This, whilst it goes no
way towards resolving many of the difficulties arising from the
– 28 –
decision, might be thought perhaps to provide a more acceptable
basis for liability, but it was specifically rejected in Anns (see per
Lord Wilberforce, at p. 754).
Fourthly, although in neither case was the builder who had
actually created the defect represented at the hearing, the fact
that the claim was, in essence, one based upon the failure of the
defendant to prevent the infliction of tortious injury by the builder
rendered it necessary to determine also the question of what, if
any, liability lay upon him. If the builder was under no obligation
to the plaintiffs to take reasonable care to provide proper
foundations it is difficult to see how the defendant authority could
be liable for failing to prevent what was, vis-a-vis the plaintiffs,
lawful conduct on his part save on the footing that the Act of
1936 imposed an absolute statutory duty to ensure that no sub-
standard building was erected. But, as already mentioned, the
action was not one for breach of statutory duty. The liability of
the local authority and that of the builder are not, therefore,
logically separable.
Finally, despite the categorisation of the damage as
“material, physical damage” (Anns, per Lord Wilberforce, at p. 759)
it is, I think, incontestable on analysis that what the plaintiffs
suffered was pure pecuniary loss and nothing more. If one asks,
“What were the damages to be awarded for?” clearly they were
not to be awarded for injury to the health or person of the
plaintiffs for they had suffered none. But equally clearly, although
the “damage” was described, both in the Court of Appeal in
Dutton and in this House in Anns, as physical or material damage,
this simply does not withstand analysis. To begin with, it makes
no sort of sense to accord a remedy where the defective nature of
the structure has manifested itself by some physical sympton, such
as a crack or a fractured pipe, but to deny it where the defect
has been brought to light by, for instance, a structural survey in
connection with a proposed sale. Moreover, the imminent danger
to health or safety which was said to be the essential ground of
the action was not the result of the physical manifestations which
had appeared but of the inherently defective nature of the
structure which they revealed. They were merely the outward
signs of a deterioration resulting from the inherently defective
condition with which the building had been brought into being from
its inception and cannot properly be described as damage caused to
the building in any accepted use of the word “damage.”
In the speech of my noble and learned friend, Lord Bridge
of Harwich, and in my own speech in D. & F. Estates Ltd. v.
Church Commissioners for England [1989] A.C. 167 there was
canvassed what has been called “the complex structure theory.”
This has been rightly criticised by academic writers although I
confess that I thought that both my noble and learned friend and I
had made it clear that it was a theory which was not embraced
with any enthusiasm but was advanced as the only logically
possible explanation of the categorisation of the damage in Anns
as “material, physical damage.” My noble and learned friend has,
in the course of his speech in the present case, amply
demonstrated the artificiality of the theory and, for the reasons
which he has given, it must be rejected as a viable explanation of
the underlying basis for the decision in Anns. However that
decision is analysed, therefore, it is in the end inescapable that
– 29 –
the only damage for which compensation was to be awarded and
which formed the essential foundation of the action was pecuniary
loss and nothing more. The injury which the plaintiff suffers in
such a case is that his consciousness of the possible injury to his
own health or safety or that of others puts him in a position in
which, in order to enable him either to go on living in the
property or to exploit its financial potentiality without that risk,
whether substantial or insubstantial, he has to expend money in
making good the defects which have now become patent. In the
course of his speech in Anns [1978] AC 728, Lord Wilberforce
acknowledged the assistance that he had derived from the
dissenting judgment of Laskin J. in Rivtow Marine Ltd. v.
Washington Iron Works [1973] 6 W.W.R. 692. That case presents
an interesting parallel, though not a precise one, for the danger
there was not to the plaintiffs but to their workmen. The
expenditure which they were there seeking to recover and for
which Laskin J. would have reimbursed them was incurred not
because it was necessary in order to rescue employees or others
from imminent injury, for the crane was not dangerous in itself
and the potential danger was known and foreseen. It was a danger
to them only if the plaintiffs chose to go on using it for the
purpose for which it was designed and the expenditure was
incurred in order to enable them to reap such economic advantages
as lay in their continued ability to use it for that purpose.
The fact is that the categorisation of the damage in Anns
as “material, physical damage,” whilst, at first sight, lending to
the decision some colour of consistency with the principle of
Donoghue v. Stevenson [1932] AC 562, has served to obscure not
only the true nature of the claim but, as a result, the nature and
scope of the duty upon the breach of which the plaintiffs in that
case were compelled to rely.
It does not, of course, at all follow as a matter of
necessity from the mere fact that the only damage suffered by a
plaintiff in an action for the tort of negligence is pecuniary or
“economic” that his claim is bound to fail. It is true that, in an
uninterrupted line of cases since 1875, it has consistently been
held that a third party cannot successfully sue in tort for the
interference with his economic expectations or advantage resulting
from injury to the person or property of another person with whom
he has or is likely to have a contractual relationship (see Cattle v.
Stockton Waterworks Co. (1875) L.R. 10 Q.B. 453; Simpson & Co.
v. Thomson (1877) 3 App.Cas. 279; La Societe Anonyme de
Remorquage a Helice v. Bennetts [1911] 1 K.B. 243). That
principle was applied more recently by Widgery J. in Weller & Co.
v. Foot and Mouth Disease Research Institute [1966] 1 Q.B. 569
and received its most recent reiteration in the decision of this
House in Leigh and Sillavan Ltd. v. Aliakmon Shipping Co. Ltd.
[1986] AC 785. But it is far from clear from these decisions
that the reason for the plaintiff’s failure was simply that the only
loss sustained was “economic.” Rather they seem to have been
based either upon the remoteness of the damage as a matter of
direct causation or, more probably, upon the “floodgates” argument
of the impossibility of containing liability within any acceptable
bounds of the law were to permit such claims to succeed. The
decision of this House in Morrison Steamship Co. Ltd. v. Greystoke
Castle (Cargo Owners) [1947] A.C. 265 demonstrates that the mere
fact that the primary damage suffered by a plaintiff is pecuniary
– 30 –
is no necessary bar to an action in negligence given the proper
circumstances – in that case, what was said to be the “joint
venture” interest of shipowners and the owners of cargo carried on
board – and if the matter remained in doubt that doubt was
conclusively resolved by the decision of this House in Hedley Byrne
& Co. Ltd. v. Heller & Partners Ltd. [1964] AC 465 where Lord
Devlin, at p. 517 convincingly demonstrated the illogicality of a
distinction between financial loss caused directly and financial loss
resulting from physical injury to personal property.
The critical question, as was pointed out in the analysis of
Brennan J. in his judgment in Council of the Shire of Sutherland v.
Heyman (1985) 157 C.L.R. 424, is not the nature of the damage in
itself, whether physical or pecuniary, but whether the scope of the
duty of care in the circumstances of the case is such as to
embrace damage of the kind which the plaintiff claims to have
sustained (see Caparo Industries Plc, v. Dickman [1990] 2 W.L.R.
358). The essential question which has to be asked in every case,
given that damage which is the essential ingredient of the action
has occurred, is whether the relationship between the plaintiff and
the defendant is such – or, to use the favoured expression, whether
it is of sufficent “proximity” – that it imposes upon the latter a
duty to take care to avoid or prevent that loss which has in fact
been sustained. That the requisite degree of proximity may be
established in circumstances in which the plaintiff’s injury results
from his reliance upon a statement or advice upon which he was
entitled to rely and upon which it was contemplated that he would
be likely to rely is clear from Hedley Byrne and subsequent cases,
but Anns [1978] AC 728 was not such a case and neither is the
instant case. It is not, however, necessarily to be assumed that
the reliance cases form the only possible category of cases in
which a duty to take reasonable care to avoid or prevent
pecuniary loss can arise. Morrison Steamship Co. Ltd. v.
Greystoke Castle (Cargo Owners), for instance, clearly was not a
reliance case. Nor indeed was Ross v. Caunters [1980] Ch. 297 so
far as the disappointed beneficiary was concerned. Another
example may be Ministry of Housing and Local Government v.
Sharp [1980] 2 Q.B. 223, although this may, on analysis, properly
be categorised as a reliance case.
Nor is it self-evident logically where the line is to be
drawn. Where, for instance, the defendant’s careless conduct
results in the interruption of the electricity supply to business
premises adjoining the highway, it is not easy to discern the logic
in holding that a sufficient relationship of proximity exists between
him and a factory owner who has suffered loss because material in
the course of manufacture is rendered useless but that none exists
between him and the owner of, for instance, an adjoining
restaurant who suffers the loss of profit on the meals which he is
unable to prepare and sell. In both cases the real loss is
pecuniary. The solution to such borderline cases has so far been
achieved pragmatically (see Spartan Steel & Alloys Ltd. v. Martin
& Co. (Contractors) Ltd. [1973] QB 27) not by the application of
logic but by the perceived necessity as a matter of policy to place
some limits – perhaps arbitrary limits – to what would otherwise
be an endless, cumulative causative chain bounded only by
theoretical foreseeability.
– 31 –
I frankly doubt whether, in searching for such limits, the
categorisation of the damage as “material,” “physical,” “pecuniary”
or “economic” provides a particularly useful contribution. Where it
does, I think, serve a useful purpose is in identifying those cases
in which it is necessary to search for and find something more
than the mere reasonable foreseeability of damage which has
occurred as providing the degree of “proximity” necessary to
support the action. In his classical exposition in Donoghue v.
Stevenson [1932] AC 562, 580-581, Lord Atkin was expressing
himself in the context of the infliction of direct physical injury
resulting from a carelessly created latent defect in a manufactured
product. In his analysis of the duty in those circumstances he
clearly equated “proximity” with the reasonable foresight of
damage. In the straightforward case of the direct infliction of
physical injury by the act of the plaintiff there is, indeed, no need
to look beyond the foreseeability by the defendant of the result in
order to establish that he is in a “proximate” relationship with the
plaintiff. But, as was pointed out by Lord Diplock in Dorset
Yacht Co. Ltd. v. Home Office [1970] AC 1004, at p. 1060, Lord
Atkin’s test, though a useful guide to characteristics which will be
found to exist in conduct and relationships giving rise to a legal
duty of care, is manifestly false if misused as a universal; and
Lord Reid, in the course of his speech in the same case,
recognised that the statement of principle enshrined in that test
necessarily required qualification in cases where the only loss
caused by the defendant’s conduct was economic. The infliction of
physical injury to the person or property of another universally
requires to be justified. The causing of economic loss does not.
If it is to be categorised as wrongful it is necessary to find some
factor beyond the mere occurrence of the loss and the fact that
its occurrence could be foreseen. Thus the categorisation of
damage as economic serves at least the useful purpose of
indicating that something more is required and it is one of the
unfortunate features of Anns that it resulted initially in this
essential distinction being lost sight of.
The two-stage test propounded by Lord Wilberforce in Anns
was at first interpreted as indicating as a universal proposition
that the relationship between defendant and plaintiff encapsulated
in the word “proximity” arose from the foreseeability of damage
alone regardless of whether the case was one of direct physical
injury or of pure pecuniary loss. Both Dutton [1972] 1 Q.B. 373
and Bowen v. Paramount Builders (Hamilton) Ltd. [1977] 1 N.Z.L.R.
394 are examples of the application of Lord Atkin’s principle as a
universal. There can, of course, be no doubt that it can
reasonably be foreseen that if an inherently defective house is
built or an inherently defective chattel is manufactured some
future owner will be likely to sustain loss when the defect comes
to light, if only because it is less valuable than it was thought to
be when he bought and paid for it. A series of decisions in this
House and in the Privy Council since Anns, however, have now
made it clear beyond argument that in cases other than cases of
direct physical injury the reasonable foreseeability of damage is
not of itself sufficient and that there has to be sought in addition
in the relationship between the parties that elusive element
comprehended in the expression “proximity” (see Governors of the
Peabody Donation Fund v. Sir Lindsay Parkinson & Co. Ltd. [1985]
A.C. 210; Yuen Kun Yeu v. Attorney-General of Hong Kong [1988]
A.C. 175; Hill v. Chief Constable of West Yorkshire [1989] A.C.
– 32 –
53). It is an expression which persistently defies definition but my
difficulty in rationalising the basis of Dutton and Anns is and has
always been not so much in defining it as in discerning the
circumstances from which it could have been derived. For reasons
which I have endeavoured to explain, the starting-point in seeking
to rationalise these decisions must, as it seems to me, be to
establish the basis of the liability of the person who is the direct
and immediate cause of the plaintiff’s loss. Anyone, whether he
be a professional builder or a do-it-yourself enthusiast, who builds
or alters a semi-permanent structure must be taken to contemplate
that at some time in the future it will, whether by purchase, gift
or inheritance, come to be occupied by another person and that if
it is defectively built or altered it may fall down and injure that
person or his property or may put him in a position in which, if
he wishes to occupy it safely or comfortably, he will have to
expend money on rectifying the defect. The case of physical
injury to the owner or his licensees or his or their property
presents no difficulty. He who was responsible for the defect –
and it will be convenient to refer to him compendiously as “the
builder” – is, by the reasonable foreseeability of that injury, in a
proximate “neighbour” relationship with the injured person on
ordinary Donoghue v. Stevenson principles. But when no such
injury has occurred and when the defect has been discovered and
is therefore no longer latent, whence arises that relationship of
proximity required to fix him with responsibility for putting right
the defect? Foresight alone is not enough but from what else can
the relationship be derived? Apart from contract, the
manufacturer of a chattel assumes no responsibility to a third
party into whose hands it has come for the cost of putting it into
a state in which it can safely continue to be used for the purpose
for which it was intended. Anns, of course, does not go so far as
to hold the builder liable for every latent defect which depreciates
the value of the property but limits the recovery, and thus the
duty, to the cost of putting it into a state in which it is no
longer an imminent threat to the health or safety of the occupant.
But it is difficult to see any logical basis for such a distinction.
If there is no relationship of proximity such as to create a duty to
avoid pecuniary loss resulting from the plaintiff’s perception of
non-dangerous defects, upon what principle can such a duty arise
at the moment when the defect is perceived to be an imminent
danger to health? Take the case of an owner-occupier who has
inherited the property from a derivative purchaser. He suffers, in
fact, no “loss” save that the property for which he paid nothing is
less valuable to him by the amount which it will cost him to
repair it if he wishes to continue to live in it. If one assumes
the parallel case of one who has come into possession of a
defective chattel – for instance, a yacht – which may be a danger
if it is used without being repaired, it is impossible to see upon
what principle such a person, simply because the chattel has
become dangerous, could recover the cost of repair from the
original manufacturer.
The suggested distinction between mere defect and
dangerous defect which underlies the judgment of Laskin J. in
Rivtow Marine Ltd. v. Washington Iron Works [1973] 6 W.W.R. 692
is, I believe, fallacious. The argument appears to be that because,
if the defect had not been discovered and someone had been
injured, the defendant would have been liable to pay damages for
the resultant physical injury on the principle of Donoghue v.
– 33 –
Stevenson it is absurd to deny liability for the cost of preventing
such injury from ever occurring. But once the danger ceases to
be latent there never could be any liability. The plaintiff’s
expenditure is not expenditure incurred in minimising the damage
or in preventing the injury from occurring. The injury will not
now ever occur unless the plaintiff causes it to do so by courting
a danger of which he is aware and his expenditure is incurred not
in preventing an otherwise inevitable injury but in order to enable
him to continue to use the property or the chattel.
My Lords, for the reasons which I endeavoured to state in
the course of my speech in D. & F. Estates Ltd. v. Church
Commissioners for England [1989] AC 177 and which are
expounded in more felicitous terms both in the speeches of my
noble and learned friends in the instant case and in that of my
noble and learned friend, Lord Keith of Kinkel, in Department of
the Environment v. Thomas Bates and Sons Ltd., I have found it
impossible to reconcile the liability of the builder propounded in
Anns with any previously accepted principles of the tort of
negligence and I am able to see no circumstances from which
there can be deduced a relationship of proximity such as to render
the builder liable in tort for pure pecuniary damage sustained by a
derivative owner with whom he has no contractual or other
relationship. Whether, as suggested in the speech of my noble and
learned friend, Lord Bridge of Harwich, he could be held
responsible for the cost necessarily incurred by a building owner in
protecting himself from potential liability to third parties is a
question upon which I prefer to reserve my opinion until the case
arises, although I am not at the moment convinced of the basis
for making such a distinction.
If, then, the law imposes upon the person primarily
responsible for placing on the market a defective building no
liability to a remote purchaser for expenditure incurred in making
good defects which, ex hypothesi, have injured nobody, upon what
principle is liability in tort to be imposed upon a local authority
for failing to exercise its regulatory powers so as to prevent
conduct which, on this hypothesis, is not tortious? Or, to put it
another way, what is it, apart from the foreseeability that the
builder’s failure to observe the regulations may create a situation
in which expenditure by a remote owner will be required, that
creates the relationship of proximity between the authority and the
remote purchaser? A possible explanation might, at first sight,
seem to be that the relationship arises from the mere existence of
the public duty of supervision imposed by the statute. That, I
think, must have been the view of Stamp L.J. in Dutton [1972] 1
Q.B. 373, for he regarded the liability of the local authority as
arising quite independently of that of the builder. His was,
however, a minority view which derives no support from the
reasoning of this House in Anns [1978] AC 728 and cannot stand
up to analysis except on the basis (a) that the damage sustained
was physical damage and (b) that the local authority, by reason of
its ability to oversee the operation, was the direct cause of the
defective construction. Neither of these propositions in my
judgment is tenable.
The instant case is, to an extent, a stronger case than
Anns, because there the authority was under no duty to carry out
an inspection whereas here there was a clear statutory duty to
– 34 –
withold approval of the defective design. This, however, can make
no difference in principle and the reasoning of the majority in
Anns, which clearly links the liability of the local authority to
that of the builder, must equally apply. The local authority’s duty
to future owners of the building to take reasonable care in
exercising its supervisory function was expressed in Anns to arise
“on principle,” but it is not easy to see what the principle was,
unless it was simply the foreseeability of possible injury alone,
which, it is now clear, is not in itself enough. The only existing
principle upon which liability could be based was that propounded
in Dorset Yacht [1970] AC 1004, that is to say, that the
relationship which existed between the authority and the plaintiff
was such as to give rise to a positive duty to prevent another
person, the builder, from inflicting pecuniary injury. But in a
series of decisions in subsequent cases – in particular Curran v.
Northern Ireland Co-ownership Housing Association [1987] A.C. 718
and Hill v. Chief Constable of West Yorkshire – this House has
been unable to find in the case of other regulatory agencies with
powers as wide as or wider than those under the Public Health
Acts, such a relationship between the regulatory authority and
members of the public for whose protection the statutory powers
were conferred (see also Yuen Kun Yeu v. Attorney-General of
Hong Kong).
My Lords, I can see no reason why a local authority, by
reason of its statutory powers under the Public Health Acts or its
duties under the building regulations, should be in any different
case. Ex hypothesi there is nothing in the terms or purpose of
the statutory provisions which support the creation of a private
law right of action for breach of statutory duty. There is equally
nothing in the statutory provisions which even suggest that the
purpose of the statute was to protect owners of buildings from
economic loss. Nor is there any easily discernible reason why the
existence of the statutory duties, in contra-distinction to those
existing in the case of other regulatory agencies, should be held in
the case of a local authority to create a special relationship
imposing a private law duty to members of the public to prevent
the conduct of another person which is not itself tortious. Take
the simple example of the builder who builds a house with
inadequate foundations and presents it to his son and daughter-in-
law as a wedding present. It would be manifestly absurd, if the
son spends money on rectifying the defect which has come to
light, to hold him entitled to recover the expenditure from his
father because the gift turns out to be less advantageous than he
at first supposed. It seems to me no less absurd to hold that
nevertheless there exists between the authority which failed
properly to inspect and the donee of the property a relationship
entitling the latter to recover from the authority the expenditure
which he cannot recover from the donor. Yet that must be the
logical result of the application of Anns, unless one is to say that
the necessary relationship of proximity exists, not between the
authority and all subsequent owners and occupiers, but only
between the authority and the owners and occupiers who have
acquired a property for value. With the greatest deference to the
high authority of the opinions expressed in Anns and in Dutton, I
cannot see, once it is recognised, as I think that it has to be, that
the only damage sustained by discovery of the defective condition
of the structure is pure pecuniary loss, how those decisions can be
sustained as either an application or a permissible extension of
existing principle.
– 35 –
The question that I have found most difficult is whether,
having regard to the time which has elapsed and the enormous
amount of litigation which has been instituted in reliance upon
Anns, it is right that this House should now depart from it. In his
speech in Dorset Yacht, Lord Diplock observed, at p. 1064:
“As any proposition which relates to the duty of controlling
another man to prevent his doing damage to a third deals
with a category of civil wrongs of which the English courts
have hitherto had little experience it would not be
consistent with the methodology of the development of the
law by judicial decision that any new proposition should be
stated in wider terms than are necessary for the
determination of the present appeal. Public policy may call
for the immediate recognition of a new sub-category of
relations which are the source of the duty of this nature
additional to the sub-category described in the established
proposition, but further experience of actual cases would be
needed before the time became ripe for the coalescence of
sub-categories into a broader category of relations giving
rise to the duty, such as was effected with respect to the
duty of care of a manufacturer of products in Donoghue v.
Stevenson [1932] AC 562. Nevertheless, any new sub-
category will form part of the English law of civil wrongs
and must be consistent with its general principles.”
For the reasons which I have endeavoured to express I do not
think that Anns can be regarded as consistent with those general
principles. Nor do I think that it can properly be left to stand as
a peculiar doctrine applicable simply to defective buildings, for I
do not think that its logical consequences can be contained within
so confined a compass. It may be said that to hold local
authorities liable in damages for failure effectively to perform
their regulatory functions serves a useful social purpose by
providing what is, in effect, an insurance fund from which those
who are unfortunate enough to have acquired defective premises
can recover part at least of the expense to which they have been
put or the loss of value which they have sustained. One cannot
but have sympathy with such a view although I am not sure that I
see why the burden should fall on the community at large rather
than be left to be covered by private insurance. But, in any
event, like my noble and learned friends, I think that the
achievement of beneficial social purposes by the creation of
entirely new liabilities is a matter which properly falls within the
province of the legislature and within that province alone. At the
date when Anns was decided the Defective Premises Act 1972,
enacted after a most careful consideration by the Law
Commission, had shown clearly the limits within which Parliament
had thought it right to superimpose additional liabilities upon those
previously existing at common law and it is one of the curious
features of the case that no mention even of the existence of this
important measure, let alone of its provisions – and in particular
the provision regarding the accrual of the cause of action –
appears in any of the speeches or in the summary in the Law
Reports of the argument of counsel.
There may be very sound social and political reasons for
imposing upon local authorities the burden of acting, in effect, as
– 36 –
insurers that buildings erected in their areas have been properly
constructed in accordance with the relevant building regulations.
Statute may so provide. It has not done so and I do not, for my
part, think that it is right for the courts not simply to expand
existing principles but to create at large new principles in order to
fulfil a social need in an area of consumer protection which has
already been perceived by the legislature but for which,
presumably advisedly, it has not thought it necessary to provide. I
would accordingly allow the appeal. It is unnecessary in these
circumstances to determine the interesting question of whether, in
fact, the appellants in the instant case, who took the only course
practically open to them, could be held responsible in law for the
negligence of the ex facie competent experts whom they consulted.
LORD JAUNCEY OF TULLICHETTLE
My Lords,
I have had the advantage of reading in draft the speech of
my noble and learned friends, Lord Keith of Kinkel and Lord
Bridge of Harwich. They have dealt so fully with all the
important matters which arise in this appeal that I doubt whether
anything which I say can make a useful contribution to the
decision. However, in view of the importance of the course which
they propose, I feel that I must briefly state my reasons for
agreeing to that course.
In Governors of the Peabody Donation Fund v. Sir Lindsay
Parkinson & Co. Ltd. [1985] AC 210 Lord Keith pointed out that
in each case of alleged negligence the true question was whether
the particular defendant owed to the particular plaintiff a duty of
care having the scope intended for and whether he was in breach
of that duty. A relationship of proximity in the sense used by
Lord Atkin in Donoghue v. Stevenson [1932] AC 562 must exist
before any duty of care can arise, but the scope of the duty must
depend upon all the circumstances of the case. In this appeal the
appellant defendants have accepted that there was a common law
duty of care incumbent upon them in relation to the passing of
the plans and we are therefore only concerned with the scope of
that duty. Like my noble and learned friend, Lord Keith, I prefer,
in the absence of argument, to express no view as to whether the
defendants in truth did owe such a duty.
The issue is whether the scope of the defendants’ duty
extended to the avoidance of economic loss resulting from a
defect in or damage to the very property for whose safety they
bore some responsibility. The courts below, relying on Anns v.
Merton London Borough Council [1978] AC 728, held that it did.
In the 40 years after Donoghue v. Stevenson it was accepted that
the principles enunciated by Lord Atkin were limited to cases
where there was physical damage to person or to property other
than the property which gave rise to the damage and where there
was no reasonable opportunity of discovering the defect which
ultimately caused the damage (Grant v. Australian Knitting Mills
Ltd. [1936] AC 85, Farr v. Butters Brothers & Co. [1932] 2 K.B.
606). Actual damage had to occur before tortious liability for
– 37 –
negligence arose, mere apprehension of such damage giving rise to
no liability (Overseas Tankship (U.K.) Ltd. v. Morts Dock and
Engineering Co. Ltd. (The Wagon Mound) [1961] AC 388, per
Viscount Simonds, at p. 425). Furthermore, pure economic loss
unaccompanied by physical injury to person or property was not
recoverable unless there was between the parties such a special
relationship as existed in Hedley Byrne & Co. Ltd. v. Heller &
Partners Ltd. [1964] AC 465. This is quite logical because in
most cases where damage or a defect which solely affects the
article in question is discovered before it causes other damage the
owner is presented with two realistic alternatives: either he
repairs it or he discards it as useless. In either event his loss is
purely economic being the cost of repair or replacement.
However, in Dutton v. Bognor Regis Urban District Council
[1972] 1 Q.B. 373, the Court of Appeal purported to apply the
principle of Donoghue v. Stevenson to a case in which there was
no damage to person or property other than to the property with
which the duty of care was concerned. A local authority was held
liable in negligence to the second owner of a house for failing to
take reasonable care to see that the foundations thereof were
constructed in accordance with building byelaws. Serious defects
occurred in the house and the plaintiff recovered the estimated
cost of repair together with a sum representing the diminished
value of the house as repaired. Lord Denning M.R. rejected a
submission that the damage was purely economic saying, at p. 396:
“The damage done here was not solely economic loss. It
was physical damage to the house. If Mr. Tapp’s submission
[for the council] were right, it would mean that if the
inspector negligently passes the house as properly built and
it collapses and injures a person, the council are liable: but
if the owner discovers the defect in time to repair it – and
he does repair it – the council are not liable. That is an
impossible distinction. They are liable in either case.
“I would say the same about the manufacturer of an
article. If he makes it negligently, with a latent defect (so
that it breaks to pieces and injures someone), he is
undoubtedly liable. Suppose that the defect is discovered in
time to prevent the injury. Surely he is liable for the cost
of repair.”
In rejecting Mr. Tapp’s argument, Lord Denning appears to have
impliedly accepted that a claim for pure economic loss would not
have been available to the plaintiff. However, his conclusion that
the cost of repairing a defect which had become patent in the
building or article in question was recoverable, albeit no damage
to the person or other property had resulted, extended the scope
of the Donoghue v. Stevenson duty in two respects. It extended
the scope in the first place to cover damage to the article itself
and in the second place to remedying a defect which had become
patent. Such an extension, if universally applied, would mean that
the owner of a chattel which developed a defect could recover
from the negligent manufacturer the cost of repair or replacement
at least if continued use of the chattel in its defective state was
likely to give rise to injury – a situation very different from those
in which the principle of Donoghue v. Stevenson had previously
been held to apply.
– 38 –
Anns v. Merton London Borough Council [1978] AC 728
came to this House on two preliminary questions of law, namely,
(1) whether a local authority was under any duty of care towards
owners or occupiers of houses in relation to inspection during the
building process and (2), if so, what period of limitation applied to
any such claims by owners or occupiers. The first question was by
far the more important. In order to answer the second question it
was necessary to determine when the cause of action arose but, as
Lord Wilberforce pointed out, at p. 751E, no question arose
directly at that stage as to the damages which the plaintiff could
recover. However, he considered that it was nevertheless
necessary to give some general consideration to the matter in the
context of the limitation question (p. 759F). It follows that his
observations as to damages, while no doubt of considerable
assistance to the parties, were peripheral to the two main
questions. Lord Wilberforce then went on, at pp. 759-760, to refer
to the sort of damages which might be recovered:
“The damages recoverable include all those which
foreseeably arise from the breach of the duty of care
which, as regards the council, I have held to be a duty to
take reasonable care to secure compliance with the byelaws.
Subject always to adequate proof of causation, these
damages may include damages for personal injury and
damage to property. In my opinion they may also include
damage to the dwelling house itself; for the whole purpose
of the byelaws in requiring foundations to be of a certain
standard is to prevent damage arising from weakness of the
foundations which is certain to endanger the health or
safety of occupants.
“To allow recovery for such damage to the house
follows, in my opinion, from normal principle. If
classification is required, the relevant damage is in my
opinion material, physical damage, and what is recoverable
is the amount of expenditure necessary to restore the
dwelling to a condition in which it is no longer a danger to
the health or safety of persons occupying and possibly
(depending on the circumstances) expenses arising from
necessary displacement. On the question of damages
generally I have derived much assistance from the judgment
(dissenting on this point, but of strong persuasive force) of
Laskin J. in the Canadian Supreme Court case of Rivtow
Marine Ltd. v. Washington Iron Works [1973] 6 W.W.R. 692,
715 and from the judgments of the New Zealand Court of
Appeal (furnished by courtesy of that court) in Bowen v.
Paramount Builders (Hamilton) Ltd. [1975] 2 N.Z.L.R. 546.”
Lord Wilberforce then posed the question, “When does the cause of
action arise?” and gave the answer, “It can only arise when the
state of the building is such that there is present or imminent
danger to the health or safety of persons occupying it.” He went
on to hold that Dutton v. Bognor Regis Urban District Council
had, in the result, been rightly decided.
My Lords, Lord Wilberforce justified inclusion of damages
for damage to the house itself as following from normal principle,
by which I understand him to be referring to that which was
propounded in Donoghue v. Stevenson [1932] AC 562 and applied
– 39 –
in Dorset Yacht Co. Ltd. v. Home Office [1970] AC 1004. Two
matters emerge clearly from Lord Atkin’s speech in Donoghue v.
Stevenson, namely, (1) that damage to the offending article was
not within the scope of the duty and (2) that the duty only
extended to articles which were likely to be used before a
reasonable opportunity of inspection had occurred. This second
matter was again emphasised by Lord Wright in Grant v.
Australian Knitting Mills [1936] AC 85, 105. Application of the
principle enunciated by Lord Atkin in Donoghue v. Stevenson would
therefore appear to negative rather than support the recovery of
damages for damage to the house itself detected before the
damage had caused resultant injury to persons or other property.
Dorset Yacht takes the matter no further and among British cases
only in Dutton can support be found for such an application of the
principle. Lord Wilberforce derived support for his conclusion from
two Commonwealth cases. In Rivtow Marine Ltd. v. Washington
Iron Works (1973) 40 D.L.R. (3d) 530, the Supreme Court of
Canada by a majority of seven to two rejected a claim against
manufacturers for the cost of repairing a dangerous defect in a
crane upon the ground that the manufacturer of a potentially
dangerous article was not liable in tort for damage arising in the
article itself or for economic loss arising from the defect in the
article. Laskin J., however, in a dissenting judgment, after
considering the liability of the manufacturers for injury to
consumers or users of their products resulting from negligence
stated, at p. 552:
“This rationale embraces, in my opinion, threatened physical
harm from a negligently-designed and manufactured product
resulting in economic loss. I need not decide whether it
extends to claims for economic loss where there is no
threat of physical harm or to claims for damage, without
more, to the defective product.
“It is foreseeable injury to person or to property
which supports recovery for economic loss suffered by a
consumer or user who is fortunate enough to avert such
injury. If recovery for economic loss is allowed when such
injury is suffered, I see no reason to deny it when the
threatened injury is forestalled.”
In Bowen v. Paramount Builders (Hamilton) Ltd. [1977] 1 N.Z.L.R.
394, the New Zealand Court of Appeal held that where a latent
defect created by a builder’s negligence caused damage to the
structure an action of damages would lie on the ground of it being
physical damage. Richmond P., after asking the question whether
damage to the house itself gave rise to a cause of action, applied
the principle of Donoghue v. Stevenson to a builder erecting a
house as follows, at p. 410:
“He is under a duty of care not to create latent sources of
physical danger to the person or property of third persons
whom he ought reasonably to foresee as likely to be
affected thereby. If the latent defect causes actual
physical damage to the structure of the house then I can
see no reason in principle why such damage should not give
rise to a cause of action, at any rate if that damage occurs
after the house has been purchased from the original
owner.”
– 40 –
In support of this proposition he relied on the view of Lord
Denning M.R. in Dutton v. Bognor Regis Urban District Council
[1972] 1 Q.B. 373 and upon the American case of Quackenbush v.
Ford Motor Co., 167 App.Div. 433; 153 N.Y.S. 131 – a case whose
authority must now be substantially destroyed by the decision of
the Supreme Court in East River Steamship Corporation v.
Transamerica Delaval Inc. (1986) 106 S.Ct. 2295, to the effect that
no liability in negligence attached to a manufacturer whose
product malfunctioned injuring only the product itself and causing
pure economic loss. This decision of the Supreme Court is in
complete accord with the decision of the majority of the Supreme
Court of Canada in Rivtow Marine Ltd. v. Washington Iron Works.
If Quackenbush v. Ford Motor Co. is no longer good law the only
remaining support for Richmond. P.’s proposition is Dutton.
In D. & F. Estates Ltd. v. Church Commissioners for
England [1989] AC 177 my noble and learned friends, Lord Bridge
of Harwich and Lord Oliver of Aylmerton were only able to
reconcile the decision in Anns v. Merton London Borough Council
[1978] AC 728 with the principle of Donoghue v. Stevenson upon
the basis that in a complex structure the constituent parts can be
treated as separate items of property distinct from the part which
has given rise to the damage. Lord Bridge after stating that when
the hidden defect in a chattel is discovered before it causes
external injury or damage there is no room for the application of
the Donoghue v. Stevenson principle, said, at p. 206:
“If the same principle applies in the field of real property
to the liability of the builder of a permanent structure
which is dangerously defective, that liability can only arise
if the defect remains hidden until the defective structure
causes personal injury or damage to property other than the
structure itself. If the defect is discovered before any
damage is done, the loss sustained by the owner of the
structure, who has to repair or demolish it to avoid a
potential source of danger to third parties, would seem to
be purely economic.”
Lord Oliver, at p. 211B, said that Anns had introduced in relation
to the construction of buildings an entirely new type of product
liability, if not, indeed, an entirely novel concept of the tort of
negligence. He later said, at p. 212:
“The proposition that damages are recoverable in tort for
negligent manufacture when the only damage sustained is
either an initial defect in or subsequent injury to the very
thing that is manufactured is one which is peculiar to the
construction of a building and is, I think, logically explicable
only on the hypothesis suggested by my noble and learned
friend, Lord Bridge of Harwich, that in the case of such a
complicated structure the other constituent parts can be
treated as separate items of property distinct from that
portion of the whole which has given rise to the damage –
for instance, in Anns’ case, treating the defective
foundations as something distinct from the remainder of the
building. So regarded this would be no more than the
ordinary application of the Donoghue v. Stevenson principle.
It is true that in such a case the damages would include,
and in some cases might be restricted to, the costs of
– 41 –
replacing or making good the defective part, but that would
be because such remedial work would be essential to the
repair of the property which had been damaged by it.”
My Lords I agree with the views of my noble and learned
friend, Lord Bridge of Harwich, in this appeal that to apply the
complex structure theory to a house so that each part of the
entire structure is treated as a separate piece of property is quite
unrealistic. A builder who builds a house from foundations
upwards is creating a single integrated unit of which the individual
components are interdependent. To treat the foundations as a
piece of property separate from the walls or the floors is a wholly
artificial exercise. If the foundations are inadequate the whole
house is affected. Furthermore, if the complex structure theory is
tenable there is no reason in principle why it should not also be
applied to chattels consisting of integrated parts such as a ship or
a piece of machinery. The consequences of such an application
would be far reaching. It seems to me that the only context for
the complex structure theory in the case of a building would be
where one integral component of the structure was built by a
separate contractor and where a defect in such a component had
caused damage to other parts of the structure, e.g. a steel frame
erected by a specialist contractor which failed to give adequate
support to floors or walls. Defects in such ancillary equipment as
central heating boilers or electrical installations would be subject
to the normal Donoghue v. Stevenson principle if such defects gave
rise to damage to other parts of the building.
My Lords if, as I believe, the decision in Anns cannot be
reconciled with the principle of Donoghue v. Stevenson upon the
basis of the complex structure theory, is there any other
established principle upon which it could be justified? When Lord
Wilberforce said that the the damages recoverable might include
those for damage to the house itself, it is clear that he was
referring to damage separate from but caused by the defective
foundations. However, the measure of such damages would be
limited to what was necessary to remove the danger to the health
or safety of the occupants, which might well include the cost of
repairing the initial defect but might equally well be less than
that required to repair all the damage. Furthermore, the cause of
action would only arise when there was present or imminent
danger to the occupants. Thus the two prerequisites to an action
based on Anns were (1) the existence of material physical damage
resulting from the original defect and (2) the presence or
imminence of danger associated with that damage. These
prerequisites give rise to a number of difficulties. In the first
place, if the basis of the duty is that persons should not be placed
in a position of danger it is difficult to draw a logical distinction
between danger which manifests itself because of physical damage
and danger which is discovered fortuitously, for example, by a
survey or inspection. Why, it might be asked, should the
houseowner in the latter case have no right of action if he takes
steps to remove the danger before physical damage has occurred
but have such a right if he waits until damage has occurred when
remedial costs may very well be much higher? In the second
place, the concept of imminent danger gives rise to considerable
practical difficulties. Is a danger imminent when it is bound to
occur, albeit not for some time, or is it imminent only if it is
likely to occur in the immediate future? Different persons will
– 42 –
have different views as to what constitutes imminence and
plaintiffs will be in doubt as to when their causes of action
accrue. If the house collapses without any warning and injures
nobody any danger inherent in its construction has been removed.
It would be a very strange result that the owner should have no
remedy in such an event but should have a remedy if the danger
had manifested itself before collapse.
My Lords, as my noble and learned friend, Lord Keith of
Kinkel, has pointed out, Anns has given rise to considerable
litigation and has long been regarded as an unsatisfactory decision.
It is clear, particularly from the careful analysis to which it was
subjected by Lord Bridge of Harwich and Lord Oliver of Aylmerton
in D. & F. Estates Ltd. v. Church Commissioners for England that
it was not based on any recognized principle. It is further
apparent that it conflicts with established principles in a number
of respects to which I have already referred. If it were to stand
as good law there is no logical reason why it should not extend to
defective chattels thereby opening the door to a mass of product
liability claims which the law has not previously entertained. I
therefore agree with my noble and learned friend, Lord Keith of
Kinkel, that Anns was wrongly decided and should be departed
from to the extent which he proposes.
Parliament imposed a liability on builders by the Defective
Premises Act 1972 – a liability which falls far short of that which
would be imposed upon them by Anns. There can therefore be no
policy reason for imposing a higher common law duty on builders,
from which it follows that there is equally no policy reason for
imposing such a high duty on local authorities. Parliament is far
better equipped than the courts to take policy decisions in the
field of consumer protection.
I would allow the appeal.
– 43 –
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URL: http://www.bailii.org/uk/cases/UKHL/1991/2.html
From <https://www.bailii.org/uk/cases/UKHL/1991/2.html>
Watson & British Boxing Board Of Control Ltd & Anor
[2000] EWCA Civ 2116 (19 December 2000)
B E F O R E :
THE MASTER OF THE ROLLS
LORD JUSTICE MAY
LORD JUSTICE LAWS
MICHAEL ALEXANDER WATSON
Respondent/Claimant
and
(1) BRITISH BOXING BOARD OF CONTROL LIMITED
(2) WORLD BOXING ORGANISATION INCORPORATED
Appellant/Defendant
– – – – – – – – – – – – – – – – – – – – – – – – – – –
(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
– – – – – – – – – – – – – – – – – – – – – – – – – – –
Mr R Walker, QC and Mr Stephen Worthington (instructed by Lawrence Graham) appeared on behalf of the Appellant/Defendant
Mr C Mackay, QC and Mr Neil Block (instructed by Myers Fletcher & Gordon) appeared on behalf of the Respondent/Claimant
Judgment
As Approved by the Court
Crown Copyright ©
LORD PHILLIPS, MR
1. On 21st September 1991 Michael Watson fought Chris Eubank for the World Boxing Organisation Super-Middleweight title at Tottenham Hotspur Football Club in London. The referee stopped the fight in the final round when Watson appeared to be unable to defend himself. He had in fact sustained a brain haemorrhage and, after returning to his corner, he lapsed into unconsciousness on his stool. There was chaos in and outside the ring and seven minutes elapsed before he was examined by one of the doctors who were in attendance. He was taken on a stretcher to an ambulance which was standing by which took him to North Middlesex Hospital. Nearly half an hour elapsed between the end of the fight and the time that he got there. At the North Middlesex Hospital he was intubated, that is an endotrachael tube was inserted, and he was given oxygen. He was also given an injection of Manitol, a diuretic that can have the effect of reducing swelling of the brain. The North Middlesex Hospital had no neurosurgical department, so Mr Watson was transferred by ambulance, still unconscious, to St. Bartholomew’s Hospital. There an operation was carried out to evacuate a sub-dural haematoma. By this time, however, he had sustained serious brain damage. This has left him paralysed down the left side and with other physical and mental disability.
2. The fight had taken place in accordance with the rules of the British Boxing Board of Control Ltd., (“the Board”). These rules included provisions for medical inspection of boxers and for the attendance of two doctors at a fight. In fact the Board had required a third doctor to be present and that an ambulance should be in attendance.
3. Mr Watson brought an action against the Board. He claimed that the Board had been under a duty of care to see that all reasonable steps were taken to ensure that he received immediate and effective medical attention and treatment should he sustain injury in the fight. He contended that they were in breach of this duty with the consequence that he did not receive the immediate medical attention at the ringside that his condition required. In a nutshell, his case was that the resuscitation treatment that he received at the North Middlesex Hospital should have been available at the ringside, but was not. He further alleged that had he received that treatment, he would not have sustained permanent brain damage.
4. On 24 September 1999 Ian Kennedy J., gave judgment in favour of Mr Watson against the Board. Against that judgment the Board now appeals. The judgment is attacked root and branch. The Board contends:-
i) that it owed no duty of care to Mr Watson;
ii) that if it owed the duty alleged, it committed no breach; and
iii) that the breach of duty alleged did not cause Mr Watson’s injuries.
5. I propose to develop the relevant facts more fully in the context of each of these issues.
Duty of Care
6. When considering whether the Board owed Watson a duty of care, Ian Kennedy J. examined at some length the role played by the Board in imposing, by rules and regulations, the safety standards to be observed by those involved in professional boxing in this country. His conclusions as to duty are to be found in the following passages from his judgment.
“The Board does not create the danger. What it does do does at least reduce the dangers inherent in professional boxing. But at the same time it countenances and gives its blessing to contests where the safety arrangements are those of its making. The promoters and the boxers do not themselves address considerations of safety. Clearly, they look to the Board’s stipulations as providing the appropriate standard.
It is not necessary for a supposed tortfeasor to have created the danger himself. In my view there is a quite sufficient nexus between the Board and the professional boxer who fights in a contest to which its rules obtain to be capable of giving rise to a duty in the Board to take reasonable steps to try to minimise or control whether by rules or other directions the risks inherent in the sport. To my mind it is difficult in such a situation to profess a concern for safety and to deny a duty such as I have described.
Where there is a potential for physical injury, I do not believe that I have to go beyond the traditional concept of neighbourhood to find a duty where there is, as here, a clearly foreseeable danger. If authority is needed for this approach, it is to be found in the Judgment of the Court of Appeal in Perrett v Collins [1998] 2 LL.L.Rep. 255.”
(Transcript p.15)
“There is always a risk, and the pool from which professional boxers tend to be recruited is unlikely to be one with an innate or well-informed concern about safety, and one may ask why should the individual boxer not rely on the Board’s arrangements? The Board professes – I do not for one moment question its sincerity – its lively interest in his safety. Its experience, contacts and resources exceed his own. It has the ability to require of promoters what it sees as good practice.
I do not believe there is any difference in principle between giving advice about safety and laying down rules to provide for safety. Thus we find here a body with special knowledge which gives advice to a defined class of persons, that it knows will rely upon that advice in a defined situation….. If, which I doubt, this conclusion represents any step beyond what is already settled law, I am fully persuaded it is a proper one to take.”
(Transcript pp.18-19)
7. I am in no doubt that the Judge’s decision broke new ground in the law of negligence. In Caparo Plc v Dickman [1990] 2 AC 605, and in many subsequent cases, the House of Lords and this Court have approved the approach to the development of the law of negligence recommended by Brennan J. in the High Court of Australia in Sutherland Shire Council v Heyman (1985) 60 A.L.R. 1, 43-44, where he said:
“It is preferable, in my view, that the law should develop novel categories of negligence incrementally and by analogy with established categories, rather than by a massive extension of a prima facie duty of care restrained only by indefinable `considerations which ought to negative, or to reduce or limit the scope of the duty or the class of person to whom it is owed.”
8. The Judge referred (Transcript p.17) to the question of whether to attach a duty of care to the facts of the present case would be an acceptable incremental extension of established liabilities, or too long a step. He did not, however, identify any obvious stepping stones to his decision. I do not find this surprising. There are features of this case which are extraordinary, if not unique. I would echo the comment of Lord Steyn in Marc Rich & Co. v Bishop Rock Ltd [1996] AC 211 at p.236:
“None of the cases cited provided any realistic analogy to be used as a springboard for a decision one way or the other in this case. The present case can only be decided on the basis of an intense and particular focus on all its distinctive features, and then applying established legal principles to it.”
9. I turn to the distinctive features of this case.
The Sport of Boxing
10. Many sports involve a risk of physical injury to the participants. Boxing is the only sport where this is the object of the exercise. The Law Commission in its 1994 Consultation Paper No.134 “Criminal Law: Consent and Offences Against the Person” recognised that boxing was an anomaly in English law. (pp.27-8). Lord Mustill reached the same conclusion in R v Brown [1994] 1 AC 212 at p.265, where he gave the following description of professional boxing:
“For money, not recreation or personal improvement, each boxer tries to hurt the opponent more than he is hurt himself, and aims to end the contest prematurely by inflicting a brain injury serious enough to make the opponent unconscious, or temporarily by impairing his central nervous system through a blow to the midriff, or cutting his skin to a degree which would ordinarily be well within the scope of Section 20. The boxers display skill, strength and courage, but nobody pretends that they do good to themselves or others. The onlookers derive entertainment, but none of the physical and moral benefits which have been seen as the fruits of engagement in many sports.”
11. Attempts have been made, within Parliament and outside, to bring about the banning of the sport of boxing. They have not succeeded. Boxing could not, however, have survived as a legal sport without strict regulation, one aim of which is to limit the injuries inflicted in the ring. That regulation has been provided by the Board.
The British Board of Boxing Control
12. The history of the Board can be traced back to the middle of the nineteenth century, but the Board itself was constituted as an unincorporated association in 1929. In 1989 it was incorporated as a company limited by guarantee. Since 1929 the Board has been and continues to be the sole controlling body regulating professional boxing in the United Kingdom. There is no statutory basis for this. The Board’s authority is essentially based upon the consent of the boxing world.
13. No one can take part, in any capacity, in professional boxing in this Country who is not licensed by the Board and, at the same time, a member of it, for the two are essentially synonymous. Thus boxers, promoters, managers, referees, time-keepers, trainers, seconds, masters of ceremonies, match-makers, agents for overseas boxers, ringmasters and whips all have to be licensed by the Board to perform their particular functions and become, when granted their licences, members of the Board.
14. A book of rules and regulations 58 pages in length provides, in detail, for the manner in which professional boxing is to be carried on. Contracts between boxer and manager and boxer and promoter have to be in standard form, providing expressly that the parties will observe the Board’s rules. Licence holders are also required to comply with the Board’s policy in respect of matters not dealt with by specific rules. The Board exercises its control of professional boxing through a system of eight Area Councils, subject to overall control by Stewards and Committees.
15. In 1991 the Board had about twelve hundred licence holders and members of which about five hundred and fifty were active boxers. Of these, the vast majority were semi-professional. Only about twenty-five British boxers succeeded in earning a full-time living from the sport.
16. The Board is non-profit making. In 1991 its income was some £314,000 of which some £51,000 represented licence and application fees and about £224,000 `tournament tax’, which I understand to represent a small percentage of the takings at boxing tournaments. At the end of December 1991 the net assets of the Board were about £352,000. The Board did not insure against liability in negligence.
The Board’s Involvement in Safety
17. The physical safety of boxers has always been a prime concern of the Board. In his Witness Statement Mr John Morris, General Secretary of the Board said “The Board believes as I do, that the safety of the boxers is of great importance and takes precedence over commercial and other interests”. The Articles of Association of the Board provide that its objects include:
“To promote and safeguard the interests of members of the company in the United Kingdom and throughout the world including members’ (being boxers) interests in boxing contests and tournaments….including…..the encouragement
and promotion of safety standards….
the concern of the Board for the physical safety of boxers is reflected in many of the Board’s rules and regulations. These can be divided into three categories:
i) rules designed to ensure that a boxer is not permitted to fight unless he is fit.
ii) rules designed to restrict the physical injuries that may be caused in the course of the fight;
iii) rules designed to secure that a boxer receives appropriate medical attention when injured in the course of a fight.
18. Examples of the first category are:
a) A requirement that a boxer must be medically examined before being granted a licence, together with a list of medical conditions that preclude the grant of a licence. (Rule 8.1).
b) The rule that a Licence may be suspended or withdrawn if, in the opinion of the Board or an Area Council, the licence-holder is not medically fit to box (Rule 4.9(b)(I)).
c) The rule that if a fight is stopped by the referee or a boxer is counted out, the boxer’s licence is suspended for at least 28 days and until the boxer is certified fit to box by a doctor. (Rule 5.9(c)).
d) The rule that a boxer must be medically examined before every contest. (Rules 8.5 and 8.6).
e) The rule that any boxer selected to take part in a championship contest shall submit to the Board a satisfactory centralised tomography (CT) brain scan report not less than 28 days before the contest and a further scan report annually, so long as the boxer continues to take part in such contests.
19. Examples of the second category are:
a) Requirements as to protective covering for the ring floor and the corners (Rule 3.4).
b) A limit on the number of rounds to twelve (Rule 3.7).
c) Rules governing bandaging for the hands and the composition of boxing gloves (Rules 3.22 and 3.23).
20. The third category is of particular importance in the context of this action. The following rules fall into this category:
3.8 The promoter shall procure that two doctors, who must be approved by the Area Medical Officer, attend at all promotions, one of whom must be seated at the ringside at all times during the contest.
3.9 …each boxer must ……be examined after every contest and a report sent to the Board or Area Council concerned if necessary. A doctor must be available to give immediate attention to any boxer should this be required.
3.10 The promoter shall procure that at all promotions a stretcher is available for use near the ring.
9.39.3 (added to the Rules on 25 May 1991)). Each venue must have a room set aside exclusively for medical purposes. It shall be adequately lit, have an examination couch and possess hot and cold running water. The medical room should be situated in close proximity to the boxer’s dressing rooms and be reasonable accessible to and from the ring.
21. The position as to the selection of doctors for a contest that prevailed in 1991 was as follows. The doctors required by the rules to be present at a contest had to be doctors who had been approved by the Board. Each area had a Chief Medical Officer, whose duties included the approval of doctors who wished to serve as medical officers at boxing matches. In theory the medical officers at a contest would be appointed and paid by the Promoter from the body of approved doctors. In practice the Area Secretary would select the medical officers for a particular contest, albeit that the promoter would pay them.
22. From at least 1959 the Board kept under review the medical safeguards that should be provided at a boxing contest in the light of developing medical knowledge, or purported so to do. In an open letter to BMA delegates, written some time in the 1980’s, Dr Whiteson, the Chief Medical Officer to the Board, wrote “The British Boxing Board of Control is justifiably proud of its reputation of being in the vanguard of the protection of professional boxers.” A little later he said “As Chief Medical Officer, my approach has always been that preventative controls are the key to making a physically hazardous sport as safe as possible…our interest in preventative controls covers the whole gamut of professional boxing.”
23. In an article on injuries in professional boxing written in 1981, Dr Whiteson stated:
“My task as Senior Medical Officer is to control the medical aspects of boxing and in this to liaise closely with Area Medical Officers and with the team of medical experts which includes neurologists and orthopaedic, plastic and ophthalmic surgeons”.
24. Dr Whiteson did not give evidence. Mr Morris, commenting in his Witness Statement on the Statement of Claim, stated:
“We do collaborate with the medical profession, indeed we believe that our Rules are as good as currently can be devised, taking into account the medical interests of the boxers, and the requirements of the sport itself. Efforts continue and will continue to improve safety standards and these efforts are and were on-going prior to the Watson fight.”
25. The body set up by the Board that gave particular consideration to safety standards was a Medical Committee, sometimes referred to as The Medical Panel, that was set up in 1950. A press release issued in the 1980’s’, stated:
“In the last 20 years, the medical protection of British professional boxers has become the Board’s main raison d’être…through its Medical Committee set up in 1950, it has provided British professional boxing with an unrivalled set of medical safety checks and balances.”
26. An example of the ongoing review of safety standards was the Board’s decision, in August 1991, that:
“In future three Board Medical Officers would be appointed when a major contest was taking place. This would mean an appointment of a Senior Medical officer specifically for the major event and then two other doctors on duty to ensure that there were always two doctors at the ringside while a major contest was taking place.”
27. Another example was a general direction given, at about the same time, that an ambulance and crew should be in attendance at a boxing contest.
28. The Board’s Medical Committee had issued detailed advice to Medical Officers in relation to their duty at the ringside which was in force at the time of the Watson/Eubank fight. I shall revert to the details of this when I come to consider the question of breach. At this stage it is enough to note that the advice set out the professional expertise expected of the medical officers and details of equipment needed to perform their duties.
29. I can summarise the position as follows. The Board set out by its rules, directions and guidance, to make comprehensive provision for the services to be provided to safeguard the health of the boxer. All involved in a boxing contest were obliged to accept and comply with the Board’s requirements. So far as the promoter was concerned, these delimited his obligations. In his Witness Statement, Mr Morris accepted that the following averment in the Statement of Claim was “basically correct”:
“at all material times, by reason of the effective control over boxing that the Board assumed, the Board was in a position to determine, and did in fact determine, the measures that were taken in boxing to protect and promote the health and safety of boxers.”
The Regime Applying to the Contest Between Watson and Eubank
30. The contest was sponsored not by the Board, but by the World Boxing Organisation (WBO). This did not, however, affect the position so far as responsibility for the safety of the boxers was concerned. Rule 23 of the Board’s rules and regulations provided:
“23.1 Commonwealth, European and World Championships when promoted in Great Britain and Northern Ireland must be organised and controlled in accordance with the Regulations of the BBB of C except where such Regulations may be at variance with those of any Commonwealth, European or World Boxing Authorities with whom the BBC of C may for the time being be affiliated, when the Regulations of such Authorities shall apply.
31. The Bout Agreement, which was subject to the sanction of the Board, provided that:
“The bout will be conducted in accordance with the rules and regulations of the WBO and BBBC”.
32. Mr Block, the Secretary of the Board’s Southern Area Council, reported to the Board that the arrangements in place were satisfactory and that the tournament could receive the Board’s approval. He gave evidence that the WBO imposed no medical requirements in respect of the fight and that in these circumstances, the ordinary Board rules and policy would and did apply. In accordance with normal practice, the medical officers for the contest were nominated by the Southern Area Council.
Reliance
33. In 1990 Mr Watson had been involved in litigation with his manager, in which the Board had filed an Affidavit. This stated that the Board was accepted as being the sole controlling body regulating professional boxing in the United Kingdom and stressed the importance that the Board place on ensuring the safety of boxers. In a Witness Statement in the present proceedings, Mr Watson stated that this accorded with his understanding as a boxer that the Board undertook responsibility for all the medical aspects of boxing, including the medical supervision of boxing contests, in the United Kingdom.
34. This concludes my summary of the facts which I consider material to the question of whether the Board owed a duty of care to Mr Watson. I turn to the law.
THE LAW
35. In Caparo v Dickman at p.617 Lord Bridge considered a series of decisions of the Privy Council and the House of Lords in relation to the duty of care in negligence and summarised their effect as follows:-
“What emerges is that, in addition to the forceability of damage, necessary ingredients in any situation giving rise to a duty of care are that there should exist between the party owing the duty and the party to whom it is owed, a relationship characterised by the law as one of “proximity” or “neighbourhood” and that the situation should be one in which the court considers it fair, just and reasonable that the law should impose a duty of a given scope upon the one party for the benefit of the other”.
36. Lord Bridge went on to state that these ingredients were insufficiently precise to be used as practical tests and to commend the desirability of proceeding by analogy with established categories of negligence. Lord Oliver at p.633 also emphasised the difficulty of using the three requirements as a practical guide to the existence of a duty of care.
“The postulate of a simple duty to avoid any harm that is, with hindsight, reasonably capable of being foreseen becomes untenable without the imposition of some intelligible limits to keep the law of negligence within the bounds of common sense and practicality. Those limits have been found by the requirement of what has been called a “relationship of proximity” between plaintiff and defendant and by the imposition of a further requirements that the attachment of liability for harm which has occurred be “just and reasonable”. But although the cases in which the courts have imposed or withheld liability are capable of an approximate categorisation, one looks in vain for some common denominator by which the existence of the essential relationship can be tested. Indeed it is difficult to resist a conclusion that what have been treated as three separate requirements are, at least in most cases, in fact merely facets of the same thing, for in some cases the degree of foreseeability is such that it is from that alone that the requisite proximity can be deduced, whilst in others the absence of that essential relationship can most rationally be attributed simply to the court’s view that it would not be fair and reasonable to hold the defendant responsible. “Proximity” is, no doubt, a convenient expression as long as it is realised that it is no more than a label which embraces not a definable concept but merely a description of circumstances from which pragmatically, the courts conclude that a duty of care exists.”
37. Saville L.J. expressed a similar view in Marc Rich & Co. v Bishop Rock Ltd [1994] 1 WLR 1071 at 1077:
“Whatever the nature of the harm sustained by the plaintiff, it is necessary to consider the matter not only by inquiring about foreseeability but also by considering the nature of the relationship between the parties; and to be satisfied that in all the circumstances it is fair, just and reasonable to impose a duty of care. Of course….these three matters overlap with each other and are really facets of the same thing. For example, the relationship between the parties may be such that it is obvious that a lack of care will create a risk of harm and that as a matter of common sense and justice a duty should be imposed….. Again in most cases of the direct infliction of physical loss or injury through carelessness, it is self-evident that a civilised system of law should hold that a duty of care has been broken, whereas the infliction of financial harm may well pose a more difficult problem. Thus the…. so-called requirements for a duty of care are not to be treated as wholly separate and distinct requirements but rather as convenient and helpful approaches to the pragmatic question whether a duty should be imposed in any given case.”
38. This passage was approved by Lord Steyn when the case reached the House of Lords [1996] AC 211 at 235. Lord Steyn stated:-
“Since the decision in Dorset Yacht Co. v The Home Office [1970] AC 1004, it has been settled law that the elements of foreseeability and proximity as well as considerations of fairness, justice and reasonableness are relevant to all cases whatever the nature of the harm sustained by the plaintiff..”
Proximity
39. Despite this statement, Ian Kennedy J. suggested that where there was a potential for physical injury there was no need to go beyond the test of foreseeability in deciding whether a duty of care existed, relying on Perrett v. Collins [1998] 255. In that case Hobhouse L.J. deprecated the introduction of tests such as `proximity’ and `fair just and reasonable’ in a situation where it was reasonably foreseeable that a failure to exercise reasonable care would cause personal injury:
“They also illustrate the dangers of substituting for clear criteria, criteria which are incapable of precise definition and involve what can only be described as an element of subjective assessment by the Court: such ultimately subjective assessments tend inevitably to lead to uncertainty and anomaly which can be avoided by a more principled approach”.
P.258.
40. Later, after referring to Lord Bridge’s speech in Caparo at p.261, he said:
“Thus when a case fits into a category where the existence of a duty of care and a potential liability in the tort of negligence has already been recognised, the more elusive criteria to which Lord Bridge referred for dealing with cases that go beyond the recognised category of proximity do not arise.”
P.261.
41. I shall have to examine the facts and reasoning in Perrett in due course, for Mr Mackay, QC, for Mr Watson has relied upon it as providing a close analogy with the present case. At the outset, however, I propose to identify some significant features of the present case, which place it outside any established category of duty of care in negligence. These make it necessary:
i) to identify the principles which are relied upon as giving rise to a duty of care in this case.
ii) to identify any categories of cases in which these principles have given rise to a duty of care, or conversely where they have not done so.
iii) to decide whether these principles should be applied so as to give rise to a duty of care in the present case.
42. At the third stage, questions of `proximity’ and of what is `fair, just and reasonable’ have to be considered.
The Special Features of this Case
43. The principles alleged to give rise to a duty of care in this case are those of assumption of responsibility and reliance. Mr Watson’s case can be summarised as follows:
i) The Board assumed responsibility for the control of an activity the essence of which was that personal injuries should be sustained by those participating.
ii) The Board assumed responsibility for determining the details of the medical care and facilities which would be provided by way of immediate treatment of those who received personal injuries while taking part in the activity.
iii) Those taking part in the activity, and Mr Watson in particular, relied upon the Board to ensure that all reasonable steps were taken to provide immediate and effective medical attention and treatment to those injured in the course of the activity.
44. The peculiar features of the duty of care alleged are as follows:
i) the duty alleged is not to take reasonable care to avoid causing personal injury. It is a duty to take reasonable care to ensure that personal injuries already sustained are properly treated.
ii) the duty alleged is not directly, through the servants or agents of the Board to provide proper facilities and administer proper treatment to those injured. It is to make regulations imposing on others the duty to achieve these results.
45. I turn to consider the extent to which there are categories of cases, in which a duty of care has been held to exist, or alternatively held not to exist involving these features.
A Duty to Administer Medical Teatment
46. The most obvious category of case of a duty of care to administer medical treatment to restrict the consequences of injury or illness, or to effect a cure, is that of the duty owed by a doctor or a hospital authority to a patient. The nature of that duty was recently considered by this Court in Capital and Counties PLC v. Hampshire C.C. [1997] QB 1004 at 1034.
“As a general rule a sufficient relationship will exist when someone possessed of a special skill undertakes to apply that skill for the assistance of another person who relies upon such skill and there is direct and substantial reliance by the plaintiff on the defendant’s skill. See Hedley Byrne & Co. Ltd. v Heller & Partners Ltd [1964] AC 465 and Henderson v Merrett Syndicates Ltd [1995] 2 AC 145. There are many instances of this. The plaintiffs submitted that that which is most closely analogous is that of doctor and patient or health authority and patient. There is no doubt that once the relationship of doctor and patient or hospital authority and admitted patient exists, the doctor or the hospital owe a duty to take reasonable care to effect a cure, not merely to prevent further harm. The undertaking is to use the special skills which the doctor and hospital authorities have to treat the patient. In Cassidy v Ministry of Health [1951] 2 K.B. 343, Denning L.J. said:
“In my opinion authorities who run a hospital, be they local authorities, government boards, or any other corporation, are in law under the selfsame duty as the humblest doctor. Whenever they accept a patient for treatment, they must use reasonable care and skill to cure him of his ailment.”
“In Barnett v Chelsea & Kensington Management Committee [1969] 1 Q.B. 428 Nield J. drew a distinction between a casualty department of a hospital that closes its doors and says no patients can be received, in which case he would, by inference, have held there was no duty of care, and the case before him where the three watchmen, who had taken poison, entered the hospital and were given erroneous advice, where a duty of care arose. Likewise, a doctor who happened to witness a road accident will very likely go to the assistance of anyone injured, but he is not under any legal obligation to do so, save in certain limited circumstances which are not relevant, and the relationship of doctor and patient does not arise. If he volunteers his assistance, his only duty as a matter of law is not to make the victim’s condition worse. Moreover, it is clear that no such duty of care exists, even though there may be close physical proximity, simply because one party is a doctor and the other has a medical problem which may be of interest to both”.
47. It is clear on the authorities that the duty to take reasonable care to prevent further harm and to effect a cure is founded on the acceptance of the patient as a patient, which carries with it an implicit undertaking to care for the patient’s needs. It is on this basis that it is possible to draw a distinction between the doctor who goes to the assistance of the victim of a road accident and the hospital that receives that victim into its casualty department.
48. I do not consider that a conscious reliance by the patient on the hospital to exercise care is an essential element in this duty of care. The duty will be owed to the victim of a road accident who is received by the hospital unconscious. While it might be possible to rationalise the reason for the duty by postulating that there is a general reliance by citizens upon the National Health Service to provide reasonable care in the case of a medical emergency, English law has set its face against this line of reasoning.
49. It seems to me that the authorities support a principle that where A places himself in a relationship to B in which B’s physical safety becomes dependent upon the acts or omissions of A, A’s conduct can suffice to impose on A, a duty to exercise reasonable care for B’s safety. In such circumstances A’s conduct can accurately be described as the assumption of responsibility for B, whether `responsibility’ is given its lay or legal meaning.
50. Thus it has been held that the prison service owes a duty of care to take reasonable steps to prevent prisoners from committing suicide.
51. In Barrett v. Ministry of Defence [1995] 1 WLR a naval rating drank himself into a state of insensibility at the Royal Navy Air Station where he was serving. This was drawn to the attention of the duty Petty Officer, who organised a stretcher, had the rating carried to his cabin and placed on his bunk in the recovery position, in a coma. No medical assistance was provided. He received only occasional visits of inspection by the duty ratings. Whilst unattended he vomited and died as a result of inhaling his own vomit. This Court held that the Ministry of Defence had been under no duty of care to prevent the deceased from abusing alcohol to the extent that he did. Beldam L.J. held that
“Until he collapsed, I would hold that the deceased was in law alone responsible for his condition. Thereafter, when the defendant assumed responsibility for him, it accepts that the measures taken fell short of the standard reasonably to be expected. It did not summon medical assistance and its supervision of him was inadequate”.
52. A duty of care at this stage had been conceded by the Ministry of Defence, but in Capital and Counties v. Hampshire this Court commented at p.1038 that this was not surprising as the deceased was under the command of the officer concerned.
53. These cases turned upon the assumption of responsibility to an individual. A number of authorities show that an acceptance of the role (usually under statutory powers or duties) of protecting the community in general from foreseeable dangers does not carry with it a legal duty of care to safeguard individual members of the community from those dangers. Thus in Capital and Counties v. Hampshire this Court held that a fire brigade was under no common law duty to answer a call for help or, having done so, to exercise reasonable skill and care to extinguish the fire. The police have been held to owe no duty to respond to a 999 call or, having done so, to exercise reasonable care to prevent a burglary Alexandrou v. Oxford [1993] 4 All ER 328 [1994] 4 All ER 328.
54. These cases were distinguished in Kent v Griffiths [2000] 2 WLR 1158. In that case a doctor phoned for an ambulance to take to hospital urgently a patient who had suffered an asthma attack. The request for an ambulance was accepted. The arrival of the ambulance was greatly delayed without any reasonable explanation. As a result of the delay the patient sustained brain damage. In the subsequent action for personal injuries, this Court held that the ambulance service had been in breach of a duty of care in failing to arrive promptly. Lord Woolf M.R. held that, on the facts, a duty of care had existed. He distinguished the fire and police `rescue’ cases on the ground that:
“This was not a case of general reliance, but specific reliance. It was foreseeable that the claimant could suffer personal injuries if there was delay. The nature of the damage was important. There was a contrast with a fire or a crime, where an unlimited number of members of the public could be affected and the damage could be to property or only economic. In its statutory context the ambulance service is more properly described as part of the National Health Service than as a rescue service. As part of the health service it should owe the same duty to members of the public as other parts of the health service. The L.A.S. had not been responsible for the claimant’s asthma but it had caused the respiratory arrest and to this extent the L.A.S was the author of additional damage.”
55. As I read the judgment the duty of care turned upon the acceptance by the ambulance service of the request to provide an ambulance and thus the acceptance of responsibility for the care of the particular patient. Thus at p.1162 Lord Woolf observed:
“Once a call to an ambulance service has been accepted, the service is dealing with a named individual upon whom the duty becomes focused. Furthermore, if an ambulance service is called and agrees to attend the patient, those caring for the patient normally abandon any attempt to find an alternative means of transport to the hospital”.
56. At p.1172 he summarised his conclusion as follows:-
“The fact that it was a person who foreseeably would suffer further injuries by a delay in providing an ambulance, when there was no reason why it should not be provided, is important in establishing the necessary proximity and thus duty of care in this case. In other words, as there were no circumstances which made it unfair or unreasonable or unjust that liability should exist, there is no reason why there should not be liability if the arrival of the ambulance was delayed for no good reason. The acceptance of the call in this case established the duty of care. On the findings of the judge it was delay which caused the further injuries. If wrong information had not been given about the arrival of the ambulance, other means of transport could have been used”.
57. This concludes my consideration of cases dealing with the assumption of responsibility to exercise reasonable care to safeguard a victim from the consequences of an existing personal injury or illness. They support the proposition that the act of undertaking to cater for the medical needs of a victim of illness or injury will generally carry with it the duty to exercise reasonable care in addressing those needs. While this may not be true of the volunteer who offers assistance at the scene of an accident, it will be true of a body whose purpose is or includes the provision of such assistance.
58. I now come to the second special feature of this case – the fact that the Board is not charged with having failed itself to provide appropriate medical treatment, but with having failed to impose rules and regulations which would have ensured that others did so.
Indirect Influence on the Occurrence of Injury
59. We have been referred to no case where a duty of care has been established in relation to the drafting of rules and regulations which have governed the conduct of third parties towards a claimant. There are, however, authorities dealing with advice given to third parties that foreseeably resulted in injury to the person or property of claimants. Ian Kennedy J. equated the formulation of rules and regulations with the giving of advice and these decisions are of relevance in this context.
60. In Clay v. Crump & Sons Ltd [1964] 1 QB 133 a building worker was injured when a wall collapsed on him. The wall had remained standing because the architect employed in supervising the building works had failed to advise that it was dangerous and should be demolished. In answer to a claim by the workman, the architect argued that his only duty was the contractual duty that he owed to the owners of the building. That argument was rejected. Ormrod L.J. held at p.557:
“Is this a case in which it can be said that the plaintiff was closely and directly affected by the acts of the architect as to have been reasonably in his contemplation when he was directing his mind to the acts or omissions which are called into question? In my judgment, there must be an affirmative answer to that question. The architect, by reason of his contractual arrangement with the building owner, was charged with the duty of preparing the necessary plans and making arrangements for the manner in which the work should be done. This involved taking precautions or giving instructions for them to be taken so that the work could be done with safety. It much have been in the contemplation of the architect that builders would go on the site as the whole object of the work was to erect building there. It would seem impossible to contend that the plaintiff would not be affected by the decisions and plans drawn up by the architect.”
61. In Marc Rich & Co v. Bishop Rock Ltd [1996] AC 211 a classification surveyor had surveyed a vessel laden with cargo and given it a clean bill of health. The vessel sailed and sank a few days later with the loss of the cargo. Cargo owners sued the classification society N.K.K. It was accepted that, if the survey had been negligent the loss of the cargo was a foreseeable consequence. On a preliminary issue the House of Lords held that the classification society had no duty of care to the cargo owners. This decision turned, essentially, on considerations of policy in relation to the role of a classification society in the context of the complex arrangements for sharing, limiting and insuring the risks inherent in carriage of goods by sea. Lord Steyn, however, gave short shrift to an argument based on assumption of responsibility:
“Given that the cargo owners were not even aware of N.K.K.’s examination of the ship, and that the cargo owners simply relied on the undertakings of the shipowners, it is in my view impossible to force the present set of facts into even the most expansive view of the doctrine of voluntary assumption of responsibility.”
62. In X (Minors) v Bedfordshire County Council [1995] 2 AC 633 five appeals were heard together by the House of Lords because they raised, by way of preliminary issues, similar questions about the duty of care. The defendant in each case was a local authority. Each case involved the performance by the local authority of duties imposed under statute for the benefit of children. One group of cases involved statutory duties imposed on local authorities for the purpose of protecting children from child abuse. The other group of cases involved duties imposed on local authorities in relation to children with special educational needs. Apart from issues of statutory duty, the question arose in each group of cases whether (i) the local authorities owed, at common law, a duty of care to the children when considering their needs and (ii) whether professionals advising on the needs of children owed a duty of care to those children which, if broken, rendered the local authorities vicariously liable. In delivering the leading speech Lord Browne-Wilkinson observed at p.739:
“The question whether there is such a common law duty and if so its ambit, must be profoundly influenced by the statutory framework within which the acts complained of were done.”
63. He went on to hold that, in relation to the child abuse cases, the statutory scheme was incompatible with the existence of a direct common law duty of care owed by the local authorities. As for the argument that the local authorities were vicariously liable for negligence on the part of those giving them advice, Lord Browne-Wilkinson held at pp.752-3:
“The claim based on vicarious liability is attractive and simple. The normal duty of a doctor to exercise reasonable skill and care is well established as a common law duty of care. In my judgment, the same duty applies to any other person possessed of special skills, such as a social worker. It is said, rightly, that in general such professional duty of care is owed irrespective of contract and can arise even where the professional assumes to act for the plaintiff pursuant to a contract with a third party: Henderson v Merrett Syndicates Ltd [1995] 2 AC 145; White v Jones [1995] 2 AC 207. Therefore, it is said, it is nothing to the point that the social workers and psychiatrist only came into contact with the plaintiffs pursuant to contracts or arrangements made between the professionals and the local authority for the purpose of the discharge by the local authority of its statutory duties. Once brought into contact with the plaintiffs, the professionals owed a duty properly to exercise their professional skills in dealing with their `patients’, the plaintiffs. This duty involved the exercise of professional skills in investigating the circumstances of the plaintiffs and (in the Newham case) conducting the interview with the child. Moreover, since the professionals could foresee that negligent advice would damage the plaintiffs, they are liable to the plaintiffs for tendering such advice to the local authority Like the majority in the Court of Appeal, I cannot accept these arguments. The social workers and the psychiatrists were retained by the local authority to advise the local authority, not the plaintiffs. The subject matter of the advice and activities of the professionals is the child. Moreover, the tendering of any advice will in many cases involve interviewing and, in the case of doctors, examining the child. But the fact that the carrying out of the retainer involves contact with and relationship with the child cannot alter the extent of the duty owed by the professionals under the retainer from the local authority. The Court of Appeal drew a correct analogy with the doctor instructed by an insurance company to examine an applicant for the life insurance. The doctor does not, by examining the applicant, come under any general duty of medical care to the applicant. He is under a duty not to damage the applicant in the course of the examination: but beyond that his duties are owed to the insurance company and not to the applicant……..
In my judgement in the present cases, the social workers and the psychiatrist did not, by accepting the instructions of the local authority, assume any general professional duty of care to the plaintiff children. The professionals were employed or retained to advise the local authority in relation to the well being of the plaintiffs but not to advise or treat the plaintiffs”.
64. In relation to two of the cases involving special educational needs, Lord Browne-Wilkinson reached a different conclusion. The Plaintiffs were children with dyslexia. They alleged that the local authorities had provided services under which, in one case, educational psychologists and, in the other, advisory teachers provided advice to teaching staff and parents as to whether children had special educational needs. In each case it was alleged that the professional in question negligently failed to diagnose dyslexia. In consequence this special need was not addressed, to the detriment of the child. One issue in each case was whether, on these facts, it could be argued that the local authority had been either directly or vicariously, in breach of a duty of care owed to the child under common law. Lord Browne-Wilkinson answered this question in the affirmative. In the first case, he held at pp.761-2:
“The claim is based on the fact that the authority is offering a service (psychological advice) to the public. True it is that, in the absence of a statutory power or duty, the authority could not offer such a service. But once the decision is taken to offer such a service, a statutory body is in general in the same position as any private individual or organisation holding itself out as offering such a service. By opening its doors to others to take advantage of the service offered, it comes under a duty of care to those using the service to exercise care in its conduct. The position is directly analogous with a hospital conducted, formerly by a local authority now by a health authority, in exercise of statutory powers. In such a case the authority running the hospital is under a duty to those whom it admits to exercise reasonable care in the way it runs it: see Gold v Essex County Council [1942] 2 K.B. 293.”
65. In the second case he reached the following conclusions of principle at p.766:
“In my judgment a school which accepts a pupil assumes responsibility not only for his physical well being but also for his educational needs. The education of the pupil is the very purpose for which the child goes to the school. The head teacher, being responsible for the school, himself comes under a duty of care to exercise the reasonable skills of a headmaster in relation to such steps as a reasonable teacher would consider appropriate to try to deal with such under-performance. To hold that, in such circumstances, the head teacher could properly ignore the matter and make no attempt to deal with it would fly in the face, not only of society’s expectations of what a school will provide, but also the fine traditions of the teaching profession itself. If such head teacher gives advice to the parents, then in my judgment he must exercise the skills and care of a reasonable teacher in giving such advice.
Similarly, in the case of the advisory teacher brought in to advise on the educational needs of a specific pupil, if he knows that his advice will be communicated to the pupil’s parents he must foresee that they will rely on such advice. Therefore in giving that advice he owes a duty to the child to exercise the skill and care of a reasonable advisory teacher.”
66. This reasoning was followed by the House of Lords in Phelps v Hillingdon Borough Council [2000] 3 WLR 776. That case involved four further claims by children against local education authorities for, among other things, negligently failing to address their special educational needs. In the leading speech Lord Slynn advanced the following statement of principle at pp.790-1:
“As to the first question, it is long and well-established, now elementary, that persons exercising a particular skill or profession may owe a duty of care in the performance to people who it can be foreseen will be injured if due skill and care are not exercised, and if injury or damage can be shown to have been caused by the lack of care. Such duty does not depend on the existence of any contractual relationship between the person causing and the person suffering the damage. A doctor, an accountant and an engineer are plainly such a person. So in my view is an educational psychologist or psychiatrist and a teacher including a teacher in a specialised area, such as a teacher concerned with children having special educational needs. So may be an education officer performing the functions of a local education authority in regard to children with special educational needs. There is no more justification for a blanket immunity in their cases than there was in Capital & Counties Plc v Hampshire Country Council [1997] QB 1004.”
“…But where an educational psychologist is specifically called in to advise in relation to the assessment and future provision for a specific child, and it is clear that the parents acting for the child and the teachers will follow that advice, prima facie a duty of care arises. It is sometimes said that there has to be an assumption of responsibility by the person concerned. That phrase can be misleading in that it can suggest that the professional person must knowingly and deliberately accept responsibility. It is, however, clear that the test is an objective one: Henderson v Merrett Syndicates Ltd., [1995] 2 AC 145, 181. The phrase means simply that the law recognises that there is a duty of care. It is not so much that responsibility is assumed as that it is recognised or imposed by the law.”
67. Lord Nicholls posed and answered the following question at p.802:
“Take a case where an educational psychologist is employed by an education authority. In the course of his work he assesses a pupil whose lack of progress at school has been causing concern all round: to teachers and parents alike. The child has a learning difficulty. The psychologist sees the child and carries out an assessment. He makes a diagnosis and advises the education authority. The diagnosis is hopelessly wrong. No reasonably competent educational psychologist, exercising reasonable skill and care, would have given such advice. In consequence, the pupil fails to receive the appropriate educational treatment and, as a result, his educational progress is retarded, perhaps irreparably.
When carrying out the assessment and advising the education authority, did the psychologist owe a duty of care to the child?
I confess I entertain no doubt on how that question should be answered. The educational psychologist was professionally qualified. He was brought in by the education authority to assist it in carrying out its educational functions. The purpose of his assessment was to enable him to give expert advice to the education authority about the child. The authority was to act on that advice in deciding what course to adopt in the best interests of the pupil with a learning difficulty. Throughout, the child was very dependent upon the expert’s assessment. The child was in a singularly vulnerable position. The child’s parents will seldom be in a position to know whether the psychologist’s advice was sound or not.
This seems to me to be, on its face, an example par excellence of a situation where the law will regard the professional as owing a duty of care to a third party as well as his own employer.”
68. Finally I return to Perrett v. Collins, the only case referred to by Ian Kennedy J. when considering the question of duty of care. The background to this case was described by Hobhouse L.J. at p.258 as follows:
“The third defendants are a trading company incorporated under the companies Acts. The precise nature of the company’s constitution is not covered by the evidence. It has limited liability. It trades under the name of the “Popular Flying Association” and it appears that either its main role or one of its main roles is to run that association. The association exists to facilitate amateurs to enjoy facilities for flying light aircraft. Thus, it has members who pay membership fees or subscriptions in return for which it provides them with facilities. The facilities include a scheme which enables members to construct and fly their own light aircraft. The Kit Fox aircraft is an aircraft which is designed for this purpose. It is supplied to amateur flyers in a kit form which they can then assemble for themselves. In order that, when complete, the aircraft can obtain first a provisional and then a full certificate of airworthiness, the assembly of the aircraft has to be supervised and checked by an inspector. Mr. Usherwood was the person who was carrying out this role in relation to Mr. Collins’ assembly of this aircraft. The plaintiff’s allegation is that during this process an alternative gearbox was fitted without the appropriate and corresponding substitution of a propeller which matched the substituted gearbox.
The company, as the Popular Flying Association, appoint inspectors for the purpose of, among other things, inspecting aircraft during the course of their construction by members of the association and certifying whether the relevant work has been done to his “entire satisfaction” and the aircraft is in an airworthy condition. Any such inspector has to be approved by the association”.
69. Mr Usherwood had authority, under an Order made pursuant to the Civil Aviation Act 1982 to certify that the aircraft was fit to fly. He did so, notwithstanding, so it was alleged, that the mismatch between gearbox and propeller made the aircraft unairworthy. The owner of the aircraft took off, with the Plaintiff onboard as a passenger. The aircraft crashed and the Plaintiff sustained personal injuries. He sued the owner, Mr Usherwood and the Popular Flying Association (“the PFA”). A preliminary issue was tried as to whether Mr Usherwood and the PFA owed the Plaintiff a duty of care. They argued that if they had failed to exercise reasonable care, this was not the direct cause of the Plaintiff’s injuries – the direct cause being that the aircraft had been designed in a manner that made it unairworthy. Thus the necessary `proximity’ was not made out. They also argued that it was not fair, just and reasonable that the PFA should be liable to negligence. PFA was not a commercial undertaking. If it was held liable it might withdraw from its work, or have to pass on the cost of increased insurance to the detriment of small aircraft operators.
70. In the leading judgment Hobhouse L.J. rejected the submission that any negligence on the part of Mr Usherwood was only an indirect cause of the crash. The role of Mr Usherwood was distinct and independent from the role of the constructor of the plane. Mr Usherwood, who alone of those involved had technical expertise, might be the only person who had been negligent. In these circumstances the claim against Mr Usherwood was a conventional claim for carelessness causing direct and foreseeable personal injury. Questions of what was fair and reasonable did not arise. Hobhouse L.J. expounded the relevant principles of law in the following passages:
“A minimum requirement of particularity and contemplation is required. But it has never been a requirement of the law of the tort of negligence that there be a particular antecedent relationship between the defendant and the plaintiff other than one that the plaintiff belongs to a class which the defendant contemplates or should contemplate would be affected by his conduct. Nor has it been a requirement that the defendant should inflict the injury upon the plaintiff. Such a concept belongs to the law of trespass not to the law of negligence”………..
“Where the plaintiff belongs to a class which either is or ought to be within the contemplation of the defendant and the defendant by reason of his involvement in an activity which gives him a measure of control over and responsibility for a situation which, if dangerous, will be liable to injure the plaintiff, the defendant is liable if as a result of his unreasonable lack of care he causes a situation to exist which does in fact cause the plaintiff injury.
Once this proximity exists, it ceases to be material what form the unreasonable conduct takes. The distinction between negligent misstatement and other forms of conduct ceases to be legally relevant, although it may have a factual relevance to foresight or causation. Thus a person may be liable for directing someone into a dangerous location (e.g. the Hillsborough cases: e.g. Sharpe v Avery [1938] 4 All E.R. 85) or a producer may be liable for the absence of an adequate warning on the labelling of his product (e.g. Heaven v Pender (1883) 11 Q.B.D. 503 at p.517, per Lord Justice Cotton). Once the defendant had become involved in the activity which gives rise to the risk, he comes under the duty to act reasonably in all respects relevant to that risk. Similarly none of the particular difficulties which arise in relation to economic loss arise in relation to the causing of personal injury. Once proximity is established by reference to the test which I have identified, none of the more sophisticated criteria which have to be used in relation to allegations of liability for mere economic loss need to be applied in relation to personal injury, nor have they been in the decided cases.”
71. While Buxton L.J. agreed with Hobhouse L.J. that the negligence alleged fell into the category of directly causing foreseeable personal injury, both he and Swinton Thomas L.J. considered the question of whether it was fair and reasonable to impose a duty of care. Each emphatically concluded that it was. The statutory obligations in relation to certifying airworthiness was designed, at least in substantial part, for the protection of those who might be injured if an aircraft was certified as being fit to fly when it was not. If PFA was not liable in negligence, the Plaintiff might be left without a remedy against anyone. Dealing with the arguments of policy advanced on behalf of PFA, Buxton L.J. observed that there was no evidence of any of the asserted potential effects of a finding of negligence against PFA. He added :
“If the plaintiff has been negligently injured by a failing by the PFA, I cannot see that it would be right to withhold relief from him simply on the ground that to grant that relief might cause a rise in the PFA’s insurance premiums, or even cause a more expensive system of inspection to be substituted for that of the PFA.”
72. These cases establish that where A advises B as to action to be taken which will directly and foreseeably affect the safety or well-being of C, a situation of sufficient proximity exists to found a duty of care on the part of A towards C. Whether in fact such a duty arises will depend upon the facts of the individual case and, in particular, upon whether such a duty of care would cut across any statutory scheme pursuant to which the advice was given.
Should the principles, as derived from the established cases, lead to a finding of a duty of care in this case?
Proximity
73. Mr. Walker advanced five arguments in support of the proposition that there was insufficient proximity to give rise to a duty of care on the facts of this case. First he submitted that the Board exercises a public function which it has assumed for the public good. This is an argument which might appeal to boxing enthusiasts, but would not be accepted by the British Medical Association. The broad function of the Board is to support professional boxing. The members of the Board are those who are involved in professional boxing. In particular they are boxers. Caring for the needs of boxers, and in particular the physical safety of boxers, is the primary object of the Board.
74. Next Mr. Walker argued that if the Board had made its Rules pursuant to a statutory power it would be tolerably clear that it could not be held liable in negligence in relation to the manner in which it chose to exercise its discretion. In support of that proposition Mr. Walker relied upon X v Bedfordshire CC and Stovin v Wise [1996] AC 923. It does not seem to me to be profitable to speculate what the position would be if the Board had a statutory function in relation to boxing. I would simply comment that if the Board were given the statutory function of directing what medical assistance should be provided to boxers at the stadium, I consider that it would be at least arguable that they owed boxers a duty of care in exercising that function.
75. Next Mr. Walker argued that the duty of care alleged was one owed for an indeterminate time to an indeterminate number of persons. He submitted that the Board would presumably owe the same duty to boxers who came from abroad to box and persons who were not yet boxers, and perhaps not even born, when the rules were made. In these circumstances there was insufficient proximity between the Board and the objects of the duty. Again I disagree. The duty alleged is a duty owed to a determinate class – professional boxers who are members of the Board. In 1991 there were only about 550 active boxers, of which almost all were semi-professional. In Caparo v Dickman the Court recognised a duty of care owed by auditors to all the members of a company. The numbers of those to whom the duty is alleged to be owed in the present case are not incompatible with the requirements of proximity.
76. Next Mr Walker argued that the Board did not create the danger of injury or the need for medical assistance. In these circumstances the Board should owe no greater duty of care than that imposed on a rescuer, that is a duty to exercise reasonable care not to make the situation worse, but no duty to reduce the damage that would have occurred in any event had the rescuer not intervened – see Capital and Counties plc v. Hampshire County Council.
77. In my judgment there is a clear distinction between the role of the Board and the role of a fire service or the police service. The latter have the role of protecting the public in general against risks, which they play no part in creating. There is a general reliance by the public on the fire service and the police to reduce those risks. In these circumstances there is no close proximity between the services and the general public. There are also reasons of public policy for not imposing a duty of care to individuals in relation to the performance of their functions. These are explored in the authorities to which I have referred earlier.
78. In contrast the injuries which are sustained by professional boxers are the foreseeable, indeed inevitable, consequence of an activity which the Board sponsors, encourages and controls. The conduct of the activity of professional boxing carries with it, for the small body of men that take part in it, the need for the provision of medical assistance to treat the injuries that they sustain and minimise their adverse consequences. It seems to me that, but for the intervention of the Board, the promoter would probably owe a common law duty to the boxer to make reasonable provision for the immediate treatment of his injuries. An analogy can be drawn with the duty of an employer, whose activities involve a particular health risk, to make provision for its employees to receive appropriate medical attention – see Stokes v. Guest Keen & Nettlefold (Bolts & Nuts) [1968] 1 WLR 1776.
79. The Board, however, arrogates to itself the task of determining what medical facilities will be provided at a contest by (i) requiring the boxer and the promoter to contract on terms under which the Board’s Rules will apply and (ii) making provision in those Rules for the medical facilities and assistance to be provided to care for the boxer in the event of injury. In this way the Board reduces this aspect of the promoter’s responsibility to the boxer to the contractual obligation to comply with the requirements of the Board’s Rules in relation to the provision of medical facilities and assistance. The Board assumes the responsibility of determining the nature of the medical facilities and assistance to be provided.
80. These facts bring the Board into close proximity with each individual boxer who contracts with a promoter to fight under the Board’s rules. The comparison drawn by Mr Walker between the Board and a rescuer is not apt.
81. These considerations lead to the final point made by Mr Walker in the context of proximity. He emphasised that the Board does not provide medical treatment or employ doctors. It acts as a regulatory rule making body. Mr Walker accepted that if Mr Watson had specifically asked the Board for advice as to the precautions that he ought to have in place for his fight, and the Board had given advice, the Board would have been under a duty to exercise care in giving that advice. In laying down Rules for the benefit of boxers generally, however, Mr Walker submitted that the Board was under no duty of care. He criticised the Judge for saying that there was no difference in principle between “giving advice about safety and laying down rules to provide for safety”.
82. In my judgment there is a difference in principle between making Rules and giving advice, but it is not one which assists the Board. Had the Board simply given advice to all involved in professional boxing as to appropriate medical precautions, it would be strongly arguable that there was insufficient proximity between the Board and individual boxers to give rise to a duty of care. The Board, however, went far beyond this. It made provision in its Rules for the medical precautions to be employed and made compliance with these Rules mandatory. As Mr Morris accepted, by reason of its control over boxing the Board was in a position to determine, and did in fact determine, the measures that were taken in boxing to protect and promote the health and safety of boxers.
83. These facts produced a relationship of close proximity between the Board and those of its members who were professional boxers.
Reliance
84. So far I have not dealt with the question of reliance by Mr Watson on the exercise of care by the Board. This has relevance to a number of the points discussed above. It was Mr Walker’s submission that there was no reliance. It was a matter for Mr Watson to choose whether or not to compete subject to the Board’s rules. The provision made by those rules in relation to medical assistance was plain. It was open to Mr Watson to provide, or to stipulate for the promoter to provide, additional medical precautions. Some boxers employed their own doctors. Thus Mr Watson voluntarily submitted to any risk associated with inadequacy of medical safeguards.
85. I found this submission unrealistic. The Board had, or had available, medical expertise. The Board held itself out as treating the safety of boxers as of paramount importance. It carried out this function by making and imposing rules dealing with the safety of boxers, by approving medical officers and by giving detailed guidance as to the qualifications and equipment those officers should bring to the ringside. A boxer member of the Board would not be aware of the details of all these matters. More significantly, he would not be in a position to know whether the provisions that the Board required to be put in place represented all that it was reasonable to provide for his safety. Boxer members of the Board, including Mr Watson, could reasonably rely upon the Board to have taken reasonable care in making provision for their safety. The Judge did not rely upon the specific evidence given by Mr Watson about reliance. He inferred that professional boxers would be unlikely to have an innate or well informed concern about safety. Thus the Board was a body with special knowledge giving advice to a defined class of persons in the knowledge that it would rely upon that advice in the defined situation of boxing contests. I consider that the Judge was entitled to conclude that there was in this case reliance by Mr Watson on the exercise of skill and care by the Board in looking after his safety. This is a further factor which tends to establish the proximity necessary for a duty of care.
Fair, Just and Reasonable
86. Many of the matters considered under the heading of proximity are also relevant to the question of whether it is fair, just and reasonable to impose a duty of care in this case. Because the facts of this case are so unusual, there is no category in which a duty of care has been established from which one can advance to this case by a small incremental step. In these circumstances the task is to look at the circumstances in which specific factors have given rise to the duty of care and to consider whether, on the facts of this case, they should also give rise to such a duty. While it is difficult, or perhaps impossible, to avoid a degree of subjectivity when considering what is fair, just and reasonable, the approach must be to apply established principles and standards.
87. While I do not agree with Mr Mackay’s submission that Perrett v Collins provides a close analogy to the present case, I do find helpful the formulation of legal principle by Hobhouse L.J. at p.262 which I have set out above. Mr Watson belonged to a class which was within the contemplation of the Board. The Board was involved in an activity which gave it, not merely a measure of control, but complete control over and a responsibility for a situation which would be liable to result in injury to Mr Watson if reasonable care was not exercised by the Board. Thus the criteria identified by Hobhouse L.J. for the existence of a duty of care were present. In this case the following matters are particularly material:
1. Mr Watson was one of a defined number of boxing members of the Board
2. A primary stated object of the Board was to look after its boxing member’s physical safety.
3. The Board encouraged and supported its boxing members in the pursuit of an activity which involved inevitable physical injury and the need for medical precautions against the consequences of such injury.
4. The Board controlled every aspect of that activity.
5. In particular, the Board controlled the medical assistance that would be provided.
6. The Board had, or had access to, specialist expertise in relation to appropriate standards of medical care.
7. The Board’s assumption of responsibility in relation to medical care probably relieved the promoter of such responsibility. If Mr Watson has no remedy against the Board, he has no remedy at all.
8. Boxing members of the Board, including Mr Watson, could reasonably rely upon the Board to look after their safety.
88. All these matters lead me to conclude that the Judge was right to find that the Board was under a duty of care to Mr Watson.
Policy Considerations
89. Mr Walker urged that a duty of care should not be imposed upon the Board because it was a non profit-making organisation and did not carry insurance. This contention had some similarities to submissions made in relation to the Popular Flying Association in Perrett v Collins. My reaction is the same as that of Buxton L.J. in that case. Considerations of insurance are not relevant. Nor do I see why the fact that the Board is a non profit-making organisation should provide it with an immunity from liability in negligence.
90. Mr Walker also suggested that a finding in favour of Mr Watson in this case would involve postulating that other sporting regulatory bodies, such as the Rugby Football Union, owed duties of care to the participants in their sports in relation to their rules and regulations.
91. It does not follow that the decision in this case is the thin end of a wedge. The facts of this case are not common to other sports. In any event it would be quite wrong to determine the result of the individual facts of this case by formulating a principle of general policy that sporting regulatory bodies should owe no duty of care in respect of the formulation of their rules and regulations. I conclude that the Judge correctly found that the Board owed Mr Watson a duty of care.
Breach of Duty
92. The relevant allegations of negligence can be summarised as follows:
* The Board failed to inform itself adequately about the risks inherent in a blow to the head;
* The Board failed to require the provision of resuscitation equipment at the venue, together with the presence of persons capable of operating such equipment.
* The Board failed to require a medical examination of Mr Watson immediately following the conclusion of the contest.
* The Board failed to ensure that those running the contest knew which hospitals in the vicinity had a neurosurgical capability.
93. In order to explain these allegations, I propose to summarise the evidence on:
* the nature of injuries such as those suffered by Mr Watson;
* the manner in which such injuries were treated in hospital in 1991;
* the manner in which such injuries should have been treated at the ringside and
* the treatment actually provided to Mr Watson.
Boxer’s Brain Damage
94. Where a blow to the head results in immediate impairment or loss of consciousness, this is normally the result of temporary deformation of the brain caused by acceleration or deceleration of movement of the head. Effects are usually short-lived and do not produce lasting damage. Mr Watson suffered such an injury when he was knocked down in the eleventh round. Any loss of consciousness was short lived – he regained his feet and walked to his corner.
95. A primary injury such as that described can have secondary consequences which are much more serious. The movement of the brain within the skull may rupture veins, or more rarely an artery, inside the head leading to bleeding which builds up into a blood clot or haematoma. The rise in pressure inside the skull caused by the haematoma results in distortion of the brain. This can, of itself, result in the restriction of the supply of oxygen to the brain. It can also result in disturbance of the processes of breathing so that insufficient air is taken into the lungs to ensure adequate oxidation of the blood. This can lead to an accumulation of carbon dioxide in the blood, which in its turn can cause swelling of the brain and a rise in intra-cranial pressure. This sequence can result in cumulative damage to the brain, leading sooner or later to death.
96. Mr Watson suffered some, at least, of these secondary effects, which were the cause of his permanent brain damage.
Hospital Treatment
97. Where a patient is brought unconscious to hospital as a result of intra-cranial bleeding, the practice is first to apply a process described as resuscitation or stabilisation. This involves intubation, or the insertion of an endotracheal tube. The patient is then artificially ventilated through this tube with oxygen. This increases the oxygen in the blood and reduces the level of carbon dioxide. The brain benefits from the increased supply of oxygen and from a reduction in intra-cranial pressure in so far as this was attributable to excessive carbon dioxide. Such treatment had been standard form in hospitals for many years prior to 1991. In 1991 it was also the practice to infuse with Manitol, though as I understand it this is no longer the case today.
98. Once resuscitation, or stabilisation has taken place, the next stage is neuro-surgery to remove the haematoma and seal any ruptured veins or arteries.
99. Mr Watson received resuscitation and neuro-surgery in hospital in circumstances that I shall describe when I come to deal with causation.
Treatment that should have been provided at the ringside
100. It was the evidence of Mr Watson’s experts that, while brain damage of the type I have described is cumulative, what happens in the first ten minutes is particularly critical. In view of this, they said that there should have been available at the ringside resuscitation equipment and doctors who knew how to use this. Mr Watson should have been resuscitated on losing consciousness and then taken directly to the nearest hospital with a neurosurgical capability, which should have been standing by to operate without delay.
101. It is worth setting out the passage of the report of the Board’s expert, Dr Cartlidge, which dealt with this aspect of the case.
“One can summarise the aims of treatment of a patient who has been rendered unconscious as the result of a head injury as follows:
1. Stabilise the patient’s condition by maintaining an air way and maintaining ventilation
2. Try and prevent and/or treat raised intracranial pressure.
3. Establish an accurate diagnosis as to the intracranial pathology.
A. He could have been treated on the spot, and had an endotrachael tube inserted, been ventilated and thereafter transferred directly to a Neurosurgical Unit where CT scan facilities were available. In other words, he could have been resuscitated on site and then transferred for more specific care.
B. If his condition was satisfactory, he could have been transferred for resuscitation to hospital, there have his condition stabilised and thereafter be transferred to a Neurosurgical Unit for more definitive investigation and treatment.
In any event, option B was the one that was undertaken. The local hospital was close to the boxing ring and therefore the transfer occurred very quickly and during this period of time, as far as I can ascertain, his condition was satisfactory and the insertion of an endotrachael tube was not absolutely necessary. I personally don’t think that the decision to follow option B as opposed to option A had any material affect upon Watson….”
The Medical facilities provided to Mr Watson at the ringside
102. The facilities provided accorded with the advice to medical officers issued by the Board’s Medical Committee, to which I referred earlier. The material passages of this advice were as follows:-
“The role of Medical Officer at a Professional Boxing Tournament is a very important one and requires an adequate working knowledge of sports medicine, the diagnosis and treatment of acute medical conditions and a working knowledge of the training and dietary requirements of a Professional Boxer and Athlete.
Each doctor is expected to attend a tournament fully equipped to cover all emergencies. He should certainly carry an aphygomamometer and stethoscope, an ophthalmoscope, an auroscope, a patella hammer, a Brooks airway and a padded spatula in case of a rate occurrence of fitting and the need to establish an airway.
As already stated, no tournament is allowed to commence or continue without one doctor sitting ringside. It is not sufficient for the doctor to be in the vicinity of the ring as in the case of an emergency the speed of the doctor’s reactions in treating this are all important. The doctors should decide between them who will remain ringside and who will undertake the emergency treatment should the need arise. Throughout these contests the boxers’ performance should be noted and any untoward medical problems arising should be reported to the Area Council or Board. At the end of the contest one doctor remains ringside, the other should follow both contestants back to the dressing room and should at least check that both boxers are in a satisfactory condition and if not instigate any treatment that is required, preferably in the treatment room provided. This may entail suturing of a wound, the assessment of the seriousness of any injury or maybe just simple advice concerning future training or contests. If any doubt arises concerning a boxer’s condition then referral to a local hospital for emergency treatment or advice should be undertaken and a report sent to the Board.
As already mentioned the referee is in sole charge of the contest, but if a boxer is counted out and fails to rise it is the doctor’s duty to get into the ring as quickly as possible and institute emergency treatment should this be required.
Most boxers recover very quickly having been knocked down and counted out and most, in fact, are fully conscious, if somewhat dazed, by the time the count reaches ten. However, should this not be so, then the boxer’s gumshield should be removed, an adequate airway established and the boxer put on his left side so that should he fit or vomit he will not obstruct his airway. If the boxer remains unconscious, then full emergency procedures should be undertaken, the stretcher placed in the ring, the boxer very carefully transferred to it, preferably by skilled handlers and, if needs be, the other doctor should by then have rung ambulance control and have contacted the local hospital to inform them of the problem. It is always better to err on the side of caution and even if a boxer has recovered sufficiently to leave the ring unaided, if and when he returns to the dressing room he exhibits any sign of persistent concussion or admits to any persistent headaches, visual disturbance or vomiting he should be immediately transferred to the local hospital where the expert advice of Neurologists and Neurosurgeons can be obtained. Obviously a full report should then be sent to the relevant Area Council or Board and the sooner this is done, from a medical view point, the better.”
103. In addition to the two doctors required by the rules, there was, on the direction of the Board, a third medical officer present. There was also an ambulance standing by which had resuscitation equipment and a paramedic who knew how to use this. His evidence was that it was his practice to use it where a patient was experiencing breathing difficulties.
The Judge’s Findings
104. The Judge’s findings in relation to breach of duty appear from the following passages in his judgment:
“The standard response where the presence of subdural bleeding is known or suspected has been agreed since at least 1980, which is to intubate, ventilate, sedate, paralyse, and in Britain at least, to administer Manitol. The patient can then be taken straight to the nearest neurosurgical unit. Mr Hamlyn said, and I accept, that there would have been very few British neurosurgeons who at this time would have questioned the need to put up a line and administer this diuretic in a case such as the present. Professor Teasdale had some reservations about the effectiveness of some of this, but he accepted that this was standard practice. I have not heard evidence to the effect that the Board or its medical advisers had before this incident considered, and for some reason decided not to follow, what may not unfairly be called this protocol.
I can only conclude that for some reason no thought was given to the practicality of introducing this standard response….
Nothing that I have heard persuades me that there was any impracticality, whether in terms of manpower or in cost to the promoters, in the Board having included such a requirement in their rules. I have had no evidence to suggest that a doctor of suitable grade and with the necessary skills would command a fee substantially in excess of that payable to the Board’s doctors under its system, nor that there would be any significant cost in having the necessary equipment to hand….
I am left with the clear impression that the Board’s medical advisers have not looked outside their personal expertise. The Board has argued that until this accident no-one had suggested that they should institute this protocol. That is true as a fact. The duty of the Board and of those advising it on medical matters, was to be prospective in their thinking and seek competent advice as to how a recognised danger could be combated. In some circumstances it can be very relevant to show that no criticism had been received about this or that practice but I have seen nothing to suggest that that is a point in this context….
Accordingly, I am left in no doubt that the Board was in breach of its duty in that it did not institute some such system or protocol as Mr Hamlyn was to propose. There is no question but that anyone with the appropriate expertise would have advised such a system whatever reservations they may have had, as had Professor Teasdale, about its ultimate utility.”
105. Later in the judgment the Judge suggested, by implication, that the Board’s rules should have included a requirement that a boxer who was knocked out, or seemed unfit to defend himself, should be immediately seen by a doctor.
Subsequent Events
106. The Judge’s reference to Mr Hamlyn was to a Neurosurgeon who operated on Mr Watson at St Bartholomew’s Hospital and who gave evidence on his behalf at the trial. Mr Watson was the third boxer on whom Mr Hamlyn had operated for similar injuries. His belief was that the brain damage that occurred in each case could probably have been avoided in whole or in a large part if the boxer had received immediate resuscitation at the ringside. On his initiative a meeting took place with the Minister for Sport, two of Mr Hamlyn’s colleagues, the Board’s Chief Medical Officer, Dr Whiteson, and other board officials on 16th October 1991. At this meeting Mr Hamlyn expressed the view that it was vital that at the ringside there should be the right doctors with the right equipment. This meant doctors able to intubate and put up a drip to treat the injured boxer immediately with Manitol. It was also important to have a prior arrangement with the hospital with a neurological unit, and with that unit placed on standby. These recommendations Mr Hamlyn set out in a detailed paper for the Board two days later. The Board’s Medical Committee met to consider these on the 22nd October 1991 and made recommendations which included the following:
“1 The nearest hospital with a neurological unit should be notified of the date of each tournament held under the Board’s jurisdiction and must be on alert in case of serious head injury. The hospital should be requested to confirm that a Neuro-Surgeon would be on stand-by.
2. An ambulance should be on site from the start of the tournament, possibly with a crew of trained para-medics. The ambulance should be prepared to go direct to the Neurological unit that had been placed on stand-by.
3. Resuscitation equipment should be at ringside along with person(s) capable of using it”.
107. The Board accepted these recommendations and promulgated them by way of guidance. Subsequently they were incorporated in the Rules by an addition to Regulation 8. The most material part of this reads:
“The Senior Medical Officer shall arrange for full and adequate resuscitation equipment (including intubation and ventilation equipment) to be available at the ringside of the venue. No contest shall take place unless fully trained personnel are able to operate such resuscitation equipment are present throughout the promotion.”
The Board’s Challenge to the Judgment
108. The first challenge to the Judge’s finding on breach of duty was that he applied the wrong test. The Board’s Grounds of Appeal argued that in making policy decisions, the Board ought not to be held to be negligent unless such decisions were found to be wholly irrational. This appears to be an attempt to import into the law of negligence concepts of public law. If so, it is misguided. The issue in this action is not whether the right policy was adopted but simply whether proper care was used in making provision for medical treatment of Mr Watson. The ordinary test of reasonable skill and care is the correct one to apply.
109. The Board next drew attention to evidence that a member of the public having sustained brain damage in a road accident would not expect to receive from the ambulance attending the scene the resuscitation service which the Judge held should have been available at the ringside. The Board argued that this demonstrated that the standard applied by the Judge was too high. This point was put to the Judge. He rejected it, holding that the standard to be expected of an ambulance dealing with every kind of medical emergency was not the same as the standard to be expected from those making provision for a particular and serious risk which was one of a limited number likely to arise.
110. I think that the Judge was right. Serious brain damage such as that suffered by Mr Watson, though happily an uncommon consequence of a boxing injury, represented the most serious risk posed by the sport and one that required to be addressed.
111. The next ground advanced by the Board in support of the contention that the Judge applied too high a standard, was that there was no evidence that any other boxing authority in the World imposed more rigorous requirements than those of the Board’s rules. The Judge accepted that this was the case but ruled that in the final analysis that it was for the Court to determine whether even the most widely followed practice was acceptable. In this the Judge was correct.
112. Next the Board argued that the presence of an ambulance, with resuscitation equipment, should have satisfied the Judge that this aspect of medical care was adequately provided. There are a number of problems with this submission. In the first place the paramedic in the ambulance was not trained to use resuscitation equipment as a matter of course where a head injury was involved. He would only use it to overcome breathing difficulties. In the second place it was not practical to use this equipment while the ambulance was on the move. In these circumstances, it is no cause for surprise that the equipment was not in fact used. The essence of Mr Watson’s case is that there should have been a system under which such equipment would not merely be available, but used immediately in the event of a brain injury.
113. The Board also argued that the nearest hospital with an Accident and Emergency Department was so close that a system which delayed the possibility of resuscitation for the few minutes that would be necessary to get to the hospital, was satisfactory. In fact, it took very much longer than a few minutes to get to the hospital, for reasons that were not identified at the trial. In my judgment the Judge was entitled to conclude that the standard of reasonable care required that there should be a resuscitation facility at the ringside. Had the ambulance been, in fact, just as satisfactory, this would have meant that the absence of a Rule requiring such a facility would have had no causative effect. That, however, did not prove to be the position.
114. Next the Board attacked the implicit finding of the Judge that the Rules should have required the doctor to enter the ring as soon as a boxer was counted out or deemed unfit to defend himself. The Board contended that this was unjustifiable, since it would require Rules which in effect instructed doctors as to how to perform their duties. I find this distinction between instructions as to duties and instructions as to how to perform duties elusive and over subtle. I see no reason why the rules should not have contained the provision suggested by the Judge. In any event I believe that this point vanishes when causation is considered.
115. The final point taken by the Board was that they did not receive advice in relation to the desirability of ringside resuscitation until after Mr Watson’s injuries. The Board argued that, until they received such advice, they could not reasonably be expected to alter their recommendations and rules in relation to ringside treatment.
116. The evidence certainly supports the proposition that it was Mr Watson’s injuries, and the subsequent advice given by Mr Hamlyn, that caused the Board to change its practice. Dr Ross, the Board’s Chief Medical Officer for the Southern Area, was asked why the Medical Committee did not make the recommendations made after Mr Watson’s injuries at an earlier stage. He answered that it took something like the injury to Mr Watson to make the Committee think of changing the practice. “It is these sorts of accidents which provoke the changes”.
117. Mr Watson’s injuries were not, however, without precedent. There had been a number of similar cases in the 1980’s. The issue is whether the standard of reasonable care required the Board to change their practice in order to address the risks of such injuries before the Watson/Eubank fight.
118. There was evidence that the Board’s Medical Committee met regularly to consider medical precautions. Mr Morris told the court that he would expect the Medical Committee, and its Chief Medical Officer, to keep abreast of developments in sports medicine that impacted on the safety of boxers in the ring. Dr Ross, who was a member of the Medical Committee for a number of years before the Watson fight, was asked whether he remembered discussions about treatment in the ring of head injuries before that fight. His answer was that he was sure that these things were discussed but he could not remember. Questioned further by the Judge, he agreed that to the best of his recollection, there was no discussion during the 1980’s about whether the practice of stabilising victims of head injuries at the scene of the event, should be applied to the sport of Boxing.
119. The witness best placed to deal with the consideration, if any, given to this matter would have been Mr Whiteson. The Board had given notice that he would be called as a witness and submitted the witness statement from him. In the event, without explanation, he was not tendered as a witness and objection was taken to the use of his witness statement. A Respondent’s Notice was served contending that the Judge could and should have drawn an adverse inference from his failure to give evidence. I consider that the Judge could properly have done so. Without so doing, however, the Judge concluded that for some reason no thought was given to the practicality of introducing at the ringside what he found had been a standard response, where the presence of sub-dural bleeding was known or suspected, since at least 1980. The Judge went on to review such statistical evidence as there was in relation to the frequency of occurrence of head injuries in boxing and observed that there had been no evidence to suggest that the Board considered and balanced the difficulty of providing the adequate response to the risks of head injury against their frequency of occurrence and severity of outcome.
120. The Board called to give evidence Mr Peter Richards, a Consultant Neuro-Surgeon with Charing Cross Hospital between 1987 and 1995. He had particular experience of brain injuries caused by sporting activities. He was present at the meeting held with the Minister for Sport after Mr Watson’s injuries. He gave evidence that he agreed with Mr Hamlyn’s views. Had he been asked in the period before the Eubank/Watson fight to advise on precautions in relation to the risk of serious head injury, he said that he would have given the same advice as Mr Hamlyn.
121. The Judge held that it was the duty of the Board, and of those advising it on medical matters, to be prospective in their thinking and to seek competent advice as to how a recognised danger could best be combated. He held that he was left in no doubt that the Board was in breach of its duty in that it did not institute some such system or protocol as that which Mr Hamlyn was later to propose. He held that anyone with the appropriate expertise would have advised the adoption of such a system. I consider that these were proper findings on the evidence and that Mr Watson’s case on breach of duty was made out.
Causation – The Point Taken
122. The Notice of Appeal contended that there was no evidence that, had the rules contended for by Mr Watson been in place, he would have been treated any differently; the Judge should have found that none of the doctors present, nor the ambulance man, would have intubated the claimant, whatever equipment had been available, because he was breathing spontaneously.
123. This ground of appeal would have been unsustainable. Mr Watson’s case, in essence, was that there should have been a different regime in place – Mr Walker described it as an intensive care unit at the ringside. The doctors who were actually present were not aware of the desirability of immediate resuscitation of a victim with a brain haemorrhage. They did not have the expertise in providing such resuscitation; nor did they have the necessary equipment. Had the Board’s rules required Mr Hamlyn’s protocol to be put in place, the doctors present could have been expected to have resorted to resuscitation.
124. In the event Mr Walker did not put this pleaded Ground of Appeal at the forefront of his argument. Instead he argued that even if resuscitation had been used, it would have been used too late to affect the outcome. This submission involves considering the timing of events and the Judge’s findings in relation to the impact of these on causation. The fight was terminated at 22.54. Mr Watson collapsed unconscious within a minute or so of this. In the chaos that then ensued, Mr Watson was surrounded by his team, which included a number of bodyguards. None of the three doctors present went to his assistance until requested to do so. The first of these to enter the ring, Dr Shapiro, reached Mr Watson seven minutes after the fight had been stopped, i.e. about 23.01. Dr Shapiro examined Mr Watson and put a Brookes Airway into his mouth to maintain his airway. Mr Watson was put on a stretcher, which was placed on a trolley and wheeled towards the ambulance. The time was now 23.08. The ambulance took him to North Middlesex Hospital, which was less than a mile away. The agreed time of reception at the hospital was 23.22. It is not clear why the ambulance took so long to reach the hospital. At the hospital Mr Watson was given the conventional resuscitation procedure – that is intubation, ventilation, oxygen and an infusion of Manitol. He was held at North Middlesex Hospital until 23.55 to ensure that he was stabilised for the onward journey, and then taken to St. Bartholomew’s Hospital. There he arrived in the scanning room at 00.30 on 22nd September. An operation was carried out to remove a moderate size haematoma and to close such veins as were found to be oozing blood. After the operation Mr Watson was taken to the intensive care unit where he arrived at 04.45. Later that day, there was a rise in intra-cranial pressure and a second operation was performed, on this occasion by Mr Hamlyn, to remove a new collection of blood and staunch a bleeding vein and artery.
125. The relevant findings of the Judge were as follows:-
“If the protocol had been in place, and Dr Shapiro had been required to go straight to the ring, he would have begun the necessary procedures within a minute or two of the collapse and so by 23.00. It would only have added three minutes or so if he had waited until he was summoned. In the event those same procedures could not have been begun before 23.25 at the earliest, to allow some time for an examination after the claimant’s recorded time of arrival at the North Middlesex. At least 20 minutes, and probably nearer 30 minutes, could have been saved. Any necessary discussion with a neurosurgeon could as easily have been done from the venue….
In my view the Claimant makes his case on causation when he shows, as he has done, that with the protocol in place he would have been attended from the outset by a doctor skilled in resuscitation, who would have made any necessary inquiries of the neurosurgeons at St. Bartholomews, who would themselves have been on notice. The Claimant would have been resuscitated within a few minutes of 23.00 and in St. Bartholomews by 23.45 at the latest. In effect, Dr Cartlidge’s ideal world would have been in being, and the Claimant’s outcome would have been materially improved….
On the evidence earlier treatment would have made a significant difference to the outcome….
The final question is, to what extent? I do not believe that the evidence admits of any accurate answer to this question but that is by no means an uncommon situation in cases of this sort. Medical knowledge does not enable one to say what, on the balance of probabilities, would have been the outcome if the protocol had been in place and followed.”
126. The Judge held that on these facts Mr Watson was entitled to recover for his injuries in full, relying on the authorities of McGhee v The National Coal Board [1973] 1 WLR 1; Wiltshire v Essex A.H.A. [1988] 1 AC 1074 at 1090; and Hotson v East Berkshire Area Health Authority [1987] 1 AC 750 at 783. The Judge summarised his findings on the facts as follows:-
“Here all that is clear is that on the balance of probabilities the Claimant’s present state would have been materially better than it actually is. It is not possible to measure even on the balance of probabilities where the damage would have stopped if the protocol had been followed. The occurrence of a haematoma could not have been prevented but its effects could have been mitigated. So the tortious damage may be seen as consecutive to, and aggravating, that which was inevitable….
On the facts of the present case the Claimant suffered only a minor primary injury. He would thus have developed the subdural haemorrhage in the most favourable circumstances possible, short of doing so in hospital with staff around him. The probability must therefore have been that he could have been among those patients who would have had a favourable outcome, or no circumstance peculiar to his physical make-up has been identified to suggest why that should not be so”.
127. Mr Walker’s challenge to these findings was based on a single point. He submitted that, having regard to the chaos prevailing at the end of the fight, Mr Watson would not have received medical attention for seven minutes, even if the Hamlyn protocol had been in place. By then, so he submitted, the evidence established that the damage would have been done. This argument was allied to Mr Walker’s submission that the Judge should not have found that the rules should have required immediate medical attention to be given to a boxer where his physical condition led to the contest being stopped.
128. The Judge did not find that the lapse of time between Mr Watson becoming unconscious and Dr Shapiro being called to assist was critical. His comment that “it would only have added three minutes or so if he had waited until he was summoned” suggests to the contrary. The Judge was impressed with the fact that, even then, resuscitation would have been commenced at least twenty and probably thirty minutes before in fact it was.
129. The evidence of the expert witnesses called on behalf of Mr Watson was that the first ten minutes after loss of consciousness were critical. Thereafter the effect of delay was less important, although brain damage occurred cumulatively until death. On the evidence I consider that the Judge was entitled to find that, even if resuscitation had not been commenced until after help was summoned, it would probably have resulted in a significantly better outcome for Mr Watson. Plainly, however, the longer the delay, the more serious the outcome.
130. I have already indicated that I do not accept the basis of the challenge of the Judge’s finding that the protocol in place ought to have included a requirement for a doctor to attend immediately where a fight was stopped because a boxer could no longer defend himself. Even absent such an express requirement, it seems to me that if the protocol had been in place, the doctors present should have been aware of the desirability of examining Mr Watson’s condition in the circumstances that had occurred, whether or not the rules expressly required this. It seems to me that this is almost implicit in Mr Walker’s argument that to issue such a requirement expressly, was to instruct a doctor as to how to perform his duty.
131. A defendant seeking to disturb the findings of fact of a trial Judge in relation to causation undertakes a hard task. I consider that the Judge was entitled to find on the evidence, that had the Hamlyn protocol been in place, the outcome of Mr Watson’s injuries would have been significantly better. On the law relied upon by the Judge, this was all that Mr Watson needed to succeed.
132. For these reasons I would dismiss this appeal.
LORD JUSTICE MAY
133. I agree that this appeal should be dismissed for the reasons given by Lord Phillips M.R.
LORD JUSTICE LAWS
134. I also agree
Order: Appal dismissed with costs on the issues of liability and causation here and below, those costs to be assessed forthwith on to Legal Services Assessment; £18,000 in Court to be paid out in part satisfaction of those costs forthwith; detailed assessment on standard basis; Legal Services Commission taxation; application for permission to appeal to House of Lords refused.
(This order does not form part of approved judgment)
Capital & Counties Plc v Hampshire County Council
[1997] EWCA Civ 3091 (14 March 1997)
Royal Court of Justice
14th March 1997
B e f o r e :
LORD JUSTICE STUART-SMITH
LORD JUSTICE POTTER
LORD JUSTICE JUDGE
____________________
(Handed down transcript of
Smith Bernal Reporting Limited, 180 Fleet Street
London EC4A 2HD Tel: 0171 831 3183
Official Shorthand Writers to the Court)
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Digital Equipment Co Ltd v Hampshire County Council
MR JAMES MUNBY QC and MR EDWARD FAULKS QC (instructed by Hampshire County Council) appeared on behalf of the Appellant (Defendant).
MR JONATHAN SUMPTION QC and MR NIGEL TOZZI (instructed by Messrs Barlow Lyde & Gilbert, London EC3A 7NJ) appeared on behalf of the Respondent (Plaintiff).
Capital & Counties v Hampshire County Council
MR JAMES MUNBY QC and MR EDWARD FAULKS QC (instructed by Hampshire County Council) appeared on behalf of the Appellant (Defendant),
MR JOHN SLATER QC, MR SIMON BROWN QC and MR ALEXANDER ANTELME (instructed by Messrs Cameron Markby Hewitt, London EC3N 4BB) appeared on behalf of the Respondent (Plaintiff).
John Munroe (Acrylics) Ltd v London Fire & Civil Defence Authority
MR RONALD WALKER QC and MR TOBY HOOPER (instructed by Messrs Hextall Erskine, London E1 8ER) appeared on behalf of the Appellant (Plaintiff).
MR MICHAEL DE NAVARRO QC, MR GRAHAM EKLUND and MR NEIL HEXT (instructed by London Fire & Civil Defence Authority) appeared on behalf of the Respondent (Defendant).
Church of Jesus Christ of Latter-Day Saints v West Yorkshire Fire & Civil Defence
MR ANTHONY BOSWOOD QC and MR BRUCE SPELLER (instructed by Messrs Devonshires, London EC2M 5QY) appeared on behalf of the Appellant (Plaintiff).
MR COLIN MACKAY QC and MR JONATHAN BELLAMY (instructed by Messrs Davies Arnold Cooper, London EC4Y 8DD) appeared on behalf of the Respondent (Defendant).
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HTML VERSION OF JUDGMENT
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LORD JUSTICE STUART-SMITH: This is the judgment of the court.
By order dated 17 December 1996 Judge LJ ordered that the appeals in these cases should be consolidated and argued together because they raise similar questions of law, in particular whether and if so in what circumstances a fire brigade owes a duty of care to the owner or occupier of premises which are damaged or destroyed by fire.
The facts of these cases can for present purposes be stated fairly shortly:
The Hampshire case
Capital and Counties PLC (Capco) v. Hampshire County Council
Digital Equipment Co. Ltd. (Digital) v. Hampshire County Council
This was a decision of H.H. Judge Havery QC sitting as an Official Referee. Capco were the developers and lead lessees of the Crescent, in Basingstoke, Hampshire. Between 1989 and the date of the fire on 6 March 1990 Digital, an American computer company, occupied the Crescent as under-lessees. The Crescent was a modern building equipped with an elaborate smoke detection system and heat-activated sprinkler system. Sprinklers are among the most effective known means of combating fire. It is the golden rule in fire-fighting in sprinklered buildings that you do not normally turn the sprinklers off until you are absolutely sure that the fire is completely extinguished. There are no advantages in doing so which could possibly outweigh the adverse impact on the spread of the fire.
The fire began at about 10:00 a.m. in the east of the roof void of Block A. The sprinklers began to operate at 10:23 a.m., shortly before the arrival of the first fire engine. At 10:50 a.m. the sprinkler system was shut down on the instructions of Stn. Officer Mitchell. This was done in those parts of the building where the fire was, as well as in other parts which were as yet unaffected. The Judge, applying the Bolam test as the standard of negligence, held that Stn. Officer Mitchell’s action in turning off the sprinklers was negligent.
At the time when the sprinklers were disabled, the fire brigade had not yet found the seat of the fire, and were not effectively fighting it themselves. The sprinklers were therefore, at that stage, the only operative means of fighting the fire. Disabling them had an immediate, or almost immediate, adverse effect on the restraining of the fire and rapidly led to its going out of control. It made it impossible to contain the fire in Block A, even after the seat of the fire was located; and it enabled the fire to spread into and across the now unprotected Blocks B and C.
At about 10:55 a.m., the fire brigade located the seat of the fire. At 11:10 a.m., the roof of Block A collapsed, and the fire entered Blocks B and C. The fire brigade then withdrew from the interior of the building to fight the fire from the outside. At this point they reactivated the sprinklers. But the spread of the fire had by then destroyed significant parts of the sprinkler system and made it practically useless. The building was a total loss by 12:10pm. There was conflicting evidence about what would have happened if the fire brigade had not turned up at all. The Judge was unable to say whether or not, on balance of probabilities, if the fire brigade had done nothing and the sprinklers had been left on, the building would have been burned down completely.
In fact, the fire brigade did turn up and they fought the fire. If they had not only done this but left the sprinklers in operation, the Judge found that the combined effect would have been to avert a total loss. Three quarters of Block A and the whole of Blocks B and C would have been saved. The damage (inclusive of interest) which was attributable to the disabling of the sprinklers was assessed at about £16 million.
The London Fire Brigade case
John Munroe (Acrylics) Ltd. v. London Fire Brigade and Civil Defence Authority & Ors.
The second defendants, a company specialising in creating special effects for film and television, caused a deliberate explosion on wasteland near the plaintiffs’ industrial premises. Burning debris was scattered over a wide area and small fires broke out. Some of the debris was seen to fall onto the plaintiffs’ premises and smoke was observed coming from a corner of the plaintiffs’ yard. Members of the public made emergency calls to the fire brigade, who responded by sending to the scene within a short time four fire engines complete with a leading fire-fighter and fire crews. The members of the fire brigade attending the scene were employed by the defendant fire authority. When the fire brigade arrived, the second defendants’ staff had already extinguished the fires on the wasteland and there was no visible evidence of any continuing conflagration. The fire brigade’s officers took steps to satisfy themselves that all fires had been extinguished and that there was no residual danger, and they left the scene about 20 minutes after the initial explosion without inspecting the plaintiffs’ premises, which abutted one side of the wasteland, where combustible material was to be seen. It was likely that there would also have been smouldering debris. No member of the Plaintiffs’ staff was present and there was no record of any conversation between the fire crews and the plaintiffs’ staff. Later that evening a fire broke out at the plaintiffs’ premises, which were severely damaged. The plaintiffs issued a writ against the fire authority alleging negligence by their servants or agents in failing adequately to inspect the wasteland and the premises, and failing to ensure that all fires and risk of further fires in the area had been eliminated before leaving.
This case came before Rougier J on a preliminary issue whether the fire brigade owed any duty of care to the plaintiffs; the case proceeded on an agreed statement of facts. The Judge held that the fire brigade was not under a duty of care, there was no sufficient proximity, and it was not fair and reasonable to impose such a duty on the fire brigade; nor did they assume responsibility or bring themselves within the necessary degree of proximity so as to impose upon them a duty of care towards persons likely to be affected by the fire, merely by electing to respond to calls for assistance.
The West Yorkshire case
The Church of Jesus Christ of Latter Day Saints (Great Britain) v. West Yorkshire Fire and Civil Defence Authority
The claim was for £1.8 million, being the cost of repairing the plaintiffs’ Chapel after a disastrous fire on the night of 22 October 1992. In the early hours of that night, a fire was spotted in a classroom attached to the Chapel: at 1:42 a.m. The defendants were asked to attend: two fire engines arrived, with commendable promptitude at 1:47 a.m., and further fire engines continued to arrive until, by just after 3 a.m., there were fifteen fire engines present. It was alleged in the Statement of Claim that it was not until some time after that the defendant was able to fight the fire efficiently, owing to the absence of a proper supply of water. No less than seven fire hydrants surrounded the Chapel. Of these, four failed to work for one reason or another, and three were either never found, or found so late as to be of little use. One hydrant was not located until a late stage because there was no yellow marking sign: another was not found at all because the yellow hydrant sign was obscured by ivy. In the end, water had to be obtained from a mill dam over half a mile away. In the result, says the plaintiff, a fire which could and should have been contained in the adjacent classroom, burnt down not only the classroom but the entire Chapel as well.
The plaintiff’s claim is framed both in negligence and breach of statutory duty: in particular under S13 of the Fire Services Act 1947 (The Act). The particulars are: failing to inspect the hydrants at least once a year; causing or permitting hydrant B to be on a service pipe; failing on inspection at all or properly to have observed that the hydrants were defective; failing at all or properly to have repaired the hydrants; failing to observe that the yellow sign marking hydrant F was obscured by vegetation; failing to locate 2 of the hydrants at an earlier stage. Since the Judgment, the plaintiff has served a proposed Amended Statement of Claim; this makes somewhat more specific reference to the frequency of inspection of the hydrants and adds allegations of breach of statutory duty contrary to S1 of the Act.
The defendants applied to strike out the Statement of Claim as disclosing no reasonable cause of action. H.H. Judge Crawford QC, sitting as a Deputy High Court Judge dismissed the action. He held that S13 of the Act did not afford an action for damages for breach of statutory duty. As to the claim in common law negligence he held that there was a relationship of sufficient proximity between the parties, but he went to hold that it was not just, fair and reasonable to impose a duty on the fire brigade. By their appeal the plaintiffs challenge the first and third holdings. By their respondents notice, the defendants challenge the second and seek to uphold the Judge’s conclusion on the basis that there was no proximity.
The statutory provisions of the Act
“1. Provision of fire services
(1) It shall be the duty of very fire authority in Great Britain to make provision for fire-fighting purposes, and in particular every fire authority shall secure –
(a) the services for their area of such a fire brigade and such equipments as may be necessary to meet efficiently all normal requirements;
(b) the efficient training of the members of the fire brigade;
(c) efficient arrangements for dealing with calls for the assistance of the fire brigade in case of fire and for summoning members of the fire brigade;
(d) efficient arrangements for obtaining, by inspection or otherwise, information required for fire-fighting purposes with respect to the character of the buildings and other property in the area of the fire authority, the available water supplies and the means of access thereto, and other material local circumstances;
(e) efficient arrangements for ensuring that reasonable steps are taken to prevent or mitigate damage to property resulting from measures taken in dealing with fires in the area of the fire authority;
(f) efficient arrangements for the giving, when requested, of advice in respect of buildings and other property in the area of the fire authority as to fire prevention, restricting the spread of fires, and means of escape in case of fire.”
“Fire-fighting purposes” means the purposes of the extinction of fires and the protection of life and property in case of fire. (S38(1))
S3(1)(e) gives power to a fire authority to employ the fire brigade maintained by them or use equipment so maintained for purposes other than fighting fires and they can charge for such services. But apart from this a fire authority may make no charge for its services. (S3(4).)
“13. Duty of fire authorities to ensure supply of water for fire-fighting
A fire authority shall take all reasonable measures for ensuring the provision of an adequate supply of water, and for securing that it will be available for use, in case of fire.
30. Powers of firemen and police in extinguishing fires
(1) Any member of a fire brigade maintained in pursuance of this Act who is on duty, any member of any other fire brigade who is acting in pursuance of any arrangements made under this Act, or any constable, may enter and if necessary break into any premises or place in which a fire has or is reasonably believed to have broken out, or any premises or place which it is necessary to enter for the purposes of extinguishing a fire or of protecting the premises or place from acts done for fire-fighting purposes, without the consent of the owner or occupier thereof, and may do all such things as he may deem necessary for extinguishing the fire or for protecting from fire, or from acts done as aforesaid, any such premises or place or for rescuing any person or property therein.
(2) Any person who wilfully obstructs or interferes with any member of a fire brigade maintained in pursuance of this Act who is engaged in operations for fire-fighting purposes shall be liable on summary conviction to a fine not exceeding level 3 on the standard scale.
(3) At any fire the senior fire brigade officer present shall have the sole charge and control of all operations for the extinction of the fire, including the fixing of the positions of fire engines and apparatus, the attaching of hose to any water pipes or the use of any water supply, and the selection of the parts of the premises, object or place where the fire is, or of adjoining premises, objects or places, against which the water is to be directed.
33. Inquiries
(1) The Secretary of State may hold a public local inquiry into the matter in which any fire authority are performing their functions under this Act, or into the circumstances of, or the steps taken to deal with, any particular outbreak of fire.”
Statutory duty or statutory power
Until the proposed amendment of the Statement of Claim in the West Yorkshire case it was not suggested by any of the plaintiffs that S1(1) of the Act imposed any duty on a fire authority the breach of which is actionable in private law. Moreover, in spite of the proposed amendment, Mr. Boswood QC on behalf of the plaintiff in the West Yorkshire has not advanced any argument to support this contention. He does however maintain that breach of S13 of the Act gives rise to a private law right at the suit of the plaintiffs. We do not propose therefore to take time over Section 1(1). In our judgment it is plain that this section lays out “target” duties breach of which are not actionable in private law.
Although the Act does not in express terms confer on the Fire Authority the power to fight fires, it is implicit in the powers conferred in S30(1)-(3) and indeed the whole tenor of the Act that they do have such a power. The style of drafting adopted may be no more than the recognition that any citizen is entitled to fight fires, although in doing so he will not enjoy the immunity from suit for trespass afforded to fire officers and constables by S30(1).
Is there a common law duty on the fire brigade to answer calls to fires or to take reasonable care to do so?
The question whether, in the absence of a statutory duty, a statutory power to act can be converted into a common law duty to exercise the power has been extensively considered by the House of Lords in Stovin v. Wise [1996] AC 923; at p 952H Lord Hoffmann, with whose speech Lord Goff of Chieveley and Lord Jauncey of Tullichettle agreed said:
“If [a statutory] duty does not give rise to a private right to sue for breach, it would be unusual if it nevertheless gave rise to a duty of care at common law which made the public authority liable to pay compensation for foreseeable loss caused by the duty not being performed. It will often be foreseeable that loss will result if, for example, a benefit or service is not provided. If the policy of the Act is not to create a statutory liability to pay compensation, the same policy should ordinarily exclude the existence of a common law duty of care.
In the case of mere statutory power, there is the further point that the legislature has chosen to confer a discretion rather than create a duty. Of course there may be cases in which Parliament has chosen to confer a power because the subject matter did not permit a duty to be stated with sufficient precision. It may nevertheless have contemplated that in circumstances in which it would be irrational not to exercise the power a person who suffered loss because it had not been exercised, or not properly exercised, would be entitled to compensation. I therefore do not say that a statutory “may” can never give rise to a common law duty of care. I prefer to leave open the question of whether the Anns case was wrong to create any exception to Lord Romer’s statement of principle in the East Suffolk case. I shall go on to consider the circumstances (such as “general reliance”) in which it has been suggested that such a duty might arise. But the fact that Parliament has conferred a discretion must be some indication that the policy of the act conferring the power was not to create a right to compensation. The need to have regard to the policy of the statute therefore means that exceptions will be rare.
In summary, therefore, I think that the minimum preconditions for basing a duty of care upon the existence of a statutory power, if it can be done at all, are, first, that it would in the circumstances have been irrational not to have exercised the power, so that there was in effect a public law duty to act, and secondly, that there are exceptional grounds for holding that the policy of the statute requires compensation to be paid to persons who suffer loss because the power was not exercised.”
Mr. Walker QC for the plaintiffs in the London Fire Brigade case submitted that he was entitled to rely on the doctrine of general reliance as giving rise to a duty to exercise statutory powers which have been granted and/or a duty of care to respond to the public’s call for help. In the Australian case of Sutherland Shire Council v. Heyman 157 C.L.R. 442 Mason J said:
“there will be cases in which the plaintiff’s reasonable reliance will arise out of a general dependence on an authority’s performance of its function with due care, without the need for contributing conduct on the part of a defendant or action to his detriment on the part of a plaintiff. Reliance or dependence in this sense is in general the product of the grant (and exercise) of powers designed to prevent or minimise a risk of personal injury or disability, recognised by the legislature as being of such magnitude or complexity that individuals cannot, or may not, take adequate steps for their own protection. This situation generates on one side (the individual) a general expectation that the power will be exercised and on the other side (the authority) a realisation that there is a general reliance or dependence on its exercise of the power ….. The control of air traffic, the safety inspection of aircraft and the fighting of a fire in a building by a fire authority ….. may well be examples of this type of function.”
The principle of general reliance has been applied on a number of occasions in Australia. It was relied upon in Casley & South v. F.S. Evans & Son Ltd. [1989] Aust Tort Reports 80. 281. But that seems to be a case where the fire authority created the danger; Northern Territory of Australia v. Deutsher Klub (Darwin) [1994] Aust Tort Reports 81. 275 (a case of negligent inspection for the purpose of granting a club licence) and Pyrenees Shire Council v Day [1995] Aust Tort Reports 81. 381; in that case Brooking JA paid some regard to the judgment of Roch LJ in Stovin v. Wise [1994] 1 W.L.R. 1124 which was reversed in the House of Lords. But the doctrine has received little if any support in English law. There appears to be no case, except Anns itself, which could be said to be an example of its application. And two of the examples suggested by Mason J have been held not to give rise to a duty of care. In Marc Rich & Co.ACT v. Bishop Rock Marine Co. Ltd. [1996] 1 AC 211 a classification society in which a vessel was entered was held not to be under a duty of care to cargo owners in respect of a negligent inspection of the vessel. And a similar conclusion was reached by the Court of Appeal in Philcox v. Civil Aviation Authority [1995] Times June 8 and transcript, the CAA being held under no duty of care to the owner of an aircraft alleged to have been negligently inspected and improperly given a certificate of airworthiness.
Further in a passage in his speech which is admittedly obiter but was a propos Mason J’s reference to the principle in the Shire Sutherland case Lord Hoffmann in Stovin’s case said at p. 954H:
“[The] application [of the doctrine of general reliance] may require very careful analysis of the role which the expected exercise of the statutory power plays in community behaviour. For example, in one sense it is true that the fire brigade is there to protect people in situations in which they could not be expected to be able to protect themselves. On the other hand, they can and do protect themselves by insurance against the risk of fire. It is not obvious that there should be a right to compensation from a negligent fire authority which will ordinarily enure by right of subrogation to an insurance company. The only reason would be to provide a general deterrent against inefficiency. But there must be better ways of doing this than by compensating insurance companies out of public funds. And while premiums no doubt take into account the existence of the fire brigade and the likelihood that it will arrive swiftly upon the scene, it is not clear that they would be very different merely because no compensation was paid in the rare cases in which the fire authority negligently failed to perform its public duty.”
Although plaintiffs’ counsel have criticised Lord Hoffmann’s reference to the existence of insurance, as being an invalid ground for saying that it is not just, fair and reasonable to impose a duty of care, we do not think that this is what Lord Hoffmann is saying in this passage. Rather he is suggesting that there is not a general expectation that fires will necessarily be extinguished by the fire brigade; there is no doubt a hope that they will; but they may arrive too late to be of practical use, or they may not arrive at all; instead for the most part people rely upon insurance for indemnification in case of loss.
In Alexandrou v. Oxford [1993] 4 All ER 328 the plaintiff’s clothing shop was burgled on a Sunday evening. The shop was equipped with a 999 type burglar alarm which rang in the police station on being activated and gave a recorded message as to the site of the burglary. The alarm sounded at 7:23p.m. and police officers went to investigate. The Judge did not believe that they had inspected the rear of the premises as well as the front. The alarm bell ceased to ring at 9:26 p.m. The Judge found that the burglary had been committed shortly before this, access being obtained through a window at the rear of the premises and egress with the stolen goods through a fire door also at the back. The Judge also rejected the police evidence that at about 9:26 they inspected the rear of the premises and nothing was amiss. He held that, if an inspection had been made at the rear as well as the front, as it should have been, the burglars would have been stopped. It is a case therefore on the facts where the police responded to the 999 call, but through negligent failure to inspect, they failed to prevent the loss to the plaintiff, their intervention being ineffectual. Glidewell LJ with whose judgment Parker and Slade LJJ agreed, dealt with the argument that there was sufficient proximity between the plaintiff and the police to give rise to a duty of care. He said at p338:
“Mr. Scholes QC for the plaintiff accepts the Judge’s definition of the class of persons to whom the police owe a duty as owners of intruder alarms connected to the police station, though at one stage in his argument he appeared to limit the class to those with 999 type burglar alarms. He submits that this is a much more limited group than the category of “young or fairly young women” to whom it was alleged that the police owed a duty in Hill’s case. Thus, submits Mr. Scholes, the fire brigade was correct in distinguishing the present case from Hill’s case.
It is possible to envisage an agreement between an occupier of a property protected by a burglar alarm and the police which would impose a contractual liability on the police. That is not, however the situation in this case. The communication with the police in this case was by a 999 telephone call, followed by a recorded message. If as a result of that communication the police came under a duty of care to the person who informs them, whether by 999 call or in some other way, that a burglary is being committed or is about to be committed. So in my view if there is a duty of care it is owed to a wider group than those to whom the fire brigade referred. It is owed to all members of the public who give information of suspected crime against themselves or their property. It follows, therefore, that on the facts of this case it is my opinion that there was no such special relationship between the plaintiff and the police as was present in the Dorset Yacht case. On this issue I respectfully disagree with the learned Judge.”
It is true that in that passage Glidewell LJ is concentrating on the question whether there was any duty to respond to the call; but he cannot have overlooked the fact that the police in fact intervened, albeit ineffectually. This will be a relevant matter when we come to consider the duty if any on the fire brigade once they have reached the fire ground. For present purposes the case of Alexandrou is clear authority for the proposition that there is no sufficient proximity simply on the basis that an emergency call is sent to the police, even if there is a direct line from the premises to the police station. The decision is binding on us, unless it can be distinguished, and in our view on this aspect it cannot.
Glidewell LJ also held, following Hill v. Chief Constable of West Yorkshire [1989] AC 53, that it was not just fair and reasonable to impose a duty of care on the police in these circumstances. Slade LJ said at p344:
“it is unthinkable that the police should be exposed to potential actions for negligence at the suit of every disappointed or dissatisfied maker of a 999 call. I can see no sufficient grounds for holding that the police owed a duty of care to this plaintiff on or after receipt of the 999 call on 26 January 1986 if they would not have owed a duty of care to ordinary members of the public who made a similar call.”
In our judgment the fire brigade are not under a common law duty to answer the call for help and are not under a duty to take care to do so. If therefore they fail to turn up or fail to turn up in time because they have carelessly misunderstood the message, got lost on the way or run into a tree, they are not liable.
Does the fire brigade owe a duty of care to the owner of the property on fire, or anyone else to whom the fire may spread, once they have arrived at the fire ground and started to fight the fire?
There are to be found some general statements to the effect that they do owe such a duty. Halsbury’s Law of England 4th Ed. Vol 18 at para 404 it is stated that:
“A fire authority is vicariously liable for acts of negligence committed by members of the fire brigade acting in the course of, and for the purposes of, their duties. It is doubtful whether there is any method by which the fire authority could free itself from liability for the negligence of persons expressly or impliedly authorised by it to deal with fires in respect to the manner in which they carry out their tasks.”
The authority cited for this proposition is Kilboy v. South Eastern Fire Area Joint Committee [1952] S.C. 280 and the second sentence is a quotation from the judgment of Lord Keith of Avonholm in that case at p 288 and is clearly obiter. The decision of the Court of Session turned on the defendants argument that it was not vicariously liable for the negligent act of a fireman in throwing down a rope which struck the infant plaintiff in the eye while he was watching fire fighting.
In Duff v. Highland & Islands’ Fire Board [1995] S.L.T. (Notes) 1362 Times November 3. Lord MacFadyen expressed the view obiter that the fire brigade would owe a duty of care to the owner of property on fire to whose assistance they have gone. He rejected the submission that such a duty should not be imposed as a matter of policy.
Before decisions the subject of the present appeals, however, there have been no reported cases on the point in this country. Since the present cases were heard at first instance, Rimer J has followed the decisions in the London Fire Brigade and West Yorkshire cases. He declined to follow the Hampshire case: see Nelson Holdings Ltd. v. British Gas PLC Transcript 5 December 1996. It is therefore necessary to approach this question from first principles.
Counsel for the plaintiffs in the Hampshire case submit that there are two approaches in principle which lead to the conclusion of liability in their case.
First it is said that, although the correct method for deciding whether there is a duty of care at common law is to adopt the approach advocated by Lord Bridge in Caparo PLC v. Dickman [1990] A.C. 605 at 617-8, namely (i) forseeability of damage arising from the negligent performance of the relevant operation (ii) the existence of a sufficient relationship of proximity between the parties and (iii) whether or not as a matter of legal policy it is “fair just and reasonable” that a duty of care should exist, the direct infliction of foreseeable physical damage is an established category of case where a duty exists. It is argued that Stn. Officer Mitchell’s act of switching off the sprinklers was a positive act of misfeasance which foreseeably caused the fire to get out of control and spread and cause the loss of Blocks B and C and part of Block A which would not otherwise have been affected. It was on this basis that Judge Havery found in the plaintiffs’ favour. By reason of the differing circumstances in each appeal this line of argument is only of direct assistance to the plaintiffs in the Hampshire case.
The alternative ground upon which it is said that proximity will arise is where someone possessed of a special skill undertakes, quite irrespective of contract, to apply that skill for the assistance of another person who relies upon such skill, and there is direct and substantial reliance by the plaintiffs on the defendant’s skill. (See Henderson v. Merrett Syndicates Ltd. [1995] 2 AC 145 per Lord Goff of Chieveley at p.178-181 adopting what was said by Lord Morris of Borthy-Guest and Lord Devlin in Hedley Byrne v. Heller [1964] AC 465 at 502-3 and 526).
We turn to consider the first of these submissions. The peculiarity of fire brigades, together with other rescue services, such as ambulance or coastal rescue and protective services such as the police, is that they do not as a rule create the danger which causes injury to the plaintiff or loss to his property. For the most part they act in the context of a danger already created and damage already caused, whether by the forces of nature, or the acts of some third party or even of the plaintiff himself, and whether those acts are criminal, negligent or non-culpable.
But where the rescue/protective service itself by negligence creates the danger which caused the plaintiff’s injury there is no doubt in our judgment the plaintiff can recover. There are many examples of this. In Rigby v. Chief Constable of Northants [1985] 1 W.L.R. 1242 the plaintiff’s gun shop was at risk from a lunatic. The police came to deal with the situation; they fired a CS canister of gas into the shop, though it caused a high risk of fire, without ensuring that the fire engine which had previously been available was there to put out any fire that resulted. In Knightly v. Johns [1982] 1 WLR 349 in the course of traffic control following an accident two police constables were instructed to take a course which involve them riding against the traffic flow round a blind bend causing a collision in which the plaintiff was injured. In Dorset Yacht Co. v. Home Office [1970] AC 1004 the defendant’s prison officers had brought the Borstal boys who had a known propensity to escape into the locality where the yachts were moored and so had created a potential situation of danger for the owners of those yachts, in which they failed to exercise proper supervision over the boys. (See per Lord Keith of Kinkel in Hill v. The Chief Constable of West Yorkshire [1989] 1 A.C. 53 at p61.) Similarly in Alcock v. Chief Constable of South Yorkshire [1992] 1 AC 310 where the question in issue was the liability of the police to those suffering shock as a result of the Hillsborough disaster. There was never any dispute that the police were liable to the primary victims because they had created the danger by incompetent crowd control.
These are all cases however where a new or different danger has been created from that which the police were seeking to guard against, except perhaps in Alcock . A comparable situation would be if, on arrival at the scene of a fire, the fire engine was negligently driven into the owner’s car parked in the street. But it seems to us that there is no difference in principle if, by some positive negligent act, the rescuer/protective service substantially increases the risk; he is thereby creating a fresh danger, albeit of the same kind or of the same nature, namely fire. The Judge held that at the time the sprinkler systems were turned off, the fire was being contained, but that once they were turned off it rapidly went out of control, spreading to Blocks B and C which had been deprived of their own sprinkler protection.
In answer to both ways in which Mr. Sumption Q.C. puts the case for Digital, Mr. Munby relies on the decision in East Suffolk Rivers Catchment Board v. Kent [1941] AC 74. The facts are well known. Owing to a very high tide, a breach was made in the sea wall as a consequence of which the respondent’s land was flooded. The appellants, in the exercise of their statutory powers, undertook the repair of the wall, but carried out the work so inefficiently that the flooding continued for one hundred and seventy eight days thereby causing serious damage to the respondent’s pasture land. By the exercise of reasonable skill in carrying out the work of repair the breach in the wall could have been repaired in fourteen days.
The trial Judge and the majority of the Court of Appeal held the appellants liable. In the House of Lords it was held that where a statutory authority embarks upon the execution of the power to do work, the only duty owed to any member of the public is not thereby to add to the damages which that person would have suffered had the authority done nothing.
The statement of principle is to be found in all the speeches of their Lordships except Lord Atkin who dissented. At P.84 Viscount Simon L.C. said:
“It is not, of course, disputed that if the appellants, in the course of exercising their statutory powers, had inflicted fresh injury on the respondents through lack of care or skill, they would be liable in damages for the consequences of their negligent act. If, for example, the appellants, by their unskilful proceedings had caused a further area of the respondents’ land to be flooded, or had prolonged the period of flooding beyond what it would have been if they had never interfered, they would be liable. But (apart from two minor matters which it is agreed do not govern the main issue) nothing of this sort happened. The respondents would have gained if the flooding had been stopped sooner; their complaint against the appellants is that they did not act with sufficient skill to stop it more promptly; but the respondents cannot point to any injury inflicted upon them by the appellant Board, unless it be the Board’s want of success in endeavouring to stop the flooding at an earlier date.”
After referring to the well know dictum of Lord Blackburn in Geddis v. Proprietor of Bann Reservoir 3 App. Cas. 430, 455 Viscount Simon said at p.87:
“it would be misapplied if it were supposed to support the proposition that a public body, which owes no duty to render any service, may become liable at the suit of an individual, if once it takes it upon itself to render some service, for failing to render reasonable adequate and efficient service. On the other hand, if the public body by its unskilful intervention created new dangers or traps, it would be liable for its negligence to those who suffered thereby.”
At P.88:
“It is admitted that the respondents would have no claim if the appellants had never intervened at all. In my opinion, the respondents equally have no claim when the appellants do intervene, save in respect of such damage as flows from their intervention and as might have been avoided if their intervention had been more skilfully conducted.”
Lord Thankerton considered that the essential question in the case was one of causation (see p.96). At p.95 he said:
“But I am equally clear that, as soon as they entered upon the land and commenced operations, the appellants owed a duty to the respondents to conduct such operations with such reasonable care as would avoid causing damage to the respondents’ property, and that they would be liable to the respondents if the latter could show (a) absence of such reasonable care in the conduct of operations, and (b) that they had suffered loss which was caused by such lack of reasonable care.”
Lord Romer at p.102 said:
“Where a statutory authority is entrusted with a mere power it cannot be made liable for any damage sustained by a member of the public by reason of a failure to exercise that power. If in the exercise of their discretion they embark upon an execution of the power, the only duty they owe to any member of the public is not thereby to add to the damages that he would have suffered had they done nothing. So long as they exercise their discretion honestly, it is for them to determine the method by which and the time within which and time during which the power shall be exercised; and they cannot be made liable, except to the extent that I have just mentioned, for any damage that would have been avoided had they exercised their discretion in a more reasonable way.”
Lord Porter at p.104 said:
“Damage caused by anything negligently done by the appellants in the course of the exercise of their power which would not have occurred if they had refrained from exercising it at all would undoubtedly have to be made good on the principles set out in the well known words of Lord Blackburn in Geddis v. Proprietors of Bann Reservoir already quoted by Lord Romer; but where, as here, the damage was not caused by any positive act on the part of the appellants but was caused and would have occurred to the like extent if they had taken no steps at all, I cannot see that the loss which the respondents suffered was due to any breach of a duty owed by the appellants. Their duty was to avoid causing damage, not either to prevent future damage due to causes for which they were not responsible or to shorten its incidence. The loss which the respondents suffered was due to the original breach, and the appellants’ failure to close it merely allowed the damage to continue during the time which they took in mending the broken bank. For that I do not think them liable nor can I find any case the decision in which would lead to that result.”
Mr Munby also relies upon the Judge’s finding, or rather lack of finding, as to what would have happened if the fire brigade had not turned up at all. The Judge said that he was “unable to say whether or not, on balance of probabilities, if the fire brigade had done nothing and the sprinklers had been left on the building would have been burned down completely.” Mr. Munby submits that, in the absence of a positive finding, the plaintiffs’ case must fail, since the burden of proof rests on the plaintiff to show all the necessary elements for recovery.
We do not accept Mr. Munby’s submission. The danger with fire is that, unless it can be controlled and prevented from spreading at a relatively early stage, it will quickly become out of control and consume all in its path. That danger was particularly acute having regard to the construction of the roof at the Crescent. Having negligently turned off the sprinklers which were at that stage containing the fire, the defendants by their positive act exacerbated the fire so that it rapidly spread. The question is thus one of causation and has to be tested with the benefit of hindsight by comparing what would have happened if the sprinklers had been left on with what in fact happened. This is what the Judge did. He was correct to compare one hypothetical situation with one real eventuality, rather than two hypothetical situations. It is not to be supposed that having arrived on the fire ground the fire brigade would simply have sat on their hands.
We think that the true analogy between the Hampshire case and the East Suffolk case would be this: Suppose that after the main sea wall had been breached the plaintiff had constructed a temporary wall which contained the floodwater to a relatively small area, and that the defendants then came upon the land to repair the main wall and negligently destroyed the plaintiff’s temporary wall so that the area of the flooding increased before the repairs were completed. In such circumstances the defendants would at least prima facie be liable for the extra damage unless they could show, (and the burden would be upon them,) that the damage would have occurred in any event, even if they had never come upon the scene. If they were unable to discharge that burden, then they would be liable. Similarly in the present case, the Judge’s inability to make such a finding in their favour must in our view render the defendants liable.
We now turn to consider the second submission made on behalf of all the plaintiffs that the requisite proximity exists. It involves the concept of assumption of responsibility by the fire brigade and particular reliance by the owner. As a general rule a sufficient relationship of proximity will exist when someone possessed of special skill undertakes to apply that skill for the assistance of another person who relies upon such skill and there is direct and substantial reliance by the plaintiff on the defendant’s skill. Hedley Byrne & Co. v. Heller & Partners and Henderson v. Merett Syndicates Ltd, already cited. There are many instances of this. The plaintiffs submit that that which is most closely analogous is that of doctor and patient or health authority and patient. There is no doubt that once the relationship of doctor and patient or hospital authority and admitted patient exists, the doctor or the hospital owe a duty to take reasonable care to effect a cure, not merely to prevent further harm. The undertaking is to use the special skills which the doctor and hospital authorities have to treat the patient. In Cassidy v. Ministry of Health [1951] 2 K.B. 343 Denning LJ said at p.360
“In my opinion authorities who run a hospital, be they local authorities, government boards, or any other corporation, are in law under the selfsame duty as the humblest doctor; whenever they accept a patient for treatment, they must use reasonable care and skill to cure him of his ailment.”
In Barnett v. Chelsea & Kensington Hospital Management Committee [1969] 1 Q.B. 428 Nield J drew a distinction between a casualty department of a hospital that closes its doors and says no patients can be received, in which case he would by inference have held there was no duty of care, and the case before him where the three watchmen who had taken poison entered the hospital and were given erroneous advice, where a duty of care arose.
Likewise a doctor who happened to witness a road accident will very likely go to the assistance of anyone injured, but he is not under any legal obligation to do so (save in certain limited circumstances which are not relevant) and the relationship of doctor and patient does not arise. If he volunteers his assistance, his only duty as a matter of law is not to make the victim’s condition worse.
Moreover it is clear that no such duty of care exists, even though there may be close physical proximity, simply because one party is a doctor and the other has a medical problem which may be of interest to both. In X (Minors) v. Bedfordshire County Council [1995] A.C. 633 at p.752 G Lord Browne-Wilkinson, with whose speech the other members of the House agreed said:
“The social workers and the psychiatrists were retained by the local authority to advise the local authority, not the plaintiffs. The subject matter of the advice and activities of the professionals is the child. Moreover the tendering of any advice will in many cases involve interviewing and, in the case of doctors, examining the child. But the fact that the carrying out of the retainer involves contact with and relationship with the child cannot alter the extent of the duty owed by the professionals under the retainer from the local authority. The Court of Appeal drew a correct analogy with the doctor instructed by an insurance company to examine an applicant for life insurance. The doctor does not, by examining the applicant, come under any general duty of medical care to the applicant. He is under a duty not to damage the applicant in the course of the examination: but beyond that his duties are owed to the insurance company and not to the applicant.”
In those instances, the social workers and doctors owed duties to the local authority or insurance company which were inconsistent with a duty being owed to the plaintiff. But that is only part of the reason why no duty existed. There was no undertaking to treat the plaintiff and no assumption of responsibility to try to effect a cure. Moreover, we consider that Mr. Munby is right when he submitted that the fire brigade’s duty is owed the public at large to prevent the spread of fire and that this may involve a conflict between the interests of various owners of premises. It may be necessary to enter and cause damage to A’s premises in order to tackle a fire which has started in B’s. During the great fire of London the Duke of York had to blow up a number of houses not yet affected by fire, in order to make a fire break.
Mr. Walker, in the course of his submissions in the London Fire Brigade case, was clearly in difficulty in seeking to identify to whom any such duty would be owed. It might be thought that the owner of the building on fire is the primary candidate. But that would not be enough for the plaintiff in the London Fire Brigade case. It would have to extend to owners and occupants of adjoining or neighbouring premises to which the fire might reasonably have been expected to have spread, if only by a spark or burning debris. Mr. Walker asserted the duty would extend to a bystander who came to watch the spectacle and, ultimately, he submitted that it might extend to a whole town or district on the grounds that if the fire got completely out of control the town or district would be at risk.
Plaintiffs’ counsel argue that the provisions of S30(3) and (2) which confer on the senior fire brigade officer present sole charge and control of fire fighting operations and make it a criminal offence wilfully to obstruct or interfere with any member of a fire brigade engaged in fire fighting, establish a proximate relationship, once responsibility for fighting the fire is taken over by the brigade.
This argument has its attraction, particularly on the somewhat extreme facts of the Hampshire case. As Mr. Slater QC pointed out, the plaintiffs had two systems of fire fighting, one very effective in the form of automatic sprinklers, the other the manual fire-fighting capability of their employees. Stn. Officer Mitchell rendered the first ineffectual and ordered out of the building the plaintiffs’ employees who were attempting to attack the fire.
But it seems to us that the statute imposes control of operations on the senior officer for the benefit of the public generally where there may be conflicting interests. By taking such control that officer is not to be seen as undertaking a voluntary assumption of responsibility to the owner of the premises on fire, whether or not the latter is in fact reliant upon it.
Plaintiffs’ counsel have sought to rely on the fact that fire brigades are under a duty of care to their own employees. There does not appear to be much authority on this point, the only reported decision being that of McNair J in Bull v. London County Council Times 29 March 1953. But even assuming this is so, the duty arises out of the ordinary master and servant relationship. It is of no assistance in the present context.
It has been held that a property owner owes a duty of care to firemen not by his negligence to start a fire or create special hazards to fire fighting operations: Ogwo v. Taylor [1988] AC 431. That being so, it was submitted that there ought to be a reciprocal duty on the part of the fire brigade to the property owner, the argument being that if there is proximity in one direction it ought to be in both. But the reason why a duty is owed to rescuers is because the law recognises, that if A by his negligence puts the person or property of B at risk, it is reasonably foreseeable that some courageous and public spirited person C will come to the assistance of B. C is the secondary victim of A’s negligence and the duty is owed to C as well as B. A has created the danger which causes injury to both B and C. But simply by attending the fire and conducting fire fighting operations the fire brigade do not, save in exceptional circumstances such as the Hampshire case, create or increase the danger.
It is not clear why a rescuer who is not under an obligation to attempt a rescue should assume a duty to be careful in effecting the rescue merely by undertaking the attempt. It would be strange if such a person were liable to the dependants of a drowning man who but for his carelessness he would have saved, but without the attempt would have drowned anyway. In Canada it has been held that he is not. “The Ogopogo” [1969] 1 LIR 374. [1970] 1 LIR 257. [1971] 2 LIR 410. This is consistent with the East Suffolk case. It is also, as we have pointed out, the effect of Alexandrou v. Oxford because the ineffective intervention by the police in incompetently inspecting the plaintiff’s premises did not create a relationship of proximity.
There are a number of cases where the courts have held that the relationship of proximity arises so as to give rise to a duty of care for the plaintiff’s physical safety which are based on assumption of responsibility and reliance. In Kirkham v. Chief Constable of Greater Manchester [1990] 2 QB 283 the plaintiff’s husband was taken into custody by the police. The police were told by the plaintiff that her husband was a suicide risk. When the husband was remanded in custody to the prison authorities that information was not passed on the prison authority. The husband committed suicide and the police were held liable to the plaintiff.
Lloyd LJ who gave the leading judgment said at p.289:
“The question depends in each case on whether, having regard to the particular relationship between the parties, the defendant has assumed a responsibility towards the plaintiff, and whether the plaintiff has relied on that assumption of responsibility. In both cases the Court of Appeal held, on the facts, that the defendant was under no duty to speak, and was therefore not liable. But the principle is well established.
In the present case I have no difficulty in holding that the police assumed certain responsibilities towards Mr. Kirkham when they took him into custody, and in particular assumed a responsibility to pass on information which might affect his well-being when he was transferred from their custody to the custody of the prison authorities. Nor have I any difficulty in inferring reliance. That is sufficient to impose on the police a duty to speak.”
It is not altogether clear whether the reliance in that case was that of the plaintiff or her husband. But the reasoning was clear.
In Welsh v. Chief Constable of Merseyside & Another [1993] 1 All ER 692 Tudor Evans J held that there was arguably a breach of duty by the Crown Prosecution Service which had undertaken to pass on certain information to the Court relating to the plaintiff’s case, but failed to do so.
In Osman v. Ferguson [1993] 4 All ER 344 a great deal of information had been given to the police by the victim’s family identifying P as a potentially dangerous criminal, but the police failed to apprehend him. McCowan and Simon Brown LJJ considered that there was arguably a sufficiently close degree of proximity between the police and the victim’s family to give rise to a special relationship. Beldam LJ expressed no opinion on this. The action was struck out on the basis that it would be contrary to public policy to impose a duty of care on the police.
In Barratt v. Minsitry of Defence [1995] 1 WLR 1217 the deceased, a 30 year old naval airman, engaged in a bout of heavy drinking; having become unconscious, was placed on a bunk lying in the recovery position, but his condition was not checked and he was later found dead having asphyxiated on his vomit. The defendant officer was not liable for preventing the deceased abusing alcohol or for anything prior to his collapse. Beldam LJ at p 1225E said:
“Thereafter, when the defendant assumed responsibility for him, it accepts that the measures taken fell short of the standard reasonably to be expected. It did not summon medical assistance and its supervision of him was inadequate”
It is apparent that the point was conceded. But it is not surprising, having regard to the fact that the deceased was under command of the officer concerned.
These are all examples of where the Court has considered on the special facts of the case that there is a sufficiently close relationship of proximity to give rise to a duty of care. But we do not think they are anywhere near the circumstances that arise in these appeals. In our judgment, a fire brigade does not enter into a sufficiently proximate relationship with the owner or occupier of premises to come under a duty of care merely by attending at the fire ground and fighting the fire; this is so, even though the senior officer actually assumes control of the fire-fighting operation.
Is it just fair and reasonable to impose a duty of care? – Public policy immunity
In the Hampshire case H.H. Judge Havery held that it was just and reasonable to hold the defendant liable for negligent actions of Stn. Officer Mitchell. Rougier J in the London Fire Brigade case held both that there was no sufficient proximity to give rise to a duty of care, and also that it would not be just fair and reasonable to impose such a duty. Rimer J in the Nelson Holdings case followed the same course. In the West Yorkshire case H.H. Judge Crawford Q.C. held there was sufficient proximity, but it was not just fair and reasonable to impose the duty of care.
In the light of our conclusion that there is not sufficient proximity in the London Fire Brigade case and West Yorkshire case it is perhaps not necessary to consider in either case whether the third test in Caparo is satisfied or not, since treated separately, the third test only arises, following the conclusion of the Court that the test of proximity is prima facie satisfied. However, the second and third test in Caparo are closely inter-related. In Marc Rich & Co. v Bishop Rock Ltd [1996] 1 AC 211 Lord Steyn, with whose speech Lord Keith and Lord Jauncey agreed, approved at p.235F the following passage from the judgment of Saville LJ in the Court of Appeal.
“Whatever the nature of the harm sustained by the plaintiff, it is necessary to consider the matter not only by inquiring about foreseeability but also by considering the nature of the relationship between the parties; and to be satisfied that in all the circumstances it is fair, just and reasonable to impose a duty of care. Of course . . . these three matters overlap with each other and are really facets of the same thing. For example, the relationship between the parties may be such that is obvious that a lack of care will create a risk of harm and that as a matter of common sense and justice a duty should be imposed . . . . Again in most cases of the direct infliction of physical loss or injury through carelessness, it is self-evident that a civilised system of law should hold that a duty of care has been broken, whereas the infliction of financial harm may well pose a more difficult problem. Thus the three so-called requirements for a duty of care are not to be treated as wholly separate and distinct requirements but rather as convenient and helpful approaches to the pragmatic question whether a duty should be imposed in any given case. In the end whether the law does impose a duty in any particular circumstances depends upon those circumstances…”
We consider first, therefore, whether there is any reason of policy why the Hampshire Fire Authority should not be liable. The starting point is that “the public policy consideration which has first claim on the loyalty of the law is that wrongs should be remedied, and that very potent considerations are required to over-ride that policy” (per Lord Browne-Wilkinson in X (minors) v. Bedfordshire County Council [1995] 2 AC 633 at 749G). Counsel for the fire brigades have placed much reliance on the police cases,, on the basis that there is a similarity between fire brigades answering rescue calls and the police answering calls for help and protection from the public. But it is clear from the leading case of Hill v. Chief Constable of West Yorkshire [1989] 1 A.C. 53 that the police do not enjoy blanket immunity. At p.59 B-C Lord Keith said;
“There is no question that a police officer, like anyone else, may be liable in tort to a person who is injured as a direct result of his actions or omissions. So he may be liable in damages for assault, unlawful arrest, wrongful imprisonment and malicious prosecution, and also for negligence. Instances where liability for negligence has been established are Knightly v. Johns [1982] 1 WLR 349 and Rigby v. Chief Constable of Northamptonshire [1985] 1 W.L.R. 1242”
Other examples would be Alcock v. Chief Constable of South Yorkshire [1992] 1 AC 310 the Hillsborough case, and Marshall v. Osmond [1983] Q.B. 1034. These are cases, as we have already pointed out, where the police created danger and are closely analogous to the Hampshire case.
There is no general immunity for professionals or others carrying out difficult tasks in stressful circumstances. Doctors, barristers (save for immunity in court), salvors (The Tojo Maru [1972] A.C. 242) police (save in certain circumstances) and prison officers do not have immunity.
In the East Suffolk case, it is clear that the Board would have been liable if through their negligence they had added to the damage the plaintiff would otherwise have suffered. The dividing line between liability and non-liability is thus defined and there is no need to pray in aid any concept of public policy. We agree with Mr. Sumption that the Courts should not grant immunity from suit to fire brigades simply because the Judge may have what he describes as a visceral dislike for allowing possibly worthless claims to be made against public authorities, whose activities involve the laudable operation of rescuing the person or property of others in conditions often of great danger. Such claims may indeed be motivated by what is sometimes perceived to be the current attitude to litigation –
“if you have suffered loss and can see a solvent target – sue it.”
Nonetheless, if a defendant is to be immune from suit such immunity must be based upon principle.
It seems to us that in those cases where the courts have granted immunity or refused to impose a duty of care it is usually possible to discern a recognition that such a duty would be inconsistent with some wider object of the law or interest of the particular parties. Thus if the existence of a duty of care would impede the careful performance of the relevant function, or if investigation of the allegedly negligent conduct would itself be undesirable and open to abuse by those bearing grudges, the law will not impose a duty. Some cases on either side of the line illustrate this.
Judges and arbitrators whilst involved in the judicial process are immune, but not mutual professional valuers. Arenson v. Arenson [1977] A.C. 405. In Marc Rich & Co an independent and non-profit making entity, created and operating for the sole purpose of promoting collective welfare, namely the safety of lives and ships at sea…” would [not] be able to carry out their functions as efficiently if they became the ready alternative target for cargo owners…” per Lord Steyn at p.241.
Solicitors and barristers, but only whilst acting as advocates in Court, are immune because their duty to the Court might conflict with their duty to their clients. Rondel v. Worsley [1969] 1 AC 191 and Saif Ali v. Sydney Mitchell & Co [1980] AC 198.
In X (minors) v. Bedfordshire County Council in relation to social workers Lord Browne-Wilkinson said at 751 B:
“Finally, your Lordships’ decision in the Caparo case [1990] 2 AC 605 lays down that, in deciding whether to develop novel categories of negligence the court should proceed incrementally and by analogy with decided categories. We were not referred to any category of case in which a duty of care has been held to exist which is in any way analogous to the present cases. Here, for the first time, the plaintiffs are seeking to erect a common law duty of care in relation to the administration of a statutory social welfare scheme. Such a scheme is designed to protect weaker members of society (children) from harm done to them by others. The scheme involves the administrators in exercising discretions and powers which could not exist in the private sector and which in many case bring them into conflict with those who, under the general law, are responsible for the child’s welfare. To my mind, the nearest analogies are the cases where a common law duty of care has been sought to be imposed upon the police (in seeking to protect vulnerable members of society from wrongs done to them by others) or statutory regulators of financial dealings who are seeking to protect investors from dishonesty. In neither of those cases has it been thought appropriate to superimpose on the statutory regime a common law duty of care giving rise to a claim in damages for failure to protect the weak against the wrongdoer: see Hill v. Chief Constable of West Yorkshire [1989] AC 53 and Yuen Kun Yeu v. Attorney General of Hong Kong [1988] A.C. 175. In the latter case, the Privy Council whilst not deciding the point said, at p.198, that there was much force in the argument that if the regulators had been held liable in that case the principles leading to such liability “would surely be equally applicable to a wide range of regulatory agencies, not only in the financial field, but also, for example, to the factory inspectorate and social workers, to name only a few.” In my judgment, the courts should proceed with great care before holding liable in negligence those who have been charged by Parliament with the task of protecting society from the wrongdoings of others.”
There is no general duty of care owed by the Crown Prosecution Service in the conduct of its prosecution of a defendant, since the effectiveness of the CPS in its central function of prosecuting crime would be inhibited by the imposition of such a duty. Elguzouli – Daf v. Commissioner for Police [1995] QB 335. But there will be such a duty where there is an express “assumption of responsibility” to a particular defendant. Welsh v. Chief Constable of Merseyside Police [1993] 1 All ER 692.
In the police case Lord Keith of Kinkel in Hill v. Chief Constable of West Yorkshire said this at p.63D:
“In some instances the imposition of liability may lead to the exercise of a function being carried on in a detrimentally defensive frame of mind. The possibility of this happening in relation to the investigative operations of the police cannot be excluded. Further it would be reasonable to expect that if potential liability were imposed it would be not uncommon for actions to be raised against police forces on the ground that they had failed to catch some criminal as soon as they might have done, with the result that he went on to commit further crimes. While some such actions might involve allegations of a simple and straightforward type of failure – for example that a police officer negligently tripped and fell while pursuing a burglar – others would be likely to enter deeply into the general nature of a police investigation, as indeed the present action would seek to do. The manner of conduct of such an investigation must necessarily involve a variety of decisions to be made on matters of policy and discretion, for example as to which particular line of inquiry is most advantageously to be pursued and what is the most advantageous way to deploy the available resources. Many such decisions would not be regarded by the courts as appropriate to be called in question, yet elaborate investigation of the facts might be necessary to ascertain whether or not his was so. A great deal of police time, trouble and expense might be expected to have to be put into the preparation of the defence to the action and the attendance of witnesses at the trial. The result would be a significant diversion of police manpower and attention from their most important function, that of the suppression of crime. Closed investigations would require to be reopened and retraversed, not with the object of bringing any criminal to justice but to ascertain whether or not they had been competently conducted.”
See also Hughes v. NUM [1991] 4 All ER 278; Alexandrou v. Oxford [1993] 3 All ER 328.
In Ancell v. McDermot [1993] 3 All ER 355 it was held that the imposition of a duty of care on the police to protect road users from hazards caused by others would be so extensive as to divert the police from the proper functions of detecting and preventing crime. And in Osman v. Ferguson [1993] 4 All ER 344 although the majority of the Court considered that it was arguable that there was sufficient proximity between the plaintiff’s family and investigating police officers, the imposition of a duty of care towards a potential victim might result in the significant diversion of police resources from the investigation and suppression of crime and was therefore contrary to public policy.
On the other hand liability has been imposed when, in the course of carrying out their duties, the police have themselves created the danger. (See the cases already cited, Rigby v. Chief Constable of Northamptonshire, Knightly v. Johnson, Alcock v. Chief Constable of South Yorkshire and Marshall v. Osmond).
In our judgment there is no doubt on which side of the line a case such as the Hampshire case falls. It is one where the defendants, by their action in turning off the sprinklers, created or increased the danger. There is no ground for giving immunity in such a case.
Rougier J in the London Fire Brigade case, after citing from the speeches of Lord Keith and Lord Templeman in Hill’s case, set out a number of reasons why in his judgment it was not appropriate to impose a common law duty to take care on fire brigades. He said at p.1003D:
“I think that as regards the fire brigade many of these considerations are applicable and militate on grounds of public policy against the imposition of any common law duty. In particular, I would single out the following. (1) I do not think than any extra standard of care would be achieved. (2) Rather the reverse, if a common law duty of care can lead to defensive policing, by the same token it can lead to defensive fire-fighting. Fearful of being accused of leaving the scene too early, the officer in charge might well commit his resources when they would have been better employed elsewhere. He would be open to criticism every time there was a balance to be struck or that sort of operational choice to be made. (3) If the efficiency of the emergency services is to be tested, it should be done not in private litigation but by an inquiry instituted by national or local authorities who are responsible to the electorate. This follows the reasoning of Lord Templeman in Hill’s case [1989] AC 53. (4) Marc Rich & Co. A.G. v. Bishop Rock Marine Co. Ltd. [1996] AC 211 suggests that the fact that a defendant in the position of the fire brigade acts for the collective welfare is one that should be taken into account. (5) Last, and to my mind by far the most important consideration is what is sometimes referred to as the “floodgates” argument.”
Judge Crawford in the West Yorkshire case added a number of others, namely (we continue the numbering from that set out in the passage above):
6. The distraction that court cases would involve from the proper task of fire-fighting.
7. It might create massive claims which would be an unreasonable burden on the tax payer.
8. It is for the individual to insure against fire risks.
These reasons have been subjected to considerable criticism by counsel for the plaintiffs on the following lines:
1 and 2. No improvement in standard of care; defensive fire-fighting
It seems hardly realistic that a fire officer who has to make a split second decision as to the manner in which fire-fighting operations are to be conducted will be looking over his shoulder at the possibility of his employers being made vicariously liable for his negligence. If there can be liability for negligence, it is better to have a high threshold of negligence established in the Bolam test and for judges to remind themselves that fire officers who make difficult decisions in difficult circumstances should be given considerable latitude before being held guilty of negligence. It is not readily apparent why the imposition of a duty of care should divert the fire brigade resources from other fire-fighting duties.
3. Private litigation unsuitable for discovering failures of service
As to this reason counsel for the plaintiffs in the Hampshire case point out that although there was a very extensive internal enquiry in that case starting on the day of the fire it was only the litigation that uncovered the serious shortcomings of the service.
4. Undesirability of actions against authorities operating for collective welfare
It is said that the fact that the defendant is a public authority acting for the collective welfare of the community such as the National Health Service has never been regarded as a ground for immunity; in any event the benefit is also for the individual householder.
5. Floodgates
Having regard to the extreme paucity of recorded cases against fire brigades in spite of the fact that for over 40 years Halsbury’s Laws of England have indicated that an action would lie, this argument should be disregarded. Again, the Bolam test should afford sufficient protection.
6. Distraction from fire-fighting
In any action against a public authority officers and employees will be distracted from their ordinary duties; that should not be regarded as a valid ground for granting immunity.
7. Massive claims against the taxpayer
This is ultimately an argument for the immunity from suit of government departments and all public authorities.
8. Insurance
The general rule in English law is that in determining the rights inter se of A and B, the fact that one them is insured is to be disregarded.(see per Viscount Simonds in Lister v. Romford Ice and Cold Storage Co. Ltd [1957] AC 555 at 576 and 7. Insurance premiums are calculated having regard to the existence and likely response of the fire brigade; very substantial reductions in premiums are granted where buildings are protected by sprinklers; there may be underinsurances and absence of insurance particularly in the lower end of the property market. Further, it would be unusual for there to be effective insurance against personal injury. Finally, there is nothing to prevent fire brigades insuring against their liability. Indeed the London and West Yorkshire brigades are insured.
In our judgment there is considerable force in the criticisms made. If we had found a sufficient relationship of proximity in the London Fire Brigade and West Yorkshire cases, we do not think that we would have found the arguments for excluding a duty of care on the grounds that it would not be just fair and reasonable convincing. The analogy with the police exercising their functions of investigating and suppressing crime is not close. The floodgates argument is not persuasive; nor is that based on insurance. Many of the other arguments are equally applicable to other public services for example the National Health Service. We do not think that the principles which underlie those decisions where immunity has been granted can be sufficiently identified in the case of fire brigades.
Statutory immunity
The argument for the defendant authorities is that section 30 confers immunity or creates a statutory defence against liability for negligence or breach of statutory duty by the fire brigade and firemen involved in extinguishing a fire. If that is correct, the plaintiffs’ claims would fail. Liability for activities which caused damage at the scene is said to be limited to cases of deliberate bad faith, which is not in question in any of the present cases.
There is a clear distinction to be observed at this stage of the argument between the general question whether the plaintiffs are entitled to maintain an action at common law and the question currently under consideration, which is whether, assuming that the 1947 Act would otherwise be appropriate to sustain an action for negligence at common law or breach of statutory duty, section 30 precludes any such liability.
Liability of a public authority in tort may be restricted or avoided by appropriate statutory language. Section 30 itself provides a clear example of language which authorises what would otherwise be a tortious interference with property.
In Allen v. Gulf Oil Refining Ltd [1981] AC 1001 Lord Wilberforce observed that:
“Where Parliament by express direction or by necessary implication has authorised the construction and use of an undertaking or works, that carries with it an authority to do what it is authorised with immunity from any action based on nuisance. That right of action is taken away.”
However it is an elementary principle repeated in different language in numerous authorities that a public body is normally expected to use its statutory powers with reasonable care.
See Mersey Docks and Harbour Board Trustee v. Gibbs (1886) LR1 HL93; Geddis v Proprietor of Bann Reservoir (1873) 3 App. Cass. 430, and the more recent examples in Dorset Yacht Company Ltd v. Home Office [1970] AC 1004, X (minors) v. Bedfordshire County Council [1955] 2 A.C. 633 and Stovin v. Wise [1996] A C 923
For the purpose of construing any particular section on which a purported claim for immunity is based Lord Greene MR in Fisher v. Ruislip-Northwood UDC & MiddlesexCounty Council [1945] K.B. 585 explained.
“The duty of undertakers in respect of the safety of works executed under statutory powers has been considered on many occasions … If … the legislature authorises the construction and maintenance of a work which will be safe or dangerous to the public according as reasonable care is or is not taken in its construction or maintenance, as the case may be, the fact that no duty to take such care is expressly imposed by the statute cannot be relied on as showing that no such duty exists. It is not to be expected that the legislature will go out of its way to impose express obligations or restrictions in respect of matters which every reasonably minded citizen would take for granted.”
Accordingly liability for negligence or breach of a statutory duty by a public body in the course of fulfilling its statutory obligations may only be excluded by express language or by necessary implication.
It is common ground between the parties that fire authorities are not expressly required to respond to emergency calls and attend the scene of each fire and to extinguish it. There is however a reasonable public expectation that normally the emergency call will be answered and the fire extinguished. In addition to their fire fighting duties, fire officers attend and assist at emergencies where their fire fighting skills as such are not required. (Section 3(1)(e))
Each member of a fire brigade on duty who attends the scene of any fire in order to extinguish it is granted specific powers directly concerned with fire fighting (see section 30(1)) and sole charge and control of all operations for the extinction of the fire is given to the senior fire brigade officer present at the scene (see section 30(3)).
The language of these sections, set out earlier in this judgment, is striking. These powers may be used only when the fireman is fighting fires, not for the purpose of any other emergencies he may attend. A police officer attending the scene of a fire is granted precisely the same powers as the fireman. It is an offence wilfully to obstruct or interfere with either a police officer or fireman who is engaged in fire fighting. The effect is that while the owner or occupier of premises which are ablaze is entitled to fight the fire as best he can, with or without the assistance of his neighbours and friends, once the fire brigade arrives at the scene he must defer to the fire brigade and is at risk of prosecution if he fails to do so. Therefore if he is ordered out of his house he must leave it; if he is anxious to retrieve an object of particular personal importance or exceptional value, or even a pet, he cannot do so against the express requirements of any fireman; indeed, in theory, he may be committing an offence if, in defiance of an instruction to the contrary, he returns to his home to rescue his own children. Forcible entry and damage to adjoining or nearby premises, not themselves affected or likely to be affected by fire, cannot be prevented by the owner or occupier, provided such entry is necessary for the purpose of fire-fighting. In the interests of the community as a whole he, like the owner of the property which is ablaze, is obliged to defer to the authority of the fire officers, whether he agrees or not, even when he considers that their actions are totally unnecessary.
Section 30 therefore removes potential impediments to efficient fire fighting. The chain of command is clear. Neither the fireman, nor his brigade, nor the police officer at the scene, can be held liable in trespass (whether to land, goods, or the person) if he enters and fights the fire at the premises where it has broken out or at which someone (including himself) reasonably believes a fire has broken out, or if he enters adjacent premises which are not in fact on fire in order to extinguish a fire elsewhere provided it is necessary to enter for that purpose or to protect life and property. The entry itself, and the necessary actions, are permitted.
There is no entitlement to compensation, even for the owner of premises which have been entered under the powers granted by section 30 which have themselves never been on fire nor indeed at any risk, and which have been entered and damaged in order to extinguish a fire elsewhere. Inefficiency in the general organisation and conduct of the fire authority, as well as investigations into the way in which a particular outbreak has been fought, may be considered at a public local enquiry held by the Secretary of State.
The powers granted to members of a fire brigade, and police officers, for the purpose of extinguishing fires are very extensive. They are entitled to exercise a very large measure of subjective judgement in deciding what is necessary to extinguish the particular fire, or deal with the emergency which has been created, and then to implement the decision. In the ultimate analysis each fire officer is empowered to do whatever he considers necessary for the purpose of fire-fighting. Any attempt to define by statute the steps which may or may not be appropriate in an individual emergency would be absurd: the decisions have to made at the scene. Liability for what would otherwise amount to trespass, when it occurs, is excluded.
Although the powers are very wide, there is nothing in section 30 which permits them to be exercised negligently. If it had been intended to exclude liability for negligence express provision could readily have been made. None was, and the omission in a section which otherwise expressly exonerates firemen from potential liability in tort for trespass is striking. If the fireman were permitted to do whatever he thought was “reasonable” or “believed to be reasonable” for all the purposes of section 30(1) this would have provided the foundation for an argument based on Holgate-Mohammed v. Duke [1984] 1 A.C. 437 that the decisions could be impugned only on the basis of bad faith or irrationality (Associated Provincial Picture Houses Ltd. v. Wednesbury Corporation [1948] 1 K.B. 22. However, the only reference in section 30 to the reasonableness of the fireman’s belief relates to his power of entry into premises in which fire has broken out or is “reasonably believed” to have broken out, thus justifying what would otherwise be a trespass. Fire demands rapid attention. The consequences of not dealing with it urgently may be catastrophic. Therefore a reasonable belief that a fire has broken out is made sufficient justification for confirming whether or not it has. Accordingly premises where it is reasonably believed that a fire has broken out are equated, for the purposes of entry, forcible if necessary, with those in which it is known that fire has indeed broken out. In relation to premises where, contrary to the earlier reasonable belief, it emerges that there is no fire, the fireman ceases to be entitled to remain in the premises unless they also happen to be premises in which it is necessary for him to remain for the purpose of fighting an outbreak of fire elsewhere. In our view those words in section 30 which empower a fire officer to do all such things as he may deem necessary for extinguishing the fire etc. Are no more than the adoption of a comprehensive formula to enable the officer to do all those things which might otherwise amount to trespass to property person or goods, or other infringements of private rights in the course of fire-fighting.
The language of section 30 is not apt to establish an implied immunity from proceedings in negligence, whether brought by those whose property has been damaged, or indeed other fireman working at the scene, or individuals present who have suffered personal injury as a result of negligence in the course of fire-fighting.
Section 13
The particular relevance of section 13 arises in relation to the West Yorkshire appeal. There are certain distinctions between that appeal and the other two before the court in the following respects. First, there is a claim for breach of statutory duty simpliciter under section 13 which provides:
“A fire authority shall take all reasonable measures for ensuring the provision of an adequate supply of water, and for securing that it will be available for use, in case of fire.”
Secondly unlike the crucial allegation in the Hampshire case, the allegations made against this defendant consists of omissions rather than positive acts. Thirdly, save for an allegation of failing to locate the hydrants close to the Chapel on arrival at the fire, none of the allegations relates to conduct in the course of fighting the fire, but rather to the failure of the defendants to take reasonable steps to ensure that the necessary plant and equipment was in place to enable the fire to be fought.
In support of his assertion that section 13 gives rise to a statutory duty, breach of which affords a personal remedy to a party injured as a result of such breach, Mr. Boswood has relied upon the authority of Dawson & Co. v. Bingley U.D.C. [1911] 2 K.B. 149, in which the Court of Appeal considered the nature of the duty of a local authority under section 66 of the Public Health Act 1875 to;
“cause fire hydrant plugs and all necessary works, machinery and assistance for securing an efficient supply of water in case of fire to be provided and to maintain and … paint or mark on the buildings and walls within the streets, words or marks near to such fire hydrant plugs to denote the situation thereof …”
The plaintiffs had suffered a fire on their premises which were a short distance from a fire plug provided; however, on the arrival of the fire brigade there was considerable delay causing additional damage by reason of a misleading indication placed by the defendants on the wall nearby, and the fact that the fire-plug was hidden beneath accumulated dirt as a result of having been placed below the surface level of the street. The authority having been found guilty of misfeasance rather than non-feasance in the performance of their duty ( a distinction no longer relevant in this context: see Atkin LJ in Phillips v. Britannia Hygienic Laundry [1933] 2 K.B. 832 at 841), was held liable to the plaintiff for the extra damage. Kennedy LJ stated:
“The law is, I think, correctly stated in Addison on Torts, 8th Ed., p.104, referring to Comyn’s Digest:
‘In every case where a statute enacts or prohibits a thing for the benefit of a person, he shall have a remedy on the same statute for the thing enacted for his advantage, or for the recompense of a wrong done to him contrary to the said law.’….”
He went on to distinguish the earlier case of Glossop v. Heston & Isleworth Local Board as being a case where the plaintiff had failed because:
“The alleged neglect was the neglect of the performance of their duty to provide a satisfactory and healthy system of drainage for a whole district; and . . . the defendants there were under no particular duty cast upon them with reference to any particular individuals. The present case belongs obviously, to a different class.”
By way of contrast, he characterised the provisions of section 66 of the 1875 Act as:
“the precise enactment of a definite duty for the protection of the class of persons to which the plaintiffs, as local residents, belong, against the kind of mischief which has in fact occurred.”
In the case of West Yorkshire, the Judge held that the duty under section 13 of the 1947 Act was “set out for everyone, not merely a limited class” and therefore did not give rise to a private right of access. He distinguished Dawson on the grounds that it turned upon “a different statute, which in its application assisted a limited class of people, the ratepayers of Bingley”.
Mr. Boswood criticised this approach. He submitted that Dawson constituted a precedent which this Court should follow on the basis that section 66 of the 1875 Act was historically the precursor of section 13 and section 14 of the 1947 Act. He also pointed out that the 1875 Act was a public general Act, and that although the Court found a private right of action to exist in relation to a duty, the benefit of which was local in effect, that right was nonetheless available for the benefit of ratepayers throughout the United Kingdom.
It is true that, historically, the provisions of section 66 of the 1875 Act in relation to the provision and maintenance of fire-plugs (or fire-hydrants as they were subsequently called) and the marking of their location were re-enacted in somewhat different form in section 2(1) of the Fire Brigade Act 1938. It is also true that, later, the general scheme for provision of fire services (following interim wartime legislation) was then embodied in the 1947 Act. However the context and wording of section 13 and section 14 in relation to the supply of water for fire fighting are so changed from the preceding legislation that the decision in Dawson affords no real assistance in considering the effect of those sections. The proper approach must be to take a fresh look at the terms of section 13 in its statutory context, guided by the recent re-statement by Lord Browne-Wilkinson in X, under the heading “Breach of Statutory Duty Simpliciter” at p.731:
“The basic proposition is that in the ordinary case a breach of statutory duty does not, by itself, give rise to any private law cause of action. However a private law cause of action will arise if it can be shown, as a matter of construction of the statute, that the statutory duty was imposed or the protection of a limited class of the public and that Parliament intended to confer on members of that class a private right of action for breach of duty. There is no general rule by reference to which it can be decided whether a statute does create such right of action but there are a number of indicators. If the statute provides no other remedy for its breach and the Parliamentary intention to protect a limited class is shown, that indicates that there might be a private right of action, since otherwise there is no method of securing the protection the Statute was intended to confer. If the Statute does provide some other means of enforcing the duty that will normally indicate that the statutory right was intended to be enforceable by those means and not by private right of action… However, the mere existence of some other statutory remedy is not necessarily decisive… Thus the specific duties imposed on employers in relation to factory premises are enforceable by an action for damages, notwithstanding the imposition by the Statutes of criminal penalties for any breach…
Although the question is one of statutory construction and therefore each case turns on the provisions in the relevant Statute, it is significant that your Lordships were not referred to any case where it had been held that statutory provision establishing a regulatory system or a scheme of social welfare for the benefit of the public at large have been held to give rise to a private right of action for damages for breach of statutory duty. Although regulatory or welfare legislation affecting a particular area of activity does in fact provide protection to those individuals particularly affected by that activity, the legislation is not to be treated as being passed for the benefit of those individuals but for the benefit of society in general… The cases where a private right of action for breach of statutory duty have been held to arise are all cases in which the statutory duty has been very limited and specific as opposed to general administrative functions imposed on public bodies and involving the exercise of administrative discretions.”
Considered in that light, we do not consider that section 13 is intended to confer a right of private action upon a member of the public injured by a breach. The duty propounded in section 13 is in no way “limited and specific” in the sense contemplated by Lord Browne-Wilkinson; it is more in the nature of a general administrative function of procurement placed on the fire authority in relation to supply of water for fire-fighting generally. There is no reference to any specific measure contemplated, nor any reference, whether expressly or by implication, to any class of person short of the public as a whole being ear-marked for protection under the section. By way of contrast with the provisions of section 66 of the 1875 Act (the subject of the Dawson decision) and section 2(1) of the 1938 Act, all specific reference to the provision and maintenance of fire-hydrants and their marking is omitted. That is no doubt because it is contemplated by section 14(3) that the responsibility for the supply of fire hydrants rests with water undertakers, who by section 14(3):
“(a)… shall at the expense of the fire authority cause the situation of every fire hydrant provided by the undertakings to be plainly indicated by a notice or distinguishing mark…”
It seems to us that the nature and wording of section 13, as the first of a group of sections in the Act appearing under the heading “Supply of water for fire-fighting” follows the same pattern, and is intended to have the same broad effect, as section 1 which appears as the first of a number of sections under the heading “Provision of fire services”. As already indicated, it has not been argued before us that the duties set out in section 1 are other than “target” duties, providing in general terms for the organisation and administration of nation-wide fire services. As such, it seems to us that the duties in section 1 and section 13 are collectively in the nature of statutory provisions establishing a regulatory system or scheme of social welfare for the benefit of the public at large, as adumbrated by Lord Browne-Wilkinson in the passage quoted above. We therefore consider that in the West Yorkshire case no action lies for breach of statutory duty under section 13.
It is of some interest to note that the statutory duty to have fire hydrants which was the duty upon which the Court of Appeal founded in Dawson is now enforceable against the water authority by means of an enforcement order obtained by the Secretary of State. The obligation to comply with the enforcement order is owed to any person affected by the contravention of the order who may sue for loss and damage attributable to such breach. (See section 14(4) of the Act and section 18 and 22 of the Water Industry Act 1991). It is clear therefore that if a similar claim was now made to that in Dawson’s case, it could only succeed if there was breach of the enforcement order and not merely the statutory duty in section 14(3).
Negligence in law
Mr. Munby’s final grounds of appeal in the Hampshire case relate to the Judge’s finding that Stn. Officer Mitchell’s conduct in turning off the sprinklers did not amount to negligence in law. The Judge applied as his bench-mark the test laid down in Bolam v. Friern Hospital Management Committee [1957] 1 W.L.R. 582. This is a very high threshold in establishing negligence, namely, it must be established that the error was one that no reasonably well informed and competent fireman could have made. (See Saif Ali v. Sydney Mitchell & Co [1980] AC 198 per Lord Diplock at p.218D). The defendant’s fire expert, Chief Fire Officer Beech of the Kent Fire Authority said that there were occasions when he had known sprinklers to be turned off, notwithstanding the normal rule that sprinklers in sprinkled buildings should not be turned off until the fire-fighters are sure that there the fire is completely extinguished. But the Judge considered with great care the reasons advanced by Stn. Officer Mitchell for departing from the normal rule, namely to prevent damage to Digital’s computers and because the sprinklers were hampering the fire-fighters, he gave unassailable reasons for not accepting them. The third reason, namely the sprinklers were not assisting in fighting the fire, is obviously no reason at all and was completely untenable. In our view the Judge’s conclusion that Stn.Officer Mitchell’s conduct amounted to negligence cannot be disturbed.
In the event all the appeals will be dismissed.
Order:
Hampshire case: appeal dismissed with costs on standard basis.
Fire Brigade case: appeal dismissed with costs
West Yorkshire case: appeal dismissed with costs.
Application for leave to appeal to the House of Lords refused.
Cases
Byrne v Ryan
[2007] IEHC 207 (20 June 2007)
Judgment Title: Byrne v Ryan
Neutral Citation: {2007} IEHC 207
High Court Record Number: 2002 15260P
Date of Delivery: 20 June 2007
Court: High Court
Composition of Court: Kelly J.
Judgment by: Kelly J.
Status of Judgment: Approved
Neutral Citation Number: [2007] IEHC 207
THE HIGH COURT
[2002 No. 15260P]
BETWEEN
BRIDGET BYRNE
PLAINTIFF
AND
JOHN RYAN
DEFENDANT
JUDGMENT of Mr. Justice Kelly delivered 20th day of June, 2007
INTRODUCTION
This is a claim for damages for negligence arising out of a failed sterilisation of the plaintiff. That sterilisation was sought to be achieved by a tubal ligation which was carried out in the Coombe Hospital on 16th December, 1999. Subsequent to it, the plaintiff bore two children.
She brings this claim against the defendant, who is the nominee of that hospital.
The plaintiff seeks damages under two headings. The first claim is for what her counsel described as the physical consequences of the failure of the operation. The second is for the recoupment of the cost of rearing the two children until such time as they cease to be dependant on their parents. In monetary terms this claim is by far the larger of the two.
Apart from the usual difficult questions which a court has to deal with in any medical malpractice suit this case has raised two others, neither of which have been the subject of judicial determination in this jurisdiction. The first is the vicarious liability, if any, of a public hospital for the negligence of a consultant doctor on its staff in treating a public patient. The second is the entitlement to recover damages for the cost of rearing a healthy child born subsequent to a failed sterilisation.
Neither of these questions will, of course, have to be answered unless the plaintiff proves that the operation in question was a failure and that its failure was as a result of the negligence of the consultant who carried it out. It is to these questions that I turn in the first instance.
The Plaintiff
The plaintiff was born on the 6th May, 1962. She married her husband Daniel on 13th October, 1979. She was then seventeen years of age.
The first of her seven children, James, was born on 17th December, 1979.
The plaintiff had a miscarriage in 1980.
On 27th December, 1981 her second son, Derek, was born.
On 19th November, 1984 she had twins, Donal and Aisling.
Her fifth child, Alan, was born on 19th June, 1988.
The plaintiff was dealt with in the Coombe Hospital for each of these confinements and for the miscarriage which took place in 1980.
In 1991 she had an ectopic pregnancy despite taking the oral contraceptive pill. Again she was treated in the Coombe Hospital. Following that experience she attended at the Adelaide Hospital for advice on the question of sterilisation. She decided against it. Throughout the 1990’s she took the oral contraceptive pill.
In 1997 the plaintiff was involved in a motor accident and inter alia suffered depression as a result of it.
By late 1998, the plaintiff had decided that she did not want to have any more children. She was quite definite about it.
The plaintiff’s general practitioner was Dr. Brian Dunne. She consulted him on the question of sterilisation. As a result he wrote a letter of referral to the Coombe hospital in the following terms:
“19th November, 1998
Gynae Clinic
Coombe Hospital,
Dublin 8
Re – Bridget Byrne, 1567 Lee Drive, Calverstown, Kilcullen, Co. Kildare.
Date of Birth 06/05/1962.
Dear Doctor,
I would be grateful if your (sic) send Bridget an appointment to be assessed for tubal ligation.
She has five children and had a tubal pregnancy in 1991.
Many thanks.
Yours sincerely,
Dr. Brian Dunne”.
It was as a result of that letter that she ultimately came under the care of Dr. Charles Murray.
Dr. Charles Murray
Dr. Murray qualified in medicine at University College, Dublin in 1962. He then went to Leeds United Hospital were he worked in the women’s and maternity hospital. Whilst there he obtained his membership of the Royal College of Obstetricians and Gynaecologists. Thereafter he went to the United States on a research fellowship. He returned to the Coombe Hospital in 1969 as Assistant Master. He was then made Senior Registrar and in 1975 became a Consultant at that hospital. He remained as a Consultant at the Coombe until his retirement in June, 2001.
Dr. Murray has extensive experience of performing tubal ligations. He carried out his first such operation in the middle of the 1960’s in England. At that stage the procedure was done by open surgery. It was not done laparoscopically until more recent times.
Dr. Murray recounted that in his early years “tubal ligation wasn’t tolerated” in the Coombe Hospital. Then the board of the Hospital allowed it in restricted circumstances. Following the decision of the Supreme Court in the McGee case (McGee v. Attorney General [1974] I.R. 287), all of this changed. To use his own words “the law changed and things changed from there. So I did an awful lot of them.”
He recalled that he was asked by the then Master to take over the family planning clinic at the Hospital. He described that title as a misnomer because what he called “standard family planning” was conducted elsewhere and the patients referred to this clinic were almost universally sent for consideration for tubal ligation. Thus it was he who was in charge of the conduct of tubal ligations in the Coombe Hospital for many years. By the year 2000 he estimated that he would have carried out that procedure “in the high hundreds and probably in the thousands”. He was therefore a consultant of great experience in tubal ligation.
The operation
The plaintiff was considered suitable for tubal ligation and it was carried out on the 16th December, 1999 by Dr. Murray. Not surprisingly he had no recollection of the operation but the theatre records and operating notes of the procedure had been kept and he was able to refresh his memory by reference to them.
The procedure was carried out laparoscopically. Dr. Murray described filling the plaintiff’s abdomen with three litres of carbon dioxide gas and then inserting the relevant instruments around the belly button area. He discovered that there were multiple adhesions from the anterior abdominal wall present. That was because the plaintiff had had previous surgery and also had had an ectopic pregnancy. He dealt with those adhesions as part of the procedure. He was able to dissect them off with the instruments which he was using so that he could see what he was supposed to be doing. Then he “just clipped the tubes”. He said there was a little difficulty because of the adhesions but he was satisfied that he had clipped the tubes.
Dr. Murray went on to say that over the years there were three or four instances where he was not altogether happy that he had achieved a satisfactory tubal ligation. In such circumstances he organised a histo- salpinogram to be carried out some six weeks after the operation. He did not do so in this case.
Following the operation Dr. Murray wrote to Dr. Dunne as follows:
“This is just to let you know that your patient Mrs. Byrne had a laparoscopic sterilisation undertaken here a few weeks ago. The operation was straightforward and she was discharged a few hours later”.
In evidence Dr. Murray said that the use of the term “straightforward” in that letter meant that there were no complications. He pointed out that the procedure is fraught with a lot of serious things which may go wrong such as damage being caused to the bowel, to the bladder, or to blood vessels. What he meant by the letter was that nothing of that nature occurred.
It is quite clear that Dr. Murray believed that he had carried out an effective tubal ligation. He believed that he had been able to deal with the adhesions and had clipped the plaintiff’s tubes. Had he had any doubts about, this I am satisfied that he would not have proceeded laparoscopically but would have changed to an open procedure and/or would have had a histo-salpinogram carried out. He was fully satisfied that the operation done by him was a success.
Unfortunately Dr. Murray was wrong. It is common case that a second tubal ligation was carried out on the plaintiff in December, 2002. It was done by Dr. Peter Boylan. He made a video recording of the procedure. The video was seen by Dr. Murray and he accepted (and indeed had no doubt) that, rather than clipping one of the plaintiff’s fallopian tubes, he in fact attached the clip to tissue just beside it. He was unable to explain how this happened. Counsel then put the following questions to him:
“Question: Doctor, I have to suggest to you that if you had been using the care which was appropriate to somebody of your experience and eminence that would not have happened? Answer: I was a very careful surgeon all my life.
Question: I understand that.
Answer: And I operated carefully. I cannot explain why this happened or how it happened but I would reject the idea that I wasn’t careful.
Question: But it is not something that can happen if the procedure which you have described is carried out carefully? Answer: Well, we were dealing with adhesions here. I freed adhesions to a degree that allowed me, as far as I was concerned, to establish – I was not looking for the full length of the fallopian tube but for an area of tube that I could clip… Question: So the existence of the adhesions did not prevent you from identifying the fallopian tube?
Answer: I don’t think so. I would doubt that.
Question: In fact you have already said to us that if you had been unhappy about your capacity to visualise the fallopian tube because of adhesions, you would have gone to a laparotomy?
Answer: I would have gone to a laparotomy, yes.
Question: So I now return to my question, Doctor, if you had removed or dissected away the adhesions sufficiently to visualise the fallopian tube, how could you apply the clip to something other than the fallopian tube if you had carefully followed the procedure which you have described to us?
Answer: I can’t answer that one because I don’t know, but I assume that I mistook a roll of tissue which was adjacent to the tube as the tube in this circumstance. That is all I can say. I have no idea…
Question: But what I am putting to you is that that couldn’t happen if you carefully followed the procedure which you have described of identifying the fallopian tube, applying the clip to it and then confirming by again identifying the location of the clip that it was on the fallopian tube?
Answer: Yes. Clearly I misidentified the fallopian tube by the sound of things. That is all I can say.
Question: Doctor, I must put it to you that that is not an acceptable result for a tubal ligation carried out by a consultant gynaecologist and obstetrician?
Answer: Well, it is an unfortunate result but I would disclaim the fact I was negligent. I was never negligent in my approach”.
The question which I must now address is whether this misidentification of a piece of tissue for a fallopian tube, resulting in it rather than the tube being clipped, constitutes negligence.
Expert Witnesses
Although Professor Colm O’Herlihy was listed as an expert witness to be called on behalf of the defendant, he was not in fact called to give evidence.
Two experts were called by the plaintiff. One was Dr. Peter Boylan who carried out the second sterilisation in December 2002. The other was Dr. Peter McKenna.
Dr. Peter Boylan
Dr. Boylan qualified in medicine in 1974. He trained in Dublin and London and then worked in the United States. From 1991 to 1998 he was Master of The National Maternity Hospital and is at present a consultant obstetrician/gynaecologist at that hospital.
The plaintiff was referred to him by her general practitioner with a request for consideration for tubal ligation. He saw her on 23rd May, 2002 and recorded her earlier medical history. That included the fact that she had the tubal ligation the subject of this action but subsequently bore two children in 2000 and 2001. He carried out the second tubal ligation in December, 2002.
In the course of carrying out the procedure he had to dissect away adhesions at the plaintiff’s left fallopian tube. Having done so, he was able to see that the clip present was not on the plaintiff’s left tube. He took the view that the probability was that the clip had not been placed on the left tube at the first operation. The clip was clearly on the right tube but not on the left. He said as follows:
“Question: In relation to the first procedure then, can you comment on the failure of that operation?
Answer: Well, I think probably the clip was not put on the left tube. It was thought to be on the left tube but I think that it was an error of thought, if you like, or a mistaken impression because it wasn’t on the tube and the clip was clearly on the right hand side. The procedure was done by a very experienced and very skilled surgeon who, clearly, formed the impression that the clip had been put in the right place, but I don’t think it had.
Question: But is it possible to be sure to check the route of the fallopian tube in order to identify… (interjection)?
Answer: Yes, I mean, there are anatomical reference points which make it clear that you are putting the clip on the tube. When we are teaching juniors, for example, about how to do this procedure, we show them how you identify the tube and differentiate it from another tube which is very close to the fallopian tube, which is the one you are trying to block, which actually looks quite similar and it is one of the common errors that a more junior person would make with a clear view.
Question: But in relation to a person with experience and holding the status of a Consultant, such a person using reasonable care, would you expect them to be able to identify correctly the appropriate tube to clip?
Answer: You would yeah.
Question: Does it follow that a failure to make that identification falls below the reasonable standard of care for such a person?
Answer: Well, I think it is a mistake. Obviously, the clip was put in the wrong place under the impression that it was put in the correct place, but that was incorrect. You know, I don’t know whether it is for me to say whether or not it falls below the standard of care, but you would expect the person doing it to take pretty good precautions to ensure it was in the correct place, yes.
Question: Well would such a person have been taught and had explained to them and perhaps even a person of that seniority taught others to take care which would avoid a mistake of this kind?
Answer: Yes, that’s a fair comment”.
In cross-examination Dr. Boylan accepted that there is a recognised
failure rate with tubal ligation. The failure rate is higher when an open procedure is used. This is because most of such procedures are done at the time of a caesarean section and the higher failure rate is attributable to the increased blood supply to the tubes at the time. He identified the commonest reason for failure as the clip being placed other than on the fallopian tube. However he went on to say that a doctor cannot put a clip on something which is not a fallopian tube and claim or believe that he had done a successful tubal ligation. He pointed out that most of the failures occur when the operation is carried out by more junior people because they mistakenly put the clips on the round ligament which looks very like a fallopian tube. He went on to say:
“In cases like this where there are adhesions and where it is done by a very experienced clinician, then you would expect that extra efforts would be made, because of the adhesions, to make sure that the tube was, in fact, in the right place. But I certainly accept that the clinician may have believed that the clip was in the right place, or else he wouldn’t have finished the surgery”.
Dr. Peter McKenna
Dr. McKenna qualified as a doctor in 1974. He is a consultant obstetrician in the Rotunda and Mater Hospitals. Until 2001 he was the Master of the Rotunda. He was never involved in treating the plaintiff. For the purpose of giving evidence he had access to all of the relevant hospital records concerning the plaintiff and the video recording made by Dr. Boylan at the time of the second tubal ligation.
Dr. McKenna identified three reasons why a woman can have a baby after a tubal ligation. The first is that she was pregnant at the time of the procedure (a question which I will have to consider later in this judgment). The second is that the clip was not put in the right place, in which case the woman was never sterilised at all. The third is that the clip was in fact put on the right place but through the passage of time it eroded in which case there was a brief period where the egg made contact with the sperm. This third reason is not due to any failure on the part of the operator. It is a failure intrinsic to the technique.
He said:
“My understanding would be that if the patient is pregnant at the time of the procedure, that is her affair. If the technique fails because the clip erodes through, having been put on the right place, well it does happen and nobody is to blame for that. But if the clip is put on the incorrect place and the patient has never been sterilised and the operation was not done correctly that is a different matter”.
Later he said:
“One would have expected a Consultant Gynaecologist to put the clips on the correct place. If not, to have recognised that and to have expressed their concern to the patient subsequently”.
“Question: Are there anatomical points which enable the correct tube to be located for the purpose of locating the clip in the correct place?
Answer: Yes, there are, it is not that difficult”.
In cross-examination he accepted that it appeared that Dr. Murray believed that he had in fact placed the clip in the right place and that his procedure was successful. He was then asked (and answered) a question which is really one for the court. It was as follows:
“Question: But it does not necessarily imply that he (Dr. Murray) was in breach of his duty of care I suggest?
Answer: That is not necessarily for me to say, that is a matter for the legal system. But I would always have approached it that if the woman is pregnant at the time of the surgery, that is her look out. If you put the clip on the right place and it wears through, nobody is to blame. But if you put the clip on the wrong place and there are no extenuating circumstances, the operator has got to face the music for that”.
The Legal Test
The appropriate legal test by which Dr. Murray’s conduct of the tubal ligation procedure has to be judged is that prescribed by the Supreme Court in Dunne v. National Maternity Hospital [1989] I.R. 91. In that case Finlay C.J. summarised six principles which he distilled from a consideration of a series of earlier cases. The first principle is the relevant one for this case. It reads as follows:
“1. The true test for establishing negligence in diagnosis or treatment on the part of a medical practitioner is whether he has been proved to be guilty of such failure as no medical practitioner of equal specialist or general status and skill would be guilty of if acting with ordinary care”.
That principle has to be understood and applied in the context of observations made by the same judge at page 110 of the report where he said:
“In order fully to understand these principles and their application to any particular set of facts, it is, I believe, helpful to set out certain broad parameters which would appear to underline their establishment. The development of medical science and the supreme importance of that development to humanity makes it particularly undesirable and inconsistent with the common good that doctors should be obliged to carry out their professional duties under frequent threat of unsustainable legal claims. The complete dependence of patients on the skill and care of their medical attendants and the gravity from their point of view of a failure in such care, makes it undesirable and unjustifiable to accept as a matter of law a lax or permissive standard of care for the purpose of assessing what is and is not medical negligence. In developing the legal principles outlined and in applying them to the facts of each individual case, the courts must constantly seek to give equal regard to both of these considerations”.
Conclusions on tubal ligation
I have set out in some detail the evidence given by Drs. Murray, Boylan and McKenna. There is no dispute but that Dr. Murray failed to apply the clip to the plaintiff’s left fallopian tube. He was a consultant of very considerable experience when he carried out the operation. The thrust of the evidence from the two experts leads me to the conclusion that that failure on the part of Dr. Murray was one which no medical practitioner of equal specialist status and skill would have been guilty of if acting with ordinary care. To put it in the words of Dr. McKenna:
“If you put the clip on the wrong place and there are no extenuating circumstances, the operator has got to face the music for that”.
The presence of adhesions in the present case did not in my view constitute an extenuating circumstance such as would excuse what occurred. There was a breach of the duty of care owed to the plaintiff.
The plaintiff’s consent
Prior to the operation being carried the plaintiff executed a consent which read as follows:
“Sterilisation
Consent by Patient
I, Bridget Byrne hereby consent to undergo the operation of sterilisation the nature and purpose of which has been explained to me by Dr./Mr. Murray.
I have been told that the intention of the operation is to render me sterile and incapable of further parenthood. I understand that there is a possibility that I may not become or remain sterile.
I also consent to the administration of a general, local or other anaesthetic.
No assurance has been given to me that the operation will be performed by any particular surgeon”.
The plaintiff signed that form as did Dr. Murray who confirmed on it that he had explained to the patient the nature and purpose of the operation.
All three specialists who gave evidence accepted that tubal ligation is not always successful and has a recognised failure rate. The form of consent executed by the plaintiff recognises that the operation may not be successful. For example, even if the clips are placed correctly they may wear through as described by Dr. McKenna in evidence. In such circumstances no liability could attach to the doctor who performed the ultimately unsuccessful sterilisation.
The defendant contends in his written submissions that by executing this document the plaintiff “consented to that risk of failure”, thus relieving Dr. Murray of any liability. I cannot accept such a proposition.
First, the document in its terms is a consent to the operation being carried out and the administration of an anaesthetic. It is not a consent to the carrying out of a failure; still less is it a consent to the carrying out of the operation in a negligent fashion. It merely records the plaintiff’s understanding that there is a possibility of failure. It might be possible to draft a form of consent which would exclude liability on the part of a doctor for negligent treatment but there is no attempt to do so here. In my view the consent executed by the plaintiff cannot be regarded as one which exonerates Dr. Murray in respect of his failure to effectively clip both fallopian tubes.
Events after the sterilisation
The plaintiff’s sterilisation on the 16th December, 1999 was dealt with as a day case. She arrived at 7.30 in the morning, had the procedure carried out and was discharged on the afternoon of that day. She was not asked as to whether she might be pregnant at the time of the operation, nor was she required to have a pregnancy test. Her last menstrual period was recorded in the hospital record as being the 1st December, 1999. She was not asked to return to the hospital after the operation.
Apart from some discomfort she recovered well from the procedure.
In February 2000, she began to suffer from abdominal pains. She consulted Dr. Dunne. He thought she was suffering from adhesions left over from the ectopic pregnancy and that the sterilisation had irritated them.
On the 30th March, 2000 she suffered extreme abdominal pain as a result of which she went to the Accident and Emergency Department of Naas Hospital. At the hospital a routine urine sample was taken. A short time later a doctor came and asked the plaintiff how old her baby was. She told the doctor that she was not pregnant and that he must have the wrong chart. However he confirmed that she was three months pregnant. She was detained in hospital for a few days and then allowed home. Following discharge from Naas Hospital she consulted her general practitioner who transferred her to the Coombe for attention.
June 2000
The plaintiff was seen at an ante natal visit on the 1st June, 2000. Her last menstrual period was recorded in the hospital notes as having taken place on the 2nd January, 2000. A scan was carried out, which suggested that she was twenty three weeks pregnant, rather than the twenty one which was expected by reference to her last menstrual period. This discrepancy between the two dates is an issue which figured during the plaintiff’s subsequent hospitalisation and indeed during the trial. Obviously if the length of pregnancy is calculated by reference to the scan, it suggests that the plaintiff was pregnant at the time Dr. Murray carried out the sterilisation. If, on the other hand, it is calculated by reference to the plaintiff’s last menstrual period, the pregnancy occurred subsequent to the tubal ligation.
The plaintiff alleged that at the time when this scan was done somebody said to her that she might have been pregnant before she had the sterilisation. She alleged that the girl who had carried out the scan said that “the clips were on the tubes and they were secure”. It is remarkable that the plaintiff, who had such poor recollection of other events, could remember this. I am not satisfied that this event occurred. All the evidence is to the effect that such an observation could not be made by reference to the scan. I think it likely that there was mention of the possibility of the plaintiff being pregnant at the time of the sterilisation. The plaintiff got the impression from that discussion that she was pregnant at the time of the sterilisation.
The plaintiff was not detained in hospital in June and returned home.
The plaintiff returned to the hospital complaining of abdominal pain on the 6th July, 2000.
The July visit
This was the plaintiff’s second ante natal visit to the hospital. The plaintiff was complaining of abdominal pain and on this occasion was seen by a consultant, Mr. Tom D’Arcy.
Mr. D’Arcy
Mr. D’Arcy is a Fellow of the Royal College of Surgeons in Ireland and a member of the Royal College of Obstetricians and Gynaecologists. He qualified in medicine in 1984 and has been a consultant at both the Coombe Hospital and St. James’s Hospital in Dublin since 2000.
Mr D’Arcy struck me as a very competent and thorough doctor with a great concern for the plaintiff.
He explained in great detail the examinations and tests which he carried out on the plaintiff when she came under his care on the 6th July, 2000. His first concern was that, having regard to her complaints and her previous obstetrical history, she might be in pre-term labour. Having carried out these examinations and tests he concluded that she was not. His second concern was to try and establish her dates and to “make sense of the disparity between those that were determined by her last menstrual period or her presumed last menstrual period on the 2nd January, 2000 and those that had been suggested on the basis of her booking scan”. It is not necessary for the purpose of this judgment to set out in detail the various tests and calculations which he did and indeed the thinking process behind them. He certainly explored the question meticulously and came to the conclusion that it was more than likely that the plaintiff had conceived after her sterilisation. He was quite unequivocal about this in his evidence and in particular when asked the following question:
“Q. Going back now to the month of July, 6th July, you are saying on that date you had come to the strong conclusion that the tubal ligation had failed. Inst that what the sum total of your evidence before lunch was?
A. Yes.”
I am quite satisfied that Mr. D’Arcy thoroughly and comprehensively carried out all necessary tests and examinations on the plaintiff so as to ascertain the true position concerning the length of her pregnancy. He concluded that she had become pregnant after the sterilisation. In my view he was correct in so concluding. The sterilisation had failed.
The question arises as to whether the plaintiff was told this. An issue also arises as to whether that information was communicated to other medical or nursing practitioners who would be involved in the subsequent care and management of the plaintiff.
Was the Plaintiff informed?
The plaintiff had no recollection of ever being informed during the course of her pregnancy with her sixth child Danielle that her tubal litigation had failed. She ought to have been so informed. That is the clear and uncontroverted view of Doctors Boylan and McKenna which I accept. Not only ought she to have been told, but other steps ought to have been taken by way of advice to her and procedures followed which were detailed in the evidence of those two doctors.
If the plaintiff had been so informed, I think it likely that she would have behaved in a manner other than she did following the birth of Danielle.
None of the doctors called by the defendant had any recollection of a conversation with the plaintiff during the course of her pregnancy in which she was told that her sterilisation had failed. This is understandable given their work load and the lapse of time. However, Dr. Boylan was clear that if an appropriate conversation had taken place with the plaintiff on this topic it would have been noted in her chart. His view in that regard was shared by Dr. Murray himself who said that he would expect a doctor to generally write in the chart that a patient had been informed of a failed ligation and given advice. No such note appears in the plaintiff’s medical records.
Mr. D’Arcy, quite understandably, had no recollection of having such a conversation with the plaintiff. In his evidence he said that he:
“certainly would not have given her to understand that her sterilisation had been successful, most certainly not, because there were grounds for considering otherwise having established the difference in her last menstrual period and having established exactly when she was sterilised and having considered also the fact that she had been on the oral contraceptive pill up to one week before she was actually sterilised”.
Later in his testimony he said that he could not honestly say that he used the exact words that the plaintiff’s “tubal ligation had failed”. In re-examination he said that if he couldn’t say that he used those exact words he believed that he told her that her tubal ligation had failed.
As I have already observed nowhere is it noted that such information was given to the plaintiff. In answer to questions which I put to Mr. D’Arcy he said that he does not always write down what he has said directly to a patient. However, he said if there were some very specific facts he would document them. If he felt the need to actually document a very specific meeting with a patient then he would be inclined to dictate a letter as to that meeting which he would then have placed within the notes and a copy sent to the patient’s general practitioner or to the patient as well. Whilst he accepted that a failed tubal ligation was a rare occurrence he did not regard it as one of the specific instances where he would note what he might have said to the patient.
I am satisfied on the evidence that Mr. D’Arcy did not inform the plaintiff in terms clear to her that her tubal ligation had failed. Whatever may have been said it did not make the position clear to her. Given the comparative rarity of a failed tubal ligation and the consequences of such for the plaintiff I think it probable that if he had told the plaintiff of this he would have either noted the matter in the chart or have prepared a letter for inclusion on the chart with a copy being sent to the plaintiff’s general practitioner. Mr. D’Arcy, very reasonably, was more concerned at the time with the plaintiff’s pain and the condition with which she was presenting together with her history on previous pregnancies where she had required a cervical suture than with this issue. He did not deal with her again.
I also think it likely that, if she had been told, not only would the plaintiff’s general practitioner have been informed but as a matter of professional courtesy, Dr. Murray would also have been informed. Neither of these things happened.
My findings in this regard are fortified by the actual notations which were made in the plaintiff’s chart.
The Chart
Mr. D’Arcy is the only consultant identified in evidence as having made an entry on the plaintiff’s chart during her pregnancy with Danielle.
Mr. D’Arcy dealt with the patient on the 6th July, 2000. He noted the discrepancy between her dates by reference to the scan results and her last menstrual period as related by her. Using distinctive green ink he wrote “measurements might suggest that she was pregnant just before TL given variation”. He made other notations in green which are not of relevance here. He told me that this entry demonstrated a state in the process of his thinking and that when he ascertained that the tubal ligation had taken place on the 16th December, 1999 and that the plaintiff had been on the oral contraceptive pill until one week before that date he came to the conclusion that the tubal ligation more than likely had failed and that she had conceived after the sterilisation.
On the same page in the chart there are notes of what occurred on the plaintiff’s first ante-natal visit to the hospital on the 1st June, 2000. Some unidentified doctor had written the words “Lap TL December 99 – failed TL”. When Mr. D’Arcy obtained additional information from the plaintiff he inserted into this notation the figure “16” before the word “December” and he wrote under the notation “On OC pill until 1/52 before TL”. These notes were made by Mr. D’Arcy in black ink rather than his characteristic green. Although he initialled the green notation he did not initial the notation made in black. It would not have been apparent to anybody reading the chart that the added words in black ink had been written by Mr. D’Arcy.
Mr. D’Arcy considered that this notation made it clear to anybody subsequently reading the chart that the plaintiff had a failed tubal ligation. In answer to two questions put by me he said as follows:
“Question: Mr. D’Arcy am I correct in thinking that the thrust of your evidence is that another medical practitioner in the obstetrics area on looking at this note here would come away with a clear conclusion that a failed tubal ligation was the cause of the problem?
Answer: That is correct.
Question: And does it dispose in your view for once and for all the possibility of her having been pregnant at the time of the tubal ligation?
Answer: Yes it does”.
Whilst I do not doubt the sincerity of Mr. D’Arcy’s views in this regard I cannot accept on the evidence that his notes did in fact achieve this desired result.
According to the evidence of Dr. McKenna if there was doubt as to whether the woman was pregnant before or after the tubal ligation a senior clinician ought to have noted in the chart that she needed to have her tubal patency checked at eight weeks. He was unequivocal in his view in that regard. Such a note would infer there was genuine doubt as to the efficacy of the tubal ligation. He could not discern any such entry on the chart. There is none.
The evidence of Mr. D’Arcy is that he had come to the clear conclusion that the tubal ligation had failed but there is no unequivocal note to that effect on the chart.
That Mr. D’Arcy’s entries on the chart did not convey to other medical and nursing staff in the hospital his clear view as to the failure of the sterilisation can be gleaned by reference to notations which appear subsequent to those made by him on the 6th July, 2000.
On the same date at 18.50 hours a mid-wife recorded: “Had TL in December 99. Had period type bleed in January, 2000 scan dates today suggests she was pregnant before the TL”. Next day, the 7th July, 2000 Dr. Sarma a Senior House Officer in Obstetrics wrote “T/L December 99 pregnant prior”. If matters were as clear as Mr. D’Arcy believed it is unlikely that these notes would have made.
In my view the criticism made by Dr. McKenna that the plaintiff’s chart did not contain an appropriate unequivocal statement as to Mr. D’Arcy’s conclusions is well founded.
Events post Danielle’s birth
Danielle was born on the 11th September, 2000.
At the time of the plaintiff’s discharge from hospital after that event she was seen by Dr. Caoimhe Lynch.
Dr. Lynch qualified in medicine in 1999 and was a Senior House Officer in the Coombe having commenced work there in July, 2000. She has since obtained her Membership of the Royal College of Obstetricians and Gynaecologists in London and is also a Member of the Royal College of Physicians in Ireland. At present she is a clinical research fellow and specialist registrar in obstetrics and gynaecology attached to the Coombe Hospital.
Dr. Lynch cannot be criticised for the fact that she had no recollection of the conversation which she had with the plaintiff when discharging her from hospital on the 4th September, 2000.
Dr. Lynch made good notes in the plaintiff’s chart pertaining to the plaintiff’s discharge from hospital. It is quite clear that Dr. Lynch was very thorough in satisfying herself that the patient was fit for discharge on the day in question. That can be gleaned not merely from her evidence but also from the notes which she made on that occasion.
The note which is relevant for the purpose of this case relates to the plan which Dr. Lynch created for the plaintiff. It read:
“- To see physiotherapist today prior to discharge
– post natal OPD 6/52
(to discuss fertility – PT pregnant – post TL”
Dr. Lynch required the plaintiff to come back to hospital rather than have a normal six week visit with her general practitioner. This was because as she put it she was
“Highlighting the fact that she needed to come back to the hospital and the reason – I put it in brackets – was to discuss her fertility because of the fact that she had become pregnant post tubal ligation”.
Dr. Lynch told me that she did not assume that the plaintiff was pregnant at the time of her sterilisation. When asked what was her view as to when the plaintiff became pregnant she said:
“Well, I would feel that there was a question that she had become pregnant following a tubal ligation. It was felt looking at the notes and establishing the dates that she was probably pregnant following the tubal ligation but that this had to be confirmed and hence the six week appointment to come back to the hospital”.
Later in her evidence Dr. Lynch accepted that her note did not indicate that the plaintiff became pregnant following a tubal ligation because she was not in a position to make such a note. That is quite understandable given her juniority. No clear note to such effect was on the chart adding fortification for my finding that the entries made on the chart by Mr. D’Arcy did not clearly record his conclusion that the plaintiff had become pregnant following the tubal ligation.
Dr. Lynch was a very junior doctor and was aware of the delicacy of her position and how inappropriate it would have been for her at this juncture to reach a conclusion that the tubal ligation had failed. She quite properly recorded that the plaintiff had become pregnant post tubal ligation.
Dr. Lynch was clear that she would not simply have told the plaintiff to come back in six weeks time. Rather she would have explained to her why she wanted her to do so. That was made evident in a number of different places in her evidence. She said:
“I would have explained why I wanted her to come back…. So one can assume that in the context of saying to the patient that she needed to come back to the clinic in six weeks, that you need to qualify the statement as to why you want her to come back in six weeks. Otherwise, they won’t come back at all”.
Later in her evidence Dr. Lynch told me:
“But I would say that it was appropriate that she was to come back for her post natal appointment and in highlighting the fact to her that I had questioned whether her tubal ligation was a success”.
However it is clear from the next answer from Dr. Lynch that she did not make any comment on whether the plaintiff’s tubal ligation was successful.
The plaintiff was discharged. No contraceptive was prescribed. Dr. Lynch accepts that she did not note informing the plaintiff that she should assume that she was fertile and would become pregnant unless she took contraceptive precautions.
Dr. Lynch struck me as a very competent and conscientious doctor who went about her duties in discharging the plaintiff is a thorough manner. I am satisfied that she carried out a full and detailed consideration of the plaintiff’s position and her records and had a discussion with her. Dr. Lynch was clearly concerned at the fact that the plaintiff had become pregnant subsequent to a tubal ligation. But there was nothing on the chart by way of a definitive note to say the ligation had failed. It was not up to Dr. Lynch to make such a finding. Indeed she was in a very difficult position because to have expressed the view that the sterilisation was a failure, given her level of juniority, could have created many difficulties given that she would be directly criticising an operation carried out by a very senior consultant in the hospital.
I am satisfied that she told the plaintiff to return to the hospital for a check-up six weeks subsequent to the discharge and that she made it clear to the plaintiff that there was uncertainty about her fertility and that it needed to be checked. She was, understandably, unable to say to the plaintiff that the sterilisation had failed.
Accordingly the plaintiff was discharged without being told then or at any stage during her stay in the Coombe in clear and unequivocal terms that her tubal ligation had failed.
She was undoubtedly told to return for an out-patients appointment six weeks after discharge and she was advised to do so because of uncertainty about her fertility.
I should record that Dr. Lynch was not the only member of the hospital personnel to see the plaintiff prior to her discharge. She was also seen by Ms. Elizabeth Byrne. She is a registered nurse and midwife and was employed in the Family Planning Department of the Coombe Hospital as a clinical midwife manager.
The hospital records demonstrate that on the 3rd September, 2000 the plaintiff was offered a leaflet that contained advice on all family planning methods that were available. That was given to her by the nursing staff on the ward. In addition however the chart notes that the ward staff requested Ms. Byrne to call on the patient for the purpose of giving family planning advice.
Ms. Byrne saw the plaintiff on the 4th September. The purpose of the visit would be to make the plaintiff aware of her fertility and to offer advice on what options were available.
Ms. Byrne had no recollection of any discussion with the plaintiff. Whilst she would have had access to the plaintiff’s chart it was not her invariable practice to look at it and she was unable to remember whether she did so in the case of the plaintiff. Little assistance can be gleaned from Ms. Byrne’s evidence. That is not a criticism of her as it would be quite impossible for her to have a recollection of having dealt with the plaintiff given that she would see about 2000 patients in any year.
Conclusions on information given to plaintiff
At no stage during her pregnancy or after delivery was the plaintiff clearly informed by any doctor, nurse or other personnel employed by the hospital that her tubal ligation had failed. The fact of the failure was not recorded in the plaintiff’s chart in clear terms. I think the criticism made by Dr. McKenna where he said the following is well founded.
“This is a case of the “emperor’s clothes” here. Everybody was not facing up to the obvious that this woman had had a failed tubal ligation and that plan B should come into play and that her tubes should be checked or she should be offered sterilisation again. Everybody was hedging around the main issue that there had been a problem”.
I am of the view that the plaintiff was aware that questions had been raised as to whether she was pregnant at the time of the sterilisation or not. She was also advised at the time of her discharge to return for an out patient appointment six weeks thereafter. The reason for that visit was explained to her by Dr. Lynch. Dr. Lynch was not in a position to say to her that the tubal ligation had failed but certainly made it clear that there was a question mark over it.
Dr. Boylan was of opinion that the failed sterilisation should have been brought to the plaintiffs notice in an unequivocal fashion. She should have been left in no doubt about it. In my view he is correct in that. That obligation was not discharged and there was a breach of the duty of care owed to the plaintiff in that regard.
Contributory negligence
The plaintiff did not attend the hospital for her six week check-up as advised. Had she done so I think it likely that matters would have been investigated further and a further pregnancy might well have been avoided. To have ignored the advice given to her by Dr. Lynch to attend for such an appointment, given what had occurred, was imprudent and in my view was also negligent. However no case of contributory negligence was pleaded against the plaintiff nor was it urged on me that her failure to take the advice offered to her on her discharge from the hospital amounted to such. Accordingly no further consideration need be given to this question.
Dr. Dunne
While the plaintiff was pregnant with Danielle she was also attending Dr. Dunne for antenatal care. He told the plaintiff to enquire in the Coombe as to the success or otherwise of her tubal ligation. He was aware of the discrepancy between the scan dates and the date of her last period. He was told that by the plaintiff. The plaintiff also told him that she was pregnant before she had the sterilisation. That information can only have been gleaned by the plaintiff from sources within the hospital. It again underscores the failure to tell her in unequivocal terms that her pregnancy arose subsequent to the sterilisation.
Dr. Dunne did not obtain any letter from the Coombe on the topic and accepted the plaintiff’s account that she was pregnant prior to the sterilisation being carried out.
Following her birth, Danielle had some health problems which involved her being brought back to hospital on occasion. Dr. Dunne was involved in at least one of those episodes which occurred when she was a few weeks old. That brought him into contact with the plaintiff. On the basis of what he was told by the plaintiff and the lack of any communication from the Coombe he was satisfied that she was infertile due to the sterilisation. Consequently he offered her no advice on any form of contraception.
The plaintiff came to him in March, 2001 and asked him to conduct a pregnancy test upon her. He did so. It was positive and her estimated date of delivery was the 5th October, 2001. In fact her seventh child Damien was born prematurely on the 13th August, 2001.
Dr. Dunne was now quite certain that the tubal ligation had failed and following the birth of Damien he advised the plaintiff to have a coil inserted. This was done in December, 2001 and the second tubal ligation was performed by Dr. Boylan on the 5th December, 2002.
Had Dr. Dunne been told of the correct position by the hospital I believe he would have advised the plaintiff on appropriate contraceptive measures. In fact no form of family planning was practiced by the plaintiff following the birth of Danielle and within a short time her pregnancy with Damien occurred.
Vicarious liability
There was a breach of the duty of care owed to the plaintiff by Dr. Murray in carrying out the tubal ligation. A second breach occurred by the hospital personnel failing to clearly tell the plaintiff of the failure of the sterilisation and to offer appropriate treatment to rectify that position.
Is the defendant hospital vicariously liable for any damages which arise as a result of the first breach? The hospital contends that it is not. Dr. Murray’s contract
The defendant referred to many aspects of Dr. Murray’s contract in arguing against vicarious liability. In the result they are not all that relevant on the topic since the defendant contends that ultimately the test to be applied is one of control. For completeness sake I deal hereunder with the terms of the contract.
Dr. Murray entered into a contract for appointment as a consultant at the Coombe Hospital on the 30th March, 1998. The contract is in the form generally referred to as the “consultant’s common contract”.
Under the contract Dr. Murray, as a category one consultant, undertook to work an aggregate of what are described as 33 ‘notional hours’ at the hospital per week. Under clause 6 of the contract he was responsible for producing an agreed schedule specifying how he intended to discharge his full contractual commitment over a period from Monday to Friday. He was obliged to furnish to the hospital such information on the discharge of his scheduled sessions as was necessary and reasonable to establish that he was fulfilling his contractual agreement.
Clause 8.3 of the contract permitted Dr. Murray to conduct private practice in accordance with the terms of a memorandum of agreement appended to the contract.
Clause 5 of the contract dealt with the nature of consultant appointments. It read as follows:
“5.1. For the purpose of this contract, a consultant is defined in the following general terms:
A consultant is a registered medical practitioner in hospital practice who, by reason of his training, skill and experience in a designated speciality, is consulted by other registered medical practitioners and undertakes full clinical responsibility for patients in his care, or that aspect of care on which he has been consulted, without supervision in professional matters by any other person. He will be a person of considerable professional capacity and personal integrity.
5.2. Being a consultant involves continuing responsibility for investigation and for the treatment of patients without supervision in professional matters by any other person. This continuing responsibility for investigation and for treatment of patients is a personal matter between each consultant and each patient in his care and it extends for as long as the patient remains in the consultant’s care. The consultant may discharge this responsibility directly in a personal relationship with his patient, or, in the exercise of his clinical judgment, he may delegate aspects of the patient’s care to other appropriate staff, or he may exercise responsibility concurrently with another doctor or doctors. Notwithstanding this however, the unique position of the consultant in the hospital requires that he carries the continuing responsibility for his patients so long as they remain in his care.
5.3. The employing authority and the consultant acknowledge that the provision of services to patients is a joint task which sets obligations on both parties.” (My emphasis)
The contract is a curious document in many ways and has all the hallmarks of having been drafted by a committee. For example under clause 2 of the agreement it is provided that it is subject to the terms and conditions specified in the contract, its appendices and in the memorandum of agreement appended to it. In that memorandum of agreement one finds reproduced verbatim in clause 2 the definition of consultant contained at clauses 5.1 and 5.2 of the contract itself. There is however an addition in clause 2 of the memorandum in the following terms:
“The agreed objective of the parties to this memorandum is the maintenance of the highest standards in the public hospital system. To this end, the remuneration, general conditions of employment and facilities are intended to attract and retain the major part of the practices of consultants of the highest calibre on the sites of public hospitals.”
Going back to the contract itself, clause 6.1 reads as follows:
“The Coombe Lying-in Hospital recognises your right to the exercise of your independent judgment in clinical and ethical matters (subject to the provisions of clause 8.11). Consultants in the Coombe Lying-in Hospital carry full clinical responsibility for patients under their care within the medical policy as determined from time to time by the Master and approved by the Board of the hospital.”
Clause 9.4 of the contract required Dr. Murray to keep himself indemnified against claims arising from malpractice and negligence in relation to his appointment. The hospital agreed to reimburse him to the extent of 90% in respect of the cost of such indemnity. Clause 2.10 of the memorandum of agreement contains a similar obligation.
The memorandum of agreement also repetitiously stipulates the role of the consultant in terms similar to those contained in clause 5 of the agreement. There are however some additional provisions most particularly contained at paras. 6.4.2. and 6.4.3. of the memorandum of agreement. They read as follows:
“6.4.2. Insofar as the work of the consultant is created by the demand placed on the hospital for the provision of specialist hospital services the consultant can be seen as providing a service to patients on behalf of the hospital (my emphasis). The work arising from him from the hospitals accident and emergency service is an example of the service provided by a consultant to patients on behalf of the hospitals. The work arising for him from general practitioner referrals or from secondary or tertiary referrals to the hospital where the hospital has a defined responsibility for providing such a service, are other examples of services the consultant is asked to provide. (My emphasis). It should be noted that regardless of the mode of referral, once a patient and doctor come into contact, then the relationship is a personal one between the patient and the doctor.
6.4.3. It can be seen from the description of the unique characteristics of consultant work that not alone does he provide some overall service to patients on behalf of the hospital to a population, he may also diagnose and treat patients directly referred to him personally (My emphasis). He may also wish, or be required, to undertake research and developmental work; to participate, as of right, in the selection process for Non Consultant Hospital Doctors; engage in teaching and education; conduct private practice and engage in systematic evaluation or audit of medical work with colleagues.”
The Defendants Submissions and Conclusions on Vicarious Liability.
The defendant submits that the hospital is not vicariously liable for Dr. Murray’s breach of duty by reference to four propositions which are contained in his written submissions. They are
“1. The correct legal criterion by reference to which a determination is made as to whether the hospital is vicariously liable for the consultant is the extent of the control exercised by the hospital over the actions of the consultant.
2. This is so whether or not the consultant was an employee of the hospital under a contract of service or an independent contractor under a contract for services.
3. In any event, the consultant was not in fact an “employee” of the hospital in that he was engaged by the hospital as a consultant obstetrician under the consultants common contract which, as a matter of construction, is a contract for services.
4. The hospital was not “in control” of the actions of the consultant in carrying out the plaintiff’s tubal ligation procedure”.
The defendant asserts that the issue of whether a person is liable in law for the wrongdoing of another is determined by reference to the element of control that is exercised regardless of the nature of the contract which governs those persons.
The defendant refers to the decision of the Supreme Court in Moynihan v. Moynihan [1975] 1 I.R. 192 and the High Court in Holohan v. Minister for Defence and Others (Unreported, Kinlen J. 30th July, 1998). In that case that judge stated that “the basis in modern jurisprudence for vicarious liability is control” and cited with approval an observation contained in the 3rd Edition of McMahon and Binchy on the Law of Torts which said of Moynihan’s case that “the decision is important because it clearly indicates that the control concept is used, not as a justification for vicarious liability, but rather as a test to determine the person for whose actions liability will be imposed on the defendant”. In the written submissions the defendant refers to the current edition of McMahon and Binchy and quotes the following section (paragraph 43.18) where this statement appears “since the Supreme Court decision in Moynihan v. Moynihan however the degree of control which the principal exercises seems to be emerging as the single most important, if not the crucial factor in establishing liability, in Ireland at least”.
The defendants did not quote the following passage which occurs on the next page of that issue of McMahon and Binchy. There the authors say of the control test as follows. “The control test, however, while useful in many cases does not seem to be determinative in all circumstances, for example, in what has become known as “the hospital cases”. Is the health authority or the hospital authority vicariousably liable for the negligence of resident surgeons, anaesthetists, nurses, etc? In these cases there is no question of the employer controlling the way in which the surgeon operates, and if the control test is doggedly adhered to the plaintiff may be denied access to “the deep-pocket”. After much uncertainty the rule seems to be well accepted that medical staff in the fulltime service of hospitals are employees for the purposes of vicarious liability. That this has been accepted in Ireland can be seen from such cases as O’Donovan v. Cork County Council. Here in an action against the defendant council for the alleged negligence of a surgeon and an anaesthetist the defendant council, while denying negligence, did not even contest the proposition that it would be vicariously liable if negligence were proved on the part of the surgeon or the anaesthetist. The remnants of the ancien regime have not disappeared completely, however, since Irish health services still retain distinctions between public and private patients, which impact on the issue of vicarious liability. In Bolton v. Blackrock Clinic Limited, the plaintiff unsuccessfully sued a cardiothoracic surgeon and a consultant thoracic physician for negligence in her treatment. She also sued the hospital where these specialists worked, on the basis of direct and vicarious liability. Having dismissed the plaintiff’s claim against the specialists, Geogehgan J. observed “that being so, there cannot be any question of vicarious liability of the hospital for medical negligence. Indeed at any rate the plaintiff was a private patient of the doctors in a private hospital, the question of vicarious liability may not arise”.
In my view the authors of McMahon and Binchy are correct in identifying that the control test is not of universal application and that hospital cases are to a considerable extent sui generis.
This view is not peculiar to Ireland. Later in the defendant’s written submissions there is a quotation from the 19th Edition of Clerk and Lindsell on Torts in the chapter dealing with vicarious liability. The defendant quotes the following: “Visiting consultants and surgeons, on the other hand, have been said not to be the employees of the hospital authorities, but, however this may be, the development of a different approach to the liability of hospital authorities for negligence occurring in the course of the treatment of their patients has probably deprived the point of practical significance. In many of the cases the tendency has been to treat the question of the hospital authorities liability as raising issues of primary, as well as vicarious responsibility. The hospital itself, it is said, is under a duty to its patients which it does not discharge simply by delegating its performance to someone else, no matter whether the delegation be to an employee or an independent contractor. On this basis it makes no difference whether or not a visiting consultant is a servant. There is some support for this view in Wilshire v. Essex Area Health Authority where Brown Wilkinson VC stated (obiter):-
“A health authority which so conducts its hospital that it fails to provide doctors of sufficient skill and experience to give the treatment offered at the hospital may be directly liable in negligence to the patient”.
This quotation is cited as being illustrative of cases where a hospital may be found to have been in breach of its own primary duty of care to its patients. It is suggested that on the evidence in the present case no issue arises as to any alleged breach by the hospital of its primary responsibility to its patient and the only possible basis for a finding of liability against it is on the basis of vicarious liability in respect of the performance of the sterilisation. This is not correct. There was in my view a breach of the hospital’s primary duty to inform the plaintiff of the failure of the sterilisation so the question of vicarious liability does not arise on that issue. On the question of the failed sterilisation there was also in my view a breach of primary duty given the fact that the plaintiff was a public patient referred to the hospital and not to an individual consultant. Fortification for this view can also be had by reference to those parts of Dr. Murray’s contract which I have emphasised and in particular clause 5.3, 6.4.2 and 6.4.3 of the memorandum of agreement. Lest however I am wrong in this view I will deal with the question of vicarious responsibility for the failed operation.
In citing the above quotation from Clerk and Lindsell the defendant failed to refer to the preceding paragraph from the same work in which the following is to be found “it was formerly thought that hospital authorities could not be liable vicariously for the negligence of a member of their medical staff, whether professionally qualified or not, if the negligence occurred in the course of an operation or treatment calling for the exercise of medical skill and knowledge. As the element of control over the method of working was lacking, according to the traditional view it followed that they could not be regarded as the employees of the hospital authority. In modern case law however, a different view has prevailed and such professionally qualified persons as radiographers, house surgeons, full time assistant medical officers and staff anaesthetists have been held to be employees of the hospital authority for the purposes of vicarious liability. Indeed it is submitted that any member of the full time staff of the hospital should be regarded as an employee of the hospital authority”.
These passages from both Irish and English textbooks appear to me to be fully justified by reference to the case law cited in them and are correct. I do not propose to add to an already lengthy judgment by citing from all of the cases cited. However a number of quotations from two of the cases in my view accurately describe the position.
In Cassidy v. Ministry of Health (1951) 2 KB 343 the Court of Appeal, in allowing the appeal, held that a hospital authority is liable for the negligence of doctors and surgeons employed by the authority under a contract of service arising in the course of the performance of their professional duties. The decision to allow the appeal was a unanimous one. However Denning LJ (as he then was) went further than the other two Lords Justices where he said (at p. 362):-
“It has been said, however, by no less an authority than Goddard LJ in Golds case (1942 2 KB 293) that the liability for doctors on the permanent staff depends, on “whether there is a contract of service and that must depend on the facts of any particular case”. I venture to take a different view. I think it depends on this: Who employs the doctor or surgeon – is it the patient or the hospital authorities? If the patient himself selects and employs the doctor or surgeon, as in Hillyer’s case, the hospital authorities are of course not liable for his negligence, because he is not employed by them. But where the doctor or surgeon, be he a consultant or not, is employed and paid, not by the patient, but by the hospital authorities, I am of opinion that the hospital authorities are liable for his negligence in treating the patient. It does not depend on whether the contract under which he was employed was a contract of service or a contract for services. That is a fine distinction which is sometimes of importance; but not in cases such as the present, where the hospital authorities are themselves under a duty to use care in treating the patient.
I take it to be clear law, as well as good sense, that, where a person is himself under a duty to use care, he cannot get rid of his responsibility by delegating the performance of it to someone else, no matter whether the delegation be to a servant under a contract of service or to an independent contractor under a contract for services”.
At the conclusion of his judgment Denning LJ said “turning now to the facts in this case, this is the position: the hospital authorities accepted the plaintiff as a patient for treatment, and it was their duty to treat him with reasonable care. They selected, employed, and paid all the surgeons and nurses who looked after him. He had no say in their selection at all. If those surgeons and nurses did not treat him with proper care and skill, then the hospital authorities must answer for it, for it means that they themselves did not perform their duty to him. I decline to enter into the question whether any of the surgeons were employed only under a contract for services, as distinct from a contract of service. The evidence is meagre enough in all conscience on that point. But the liability of the hospital authorities should not, and does not, depend on nice considerations of that sort. The plaintiff knew nothing of the terms on which they employed their staff; all he knew was that he was treated in the hospital by people whom the hospital authorities appointed; and the hospital authorities must be answerable for the way in which he was treated”.
Denning LJ may have been somewhat ahead of his time in expressing these views. Neither of his colleagues on the Court of Appeal went so far since they decided that the hospital authority was liable in respect of doctors who were employed under a contract of service. However the views of Denning LJ in my view are correct and are applicable in the instant case.
In Roe v. Minister of Health (1954) 2 QB 66 the Court of Appeal again had to consider the question of vicarious liability. All three judges delivered separate judgments to the same effect in that they dismissed the appeal. In his judgment Somervell LJ regarded the question of vicarious liability as being settled by reference to whether or not the doctor was part of the permanent staff of the hospital. More to the point, however, for this case is the judgment delivered by Morris LJ.
He said (at p. 90) “If a patient in 1947 entered a voluntary hospital for an operation it might be that if the operation was to be performed by a visiting surgeon the hospital would not undertake, so far as concerned the actual surgery itself, to do more than to make the necessary arrangements to secure the services of a skilled and competent surgeon. The facts and features of each particular case would require investigation. But a hospital might in any event have undertaken to provide all the necessary facilities and equipment for the operation and the obligation of nursing and also the obligation of anaesthetizing a patient for his operation. The question in the present case is whether the hospital undertook these obligations. In my judgment they did. There can be no doubt but that they undertook to nurse the plaintiffs and to provide the necessary facilities and equipment for the operations. I think they further undertook to anaesthetise the plaintiff. The arrangements made between the hospital and Dr. Pooler and Dr. Graham, together with the arrangements by which a resident anaesthetist was employed, had the result that the hospital provided a constantly available anaesthetic service to cover all types of cases.
It is true that Dr. Pooler and Dr. Graham could arrange between themselves as to when they would respectively be on duty at the hospital: and each was free to do private work. But these facts do not negative the view, to which all the circumstances point, that the hospital was assuming the obligation of anaesthetising the plaintiffs for their operations. I consider that the anaesthetists were members of the “organisation” of the hospital: they were members of the staff engaged by the hospital to do what the hospital itself was undertaking to do. The work which Dr. Graham was employed by the hospital to do was work of a highly skilled and specialised nature, but this fact does not avoid the application of the rule of respondeat superior.”
The views of the members of the Court of Appeal in these two cases, expressed as they were over 50 years ago, appear to be correct to this day and of application in the instant case.
The plaintiff was referred not to a particular surgeon but to the Coombe Hospital. She had no say in the choice of who would carry out her sterilisation. It was done by Dr. Murray. He was part of the “organisation” or permanent staff of the hospital. The performance of the operation was part of a service provided by the hospital to the plaintiff. Dr. Murray was the person in the hospital’s organisation via whom that service was provided.
In these circumstances it matters not whether Dr. Murray was employed under a contract of service or a contract for services. In my view having regard to the principles enunciated in both Cassidy and Roe’s case the hospital here is liable for any want of care on the part of Dr. Murray.
Damages for pregnancy, birth and second sterilisation
The defendant concedes that in the event of a finding of negligence the plaintiff is entitled to damages for the pain suffering and inconvenience of pregnancy and childbirth and of course for having to have the sterilisation repeated. Special damages for extra medical expenses are also conceded. These concessions are made by reference to the views expressed by the majority of the members of the House of Lords in McFarlane v. Tayside Health Board (2000) 2 AC 59.
In the light of these concessions I am not called upon to consider whether as a matter of principle it is open to the plaintiff to recover damages arising from her pregnancy and the births of Danielle and Damien.
In McFarlane’s case Lord Gill, the Lord Ordinary (as he then was) considered that pregnancy could not be equiparated with a physical injury. Even if it could, he held that it was not an injury for which damages are recoverable. The existence of a child and the mother’s happiness derived from it could not be ignored and they outweighed the pain and discomfort.
He held that damages were not recoverable as a matter of principle. That was not a view shared by the Inner House of the Court of Session or the majority in the House of Lords. Whether Lord Gill’s view is to be preferred to that of the other judges is a matter which I am not called upon to decide in the light of the concession which the defendants make as to the entitlement of the plaintiff to damages. I will assess these damages later.
The largest part of the plaintiff’s claim in these proceedings is in respect of the cost of rearing the two children born subsequent to her first sterilisation. That sum has been agreed at €27,000 to date and €354,678.00 for the future. The question to which I must now turn my attention is as to whether the plaintiff is entitled to recover such damages.
Damages for rearing Danielle and Damien
In McFarlane’s case Lord Gill disallowed the claim for damages for the costs of rearing the child that was born following the failed vasectomy of the father. He said:
“I am of the opinion that this case should be decided on the principle that the privilege of being a parent is immeasurable in money terms; that the benefits of parenthood transcend any patrimonial loss, if it may be so regarded, that the parents may incur in consequence of their child’s existence; and that therefore the pursuers in a case such as this cannot be said to be in an overall position of loss”.
In the present case the plaintiff has been at pains throughout her case to make it clear that both Danielle and Damien were welcomed into her family by both parents and their siblings. The parents have since separated but Danielle and Damien continue to be “loved, cherished and supported by both of them. Their children are a source of joy and satisfaction to them. They, no more than any other parents, do not assess their relationship with Danielle and Damien in terms of profit and loss. They do not seek compensation from the courts in respect of any of the intangible burdens in the upbringing of their children. They accept those burdens as do any parents gladly”. Given this acknowledgement of the joy and satisfaction that these two children have brought to her there is a certain incongruity in the plaintiff seeking to recover the costs of rearing them from the defendant. I think there is much to be said for the observations of Lord Gill in this regard.
Lord Gill’s decision was appealed to the Inner House. The appeal was allowed. The case then went to the House of Lords which restored the conclusion of Lord Gill. Their Lordship’s House held unanimously that a negligent doctor is not required to meet the cost of bringing up a healthy child born in circumstances such as obtain in the instant case. In reaching that conclusion the legal reasoning and the language used by the five Law Lords differed. But in essence the conclusion which was reached was that fairness and reasonableness do not require the damages payable by a negligent doctor should extend so far as to require him to pay for the cost of rearing an unintended healthy child.
That view expressed by the House of Lords is one which has found favour in the majority of the common law countries where this issue has arisen.
The speeches of their Lordships in McFarlane’s case contain a detailed analysis of all of the previous decisions in England, Wales, Scotland, the Commonwealth countries, other common law jurisdiction and a number of civil jurisdictions.
In his speech Lord Steyn traces the history of such claims in England beginning with Udale v. Bloomsbury Area Health Authority [1983] I.W.L.R. where Jupp J. rejected a claim for the cost of bringing up an unwanted child. That Judge observed that the birth of a child is “a blessing and an occasion for rejoicing”. In 1986 Peter Pain J. in Thake v. Maurice [1986] Q. B. 644 declined to follow Udale’s case and allowed such a claim. He observed that social policy which permitted sterilisation implied that it was generally recognised that the birth of a healthy child was not always a blessing. These divergent approaches were considered by the Court of Appeal in Emeh v. Kensington and Chelsea and Westminister Area Health Authority [1985] 1 Q.B. 1012. The unwanted child in Emeh’s case had been born with congenital disabilities. The defendants argued that damages should be limited to the extra costs of upbringing attributable to the disabilities. Full costs were allowed but in what was described as a ‘modest sum of £6,000’.
It is clear that the decision in Emeh’s case was one which created unease amongst judges. As is recorded by Lord Steyn that was memorably articulated in Jones v. Berkshire Area Health Authority (Unreported, 2nd July, 1986) another unwanted pregnancy case where Ognall J. said:
“I pause only to observe that, speaking purely personally, it remains a matter of surprise to me that the law acknowledges an entitlement in a mother to claim damages for the blessing of a healthy child. Certain it is that those who are afflicted with a handicapped child or have longed desperately to have a child at all and are denied that good fortune, would regard an award for this sort of contingency with a measure of astonishment. But there it is: that is the law”.
Since the decision of the House of Lords in McFarlane’s case it is no longer the law in England and Wales. Furthermore the decision in McFarlane was subsequently considered by a differently constituted judicial committee of the House of Lords in Rees v. Darlington Memorial Hospital NHS Trust [2004] 1 AC 309 and was not disturbed.
That the view of the House of Lords in McFarlane is not out of kilter with other jurisdictions can be ascertained by reference to the following passage from the speech of Lord Steyn:
“In the United States the overwhelming majority of state courts do not allow recovery of the costs of bringing up a healthy child: see the review in Johnson v. University Hospital of Cleveland, 540 N.E. 2d 1370. In Canada the trend is against such claims: see Kealey v. Berezowski [1996] 136 D.L.R. (4th) 708 which contains a review. By a majority the New South Wales Court of Appeal in CES v. Superclinics (Australia) Pty. Ltd. 38 N.S.W.L.R 47 held that the plaintiff had, through the negligence of the defendants lost the opportunity to have an abortion which would not necessarily have been unlawful. The court ordered a retrial on the issue as to whether an abortion would have been unlawful. Kirby P. considered that damages could be awarded for the cost of bringing up the child. Priestly J.A. was prepared to allow a limited recovery for “wrongful birth” but not for child rearing expenses and Meagher J. A. agreed with Priestly J. A. on this point, though in a dissenting opinion he concluded that public policy was an absolute bar to the award of damages in “wrongful birth” cases. In New Zealand there is a no fault compensation scheme. It is, however, instructive to note that the Accident and Compensation Authority held that there was no causal connection between the medical error and the cost of raising the child. In Germany the Constitutional Court has ruled that such a claim is unconstitutional in as much as it is subversive of the dignity of the child. But the Bundesgerichtshof has rejected this view and permits recovery of the costs of bringing up the child. The Federal Court observed that compensation not only has no detrimental effect on this child, but can be beneficial to it. In France The Cour de Cassation has ruled that:
“Whereas the existence of the child she has conceived cannot in itself constitute for the mother a loss legally justifying compensation, even if the birth occurred after an unsuccessful intervention intended to terminate the pregnancy”.
Such claims are not allowed. From this comparative survey I deduce that claims by parents for full compensation for the financial consequences of the birth of a healthy child have sometimes been allowed. It may be that the major theme in such cases is that one is simply dealing with an ordinary tort case in which there are no factors negativing liability in delict. Considerations of corrective justice as between the negligent surgeon and the parents were dominant in such decisions. In an overview one would have to say that more often such claims are not allowed. The grounds for decision are diverse. Sometimes it is said that there was no personal injury, a lack of forseeability of the costs of bringing up the child, no causative link between the breach of duty and the birth of a healthy child, or no loss since the joys of having a healthy child always outweigh the financial losses. Sometimes the idea that the couple could have avoided the financial costs of bringing up the unwanted child by abortion or adoption has influenced decisions. Policy considerations undoubtedly played a role in decisions denying a remedy for the cost of bringing up an unwanted child. My Lords, the discipline of comparative law does not aim at a poll of the solutions adopted in different countries. It has the different and inestimable value of sharpening our focus on the weight of competing considerations. And it reminds us that the law is part of the world of competing ideas markedly influenced by cultural differences. Thus Fleming has demonstrated that it may be of relevance, depending on the context, to know whether the particular state has an effective social security safety net”.
Whilst the five Law Lords in McFarlane came to the same conclusion they did so for different reasons. I think there is little to be gleaned by quoting large extracts from their individual speeches. Rather I should attempt to summarise the rationale for the decision. In the case of Lords Slynn, Steyn and Hope they took the view that a claim such as the present one was neither fair or just or reasonable. In the case of Lord Clyde considerations of distributive justice appeared to weigh heavily in leading him to his conclusion. Lord Millett’s view was rather similar to that expressed at first instance by Lord Gill to the effect that the advantages and disadvantages of parenthood are so bound up together that the benefits should be regarded as outweighing any loss. All of these appear to me to boil down to the view which I have already expressed in this judgment to the effect that their Lordships took the view that such a claim was neither fair or just or reasonable.
Indeed I am fortified in this expression of opinion by reference to the later case of Rees v. Darlington Memorial Hospital NHS Trust [2004] 1 AC 309.
That was a case which resulted in seven Law Lords being assembled since they were asked to reconsider McFarlane’s case. A number of their Lordships were common to both cases. By a majority the decision in McFarlane was applied. In not disturbing McFarlane the Court considered developments which had taken place in the meantime in other countries and in particular the Australian case of Cattanach v. Melchior [2003] H.C.A. 38.
Perhaps the most useful speech from those in the majority in the Rees case is that of Lord Bingham of Cornhill. In reviewing the decision in McFarlane he said:
“The five members of the House who gave judgment in McFarlane adopted different approaches and gave different reasons for adopting the third solution listed in paragraph (3) above (i.e. that no damages may be recovered where the child is born healthy and without disability or impairment). But it seems to me clear that all of them were moved to adopt it for reasons of policy (legal, not public, policy). This is not a criticism. As Lord Denning M. R. said in Dutton v. Bognor Regis Urban District Council [1972] 1 Q.B. 373, 397:
“This case is entirely novel. Never before has a claim been made against a council or its surveyor for negligence in passing a house. The case itself can be brought within the words of Lord Atkin in Donoghue v. Stevenson: but it is a question whether we should apply them here. In Dorset Yacht Co. Limited v. Home Office [1970] A.C.1004, Lord Reid said, at p. 1023, that the words of Lord Atkin expressed a principle which ought to apply in general “unless there is some justification or valid explanation for its exclusion”. So did Lord Pearson at p. 1054. But Lord Diplock spoke differently. He said it was a guide but not a principle of universal application (p. 1060). It seems to me that it is a question of policy which we, as judges, have to decide. The time has come when, in cases of new import, we should decide them in accordance with the reason of the thing.
In previous times, when faced with a new problem, the judges have not openly asked themselves the question: what is the best policy for the law to adopt? But the question has been there in the background. It has been concealed behind such questions as “was the defendant under any duty to the plaintiff? Was the relationship between them sufficiently proximate? Was the injury direct or indirect? Was it foreseeable, or not? Was it too remote? and so forth.
Nowadays we direct ourselves to considerations of policy. In Rondel v. Worsley [1969] 1 AC 191, we thought that if advocates were liable to be sued for negligence they would be hampered in carrying out their duties. In Dorset Yacht Co. Limited v. Home Office [1970] AC 1004, we thought that the Home Office ought to pay for damage done by escaping Borstal boys, if the staff was negligent, but we confined it to damage done in the immediate vicinity. In S.C.M. (United Kingdom) Limited v. W.J. Whittall and Son Limited [1971] 1 Q.B. 337, some of us thought that economic loss ought not to be put on one pair of shoulders, but spread among all the sufferers. In Launchbury v. Morgans [1971] 2 Q.B. 245, we thought that as the owner of the family car was insured she should bear the loss. In short, we look at the relationship of the parties: and then say, as a matter of policy, on whom the loss should fall”.
The policy considerations underpinning the judgments of the House were, as I read them, an unwillingness to regard a child, (even if unwanted) as a financial liability and nothing else, a recognition that the rewards of parenthood (even if involuntary) may or may not bring cannot be quantified and a sense that to award potentially very large sums of damages to the parents of a normal and healthy child against a national health service always in need of funds to meet pressing demands would rightly offend the community sense of how public resources should be allocated”.
While this latter observation may have little application here nonetheless it seems to me that the question which I have to ask is one of principle or, if one prefers, policy.
Principle/Policy in Irish Law
The decision in the Supreme Court in Fletcher v. The Commissioners for Public Works [2003] 1 IR 465 makes it plain that it is proper to exclude an award of damages in certain circumstances on the grounds of policy. That case raised a question which had not been considered in this jurisdiction before. It was whether, and if so, to what extent and subject to what limitations, an action might lie in negligence where the sole injury for which damages were sought to be recovered was a psychiatric condition resulting from fear of contracting an illness in the future as a consequence of alleged negligent acts and omissions. In this court O’Neill J. awarded damages to the plaintiff. His decision was reversed by a unanimous Supreme Court with two written judgments being delivered. The first was that of Keane C. J. and the second was by Geoghegan J.
Both judgments recognised that a question of policy fell to be decided by the court. Indeed in his judgment Geoghegan J. mirrored to some extent the observations of Lord Denning M. R. in Dutton’s case, the relevant extract from which is contained in the quotation from the speech of Lord Bingham in the Rees case which I have already reproduced.
Geoghegan J. said:
“It is against this background of the case law, which I have reviewed, that this court must decide, as a matter of policy and of reasonableness, whether claims for damages for psychiatric injury only and resulting from fear of asbestos related diseases of a degree which is objectively irrational are recoverable. Traditionally, courts do not always use the actual word “policy”. They may attempt to draw artificial limits to what can be regarded as being reasonably foreseeable or they may, in considering proximity or other questions in relation to the existence of a duty of care, invoke the concept of reasonableness so that a duty of care will not in fact be imposed if the court considers it unreasonable to do so. The third control mechanism which the court may impose is in relation to particular heads of damage or finally, they may expressly deny a claim on grounds of public policy”.
Keane C. J. and Geoghegan J. both cite with approval observations from two different members of the House of Lords in the case of White v. Chief Constable of South Yorkshire Police [1999] 2 AC 455. Keane C. J. cites the views of Lord Steyn whilst Geoghegan J. those of Lord Hoffmann.
Having quoted from Lord Hoffmann’s speech Geoghegan J. said that he agreed “that pragmatic control mechanisms must be applied in actions for pure psychiatric damage and, in many instances, even in the interests of distributive justice”.
These observations of the Supreme Court appear to entitle me to decide on the recoverability of damages as a matter of principle or legal policy since the question has never heretofore been considered by courts in this jurisdiction. In making that decision the court is entitled to have regard to concepts of reasonableness and distributive justice.
Decision on costs of upbringing
I conclude that it is not open to the plaintiff to recover damages for the cost of upbringing the two healthy children which she bore subsequent to her failed sterilisation. I do not believe that the law in this jurisdiction should be extended so as to allow the recovery of such damages.
I am persuaded that the conclusions reached by the House of Lords in both in the McFarlane and Rees cases are correct. They are to be preferred to the majority view expressed in the Australian case of Cattanach v. Melchior. I have not cited particular passages from the judgments in that case since I share the view of Lord Millett (as expressed in Rees) that “despite the diversity of opinion, the judgments cover familiar ground and contribute no new insight”.
I am of opinion that it would not be fair or reasonable to visit a doctor who negligently performs a sterilisation procedure with the cost of rearing a healthy child that is conceived and born subsequent to the failure of such procedure. Even if one disagrees with this approach the refusal to award damages in circumstances such as this can be equally justified by considerations of distributive justice as particularly exemplified in the speech of Lord Clyde. Alternatively the view can be justified by reference to the views of Lord Gill at first instance and Lord Millett in the House of Lords to the effect that the benefits of a healthy child outweigh any loss incurred in rearing the child. Whilst the parties here have agreed the quantum of damages a decision in favour of the claim made would open the door to a limitless range of claims related to every aspect of family life.
I obtain some comfort that in arriving at this decision, the court is in harmony with the majority of decisions in the common law world. The vast majority of state courts in the United States, the courts of England and Wales, Scotland and a number of civil law courts are of like mind.
I am also of opinion that the conclusion which I have arrived at blends more harmoniously with the constitutional order which obtains in this jurisdiction then would a decision to the contrary. The value which the Constitution places upon the family, the dignity and protection which it affords to human life are matters which are, in my view, better served by a decision to deny rather than allow damages of the type claimed.
Accordingly I refuse to award damages in respect of the costs of rearing Danielle and Damien.
Assessment of Damages
There is no doubt but that the plaintiff is entitled to recover damages for having to undergo a second tubal ligation. That was carried out on the 5th December, 2002. The plaintiff has no recollection of it. It was carried out by Dr. Boylan and was quite straightforward. It did not involve overnight hospitalisation and the plaintiff had no complaints thereafter. She must also have had the usual anxiety that accompanies any surgical procedure and is entitled to be compensated for that. It was however a minor procedure carried out speedily and uneventfully. I award the sum of €10,000 damages to compensate for having to undergo this second operation.
As I have already pointed out, the defendant has conceded that in the event of a finding of negligence the plaintiff is entitled to damages for the pain, suffering and inconvenience of pregnancy and childbirth together with any special damages for extra medical expenses involved. The question of principle as to whether there is in law an entitlement to such damages will have to await another case where a concession such as the one made in this case is not forthcoming. It is sufficient to record that there is no unanimity of judicial opinion throughout the common law world on the topic.
Pregnancy is not an illness or a disease. It does cause pain, sickness and distress. It is an entirely natural process. In the present case it resulted in the births of two unique human beings, Danielle and Damien, who are both healthy. Danielle was born one month prior to term. She did have some breathing difficulties and some infections thereafter but they had all resolved within a year and she is a healthy child. Damien was born seven and a half weeks prior to term. He is also healthy.
I accept the plaintiff’s evidence that both pregnancies had attendant difficulties over and above what might be regarded as the norm. In the case of Danielle the plaintiff had to wear a support strap which was found to be ineffective and so for six to eight weeks prior to and subsequent to her confinement was on crutches. In the case of her pregnancy with Damien she had similar difficulties and was on crutches for three weeks prior to his birth. She had to remain on crutches for six to eight weeks subsequent thereto. Danielle’s pregnancy was the longer of the two and the more difficult from the plaintiff’s point of view.
In assessing damages I also take account of the shock and emotional distress caused to the plaintiff when she discovered that she was pregnant with these two children. She did not want either pregnancy and would not have had them but for the defendants breaches of duty.
I assess damages in respect of the pregnancy and birth of Danielle at €45,000. In respect of the pregnancy and birth of Damien I award €35,000.
Result
I award the plaintiff a total of €90,000 damages in respect of the second tubal ligation and the pregnancy and birth of Danielle and Damien. I dismiss the claim for agreed damages in the total sum of €381,678 for the upbringing of the two children.
Glencar Exploration plc v. Mayo County Council
[2001] IESC 64; [2002] 1 ILRM 481 (19 July 2001)
KEANE, C.J,
DENHAM, J.
MURRAY, J.
MCGUINNESS, J.
FENNELLY, J.
BETWEEN
JUDGMENT delivered the 19th day of July, 2001, by Keane C.J.
1. The facts in this case, to the extent that they are not in dispute, are summarised with such admirable clarity in the High Court judgment under appeal, that I can limit myself. for the purposes of this judgment, to a relatively brief résumé.
2. The applicants are two publicly quoted companies engaged in prospecting for and mining ores and minerals. On 30 May 1968, they were granted ten prospecting licences by the Minister for Energy for the purpose of exploring for gold in an area south of Westport in Co. Mayo. Those licences were renewed from time to time and, during the period from the date on which they were granted to the adoption by the respondents of what has been described as a ‘mining ban’ in the County Mayo Development Plan on 17 February 1992, they expended a sum of £1,938,264 in prospecting for gold in the relevant areas. In July 1990, Mr McCullough, the managing director of the first applicant, had written to the respondents pointing out that the applicants’ exploration work in south Mayo was well advanced and that they hoped to develop a gold mine in the area.
3. Although the results of the prospecting activities were highly encouraging, the applicants were of the view that, if the gold which appeared to exist in these areas was to be commercially mined, a further substantial investment would be required. They accordingly entered into a joint venture agreement with a company called Newcrest Mining Ltd, one of the largest Australian gold producers (hereafter ‘Newcrest’) in November 1991. Under that agreement, Newcrest was to spend at least £1.6 million on further exploration and, in return, was to be given a 51% interest in the venture. In February 1992, however, Newcrest withdrew from the joint venture as a direct result, the applicants alleged, of the inclusion in the county development plan of the mining ban.
4. The applicants then applied for and were granted leave to institute the present proceedings by way of judicial review in the High Court, in which they claimed, inter alia, the following reliefs:
(1) Declarations that the respondents were not empowered by the relevant legislation to include the mining ban in the County Mayo Development Plan and that it was ultra rues the legislation, unreasonable and contrary to constitutional and/or natural justice;
(2) An order of certiorari quashing so much of the development plan as included the mining ban; and
(3) Damages for negligence and breach of duty, including breach of statutory duty.
5. A statement of opposition having been filed on behalf of the respondents, the substantive hearing of the claim for judicial review came on before Blayney J. In a reserved judgment delivered on 13 November 1992 and reported in [1993] 2 IR 237, he granted the declaration sought by the applicants that the mining ban was ultra vires the respondents powers under the relevant legislation and was, accordingly, null and void. The applicants’ claim for damages was adjourned with liberty to apply.
6. The learned High Court judge found that the inclusion of the mining ban was ultra vires the respondents on two grounds:
(1) That a development plan under Part III of the Local Government (Planning and Development) Act 963 (hereafter ‘the 1963 Act’) must consist of a written statement and plan indicating the development objectives for the area of the planning authority, that such development objectives must be positive in character and that an objective which aims to prevent development cannot be such an objective;
(2) That the use of land for the purpose of winning and working of minerals is prima facia exempted development under the relevant regulations, that only An Bord Pleanála may determine whether such development is or is not exempted development and that, accordingly, the respondents could not, as a matter of law, include the mining ban in their development plan.
7. The applicants had relied on a further ground in support of their claim, i.e. that the mining ban was in breach of the policy of the government as conveyed to them in a letter dated 16 December 1991 written on behalf of the Minister for Energy and that, accordingly, the respondents had not had regard, as they were statutorily obliged to do, to the policy of the government. The learned High Court judge, however, while satisfied that the respondents had acted in disregard of government policy, did not find it necessary to come to any conclusion as to the effect in law of their having done so, having regard to his conclusion that, in any event, the mining ban was ultra vires.
8. On 11 December 1995, the applicants brought a notice of motion seeking directions as to the time and mode of trial of the applicants’ claim for damages. It was ordered by consent that points of claim and defence should be delivered, that discovery should be made by both parties and that the applicants should be at liberty to amend their claim for damages by extending it to a claim for damages for breach of duty not to inflict damage by acting ultra vires and to respect the applicants legitimate expectations, for misfeasance in public office and for wrongful interference with the applicants’ constitutional rights.
9. The application came on for hearing before Kelly J. In his written judgment delivered on 20 August 1998, the learned High Court judge dismissed the applicants claim for damages. In particular, while finding that the respondents were negligent in adopting the mining ban, in the sense that they did something which no reasonable authority would have done, he was satisfied that the negligence in question did not give rise to any right to damages.
10. The applicants have appealed to this court from the dismissal by the learned High Court judge of their claim for damages. While no notice to vary the judgment in the High Court ‘was served on behalf of the respondents, arguments were advanced to this court on the hearing of the appeal to the effect that the findings of negligence by the High Court judge were erroneous in point of law.
11. It is now necessary to consider in some more detail the circumstances in which the mining ban w as adopted by the respondents.
12. The question as to whether mining should he permitted in the Westport area gave rise to acute controversy in the early 1990s. It had come to a head with the ‘work carried out by Burmin Exploration and Development plc and Tara Mines plc on the slopes of Croagh Patrick. There was similar opposition to a proposed development by Ivernia West in an area about a mile south east of the Westport urban district area.
13. When the applicants obtained their prospecting licences, the development plan which had been made by the respondents under Part III of the 1963 Act did not contain a mining ban. In 1990, a new draft development plan was put on public display by the respondents. Paragraph 3.6.1 of the draft plan, dealing with mineral extraction, was as follows:
It is clear that there are large potential mineral resources within the county from the scale of exploration currently underway. Development of the resources will have major implications for the environment, water resources, aquaculture, tourism and employment.
Policy
It is the policy of the council that where mining and quarrying developments would seriously injure the visual environment, water resources, aquaculture, tourism, sites of archaeological, geological, historical, religious or scientific interest, the development shall not be permitted.
It is the policy of the council that, as part of any planning application for the large scale extraction of minerals, an environmental impact assessment under EC Directive 85/337/EC and SI No. 349 of the 1989 European Communities (Environmental Impact Assessment) Regulations 1989, shall be required by the Mayo County Council.
Objectives
It is an objective of the council to ensure, through control of mineral extraction developments. that the physical environment, flora and fauna is reinstated, on a phased basis. and with land, farms and vegetation in keeping with the natural environment.
It is an objective of the council to ensure that all forms of discharges from mineral extraction shall be strictly controlled and monitored and that any breaches ~ such controls be prosecuted in accordance with the appropriate legislation.
It is an objective of the council to ensure that adequate environmental safeguards are enforced to minimise disturbance and nuisance during operations.
It is an objective of the council that features of archaeological interest are protected and preserved and if this is not possible that they be properly surveyed and recorded.
14. The mining ban was effected by an amendment to this section of the development plan which was passed at a meeting of the respondents held on 11 March 1991 It consisted of the insertion of a paragraph between the two paragraphs under the heading ‘Policy’ as follows:
It is the policy of the council that no development and/or work shall take place in relation to minerals (as defined by the Minerals Act 1940 as amended) in the areas shown dotted on map 10A.
15. Map 10A indicated that the area in which mining was prohibited consisted of over 300 square miles extending from Achill Head in the west to Westport in the east and from Ballycroy in the north to Inisturk Island in the south. There was already a map 10 in the development plan delineating what were described as ‘areas of special scenic importance’ and which included some, though not all, of the area delineated as the mining ban area in map 10A. It should be noted that, at an earlier stage, the possibility of making a special amenity area order in respect of the area subsequently affected by the mining ban had been considered by the respondents but rejected by them.
16. There was support for the mining ban across party lines, two of its most enthusiastic supporters being Mr Seamus Hughes and Mr Enda Kenny, who represented the Fianna Fail and Fine Gael parties respectively on the council. Indeed at the meeting of the respondents held on 11 March 1991, the vote in favour of amending the draft plan in this fashion was passed unanimously. The amended draft plan was then put on display and various representations and objections were received and circulated to the respondents. Among them was a letter from the applicants which, however, was received outside the statutory period for the receipt of such representations.
17. On 11 November 1991 the respondents, having considered the written representations received in relation to the mining ban, resolved that the development plan should be amended so as to include the mining ban. The draft plan as amended could, in the normal course, have been adopted by the respondents at their meeting in the following December. However, on the day of the meeting, the letter already referred to on behalf of the Minister for Energy was received by them. That letter stated inter alia:
I am directed by the minister to state that he views with grave concern the draft policy statement in relation to minerals development in parts of County Mayo. The statement runs contrary to stated government policy that mineral resources should be explored for and should he exploited where this can be done in an environmentally acceptable manner. The statement, which implies that planning permission would be automatically refused to any mining project means that there will in fact, be no exploration investment whatsoever…
The minister is of the view that there is in principle nothing fundamentally wrong with the existing planning procedures and that it should be possible to accommodate the needs of both the mining industry and those concerned with the environment within the current legal and procedural framework.
Finally, I am directed by the minister to state that it is his official view that the statement proposed for the draft development plan should be deleted.
18. In view of the contents of this letter, the meeting of 16 December was adjourned. A motion was proposed by six members of the respondents to rescind the resolution of 11 November 1991 which had approved the inclusion of the mining ban in the draft development plan. At a meeting of the respondents on 17 February 1992 that motion was defeated by 22 votes to eight.
19. The mining ban which was thus inserted in the development plan and which led to the institution of these proceedings was adopted by the elected members of the respondents despite repeated advice from the officials of the respondents that it was not an appropriate course to take. The relevant evidence is referred to in detail in the judgment of the learned High Court judge: it is sufficient to say that the county manager, the senior executive planner and the county engineer were all of the view that the ban was unwise for a number of reasons. First, it was in the interest of the council, through prospecting activities, to find out what minerals were actually in the county, irrespective of whether or not permission to extract them was forthcoming: prospecting in the area would be improbable if the mining ban was adopted. Secondly, each application for such permission, in the event of the mining ban not being adopted, would he judged on its merits and in the light of all the relevant planning considerations and the provisions of the EC Directives on the environment.
20. Mr Hughes and Mr Kenny appear to have been under the impression that the effect of the mining ban would not be to prevent any mining development in the prohibited area: it would simply ensure that any application for permission was considered by the elected members, who could then decide that a permission should be granted, although constituting a material contravention of the development plan. It was, however, pointed out by the officials that this would not necessarily be the case, since, under the relevant legislation, the application for permission would come before the elected members only where the county manager decided to institute such a process. They also said that it was the duty of the elected members to take such steps as might be necessary to secure the objectives in the plan and that, if the plan were adopted, the granting of a permission in defiance of it could well be successfully challenged by an objector on the ground that the council were behaving irrationally and illogically. The difficulties arising from the fact that the course adopted by them was also contrary to stated government policy were also pointed out to them.
21. The respondents were also advised as to the legal implications of the mining ban by one of the foremost authorities on planning law at the time, Mr Philip O’Sullivan SC (now O’Sullivan J.). The county solicitor, Mr Michael Browne, in response to a letter from the county secretary on 15 May 1991, pointed out that those who had objected to the adoption of the mining ban might succeed in having the resolution declared invalid for a number of reasons, which he enumerated, and said that he considered he should submit a detailed case to advise to senior counsel. He specifically referred to the fact that it was public knowledge that the first named applicants had been prospecting in the relevant area for some time.
22. In his opinion, Mr O’Sullivan said that he had not seen map 10A but that since the terms of the ban referred to ‘areas’ in the plural he assumed that it referred to a number of different locations and that the map was prepared with the degree of attention to detail and care to limit the exclusionary prohibition to specified amenity locations rather than by reference to a crude exclusionary policy.
23. He went on:
In my opinion a planning authority is perfectly within its rights to make a decision in principle in its development plan that no mining would take place in particular areas where they perceive such mining activities are in conflict with amenity or other natural resources and to have a policy in the development plan stating this. A planning authority in general is under a positive obligation to formulate policies and to express them in the development plan and in my opinion the proposed amendment is doing just this. I assume the proposal is reasonable in the sense that it is made by reference to objective criteria.
24. Commenting on this passage in Mr O’Sullivan’s opinion, the learned High Court judge said that had he seen map 10A and been aware of the evidence adduced in the hearing in the High Court, there could be little doubt but that he would have concluded that the ban was nothing more than a ‘crude exclusionary policy’. He would also probably have concluded that the proposal could not be regarded as reasonable. because it was not made by reference to objective criteria. However as Kelly J went on to point out, it appears that, unfortunately, it was mistakenly thought by the respondents that they were legally empowered to impose the ban, despite the important caveats in Mr O’Sullivan’s opinion. Minutes of the meeting of 17 February 1992 record the manager as stating:
The council was informed that it was legally entitled to include such a ban although advised not to do so.
The High Court Judgment
25. In his judgment, Kelly J having set out the facts, went on to deal with the various legal headings under which the applicants’ claim for damages was brought.
26. The first was the tort of misfeasance in public office. He said that he was satisfied that the applicants had not established that, in opposing the ban, the elected members of the respondent were actuated by malice against the applicants or realised that what they were doing amounted to an abuse of office. While he was of the view that considerable criticism could be made of the approach of the elected members to the ban, he was satisfied that they were responding in good faith to the pressures brought to bear on them by the electorate: while they had acted unlawfully, they had also acted honestly and in the belief that they were entitled in law to adopt the ban.
27. As to the claim based on a breach of statutory duty, Kelly J said that he was of the view that the duties imposed by the relevant sections of the 1963 Act and the Local Government Act 1991 were for the benefit of the public or the government and that, accordingly, no action for damages lay at the suit of individual member of the public in respect of the alleged breach of duties.
28. As to the claim based on legitimate expectations, Kelly J held that, while the applicants were entitled to expect that any application they might make for permission would be fairly considered by the respondents, that expectation had not been frustrated, since no such application had ever been made. He was also satisfied that, even if any legitimate expectations on their part had been frustrated by the actions of the respondents, damages would not be available as a remedy in respect of it because of the absence of a contractual relationship or a relationship similar thereto, between the parties. He also rejected submissions that the applicants were entitled, in the alternative, to damages for what was alleged to be a wrongful invasion of their property rights under the Constitution.
29. As to the claim based on negligence, Kelly J said that he had concluded that the respondents had acted negligently in adopting the mining ban in the sense that they did something which no reasonable authority would have done. He expressed his conclusions as follows:
Whatever may have been the motives of the elected members, they set about achieving their goal in a way which, in my view, no reasonable local authority in receipt of the advice which they obtained would have done. It is not the function of elected representatives to slavishly give effect to their constituents’ demands come what may. They must exercise a degree of judgment in any particular case.
In this case, the evidence demonstrates that the provision of the mining ban was unnecessary. The existing planning code was sufficient to protect all legitimate planning interests. This was the advice they received from their officials. It was also the view made clear to them by the Minister for Energy. Not merely was it unnecessary from a planning point of view, but the evidence was that it was in fact contrary to the best interest of the county because it would drive away investment and exploration and the county would lose the chance of evaluating the benefits of any project put forward for planning permission. Furthermore, there was in my view no objective justification for the adoption of the ban, It was to operate in respect of all minerals, regardless of their method of extraction, value or the quantity likely to be extracted. The ban was of enormous span and it was clear, particularly from the evidence of Mr Dunleavy, that little or no thought went into the nature or the extent of the ban. It was nothing more than a crude exclusionary policy.
30. However, while Kelly J was of the opinion that, to that extent, the respondents had acted negligently in adopting the mining ban, he also came to the conclusion, having reviewed the authorities, that, in so acting, they were not in breach of any duty of care which they owed to the applicants and that, accordingly, no actionable claim for damages for negligence had been established.
31. Although, as a result of those conclusions, Kelly J was satisfied that the applicants’ claim for damages should be dismissed, he went on to consider the extent of the damages to which they would have been entitled had they succeeded in their claim. He was of the view that, if the damages were to be assessed as of the date of the mining ban, they would be entitled, at the most, to one-tenth of the expenditure they had actually incurred, ie £193,826.40. If, however, the damages were to be assessed as of the date of the trial, then they would have to be reduced further, because of the greater unlikelihood of permission ever having been granted as a result of the enactment of a European Union habitats directive: in that event, the most they could have hoped to recover was one-twentieth of the expenditure incurred by them.
Submissions of the parties
32. The claim of the applicants based on misfeasance in public office was not pursued in this court.
33. As to the claim based on breach of statutory duty and the applicants’ constitutional rights, Mr Sreenan, SC and Mr Brady SC on behalf of the applicants submitted that the judgment of Finlay CJ in Pine Valley Developments Ltd v. Minister for the Environment [1987] IR 23, [1987] ILRM 747, left open the possibility of an action for damages arising from the commission of an ultra vires administrative action where the action in question was in breach of a duty owed to a particular person. They submitted that where, as here, the breach of a statutory duty had caused loss and damage to an individual, the latter was entitled to be compensated and that the granting of any immunity to public authorities in such circumstances was not in accordance with the jurisprudence of the European Court of Human Rights or of the Court of Justice of the European Economic Communities, citing in support the decisions in Osman v. United Kingdom 29 EHRR 245 and Francovich v. Italy (Case-6/90 [1991] ECR I-5357. They further submitted that, in any event, even adopting what they described as the restrictive interpretation of the tort of breach of statutory duty by the trial judge, the duty to have regard to government policy was in fact for the benefit of a limited class of persons who were the beneficiaries of that policy, i.e. the holders of mining licences.
34. As to the claim based on legitimate expectations, they submitted that the trial judge had been in error in treating their claim as based on a representation, express or implied, that they would obtain planning permission. The legitimate expectation on which they relied was that the respondents would act lawfully and with due regard to the advices they received from their officials and to relevant government policy as communicated to them, that they would not seek to prejudge all applications for planning permission for mining development within a substantial part of the area for which they were responsible and that they would act legally and fairly towards the applicants. They submitted that it was clear from cases such as Fakih v. Minister for Justice [1993] 2 IR 406; Dascalu v. Minister for Justice High Court (O’Sullivan J.) 4 November 1999 and Philips v. Medical Council [1991] 2 IR 115; [1992] ILRM 469 that a person could legitimately expect that public authorities would act in accordance with the law. They also cited in support the decision of this court in Duff v. Minister for Agriculture (No. 2) [1997] 2 IR 22. They further submitted that the trial judge was wrong in law in holding that damages would not be available for a breach of a legitimate expectation in the absence of a subsisting contractual or equivalent relationship, citing in support the decisions in Duggan v. An Taoiseach [1989] ILRM 710 and Webb v. Ireland [1988] IR 353; [1988] ILRM 565.
35. As to the finding of the High Court that the claim for damages for negligence was not maintainable because of the absence of any duty of care, they submitted that the existence of a duty of care had not been traversed in the points of defence furnished by the respondents. On the assumption that the respondents were entitled to argue that no duty of care existed, they submitted that this was not the law, having regard to the decision of the High Court and the Supreme Court in Ward v. McMaster [1985] IR 29; [1988] IR 337; [1989] ILRM 400.
36. The duty of care arose by virtue of:
(a) the foreseeability of damage to the applicants as a consequence of the respondents’ action;
(b) the statutory framework under which the relationship between the parties existed;
(c) the relationship of proximity between the parties, there being no factors in the relationship between the parties that would negative a duty of care;
(d) the absence of any factors that would make it ‘fair and reasonable’ to relieve the respondents from any duty of care, applying the formulation adopted by Costello J. at first instance in Ward v. McMaster.
37. They further submitted that, if the criteria laid down by McCarthy J. in Ward v. McMaster for determining whether a duty of care existed were to be adopted, the argument for holding that the respondents were under a duty of care was even more compelling.
38. On behalf of the respondents, Dr Forde SC submitted that, on the facts of the present case, no question of a legitimate expectation, as that doctrine had been developed in the authorities in Ireland and the United Kingdom, arose. The applicants had never applied for planning permission and, accordingly, could not contend that any expectation they might have of obtaining such a permission had been frustrated by any action on the part of the respondents: the evidence, indeed, established that the applicants had expressly refrained from applying for planning permission in order to preserve their possible claim for damages. In any event, he submitted that the doctrine of legitimate expectation was a guarantee of procedural fairness, not of substantive outcomes, citing Tara Prospecting Ltd. v. Minister for Energy [1993] ILRM 771. Moreover, damages were not a remedy for the breach of a legitimate expectation, assuming one existed, in the absence of a subsisting contractual or equivalent relationship. Webb v. Ireland was not authority for the proposition that a remedy by way of damages was available in cases of a breach of legitimate expectation: in that case, there had been an express assurance that the plaintiff would be reasonably treated and the court had treated this as a form of promissory estoppel rather than legitimate expectation.
39. As to the claim for damages based on a breach of statutory duty, Dr Forde submitted that it had been clear since the decision in Cutler v. Wandsworth Stadium Ltd. [1949] AC 398 that, for a liability to damages to arise, it had to be established that the legislature intended that a breach of the Act should result in an award of damages in favour of a category of persons to which the plaintiff belonged. The ultra vires act found by Blayney J. to have been committed by the respondents in adopting the mining ban was, at most, a breach of a duty owed by the respondents to the public in general and not to any specific category of persons to whom the plaintiff belonged.
40. As to the contravention alleged to have been committed of the duty under the 1991 Act to have regard to the policy of the government, Dr Forde submitted that the trial judge was erroneous in point of law in inferring from the evidence that the respondents had acted in breach of their duty: both the trial judge and the applicants, in their submissions to this court, mistakenly assumed that, because the respondents, having considered the Minister’s letter, had decided to proceed with the mining ban, they had acted in disregard of the policy of the government. The 1991 Act did not oblige the respondents to implement government policy, but rather to have regard to it in arriving at a decision. That did not mean, he said, that, having given appropriate consideration to the policy in question, they were then obliged to give effect to that policy.
41. Dr Forde further submitted that, in any event, even assuming that the respondents were in breach of their duty under the 1991 Act, that was a duty owed at best to the government or one of its individual ministers and not to any category of persons to which the plaintiff belonged.
42. As to the claim based on negligence, Dr Forde took issue with the inferences of fact drawn by the trial judge from the evidence. Since he had correctly found that the elected representatives believed with good reason that they had the legal power to impose the ban, there was no basis for his finding that they had acted negligently. Specifically, he gave no reason for holding that the ban had not been made by reference to objective criteria. Nor was it negligent for the elected representatives to act the contrary to the advise of their officials on a matter of policy such as this on which their constituents had strong views. It was also not an act of negligence on their part to decline to have regard to government policy, even supposing that that was what the elected representatives did.
43. On the assumption that the trial judge was entitled to infer from the evidence that the respondents had acted negligently, in the sense that they had done what no reasonable authority should have done, Dr Forde submitted that this afforded them no cause of action against the respondents. In the first place, the law of negligence was intended to provide redress for personal injuries and physical damage to property: it was only in exceptional circumstances, which did not arise here, that liability could arise in negligence for exclusively economic loss. He cited in this context the summary of the law in McMahon and Binchy on the Law of Torts, 3rd ed. chapter 10. He further submitted that there was no authority for the proposition that a duty of care rested on a local authority in circumstances such as the present: the decision in Ward v. McMaster was clearly distinguishable. He said that it had also been held in a number of cases, such as Yuen Kun Yeu v. Attorney General of Hong Kong [1988] AC 175; Pine Valley Developments Ltd. v. Minister for the Environment and Dunlop v. Woollahra Municipal Council [1982] AC 158 that where a decision in a policy area by a public authority was in issue, liability in negligence should not normally arise. He said that the public policy underlying that principle was reinforced, in the case of local authorities, by the fact that, if the respondents were made liable in the present case, they would be liable to a surcharge.
44. Dr Forde further submitted that the collapse of the joint venture agreement with Newcrest and the impossibility of getting other joint venturers was not reasonably foreseeable by the respondents. He further submitted that the respondents’ resolution was not the cause of any loss that the applicants’ claimed to have sustained: even if the resolution had not been adopted, the provisions of the county development plan prohibiting mining and quarrying development which would impair the visual environment, etc., might well have resulted in a refusal of planning permission. The collapse of the joint venture with Newcrest, moreover, was not caused by the ban, but by the low price of gold, the failure of the government to take any action regarding the ban and the subsequent unilateral act of Newcrest.
45. In reply, Mr Brady submitted that, in determining whether a duty of care existed, the correct approach was to look first at the conduct of the alleged wrongdoer and then determine whether, in the circumstances of the particular case, a legal relationship in the form of a duty to exercise reasonable care existed. He submitted that this was in accordance with the well known tests adopted by Lord Wilberforce in Anns v. Merton LBC [1978] AC 728 and by Costello J at first instance and McCarthy J in this court in Ward v. McMaster. He also urged that, far from indicating any public policy against a finding of negligence in cases such as the present, the statutory liability to a surcharge reflected a public policy in favour of making such findings where appropriate.
Conclusion
46. Before stating my conclusions on the issues that arise in this appeal, I think it appropriate to make some observations concerning the decision of Blayney J which gave rise to the claim for damages the subject of the appeal.
47. The first ground on which he found the resolution adopting the mining ban ultra vires was that it was not positive in nature but simply constituted a restriction on a particular form of development. He based that conclusion on the undoubted fact that, by virtue of s. 19(2) of the 1963 Act, a development plan is to consist of a written statement and a plan indicating the ‘development objectives’ for the area in question. He pointed out that ‘development’ is defined in s. 3(1) as ‘the carrying out of any works on, in or under land…’ From that, he inferred that the ‘development objectives’ referred to must have as their aim the carrying out of works on, in or under land and that they must be positive in character.
48. That is at least questionable, since sub-s. (2)(a)(i) states that the ‘development objectives’ referred to may include objectives:
for the use solely or primarily . . . of particular areas for particular purposes (whether residential, commercial, industrial, agricultural or otherwise)…
49. Thus, in the case of agricultural land, development plans may, and frequently do, legitimately include provisions ensuring that, during the currency of the plan, the land will continue to be used as agricultural land. Far from requiring the carrying out of any works on the land, such an objective would have the effect of restricting any development which would involve a change of use of the land, save for exempted development.
50. Even more critically, however, the learned judge does not appear to have had any regard to sub-s. (3) which provides that:
Without prejudice to the foregoing subsection and subs. (5) of this section, a development plan may indicate objectives for any of the purposes mentioned in the Third Schedule to this Act. . .
51. At this point the word ‘objectives’ is used without any qualification and the Third Schedule itself indicates a number of objectives which can be achieved which do not require the carrying out of works of any sort, such as (of particular relevance in the context of the present case) in Part IV at paragraph 7:
Preservation of views and prospects and of amenities of places and features of natural beauty or interest.
52. As to the second ground on which the learned judge found the mining ban ultra vires, it is undoubtedly the case that it was for An Bord Pleanala, and not the planning authority, to decide in any particular case whether a particular development constituted an exempted development or not. However, it seems to me that the prohibition of mining in a particular area could not, in law, have the effect of restricting the carrying out of any exempted development. Under the then law, contained in the Local Government (Planning and Development) Regulations 1977 (SI No. 65 of 1997) the following was an exempted development:
The use of land for the purpose of the winning and working of minerals, the carrying out of works incidental thereto (other than open cast mining or surface working or the deposit of refuse or waste materials) and, in the case of land other than land situate in an area to which a special amenity area order relates, the erection or placing of structures on the land for such specific purposes.
53. It will be noted that open cast mining or surface working is removed from the category of exempted developments and, accordingly, the effect of the mining ban would have been to require permission to be obtained for any such development in the area of the ban. No doubt the fact that the mining ban would not preclude purely underground mining would limit its efficacy to that extent, but it by no means follows, in my view, that the ban was thereby rendered ultra vires.
54. It is noteworthy in this context that Mr O’Sullivan advised the council that the imposition of the ban would be lawful, provided that the prohibition was limited to specified high amenity locations and not by reference to a crude exclusionary policy. The ban might well have been successfully challenged on the ground that it failed to meet the criteria identified by Mr O’Sullivan but that did not happen.
55. The parties naturally accepted that, there having been no appeal from the decision of Blayney J, it is binding as a matter of law for the purpose of these proceedings. I would expressly reserve for another occasion the question as to whether the decision that the mining ban was ultra vires on the grounds set out in the judgment of Blayney J was correct in point of law.
56. I consider next the different headings under which it has been contended on the hearing of this appeal that the applicants were entitled to damages.
(1) Breach of statutory duty and the applicants’ constitutional rights
57. The first breach of statutory duty alleged against the respondents arises out of the provisions of s. 19 of the 1963 Act which imposed on the respondents an obligation to make a development plan for their area. The applicants cannot complain that the respondents did not fulfil their obligation under that section, because they manifestly did. Their complaint is rather that the development plan which they made in fulfilment of their obligation under the section contained, in the form of the mining ban, a provision which was ultra vires. On one view, that complaint was met when the offending section of the plan was deleted in consequence of the judgment and order of the High Court and it is difficult to see how, in those circumstances, a claim for damages for breach of statutory duty could be well founded.
58. However, apart from that consideration, it seems to me that, in any event, a claim for damages for breach of the statutory duty imposed by s. 19 could not arise in the circumstances of the present case. The applicants, in abandoning their claim based on the tort of misfeasance in public office, have in effect conceded that the respondents, in adopting the mining ban, were not deliberately and dishonestly abusing the powers conferred on them under the 1963 Act. The decision by the respondents to include the mining ban constituted the purported exercise by them of a power vested in them by law for the benefit of the public in general. It was not the fulfilment by them of a duty imposed by statute for the specific protection of particular categories of persons, the breach of which may lead to an action for damages. It follows that the ultra vires exercise of the power in the present case could not of itself provide the basis for an action in damages. This view of the law is authoritatively confirmed by the judgment of Finlay CJ in Pine Valley Developments v. Minister for the Environment where he cited with approval the following statement of the law in the 5th edition of Wade on Administrative Law at p. 673:
The present position seems to be that administrative action which is ultra vires but not actionable merely as a breach of duty will found an action for damages in any of the following situations:
1. If it involved the commission of a recognised tort, such as trespass, false imprisonment or negligence.
2. If it is actuated by malice, e.g. a personal spite or a desire to injure for improper reasons.
3. If the authority knows that it does not possess the power which it purports to exercise.
59. The learned Chief Justice added that he was satisfied that there would not be liability for damages arising under any other heading.
60. In the present case, paragraphs 2 and 3 in the passage cited are clearly not applicable. It will be necessary to consider at a later point in this judgment whether the ultra vires act in the present case involved the commission of the tort of negligence.
61. The applicants sought to rely on the reference in the passage quoted to an administrative action which is ‘not actionable merely as a breach of duty’ and submitted that it was, accordingly, envisaged that in some instances at least an ultra vires administrative act might be actionable as a breach of duty. That is undoubtedly so, but only where, as pointed out by the learned Chief Justice, the statutory duty in question is imposed on the body concerned for the specific protection of the rights of individuals. It is clear that this is not such a case.
62. As for the damages allegedly sustained by the applicants as a result of the breach of their constitutional rights, a similar claim was made in Pine Valley, but was also rejected. In that case, the ultra vires decision by the Minister for Local Government (as he then was) to grant permission for the development of the plaintiff’s lands was treated by Finlay CJ in the course of his judgment, as having probably contributed towards a diminution in the value of the land in the plaintiff’s hands. Similarly, it could no doubt be said in the present case that the imposition of the mining ban contributed to a reduction in value of the property right represented by the prospecting licences which was vested in the applicants. Finlay CJ, however, said that:
That fact, itself however, does not, in my view necessarily mean that an injustice was done to the plaintiffs and I am certain that that does not constitute an unjust attack on the plaintiffs’ property rights…
I am satisfied that it would be reasonable to regard as a requirement of the common good an immunity to persons in whom are vested statutory powers of decision from claims or compensation where they act bona fide and without negligence.
Such an immunity would contribute to the efficient and decisive exercise of such statutory powers and would, it seems to me, tend to avoid indecisiveness and delay, which might otherwise be involved.
63. I am satisfied that those considerations also apply to the present case. The remedy available to persons affected by the commission of an ultra vires act by a public authority is an order of certiorari or equivalent relief setting aside the impugned decision and not an action for damages, to allow which, in the case of public officials, would be contrary to public policy for the reasons set out by Finlay CJ in the passage just cited.
64. It was urged in the present case that this view of the law was not in accordance with the provisions of the European Convention on Human Rights and Fundamental Freedoms as applied by the European Court of Human Rights in Osman v. United Kingdom. At the time of writing, the Convention is not part of our domestic law. However, I am in any event satisfied that the decision in Osman is of no assistance to the applicants. That was a case in which the courts in the United Kingdom had struck out proceedings for negligence against the police brought by the family of a victim of manslaughter. The Court of Appeal had done so on a preliminary application on the basis of a so-called exclusionary rule laid down by the House of Lords on grounds of public policy in Hill v. Chief Constable of West Yorkshire [1989] AC 53. That was held to be in breach of article 6(1) guaranteeing to everyone the right to have any claim relating to civil rights and obligations brought before a court or tribunal. However, that was because the court was considering a claim in negligence and not one based on an ultra vires act. It was, moreover, a case in which the merits of the applicants’ claim having regard to the facts of the particular case had never been the subject of an adjudication by a competent tribunal. In the present case, the plaintiffs’ claim based on negligence has been fully considered and rejected by the High Court and has been the subject of a fully argued appeal to this Court.
65. It was also submitted that the decision in Pine Valley and of the High Court in the present case were not in accordance with EC Law as laid down by the Court of Justice in Francovich v. Italy. However, the decision in the latter case was to the effect that an action for damages would lie against a public authority in a member state which had acted in breach of EC Law where damage had been sustained as a result. The applicants’ claim for damages in the present case is grounded on alleged breaches of Irish law and not of EC Law.
(2) Legitimate expectation
66. The doctrine of legitimate expectation, as it has come to be called, derives, it would seem, from the jurisprudence of the European Court of Justice, although some have seen it as also constituting a development of the English doctrine of promissory estoppel. It made its first appearance in our law in Smith v. Ireland and Others [1983] ILRM 300 where Finlay P, as he then was, found on the facts that it had not been established that a legitimate expectation of the plaintiff had not been met. In Council of Civil Service Unions v. Minister for the Civil Service [1985] AC 374, Lord Diplock said that it arose in the case of decisions which affected other persons by
(a) altering rights or obligations of that person which are enforceable by or against him in private law; or
(b) … depriving him of some benefit or advantage which either
(i) he had in the past been permitted by the decision maker to enjoy and which he can legitimately expect to be permitted to continue to do until there has been communicated to him some rational grounds for withdrawing it on which he has been given an opportunity to comment, or
(ii) he has received an assurance from the decision maker will not be withdrawn without giving him first an opportunity for advancing reasons for contending that they should not be withdrawn.
67. In the same case, Lord Roskill said:
As the cases show, the principle is closely connected with ‘a right to be heard’. Such an expectation may take many forms. One may be an expectation of prior consultation. Another may be an expectation of being allowed time to make representations especially where the aggrieved party is seeking to persuade an authority to depart from a lawfully established policy adopted in connection with the exercise of a particular power because of some suggested exceptional reasons justifying such a departure.
68. There is authority in Ireland for the proposition that, to the extent that the doctrine of ‘legitimate expectation’ exists in our law, the circumstances in which it arises are those identified in the passages cited. As Costello J pointed out in Tara Prospecting Ltd v. Minister for Energy [1993] ILRM 771 (a case coincidentally also arising out of the exploration of gold in County Mayo) at p. 783:
…The case law developed in England has established that a duty to afford a hearing may be imposed when such expectations are created by public authorities. The correlative right thus arising is therefore a procedural one. And it is important also to recognise that the claim I am now considering is a very different one. It is not that the legitimate expectations which the applicants held entitled them to a fair hearing (such a right arising from constitutional and well established common law principles I have already considered), but that they created a right to the benefit itself which should be enforced by an order of mandamus….
69. Having considered the authorities in Ireland and elsewhere, he then went on to hold inter alia that:
In cases involving the exercise of a discretionary statutory power the only legitimate expectation relating to the conferring of a benefit that can be inferred from words or conduct is a conditional one, namely, that a benefit will be conferred provided that at the time the Minister considers that it is a proper exercise of the statutory power in the light of current policy to grant it. Such a conditional expectation cannot give rise to an enforceable right to the benefit should it later be refused by the Minister in the public interest.
70. It has been said that this is an unduly restrictive approach and that there is no reason, in logic or principle, why the doctrine cannot be successfully invoked so as to declare a person entitled, in an appropriate case, not simply to fair procedures, but to the benefit which he was seeking in the particular case. (See the decisions of the High Court in Duggan v. An Taoiseach [1989] ILRM 710 and Abrahamson v. Law Society of Ireland [1996] 1 IR 403; [1996] 2 ILRM 481.)
71. It is unnecessary, however, in the context of the present case to determine whether the more expansive approach suggested by those decisions is to be preferred to the view of the law taken by Costello J in Tara Prospecting Ltd.v. Minister for Energy. The applicants cannot, and do not, complain that they were deprived of a benefit in the form of a grant of planning permission which, in the language of the doctrine, they reasonably and legitimately expected to receive. They never applied for such a permission. Their complaint is that the respondents imposed an improper and illegal constraint on the manner in which they would propose to consider an application from the applicants for permission, in the form of the mining ban. That unlawful fetter on the powers of the applicants was removed by the decision of the High Court and thereafter the doctrine of legitimate expectations ceased to have any relevance in this case.
72. It should also be pointed out that the judgment of Finlay CJ in Webb v. Ireland, on which the applicants also relied, proceeded on the basis that the facts in that case gave rise to a sustainable claim based on promissory estoppel, rather than on the doctrine of legitimate expectations as that doctrine has been explained in the other authorities to which I have referred. Webb was, moreover, a decision which turned on particular facts – specifically the assurance that the finder of the chalice would be honourably treated – which have no parallel in the present case.
(3) Negligence
73. There are two preliminary matters which must first be considered.
74. It was submitted on behalf of the applicants that the existence of a duty of care had not been traversed in the points of defence furnished by the respondents. However, at paragraph 19 of the points of defence the respondents denied that they were guilty of negligence or breach of duty and the particulars of negligence and breach of duty are also expressly denied in paragraph 22. It was clearly implicit in those pleas that the respondent was contending that it was under no duty of care or, if it was, that it was not in breach of the relevant duty. Apart from that consideration, whether a duty of care existed in the particular circumstances of this case was a matter of law and, on the orthodox view of the function of pleadings, the absence of a duty of care did not have to be expressly pleaded by the respondents. There is, of course, no question of the applicants having been taken in any way by surprise either in this court or in the High Court, having regard to the detailed written submissions furnished in both courts on the legal aspects of the case, and I would, accordingly, reject the submission based on this pleading point.
75. The second issue is in relation to the findings of fact made by the learned trial judge. As already noted, although no notice to vary had been served on behalf of the respondent, Dr Forde argued that the inferences of fact drawn by the trial judge from the evidence were not justified.
76. Although the trial judge found that the respondents had acted negligently in adopting the mining ban, I think that it is clear that, in so finding, he was not holding that they had been in breach of any duty of care they owed the applicants: a finding to that effect would have been inconsistent with the conclusions he later reached, after a consideration of the authorities, that the respondents had not been in breach of any duty of care they owed the applicants. He did, however, conclude that, in adopting the mining ban, they had done something which no reasonable local authority would have done.
77. I am satisfied that this was an inference which the trial judge was entitled to draw from the evidence and is not one which should be set aside by this court. The uncontested evidence was that the ban was adopted in the face of unequivocal advice from the officials of the respondent that it was unnecessary in planning terms and would be contrary to the interests of the people of County Mayo, since it would be a disincentive to investment and exploration and the absence of any prospecting would mean that the county would not know the extent of its mineral resources. The ban, moreover, was clearly to operate in an arbitrary manner and could not be objectively justified as being solely designed to protect high amenity locations. I will return at a later point to the question as to whether the trial judge was correct, in point of law, in also holding that the respondents had acted unlawfully in acting, as it was claimed they did, in disregard of government policy.
78. The next, and final, issue which has to be determined is as to whether the trial judge was correct in point of law in holding that, although the respondents’ action in adopting the mining ban was properly characterised as one which no reasonable planning authority could have taken, it did not constitute a breach of a duty of care owed by the respondents to the applicants as a result of which they suffered loss and are entitled to damages.
79. This has resulted in a impressively wide ranging discussion in this court as to the nature of the modern tort of negligence. The starting point is obviously the famous passage in the speech of Lord Atkin in Donoghue v. Stephenson [1932] AC 562 which, however often quoted, must be set out here again, but including an introductory passage, which is of critical importance, and is frequently omitted:
At present I content myself with pointing out that in English law there must be, and is, some general conception of relations giving rise to a duty of care, of which the particular cases found in the books are but instances. The liability for negligence, whether you style it such or treat it as in other systems as a species of ‘culpa’ is no doubt based upon a general public sentiment of moral wrongdoing for which the offender must pay. But acts or omissions which any moral code would censure cannot in a practical world be treated so as to give a right to every person injured by them to demand relief. In this way rules of law arise which limit the range of complainants and the extent of their remedy. The rule that you are to love your neighbour becomes in law, you must not injure your neighbour; and the lawyer’s question, Who is my neighbour? receives a restricted reply. You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour. Who, then, in law is my neighbour The answer seems to be persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected when I am directing my mind to the acts or omissions which were called in question.
80. The opening passage indicates that, in Lord Atkin’s view, while the law of negligence involves some general conception of relations giving rise to a duty of care, it necessarily embodies rules of law which limit the range of complainants and the extent of their remedy. The well known biblical reference is then followed by Lord Atkin’s clarification of the dicta in Le Lievre v. Gould [1893] 1 QB 91 which suggested that the duty of care arose because of the ‘proximity’ of the person or property injured to the person or property which caused the injury. He pointed out that ‘proximity’ in this context should not be confined to ‘mere physical proximity’ but should extend:
to such close and direct relations that the act complained of directly affects a person whom the person alleged to be bound to take care would know would be directly affected by his careless act.
81. That was clearly an essential clarification when what was under consideration was the duty of the manufacturers of articles to the ultimate purchaser with whom they had no relationship in contract.
82. Finally, it should be noted that in Le Lievre v. Gould, in a passage cited with approval by Lord Atkin (subject to the qualification just mentioned), Lord Esher said:
If one man is near to another, or is near to the property of another, a duty lies upon him not to do that which may cause a personal injury to that other, or may injure his property.
83. That passage is of importance for two reasons. It makes it clear in the first place, that, in general, the law of negligence is directed to a positive act which causes injury or damage rather than a failure to take action so as to prevent such injury or damage. No doubt in the course of a particular operation an omission to do something may render the defendant amenable in damages: the failure of a motorist to give a required signal which results in an accident converts a blameless form of driving into negligent driving.
84. The second feature of the law of negligence identified in that passage is that, in general, for a defendant to be found guilty of negligence the careless act must have caused personal injury to, or damage the property of, the plaintiff. The law of negligence normally does not afford redress to those who have suffered what has come to be described in the authorities as ‘economic loss’ simpliciter.
85. Lord Atkin’s speech in Donoghue v. Stephenson thus established (or on another view, apparently his own, simply confirmed) that reasonable foreseeability on the part of the defendant that his actions would be likely to injure the plaintiff was a necessary but, of itself, insufficient condition of liability in negligence. It was also necessary for the plaintiff to establish that there was a relationship of ‘proximity’ between himself and the defendant which gave rise to the legal duty to take care that the foreseeable consequence was avoided. However, in cases where the damage occurred outside the familiar territory of the highway and the workplace, the application of these principles has led, throughout the common law world, to a vast range of judicial decisions not always easy to reconcile.
86. So too with the principle that no action for negligence lay in respect of purely economic loss. A major qualification of that principle was established in Hedley Byrne & Co. Ltd v. Heller & Partners Ltd. [1964] AC 465 in the case of pecuniary loss caused by a negligent misstatement, but until the much discussed decision of the House of Lords in Junior Books Ltd. v. Veitchi Co Ltd. [1983] 1 AC 520 it remained the law in both England and Ireland that, negligent misstatement apart, no action in negligence lay in respect of such damage.
87. In the following passage in his speech in Anns v. Merton London Borough Council [1978] AC 728 at p. 751, Lord Wilberforce set out the principles which in his view determined the existence of the scope of a duty of care:
Through the trilogy of cases in this House, Donoghue v. Stephenson, Hedley Byrne & Co Ltd. v Heller & Partners Ltd. and Home Office v. Dorset Yacht Co. Ltd the position has now been reached that in order to establish that a duty of care arises in a particular situation, it is not necessary to bring the facts of that situation within those of previous situations in which a duty of care has been held to exist. Rather the question has to be approached in two stages. First, one has to ask whether, as between the alleged wrongdoer and the person who has suffered damage, there is a sufficient relationship of proximity or neighbourhood such that, in the reasonable contemplation of the former, carelessness on his part may be likely to cause damage to the latter, in which case a prima facie duty of care arises. Secondly, if the first question is answered affirmatively, it is necessary to consider whether there are any considerations which ought to negative, or to reduce or limit the scope of the duty or the class of person to whom it is owed or the damages to which a breach of it may give rise. . . .
88. In later English cases, doubts were expressed as to whether this formula was of such universal applicability as a superficial reading might suggest. In Governors of the Peabody Donation Fund v. Sir Lindsay Parkinson & Co Ltd [1985] AC 210 at p. 240 Lord Keith of Kinkel said of this reading of the passage (and an observation of a similarly general nature by Lord Reid in Dorset Yacht Company Ltd.):
This is a temptation which should be resisted … in determining whether or not a duty of care of a particular scope was incumbent on a defendant it is material to take into consideration whether it is just and reasonable that it should be so.
89. In Yuen Kun Yeu v. Attorney General of Hong Kong, the judicial committee of the Privy Council said that the two step test had:
been elevated to a degree of importance greater than it merits, and greater perhaps than its author intended.
90. Moreover, in the compressed form adopted by Lord Wilberforce, it was open to the possible interpretation that foreseeability alone was a sufficient criterion of liability. It was also seen as eroding the distinction, already noted, between positive acts causing injury or damage and a failure to prevent such injury or damage.
91. Ultimately, in Caparo Industries Plc. v. Dickman [1990] 2 AC 605, a different approach was adopted, epitomised in a passage in the judgment of Brennan J in the High Court of Australia in Sutherland Shire Council v. Heyman (1985) 60 ALR 1:
It is preferable in my view that the law should develop novel categories of negligence incrementally and by analogy with established categories, rather than by a massive extension of a prima facie duty of care restrained only by undefinable considerations which ought to negative, or to reduce or limit the scope of the duty, and the class of person to whom it should be owed.’
92. In Caparo, Lord Bridge summed up the approach in England as follows:
What emerges is that, in addition to the foreseeability of damage, necessary ingredients in any situation giving rise to a duty of care are that there exists between the party owing the duty and the party to whom it is owed a relationship characterised by the law as one of proximity’ or ‘neighbourhood’ and the situation should be one in which the court considers it fair, just and reasonable that the law should impose a duty of a given scope on the one party for the benefit of the other.
93. The law in Ireland must now be considered. The decisions in both Donoghue v. Stephenson and Hedley Byrne v. Heller & Partners Ltd. have been considered and adopted by our courts in a number of cases and unquestionably represent the law in this jurisdiction. It has also been said (see, for example, the 3rd edition of McMahon and Binchy on the Law of Torts, chapter 6) that the two stage test adopted by Lord Wilberforce in Anns is also the test which must be adopted in this jurisdiction, having regard to the decision of this court in Ward v. McMaster.
94. The plaintiffs in that case, a married couple, had purchased a house from a builder. Shortly afterwards, they discovered that it contained serious structural defects which, if not repaired, would render it dangerous and a risk to health. The plaintiffs had bought the house with the assistance of a loan from the local authority under the relevant housing legislation. They had not had any independent examination of the house by a surveyor carried out before they bought it, but it had been examined on behalf of the local authority by an auctioneer. The plaintiffs sued both the builders/vendor and the local authority. Their claim against the latter was based on the contention that the local authority should have known that the plaintiffs, not being persons of means, would be unlikely to retain their own independent surveyor and would have relied on an appropriate inspection having been carried out on behalf of the authority. In fact, as already noted, the examination was carried out by an auctioneer who was not a qualified surveyor and whose report did not reveal the defects in the house.
95. In the High Court, the plaintiffs’ claim against both the builder and the local authority succeeded. Although the damage which resulted was, on one view, purely economic loss, Costello J in the High Court was satisfied that it was recoverable in the light of the decision in Junior Books Ltd. v. Veitchi Company Ltd. Having considered the authorities in England, he stated the legal principles which were applicable in determining whether a duty of care arose in the circumstances of that case to be as follows:
(a) When deciding whether a local authority exercising statutory functions is under a common law duty of care the court must firstly ascertain whether a relationship of proximity existed between the parties such that in the reasonable contemplation of the authority carelessness on their part might cause loss. But all the circumstances of the case must in addition be considered, including the statutory provisions under which the authority is acting. Of particular significance in this connection is the purpose for which the statutory powers were conferred and whether or not the plaintiff is in the class of persons which the statute was designed to assist.
(b) It is material in all cases for the court in reaching its decision on the existence and scope of the alleged duty to consider whether it is just and reasonable that a common law duty of care as alleged should in all the circumstances exist.
96. In the case of the local authority, he held that it was within the reasonable contemplation of the second named defendant that carelessness on its part in carrying out the valuation of the house might be likely to cause damage to the purchaser. It was consistent with the local authority’s public law powers that they should be accompanied by a common law duty of care in favour of the plaintiffs and he further held that, for similar reasons, it was ‘just and reasonable’ that the court should hold that a duty of care arose in that case.
97. The local authority appealed to this court which unanimously upheld the judgment of Costello J. However, although there was, as in this case, an extensive debate as to the nature and scope of the duty of care, Henchy J was satisfied that the facts of the case were such that it could be decided in accordance with what he described as ‘well established principles’. In his view, the relationship between the first named plaintiff and the local authority was such that the latter owed a duty to him to take due care in the valuation of the house since they should have known that, in the light of his lack of means, he would rely on their having carried out an appropriate valuation. There is, accordingly, nothing in his judgment to indicate that he was adopting the more expansive view of the extent of the duty of care, rightly or wrongly attributed to Lord Wilberforce in Anns, rather than the more restrictive approach subsequently adopted in the English authorities.
98. By contrast, in the only other judgment delivered in this court, McCarthy J expressly endorsed the two stage test adopted by Lord Wilberforce and added
Whilst Costello J essentially rested his conclusion on the ‘fair and reasonable’ test, I prefer to express the duty as arising from the proximity of the parties, the foreseeability of the damage, and the absence of any compelling exemption based upon public policy. I do not, in any fashion, seek to exclude the latter consideration, although I confess that such a consideration must be a very powerful one if it is to be used to deny an injured party his right to redress at the expense of the person or body that injured him.
99. As to the passage already cited from the judgment of Brennan J in Sutherland Shire Council v. Heyman, the learned judge commented that:
This verbally attractive proposition of incremental growth …suffers from a temporal defect – that rights should be determined by the accident of birth.
100. Finlay CJ and Griffin J said that they were in agreement with the judgments of both Henchy J and McCarthy J: Walsh J confined his concurrence to the judgment of McCarthy J
101. While the decision in Ward v. McMaster has been treated by some as an unqualified endorsement by this court of the two stage test adopted by Lord Wilberforce in Anns, it is by no means clear that this is so. As already noted, Henchy J was satisfied that the case could be decided by reference to ‘well established principles’ and made no reference in his judgment to the two stage test in Anns. Since Finlay CJ and Griffin J expressed their agreement with both the judgments of Henchy J and McCarthy J, it is not clear that the observations of the latter in relation to the two stage test in Anns necessarily formed part of the ratio of the decision. Given the far reaching implications of adopting in this jurisdiction a principle of liability in negligence from which there has been such powerful dissent in other common law jurisdictions, I would not be prepared to hold that further consideration of the underlying principles is foreclosed by the dicta of McCarthy J in Ward v. McMaster.
102. In considering whether that approach, or the more cautious approach favoured in Caparo Industries plc. v. Dickman and Sutherland Shire Council v. Heyman should be adopted, I think it is helpful to refer again to the philosophy reflected in Lord Atkin’s approach in Donoghue v. Stephenson. The bystander who sees a building on fire and knows that there are people inside no doubt foresees that if he waits for the fire brigade to arrive rather than attempting to rescue them himself they may die. But the law has never imposed liability in negligence on a person who fails to act as a more courageous citizen might in such circumstances. A strict moral code might censure his timidity: the law of negligence does not. It is precisely that distinction drawn by Lord Atkin between the requirements of morality and altruism on the one hand and the law of negligence on the other hand which is in grave danger of being eroded by the approach adopted in Anns as it has subsequently been interpreted by some. There is, in my view, no reason why courts determining whether a duty of care arises should consider themselves obliged to hold that it does in every case where injury or damage to property was reasonably foreseeable and the notoriously difficult and elusive test of ‘proximity’ or ‘neighbourhood’ can be said to have been met, unless very powerful public policy considerations dictate otherwise. It seems to me that no injustice will be done if they are required to take the further step of considering whether, in all the circumstances, it is just and reasonable that the law should impose a duty of a given scope on the defendant for the benefit of the plaintiff, as held by Costello J at first instance in Ward v. McMaster, by Brennan J in Sutherland Shire Council v. Heyman and by the House of Lords in Caparo Industries plc. v. Dickman. As Brennan J pointed out, there is a significant risk that any other approach will result in what he called a ‘massive extension of a prima facie duty of care restrained only by undefinable considerations…’
103. I observe, in this context, that it has been suggested in England that the difference in approach between Anns and Caparo may ultimately be of no great significance, since the considerations which, in a particular case, may negative the existence of a duty of care under the Anns formulation are consistent with an assessment as to whether it is just, fair and reasonable to impose such a duty in the particular circumstances. (See the comments of Lord Hoffman in Stovin v. Wise [1996] AC 923 at p. 949.)
104. In the present case, we are concerned with negligence alleged against a public authority in the performance of a statutory function. The circumstances in which a duty of care can be said to arise in the case of such authorities when exercising statutory functions has also given rise to an enormous volume of decided cases in the common law world, to many of which we were referred. There are, of course, many instances in which a public authority will be liable in negligence because the duty of care imposed on the law by them is no different from that arising in private law generally. Obvious examples are the duties owed by local and other public authorities arising out of their occupation of premises or their role as employers. In such cases, the plaintiff does not have to call an aid the fact that the defendants may have been exercising a statutory function: their duty of care as occupiers, employers, etc., is no greater, but also no less, than that of their counterparts in the private sector.
105. Difficulties have arisen, however, in determining whether, and to what extent, a statutory authority can be made amenable in damages for the negligent exercise of a power which they were entitled, but not obliged, to invoke. In Anns, it had been held that, although a local authority was not under a duty to inspect the foundations of buildings, it could be made liable where proper consideration had not been given to the question as to whether they should inspect or not. In Siney v. Dublin Corporation [1980] IR 400, this court held that, where a flat had been provided by a local authority pursuant to their duties under the relevant housing legislation, they were obliged to take reasonable care to ensure that it was fit for human habitation and that, accordingly, they were liable in damages because appropriate humidity tests had not been carried out in order to determine whether the flat would be sufficiently ventilated. In Ward v. McMaster, as we have seen, the local authority were found liable in damages for having failed to carry out a valuation by a qualified surveyor in circumstances where it could not be suggested that they were under a statutory duty to provide themselves or anyone else with such a valuation, although they were undoubtedly authorised so to do. Again, in the judgments of Costello J at first instance and McCarthy J in this court, Anns is cited with approval as authority for the proposition that a duty of care arises in such circumstances.
106. In Anns, it was suggested that the imposition of a duty of care in cases of this nature was justified where the nature of the statutory power was such that it was obviously the intention of the legislature that it would be exercised and that, accordingly, a negligent failure to exercise what were described as ‘operational’ powers or duties could give rise to liability. In subsequent cases in England, however, it has been said that the distinction between policy and operations may not be a particular useful guide in determining whether a duty of care should be found to exist in any particular case. Similar considerations apply to the distinctions drawn in some of the authorities between discretionary and non-discretionary decisions.
107. For the purposes of this case, it is sufficient to say that the mere fact that the exercise of a power by a public authority may confer a benefit on a person of which he would otherwise be deprived does not of itself give rise to a duty of care at common law. The facts of a particular case, however, when analysed, may point to the reasonable foreseeability of damage arising from the non-exercise of the power and a degree of proximity between the plaintiff and the defendant which would render it just and reasonable to postulate the existence of a duty of care. That approach is consistent with the reluctance of the law to impose liability for negligence arising out of an omission to act rather than out of the commission of positive acts which may injure persons or damage property. In the present case, the decision by the respondents that they would not grant planning permission for any mining development within the area covered by the ban was, on the assumption that it was intra vires, the exercise by them of a statutory power which would result in the withholding of a benefit from the applicants which would foreseeably result in their suffering financial loss. But, although such a loss was undoubtedly reasonably foreseeable, when one bears in mind that the powers in question were exercisable by the respondents for the benefit of the community as a whole and not for the benefit of a defined category of persons to which the applicant belonged (as in Siney and Ward v. McMaster), I am satisfied that there was no relationship of ‘proximity’ between the plaintiffs and the respondents which would render it just and reasonable to impose liability on the respondents.
108. In considering whether such a relationship of ‘proximity’ existed and whether it would be just and reasonable to impose a duty of care on the respondents, I think one also has to bear in mind that this was not a case in which it could reasonably be said that the applicants, in incurring the expense of their prospecting activities, could be said to have been relying on the non negligent exercise by the respondents of their statutory powers. Their position is in contrast to that of the plaintiffs in both Siney and Ward v. McMaster where, in each case, they belonged to a category of persons for whose benefit a particular statutory framework had been created and who might reasonably be said to have relied on the local authority in each case taking reasonable care in the exercise of the statutory powers vested in them. The applicants in the present case could rely on no more than a general expectation that the respondents would act in accordance with the law which is not, in my view, sufficient to give rise to the existence of a duty of care.
109. It is also far from clear that the applicants have established that what the High Court judge found to be the unreasonable manner in which they had adopted the mining ban caused the damage of which they complain. Had they observed the criteria which Mr O’Sullivan SC had advised were appropriate in adopting the ban they would still have been found to have acted ultra vires in the High Court on the grounds set out in the judgment of Blayney J Accordingly, even if they had confined the ban to a significantly smaller area in a manner which could have been justified on objective criteria relating to the need to protect areas of particular scenic beauty, and which included those areas in which the applicants were prospecting, it would still have been set aside on those grounds. I should add that I am also satisfied that Dr Forde was correct in submitting on behalf of the respondents that it had not been established that the respondents had acted in breach of their statutory obligation pursuant to s. 7(1)(e) of the Local Government Act 1991 to
have regard to….
(e) policies and objectives of the government or any Minister of the government in so far as they may affect or relate to its functions…
110. There was no evidence to indicate that the respondents simply ignored the letter from the Minister for Energy: on the contrary, they adjourned the meeting at which they were to make the vital decision so that the Minister’s views could be considered. The fact that they are obliged to have regard to policies and objectives of the government or a particular Minister does not mean that, in every case, they are obliged to implement the policies and objectives in question. If the Oireachtas had intended such an obligation to rest on the planning authority in a case such as the present, it would have said so.
111. There remains the question of economic loss. The reason why damages for such loss – as distinct from compensation for injury to persons or damage to property – are normally not recoverable in tort is best illustrated by an example. If A sells B an article which turns out to be defective, B can normally sue A for damages for breach of contract. However, if the article comes into the possession of C, with whom A has no contract, C cannot in general sue A for the defects in the chattel, unless he has suffered personal injury or damage to property within the Donoghue v. Stephenson principle. That would be so even where the defect was latent and did not come to light until the article came into C’s possession. To hold otherwise would be to expose the original seller to actions from an infinite range of persons with whom he never had any relationship in contract or its equivalent.
112. That does not mean that economic loss is always irrecoverable in actions in tort. As already noted, economic loss is recoverable in actions for negligence misstatement. In Siney, economic loss was held to be recoverable in a case where the damages represented the cost of remedying defects in a building let by the local authority under their statutory powers. Such damages were also held to be recoverable in Ward v. McMaster, the loss being represented by the cost of remedying defects for which the builder and the local authority were held to be responsible. In both cases, the loss was held to be recoverable following the approach adopted by the House of Lords in Anns. While the same tribunal subsequently overruled its earlier conclusion to that effect in Murphy v. Brentwood District Council [1991] 1 AC 398, we were not invited in the present case to overrule our earlier decisions in Siney and Ward v. McMaster.I would expressly reserve for another occasion the question as to whether economic loss is recoverable in actions for negligence other than actions for negligent misstatement and those falling within the categories identified in Siney and Ward v. McMaster and whether the decision of the House of Lords in Junior Books Ltd. v. Veitchi Co. Ltd. should be followed in this jurisdiction.
113. I would dismiss the appeal and affirm the order of the High Court.
The Supreme Court
1998/323, 2000/61J
Keane, C.J,
Denham, J.
Murray, J.
McGuinness, J.
Fennelly, J.
Between
Glencar Exploration PlC
and Andaman Resources plc
And
Mayo County Council
JUDGMENT delivered the 19th day of July, 2001, by Fennelly J.
114. I agree with the judgment of the Chief Justice that the appeal should be dismissed. The appeal raises issues of importance concerning the liability of public authorities to pay compensation for ultra vires decisions.
115. It is necessary for a proper understanding of the issues to be aware of the facts. These have been very fully explained both in the judgment of the learned High Court judge and that of the Chief Justice. Any repetition of those accounts would be needless and wasteful. I will content myself with recounting the barest essentials facts so as to highlight the central legal issues.
116. The appellants, at all material times, held licences to prospect for minerals in areas of Count Mayo. These were granted to them in 1986 by the Minister for Energy under statutory powers. As a result of prospecting and exploration operations pursuant to the licences, they had made findings of gold deposits in commercial quantities in these area but this was an expensive business. They had expended some £2 million in proper and effective reliance on their rights under the licences. The finds were attractive enough to persuade Newcrest Mining Ltd, an important Australian gold producer, to agree in 1991 to invest £1 .6 million in the venture and, in reality, by acquiring a 5 1% interest to become a partner in the enterprise.
117. The elected members of the respondent, the planning authority for the County of Mayo, adopted a new development plan, in early 1992. Amidst considerable controversy, an amendment providing for a policy which would amount to an effective ban on mining development was included in the plan. It said:
It is the policy of the council that no development and/or work shall take place in relation to minerals (as defined by the Minerals Act 1940, as amended) in the areas shown dotted on map 10A.
118. I will call this, for the sake of brevity, the ‘mining ban.’ Obviously, the statute is the Minerals Development Act 1940. The mining ban purported to affect an area, delineated in map 10A. of some 300 square miles, in the Westport electoral area, constituting about one seventh of the area of the entire county, and including the areas covered by the appellants’ licences.
119. The result of the mining ban was that the prospective partner withdrew. For practical purposes the entire venture has become what was colourfully described by the managing director of the first named appellant as a ‘dead duck.’ Its investment expenditure is written off as a total loss. The learned trial judge found that the appellants have no further intention of carrying out any work in the areas covered by the licences.
120. The appellants challenged the validity of the mining ban in judicial review proceedings. In a judgment of 13 November 1992. Blayney J held the mining ban to be ultra vires the powers of the respondent and made an order annulling it. I do not consider it necessary to review the reasons for that decision. Although the Chief Justice raises significant queries as to its correctness, the respondent did not appeal the order of the High Court, which now must be regarded as correct. The starting point for consideration of the legal issues on the appeal is that the respondent, as planning authority, in purported exercise of its statutory powers, made a decision, which it had no power to make. As a consequence, it became obvious that the appellants’ mining prospect was rendered valueless. The learned trial judge has found as a fact that the mining ban caused the appellants’ mining project to collapse and that the judgment of Blayney J did not lead to any revival of confidence. The appellants claim that they should be allowed to recover damages from the respondent for losses in the form of the monies expended by them prior to the imposition of the mining ban.
121. A large part of the argument concerning the liability of the respondent necessarily centred on the contents of the legal advice received by the respondent from its solicitors and counsel regarding its power to include the mining ban in its development plan combined, of course, with the respondents state of knowledge of the likely effect of the mining ban on the appellants.
122. The knowledge of the respondent of the appellants’ interest is easily established. The appellants objected in writing to the draft development plan on 2 May 1991. Its letter was transmitted to Mr Michael Browne, the county solicitor, who, in conveying his legal advice dated 5 May 1991 to the respondent at the height of the controversy specifically drew attention to the fact that the appellant had been prospecting in the area for some time. He presciently warned that adversely affected mining companies might seek judicial review. On 5 December 1991, the appellants wrote to the respondent pointing out that the only areas selected for inclusion in map 10A were areas which had been of particular interest to mining companies. They demanded the withdrawal of the mining ban and put the respondent clearly on notice of its intention to sue it for any loss it would suffer as a result of the ban. Thus, the respondents were fully conscious not only of the fact that the mining ban would cause loss to mining companies and the appellants in particular but that they would be sued for any consequential losses. Loss to the mining interest was, of course, inherent in the mining ban. Its very purpose was to make it difficult if not impossible for mining to be permitted in the area covered by map 10A.
123. The position regarding the state of knowledge of the respondent of its legal power to impose the mining ban is not so clear cut. Central to this issue is the advice of Mr Philip O’Sullivan, senior counsel, now O’Sullivan J and the respondent’s appreciation of its effect. Mr Browne had raised in quite a pointed way the question of the validity of the resolution to include the mining ban in the development plan. He covered issues of powers under the planning acts, breach of Article 43 of the Constitution and legitimate expectation all of which, to some degree, have made an appearance in the course of this litigation. Mr Browne’s advice was not, of course, conclusive. He said:
In view of the risks to the council in adopting this resolution as an objective of the plan and the many and complex areas of Iaw involved I would require some time to complete inquiries . . . to consider further the implications and to submit a detailed case for the opinion of the appropriate senior counsel.
124. In the event, Mr O’Sullivan was asked to advise. Because of its central role in considering the matters now before the court, at the risk of repetition, I will set out in full the part of his opinion which is cited by the learned trial judge:
125. I have not seen map 10A referred to in the resolution proposing the amendment to the mineral policy in the draft plan, but the wording refers to areas in the plural and I make the assumption that the map refers to a number of locations where mining activity is to be excluded. This suggests that the map was prepared with a degree of attention to detail and care to limit the exclusionary prohibition to specified high amenity locations rather than by reference to a crude exclusionary policy. In my opinion a planning authority is perfectly within its rights to make a decision in principle in its development plan that no mining would take place in particular areas where they perceive such mining activities are in conflict with amenity or other natural resources and to have a policy in the development plan stating this. A planning authority in general is under a positive obligation to formulate policies and to express them in the development plan, and in my opinion the proposed amendment is doing just this. I assume the proposal is reasonable in the sense that it is made by reference to objective criteria. It does not have to be the best policy or a policy which a judge would approve, or a policy which no one could criticise or which could not be improved. Providing it is based on objective criteria and is made bona fide, having regard to the proper planning and development of the area then, in my opinion, it is within the powers of the planning authority to have such a policy and the jurisdiction to make it is contained in Part III of the 1963 Planning Act as amended.
126. Having quoted this extract, the learned trial judge continued:
127. Had Mr O Su1livan seen map 10A, comprising as it does three hundred square miles or one-seventh of the total area of Co. Mayo, and had he been privy to the evidence in this case, I have little doubt but that he would have concluded, as indeed do I, that this ban was nothing more than a crude exclusionary policy. The map was not prepared with a degree of attention to detail. Care was not taken to limit the exclusionary prohibition to specified high amenity locations. Neither could the proposal be regarded as reasonable because it was not made by reference to objective criteria.
128. The learned trial judge then concluded: ‘It is clear from the foregoing that in essence the legal advice was to the effect that there was no power to impose it’ (meaning the mining ban). In this passage, the learned trial judge reached a conclusion as to what the opinion of Mr O’Sullivan would have been if he had seen map 10A. In doing so, he was possibly influenced by the reasoning of Blayney J. However, that decision was delivered subsequent to Mr O’Sullivan’s opinion. The core of the opinion was to the effect that a planning authority was entitled to ‘make a decision in principle in its development plan that no mining would take place in particular areas. . . .’ Kelly J may, of course, be right, but there is a degree of speculation involved. Personally, I am not persuaded that Mr O’Sullivan’s opinion would necessarily have been different if he had seen map 10A. In so saying, I acknowledge that I am, myself, influenced by the doubts cast on the correctness of the judgment of Blayney J. In any event, I do not agree with the learned trial judge’s summation of the effect of Mr O’Sullivan’s opinion being that there was no power to impose the mining ban. Kelly J himself made it clear, in any case, in an ensuing passage, that the opinion was not so understood. He went on:
That said, I am by no means satisfied that the import of Mr O’Sullivan’s advice was understood by the respondent. His advice as to the legal ability to include the ban was clearly conditional on the matters addressed in that part of the opinion from which I have just quoted. The conditions were not met. Yet the respondent appears to have concluded that the advice was to the effect that there was power to proceed, This is particularly clear when one reads the minutes of the meeting of 17 February 1992. There, there is set forth the advice of the county manager on the procedural aspect of that meeting In the course of his recital of the events giving rise to the motion being proposed, he is reported to have said:
The council considered the written representations following the last public display, at a meeting held on 11 November 1991. The plan contained a ban on mineral extraction in a specific area as outlined in map 10A. The council was informed that it was legally entitled to include such a ban although advised not to do so.
This strongly suggests that Mr O’Sullivan’s advice was understood as an imprimatur for the proposal whereas, properly understood, it did not even amount to a nihil obstat.
In any event, I am of opinion that the respondent believed (wrongly) that it had power to impose the ban.
129. The legal issues can thus be approached on the basis that Mr O’Sullivan’s opinion was not understood by the respondent as questioning the power to adopt the mining ban. My only gloss on the judgment of the learned trial judge is that I do not necessarily think that the respondents were misreading Mr O’Sullivan’s opinion when they reached that conclusion.
Damages for ultra vires acts
130. I will now turn to the legal issues which arise on the appeal. These and in particular the arguments of the appellant have been fully explained in the judgment of the Chief Justice. The starting point of the plaintiff’s claim has to be the decision of Blayney J that the mining ban was ultra vires the powers of the respondent. Since it had no power to adopt the mining ban and since the appellants suffered loss as a result of its inclusion in the development plan, they should be compensated by the respondent for the making of this invalid decision. Such a crude characterisation of the issue does not, of course, do justice to the appellants’ arguments. They do not suggest that they can establish the right to be compensated without bringing themselves within the four walls of one of the established causes of action. The lack of any link between the invalidity of a decision of a public authority and loss caused by it underlies to a substantial extent the real legal issues in the case.
131. As the learned trial judge correctly pointed out, ‘there is no direct relationship between the doing of an ultra vires act and the recovery of damages for that act.’ This fundamental proposition can be underlined in two ways.
132. Firstly, an individual needs no power to perform a wide range of actions which affect others and with the potential to affect them adversely. An individual’s activity is not actionable, however, unless it consists of the commission of some civil wrong, most usually a breach of contract or a tort. The fact that a public authority must act within the scope of the powers conferred upon it has no necessary connection with loss which may be suffered by persons affected by it. Many people or bodies corporate are affected for better or worse by the actions of public authorities in the performance of their statutory functions. However, the incidence of gain or loss to individuals is unrelated to the validity of the decisions made. A valid decision is no more or less likely to cause loss than an invalid one. Breach of a specific statutory duty is, of course, a special case to which I will return.
133. Secondly,.the nature of the tort of misfeasance in public office emphasises that lack of vires is insufficient on its own to ground a cause of action sounding in damages. Keane J, as he then was, observed in his judgment in McDonnell v. Ireland [1998] 1 IR 134 at p. 156, that that ‘tort is only committed where the act in question is performed either maliciously or with actual knowledge that it is committed without jurisdiction and with the known consequence that it would injure the plaintiff. …’ The common characteristics of those two alternative elements of that rare and unusual civil wrong are, as explained by Clarke J in Three Rivers DC v. Bank of England (No 3) [1996] 3 All ER 558 at p. 632, in a passage cited by the learned trial judge as being that the tort ‘is concerned with a deliberate and dishonest wrongful abuse of the powers given to a public officer.’ The appellants have not, of course, pursued their appeal against the rejection by the learned trial judge of their reliance on misfeasance in public office. Nonetheless, the conditions demanded by the law for success in invoking it explain the policy of the law that public authorities should not be at risk of claims for damages if they exercise their powers bona fide. Finlay CJ in a well-known passage from his judgment in Pine Valley Developments Ltd v. Minister for the Environment [1987] IR 23; [1987] ILRM 747 at pp. 38/759 said:
I am satisfied that it would be reasonable to regard as a requirement of the common good an immunity to persons in whom are vested statutory powers of decision from claims for compensation where they act bona fide and without negligence. Such an immunity would contribute to the efficient and decisive exercise of such statutory powers and would, it seems to me, tend to avoid indecisiveness and delay, which might otherwise be involved.
134. In his judgment in the same case, Henchy J stated:
Breach of statutory duty may occur in a variety of circumstances and with a variety of legal consequences. Here we are concerned only with a breach of statutory duty in the making of a decision which has been committed by statute to the decision-maker. The weight of judicial opinion as stated in the decided cases suggests that the law as to a right of damages in such a case is as follows. Where there has been a delegation by statute to a designated person of a power to make decisions affecting others, unless the statute provides otherwise, an action for damages at the instance of a person adversely affected by an ultra vires decision does not lie against the decision-maker unless he acted negligently, or with malice …in the sense of spite, ill-will or suchlike improper motive), or in the knowledge that the decision would be in excess of the authorised power:
see, for example, Dunlop v Woohllhara Municipal Council [1982] AC 158; Bourgoin SA v Ministry of Agriculture [1985] 3 All ER 585. While the law as I have stated it may be lacking in comprehensiveness I believe it reflects, in accordance with the requirements of public policy, the limits of personal liability within which persons or bodies to whom the performance of such decisional functions are delegated are to carry out their duties.
135. I respectfully agree with those statements. I would add that the absence of the right to automatic compensation for loss caused by an ultra vires act can find further justification from the protection of individual rights afforded by the existence of the remedy of judicial review. While the sufferer of loss from a lawful but non-tortious private act is entirely without a remedy, a similarly positioned victim of an ultra vires act of a public authority, by way of contrast, has at his disposal the increasingly powerful weapon of judicial review. Thus, he may be able to secure, as in this case, an order annulling the offending act. In appropriate cases, a court may be able to grant an interlocutory injunction against its continued operation. I believe that the considered statements of the law made in Pine Valley remain the law, despite apparent inconsistency with some dicta in the majority judgments in Duff v. Minister for Agriculture (No. 2) [1997] IR 22, which appear to treat liability for damages as automatically flowing from a mistake of law said to have been made by a minister. The Pine Valley case, though fully considered and applied in the High Court judgment of Murphy J in that case, does not figure at any point in the judgments of the Supreme Court. I do not believe that it can have been intended to depart from such an important principle as that laid down in Pine Valley.
136. On the appeal, the appellants pursued only the claims based respectively on breach of statutory duty, negligence, breach of legitimate expectations and infringement of constitutional rights. I propose to consider the first three. As already stated, I agree with the Chief Justice that the appeal should be dismissed. It is only in respect of the issue of legitimate expectations that my views may appear to differ to any extent.
Breach of statutory duty
137. In my judgment, the learned trial judge was correct to say that: ‘nowhere do I find either expressly or by implication that it (s. 19 of the Act) creates any duty which the legislature intended to be enforceable by an individual in a claim for damages.’ He was, in that passage thinking of the type of statutory duty that is not infrequently imposed by the legislature with the object of protecting the interests of or creating a benefit for an identifiable class of persons. The notion of a protective norm is familiar to many systems of law. For example, the appellants have cited Francovich v Italy (Case C’—6/90) [1991] ECR 1—5357, the decision which first established the principle and then laid down the criteria for establishing state liability for breach of a provision of European Community law. The first condition enunciated by the Court of Justice is that the community act which is invoked – in that case a directive – ‘should entail the grant of rights to individuals’ (paragraph 40 of the judgment). A duty imposed by statute on a public body will not be held to create a right to damages for its breach unless it can be shown to have within the scope of its intendment a reasonably identifiable protective purpose and identifiable class intended to benefit.
138. It is not possible without straining language to transpose that principle to the present case. The statutory duty, in the sense of obligation, which is imposed by the Local Government (Planning and Development) Act 1963 on planning authorities is, as the Chief Justice has made clear and as seems to be accepted by the appellants, to adopt a ‘plan indicating development objectives for their area’. However, that is a ditty imposed for the benefit of the public and not for the protection of any particular class of the public. Moreover, it is not the duty whose breach is invoked by the appellants. It was, in fact, observed when the plan was adopted. Their complaint is that the respondent acted ultra vires when it decided to include the mining ban in the development plan. The decision to include any particular objective in such a plan is more appropriately characterised as the exercise of a discretion. Whether the decision fell properly within the range of the statutory powers of the body in question is nihil ad rem. No breach of statutory duty is involved. I agree with the Chief Justice’s response to the appellants’ argument based on the qualifying phrase in the judgment of Finlay CJ in Pine Valley, which it is claimed leaves the door open for liability for an act which is ‘not actionable merely as a breach of duty’.
139. The appellants developed this argument in their written submissions stating that the degree of immunity granted to public authorities by virtue of the strict restrictions on the tort of breach of statutory duty were inconsistent with the jurisprudence of the European Court of Human Rights, in particular Osman v. United Kingdom (1998) 29 EHRR 245. The latter case originated in an action for damages commenced against the police alleging negligence in investigating complaints with tragic consequences. In Osman the Court of Human Rights held that the United Kingdom had violated article 6(1) of the convention by denying the complainants access to a court. The Court of Appeal had struck out the applicants’ statement of claim for failure to disclose a reasonable cause of action against the police. The police could not be held liable in negligence, under the precedent of Hill v. Chief Constable of West Yorkshire [1989] AC 53, for failures in the investigation of crime even to persons, who, like the applicants, had justifiably sought protection from known and identified persons who posed a real and imminent threat to their safety.
140. In evaluating the relevance of this case-law to the present case, it has to be borne in mind that the pertinent article of the convention guarantees the right to a fair trial, a right held to include the right to have access to a court competent to adjudicate on a complaint. Article 6 does not purport to regulate the substance of the legal remedies available under the law of the contracting states. The Court of Human Rights took the view that English law, as it had been interpreted by the Court of Appeal, conferred an automatic blanket immunity on the police from civil suit in respect of their acts or omissions in the investigation and suppression of crime. It was this component of English law which was held to prevent the English courts from even considering competing public interest considerations. In effect, counsel for the United Kingdom had been unable to persuade the court that ‘the rule as interpreted by the domestic court did not provide an automatic immunity to the police.’
141. Had the matter stood on the basis of the Osman ruling alone, I would not have been persuaded that Irish law confers any blanket immunity on public authorities for the consequences of their negligent acts of the sort which was there found to exist. Moreover, as it happens, the Court of Human Rights has taken the opportunity to clarify its Osman ruling in a case decided since the hearing of the appeal in the present case. On 10 May 2001, it gave judgment in Z. v United Kingdom (Application No. 29392/95,), a case concerning the liability of local authorities for alleged failures in the performance of its functions regarding the taking into care of children feared to be at risk. The court was at pains to stress, recalling earlier case-law, that article 6 did not guarantee any particular content for the relevant rights and obligations in the domestic law of the contracting states. It accepted that the House of Lords in particular, in its development of the public policy element of the law of negligence, had not conferred any blanket immunity on the public authorities in question in that case. It also frankly acknowledged that its own judgment in Osman had to be ‘reviewed in the light of the clarifications subsequently made by the domestic courts and notably the House of Lords’ (paragraph 100 of the judgment).
142. The judgments of the Court of Human Rights may be useful sources of persuasive authority where they contain reasoning relevant to the interpretation of legal rights guaranteed by the convention which are analogous to rights which are known in our law and Constitution and which our courts have to apply. The value of the Osman case as an authority is, in my view, undermined for the present case by the fact that it is concerned with a right of access to justice rather than the substance of the legal right asserted. The appellants claim in essence that the civil wrong of breach of statutory duty is unduly narrow, by reason of its failure to include within its scope the claim made in this case, namely that the appellants should be compensated for the ultra vires act of the respondent. This is a claim that the substance of the legal right being asserted insufficiently protects the interests of the appellants. The appellants’ access to the courts have not been restricted or impaired. The convention cannot via article 6 supply what is lacking in Irish law. I agree with the respondent that Osman is irrelevant.
Negligence
143. On the issue of negligence, I am in full agreement with the judgment of the Chief Justice and with his extensive treatment of the English and Irish case-law. I should advert, at first, as does the Chief Justice in his judgment, to the parameters of the appeal. The appellants failed in their claim because the learned trial judge held that the respondent did not owe them a duty of care in the exercise of their statutory powers pertaining to the drawing up of the development plan and specifically the inclusion of the mining ban. The appellants take issue with this conclusion in their notice of appeal. They say in particular that the learned trial judge:-
– gave undue weight to his view that the statutory powers were to be operated for the benefit of the public at large;
– having made findings of negligence, should have concluded that there was a duty of care;
– failed to conclude that there was no compelling reason to base an exemption from liability based on public policy.
144. They object, however, that the defence did not specifically contest the existence of a duty of care.
145. It seems to me artificial in the highest degree to ask this court to parse the pleadings of the parties in the High Court, when it seems that the existence of a duty of care was very fully considered on its merits by the learned trial judge and in circumstances where no significant objection appears to have been taken in the High Court. It is commonplace that the issues debated become transformed as a trial proceeds. If one party finds itself significantly disadvantaged by having to deal with a point not pleaded, that will become an issue at the trial and the trial judge will make rulings to ensure the fairness of the hearing. The points of claim and defence, in fact, seem to have concentrated very much on the question of whether the respondent was under a duty to ensure that it did not adopt a development plan containing a provision which it had no power to adopt. They focus very much on whether the respondent had taken proper legal advice or had proper regard to the advice which it had received.
146. I agree with the Chief Justice that the existence of a duty of care must be regarded as being in issue on the appeal. However, I think it is impossible before proceeding to discuss that issue to ignore the nature of the findings of negligence made by the learned trial judge, upon which the appellants place so much reliance. They do not, in fact, relate to the alleged duty not to act in excess of statutory powers. They are contained in the following passage from the judgment under appeal:
I have come to the conclusion that the imposition of the mining ban in the present case was done negligently. Whatever may have been the motives of the elected members, they set about achieving their goal in a way which, in my view, no reasonable local authority in receipt of the advice which they obtained would have done. It is not the function of elected representatives to slavishly give effect to their constituents’ demands come what may. They must exercise a degree of judgment in any particular case.
In this case, the evidence demonstrates that the provision of the mining ban was unnecessary. The existing planning code was sufficient to protect all legitimate planning interests. This was the advice they received from their officials. It was also the view made clear to them by the Minister for Energy. Not merely was it unnecessary from a planning point of view, but the evidence was that it was in fact contrary to the best interests of the county because it would drive away investment in exploration and the county would lose the chance of evaluating the benefits of any project put forward for planning permission. Furthermore, there was in my view no objective justification for the adoption of the ban. It was to operate in respect of all minerals, regardless of their method of extraction, value or the quantity likely to be extracted. The ban was of enormous span and it was clear, particularly from the evidence of Mr Dunleavy, that little or no thought went into the nature or the extent of the ban. It was nothing more than a crude exclusionary policy.
In concluding that the council were negligent in the sense that they did something which no reasonable authority would have done, I have yet to address the question as to whether that negligent act was done in the context of a duty of care being owed to the applicants. It is only in such context that a right to damages would arise.
147. This approach, by making findings of negligence before determining whether a duty of care exists, risks reversing the correct order of analysis. Admittedly, it was the course followed in this court in Pine Valley, where it was held that the minister could not be considered negligent without pronouncing on the existence of a duty of care. The elements of the tort of negligence are the existence of a duty of care, lack of proper care in performing that duty and consequential damage. The lack of care which we commonly call negligence consists in commission or omission of acts. In order to be actionable, the acts or omissions must be such as will reasonably foreseeably cause damage to any person to whom the duty is owed. Mere causation is not enough. As a matter of principle, it seems to me that the failure to exercise due care can only be established by reference to a recognised duty. Then one can know what sorts of act are liable to cause damage for which one is liable. This dilemma is well-illustrated by the passage from the judgment of Kelly J, which I have just quoted. At the beginning and the end of the passage, he concludes that the respondent acted as ‘no reasonable authority would have done’, a test more relevant to the validity of the exercise of statutory powers than to the failure to respect that standard of care which is owed to another to whom a duty is owed. This is consistent with the concrete criticisms made in the rest of the passage. Whether the mining ban was ‘unnecessary’ or ‘contrary to the best interests of the county. .’ or lacked ‘objective justification’ are not in my view relevant to the question of negligence. To treat these conclusions uncritically as having found the respondent to have acted negligently not only begs the question as to whether it owed the relevant duty of care but also obscures the difficult issue of liability for pure economic loss. The learned trial judge was perfectly entitled to expose the actions of the respondent to the severest criticism. However, these particular criticisms do not appear to me to have any bearing on the issue of negligence. I agree, of course, with the Chief Justice that these findings of the learned trial judge cannot be disturbed on this appeal. I also agree with his view that the making of such findings did not mean that the learned trial judge was finding the respondent to be in breach of any duty of care owed to the appellants. For these reasons, the passage in question ceases to have relevance for the issues to be decided on this appeal.
148. In these circumstances, the question has to be whether the making of an admittedly ultra vires decision can form the basis for any finding of negligence against the respondent. In this connection, the focus has to be on the legal validity of the decision. I will consider whether a public authority in the position of the respondent can be held to owe a duty of care to persons affected by its decisions to see that the decision falls within the scope of its statutory powers.
149. That seems to me to be the real issue here.
150. Let us consider the position on the hypothesis that the planning authority had the power to adopt the mining ban. On that assumption, could it have been liable to persons, natural or legal, to compensate them for economic damage suffered as the result of the incidence of the operation of the plan? In my judgment, the answer would clearly be in the negative. The development represents the culmination of a process designed to gather the views of all relevant interests, economic and social, and to give appropriate weight to them in the plan formally adopted. The authority is required to publish its proposals and receive representations from those affected or potentially affected. In its final form, it inevitably represents a whole series of compromises between potentially conflicting economic, social and environmental aims – the list is not exhaustive – and objectives. The preference given to one objective will be to the disadvantage of another and consequently to those who have an interest in that other. This is inherent in the process. In certain circumstances, a person whose property is affected by a provision in a development plan may have the right to receive compensation. Such provisions recognise the possibility that an invasion of rights for the common good may be entitled to recompense from the public purse. However, as a general proposition, those affected by the restrictive provisions of a development plan are not entitled to payment. Equally obviously, landowners affected by zoning provisions or businesses affected by restrictions adopted for policy reasons in the general interest cannot, in my view, be regarded as coming within the scope of any duty of care owed by the authority in the framing of its plan.
151. This type of effect is quite different from that which arose in Ward v. McMaster [1988] IR 337; [1989] ILRM 400. The loss suffered by the plaintiff in that case did not flow inevitably from the decision of the local authority to make the loan but rather from an act of incidental negligence in the performance of its statutory function. Similarly in Siney v. Dublin Corporation [1980] IR 400, the defendant housing authority owed a duty of care to the tenant of a flat which it provided in pursuance of its statutory power because the tenant was entitled to rely on it to ensure that the flat would be habitable. In each of these cases, an individual direct relationship came into existence by reason of the statutory context. They do not support any principle of liability arising from lack of care in the decision-making process producing foreseeable loss.
152. I return then to what I consider to be the nub of the case, whether a successful claim can be made for damages for the fact of the decision being invalid. It may be no accident that almost all of the cases in which courts have had to consider this issue concern the exercise of planning powers. The most relevant authority in this jurisdiction is Pine Valley. The judgment of Finlay CJ dealt with the claim for damages in negligence as follows:
Having regard to that finding, I am quite satisfied that the learned trial judge was right in reaching the conclusion which he did that the first defendant could not be said to have been negligent or to have been guilty of negligent misrepresentation. If a minister of state, granted as a persona designata a specific duty and function to make decisions under a statutory code (as occurs in this case), exercises his discretion bona fide, having obtained and followed the legal advice of the permanent legal advisers attached to his department, I cannot see how he could be said to have been negligent if the law eventually proves to be otherwise than they have advised him and if by reason of that he makes an order which is invalid or ultra vires. . . . I am, therefore, satisfied that in so far as the plaintiffs have appealed against the learned trial judge’s findings, that an action in damages for negligence or for negligent misrepresentation does not and cannot lie, the appeal must fail.
153. The court, having found that the minister had not, in fact, been negligent because he had taken legal advice, did not consider whether the minister would have been liable if he had taken no legal advice, in other words whether he owed a duty of care to take advice. In Pine Valley, it should be recalled, there was a close causal relationship between the losses allegedly suffered by the plaintiff and the invalidity of the decision. The plaintiff was in a position to argue at a minimum that a decision to grant planning permission would foreseeably be relied upon by potential purchasers of the affected land who would equally foreseeably suffer loss if the permission turned out to be invalid. Consequently, it could be argued that the minister should exercise reasonable care in deciding whether he had power to make the decision, In the result, the judgment of the Supreme Court did not determine whether the minister had any such obligation. He had, in fact, taken legal advice. Even though the advice was actually mistaken, the minister was not liable, because he had reasonably followed legal advice from a reputable source.
154. This problem was considered only slightly more directly in two Privy Council cases in the 1980s. In Dunlop v Woollahra Municipal Council [1982] AC 158, also, as it happens, a case concerning losses caused by an invalid planning decision, the authority had passed two resolutions subsequently held to be invalid (one for lack of vires and one for failure to observe fair procedures) which adversely affected the plaintiffs interest in a development site. Although it was expressly argued that the council owed a duty to the plaintiff to exercise reasonable care not to affect adversely his property rights by passing invalid resolutions, the Privy Council, whose advice was delivered by Lord Diplock, contented itself with saying that it shared the doubts of the New South Wales Supreme Court as to the existence of any such duty of care. It ruled against the claim in negligence on the rather more debatable ground that the plaintiff was in as good a position as the council to know that the decision was void: ‘He can ignore the purported exercise of the power’ (see p. 172.) The existence of a duty of care to take legal advice was also considered by the Privy Council in Rowling v Takaro Properties Ltd [1988] AC 473, a case which concerned a decision by a New Zealand government minister to refuse his consent under statute to an investment transaction involving the sale of shares to a non-New Zealand investor. The New Zealand Court of Appeal annulled the decision on the ground that the minister had mistakenly taken into account a reversion factor, i.e. the desirability that the property should revert to New Zealand interests. An action for damages was brought against the minister. The advice of the Privy Council on the issue of duty of care, upon which the respondent relied strongly. contains the following interesting statement (p. 500):
The character of the claim is novel. So far as their Lordship are aware, it has never previously been held that where a minister or other governmental agency mistakes the extent of its powers and makes a decision which is later quashed on the ground of excess of statutory powers or of an irrelevant matter having been taken into account, an aggrieved party has a remedy in damages for negligence.
155. The Privy Council did not, however, find it necessary to provide a definitive answer. It did, nonetheless, suggest some powerful considerations militating against the imposition of the duty of care. These may be summarised:
— since the process of judicial review is available to correct any legally erroneous administrative decisions, the effect of such decisions is likely to be limited to delay;
— it is most unlikely that a mistaken ministerial view of the law will amount to negligence: even a judge may be mistaken in construing a statute;
— the imposition of a duty of care may be counterproductive: public authorities may become over-cautious;
— it will be extremely difficult to say in which cases a minister is under a duty to seek legal advice; it would not be reasonable to expect a minister to seek legal advice before exercising a statutory discretion.
156. Even if somewhat tentatively, the Privy Council (at p. 503) suggested:
In all the circumstances, it must be a serious question for consideration whether it would be appropriate to impose liability in negligence in these cases, or whether it would not rather be in the public interest that citizens should be confined to their remedy, as at present, in those cases where the minister or public authority has acted in bad faith.
157. Counsel for the respondent also referred the court to a decision to similar effect by the Supreme Court of Canada in 1970 (Welbridge Holdings Ltd v Metropolitan Cprporation of Greater Winnipeg (1970) 22 DLR (3d) 470). That court firmly rejected as ‘incredible’ the proposition that the municipality which had in the ultimate view of a court (albeit upon the advice of counsel) acted beyond its powers could be held to have ‘owed a duty of care giving rise to liability in damages for its breach.’
158. In my judgment, the concerns of the Privy Council are highly relevant to the question of whether and in what circumstances a duty of care to act within the limits of its statutory powers should be held to exist. If a duty to obtain legal advice is to become a component of the duty of a public authority, in which cases will it apply? An enormous number of discretionary statutory powers are exercised on a daily basis. An obligation to seek legal advice even as a counsel of perfection could have a paralysing effect on public administration. As is clear from the judgment of the learned trial judge, the mere fact of an ultra vires decision does not confer a right to compensation. It is equally clear that liability of that type including liability for failure to take legal advice has never in fact been imposed. Individuals enjoy protection from the consequences of unlawful public action in three respects: firstly, if that action consists of the commission of a recognised existing tort, including, in certain cases, negligence; secondly, unlawful decisions can be quashed on judicial review; thirdly, misfeasance in public office by knowing or malicious abuse of power, combined with the right in appropriate cases to award exemplary or punitive damages is the most appropriate remedy. I do not consider that a general duty to take legal advice can realistically be imposed on public authorities.
159. As a matter of principle, it would not be wise to rule out the possibility that a case may in the future present itself where the relationship between a person liable to be affected by a ministerial or other public law decision is entitled to expect that care will be exercised in and about the decision to take legal advice and the manner of its taking. At the least, I think it would have to be shown that the statutory power in question was of the type which is designed to protect particular interests and that the plaintiff comes within its scope. In addition, it would probably be necessary for the claim to arise from the context of the type of individual transaction which was the subject-matter of Ward v. McMaster or perhaps from the sort of reliance on the expertise of another which formed the background to Hedley Byrne & Co Ltd v. Heller & Partners Ltd [1964] AC 465. I do not consider, however, that this is such a case. There is, of course, no doubt that the appellants’ interest was well known to the respondent at the time the decision was in contemplation. The appellants could scarcely have made their interest more clear or their complaint more insistent. The respondent was fully aware that the appellants would be affected by a mining ban. But that is not enough to take them out of a class of mining enterprises actual and potential similarly affected. They were not engaged in any direct legal relationship with the respondent. Their prospecting licences had been granted by the State. They had not made any application for planning permission, not that that would necessarily alter the position. In short, I do not believe that the respondent owed a duty of care to the appellants either to take legal advice or to take further steps to follow it up.
160. In addition to the foregoing, I think it is clear in any event that the effect of the legal advice actually given, as I have summarised it above, was not understood as casting any doubt on the respondent’s power to impose the mining ban. For that reason, the respondent could not be held to have acted negligently, I would uphold the decision of the learned trial judge that the respondent did not owe a duty of care to the appellants to ensure that its decision to adopt the mining ban was valid.
Legitimate expectations
161. I am in full agreement both with the learned trial judge and with the Chief Justice that the appellants have not made out a case for infringement of their legitimate expectations. This is because the particulars of failure they allege do not come, in my view, in any meaningful way at all within the concept of action or inaction by a public authority which an affected individual has the right legitimately to expect. Consequently, I am not sure that this is an appropriate case in which to delineate the contours of the principle of legitimate expectations.
162. I believe that the learned trial judge was correct in concluding that:
There is neither allegation nor evidence supporting any promise, express or implied, on the part of the respondent. It was never represented to the applicants that they would obtain planning permission. Furthermore, the applicants could not, in my view, have had a legitimate expectation that planning permission would be given for mining even in the absence of the mining ban.
163. In their written submissions, the appellants say:
The appellants submit that they had a legitimate expectation that the respondent would act lawfully; that the respondent would have regard to ministerial and governmental policy; that the respondent would only include development objectives in the development plan; that the respondent would pay due regard to the advices of the county manager, county engineer, senior executive planner and solicitor advising Mayo County Council; that the respondent would not act contrary to its legal obligations having received the letter from the Minister for Energy dated 16 December 1991; that the respondent would not seek to circumvent the statutory procedure for the making of a special amenity area order by the misuse of the powers to make a development plan; that the respondent would not seek to prejudge all applications for the development of mines within a substantial part of the area for which they were responsible; that the respondent would act legally and fairly toward the appellants.
164. None of these matters, which paraphrase and repeat the submissions of the appellants as summarised in the judgment of the learned trial judge, amount in substance to saying any more than that the appellants had a legitimate expectation that the respondent would act properly and lawfully. Kelly J was right, in my view, to seek in the evidence or submission something in the nature of an undertaking or promise or representation express or implied addressed to or applicable to the appellants. I do not say that there must be a direct nexus. It may be sufficient that the claimant belongs to a class or group of persons affected by an act which is accompanied by or implies an intention to follow an identifiable course of conduct by the public authority. Every citizen can, however, assert an expectation that public authorities will act within the law, but that is clearly not enough. If it were, the doctrine would be almost meaningless and would duplicate the ordinary right, for example, to seek judicial review of administrative action. For that reason, I would dismiss the appeal. Consequently, my further comments on this issue are obiter.
165. The principle of respect for legitimate expectations is generally acknowledged to have originated in German administrative law where it is stated to constitute a fundamental, even a constitutional principle. Its proximate origins are to be found in the decision of the Court of Justice in 1973 (Commission v Council (Case 81/72) [1973] ECR 575), a case described as the locus classicus of the principle, concerning the indexation of pay of community officials. The council had gone back on a decision to adopt an average of two indices for annual pay increases in favour of the single lower one, and the commission challenged this before the court. The court annulled the relevant parts of the Council regulation, resting its decision on what it called ‘the rule of protection of the confidence that the staff could have that the authorities would respect undertakings’ (paragraph 10 of the judgment). Thus there came to be recognised the doctrine, described in the headnote of the case as ‘legitimate confidence’ corresponding to the French ‘confiance légitime’. In the context of European Community law, the doctrine undoubtedly has potentially substantive content. Part of the milk quota regime was annulled for failure to take account of the legitimate expectations of a group of farmers who should have been allowed a quota. (Mulder v Minister van Landbouw en Visserij (Case 120/86,)[1988] ECR 2321).
166. The Chief Justice in his judgment has reviewed a number of the cases on the doctrine of legitimate expectations as it has come to be recognised independently in our courts as well as in the United Kingdom. The dilemma he identifies is whether the doctrine, as Costello J ruled in Tara Prospecting Ltd v. Minister for Energy [1993] ILRM 771, confers only a conditional expectation’ capable of being withdrawn by the authority, following a fair hearing in the public interest, or whether it is capable of conferring substantive rights. I agree with the Chief Justice that it is not necessary for the court to choose in this case between those two alternatives. The appellants have not identified any meaningful legitimate expectation.
167. It is true that an official exercising a statutory power will, in most cases, have no greater obligation than to afford a hearing to an affected individual before departing from a prior position or policy. In other cases, this may not be enough. The damage may be done. It may not be possible to restore the status quo. If the official position is altered, the court may have to furnish ‘such remedy as the equity of the case demands’ (per Denning MR in Amalgamated lnvestment & Property Co. v Texas Commerce International Bank [1982] QB 84 at p. 122). The Court of Justice seems to me to accord due weight to the competing imperatives of private justice and public policy in an often quoted passage (Tomadini v. Amministrazioni delle Finanze dello Stato (Case 84/78) [1979] ECR 1801 at paragraph 20):
… [I]f in order to deal with individual situations the community institutions have laid down specific rules enabling traders in return for entering into certain obligations with the public authorities to protect themselves – as regards transactions definitively undertaken – from the effects of the necessarily frequent variations in the detailed rules for the application of the common organisation the principle of respect for legitimate expectations prohibits those institutions from amending those rules without laying down transitional measures unless the adoption of such a measure is contrary to an overriding public interest.
168. In order to succeed in a claim based on failure of a public authority to respect legitimate expectations, it seems to me to be necessary to establish three matters. Because of the essentially provisional nature of these remarks, I would emphasise that these propositions cannot be regarded as definitive. Firstly, the public authority must have made a statement or adopted a position amounting to a promise or representation, express or implied, as to how it will act in respect of an identifiable area of its activity. I will call this the representation. Secondly, the representation must be addressed or conveyed either directly or indirectly to an identifiable person or group of persons, affected actually or potentially, in such a way that it forms part of a transaction definitively entered into or a relationship between that person and group and the public authority or that the person or group has acted on the faith of the representation. Thirdly, it must be such as to create an expectation reasonably entertained by the person or group that the public authority will abide by the representation to the extent that it would be unjust to permit the public authority to resile from it. Refinements or extensions of these propositions are obviously possible. Equally they are qualified by considerations of the public interest including the principle that freedom to exercise properly a statutory power is to be respected. However, the propositions I have endeavoured to formulate seem to me to be preconditions for the right to invoke the doctrine.
Shinkwin v. Quin-Con Ltd.
[2000] IESC 27; [2001] 1 IR 514; [2001] 2 ILRM 155 (21st November, 2000)
Keane C.J.
Geoghegan J.
Fennelly J.
122 & 152/98
THE SUPREME COURT
SAMUEL SHINKWIN
V.
QUIN-CON LIMITED AND NICHOLAS QUINLAN
JUDGMENT delivered on the 21st day of November, 2000 by FENNELLY J. (nem. diss.)
1. The present appeal concerns one principal issue namely, whether the second defendant was correctly held liable to the plaintiff for serious injuries he sustained in an accident at the factory premises where he was employed by the first defendant. The first defendant was uninsured, had no assets and did not defend the claim. Hence the plaintiffs wish to succeed against the second defendant, the effective sole shareholder and controller of the first defendant. The award was £304,000. The plaintiff lost several fingers in his right hand. Damages are not in issue on the appeal.
2. The plaintiff cross-appeals against the failure of the trial judge to find that he was employed by the second defendant, an issue which does not arise if he succeeds on the principal issue.[*2]
3. The plaintiff was twenty years of age at the date of the accident, the 3rd August 1993. The first defendant had a small factory making trophies near Clogheen, Co. Cork. He originally went to work for the defendants by way of work experience on a FÁS training programme. He began working on assembling trophies but graduated to working on woodworking machines. He was put to work on the machine which caused his injury about eight months before the accident. It was an electric circular saw with a jig which had to be moved or adjusted from time to time. The plaintiff moved the jig while the saw was in motion and while it was inadequately guarded. He had never been instructed to do otherwise. The jig shifted suddenly, as it was stiff. His right hand slipped and came in contact with the saw. He lost the index, middle and ring fingers and part of his thumb
4. The learned trial judge found in favour of the plaintiff as against the first defendant because the machine had no proper guard, or, if it did, the plaintiff was not instructed in its use. It was not seriously contested that, as found by the trial judge, the plaintiff received no training in the use of an admittedly dangerous machine and no warnings as to the dangers that were inherent in the work. In particular he was not warned to stop the circular saw before adjusting the jig.
5. As to the second defendant, the trial judge held:
“The Plaintiff regarded the second named Defendant as his boss. The second named Defendant was in my opinion, or did in my opinion, owe a duty of care to the Plaintiff as manager of the factory premises, and I am satisfied that he failed in that duty in that he failed to provide proper training for the Plaintiff. He failed to warn the Plaintiff of the dangers inherent in the work that he was obliged to do. He failed to ensure that the guard was at all times properly adjusted over the saw and [*3] he failed to ensure that the saw was switched off at all times when the jig was being moved.”
6. Counsel for the second defendant says that the fact he is virtually the sole owner of the business is not relevant. It does not impose a duty of care. The duty to provide a safe system and a safe place of work is an obligation imposed directly in law on the first defendant as employer of the plaintiff. The decision, if allowed to stand, would open the door too wide and establish a new category or basis of liability for factory managers. A fellow employee is admittedly liable personally for any direct negligent act which causes injury in the work place. However, this case is different. The second defendant must be regarded merely in the guise of manager. The faults attributed to him are mere acts of omission. Persons in such positions do not attract personal liability. He relied on the judgment of Barron J in the High Court in Sweeney v Duggan [1991] 2 I. R. and of this Court on appeal [1997] 2 I. R. 531.
7. Counsel for the plaintiff relies on the principle established in Donoghue v Stevenson [1932] AC 562 that everybody owes a duty to exercise reasonable care not to cause injury to any person who should be regarded as his neighbour, i.e. anybody to whom he is in such a relationship of proximity that it is reasonably foreseeable that that other person may suffer injury as a result of his negligent acts. The first defendant was not merely the sole effective shareholder of the plaintiff’s employer. He was also the effective and only manager. Counsel laid special emphasis on the complete control exercised by the second defendant over the factory which was the plaintiffs workplace and the plaintiff. He drew attention to the following passage from the judgment of Gannon J in Tulsk Co-operative Livestock Mart Limited v Ulster Bank Limited [unreported 13th May 1983] [*4]
“In every case in which a claim for damages is founded in negligence it is essential to examine the circumstances which bring the parties into relation with each other and in which the risks of reasonably foreseeable harm can be identified, and the extent to which each or either has control of the circumstances, with a view to determining what duty of care, if any, may exist, the nature and extent of the duty, and whether and to what extent there may have been a breach of duty of care….”
8. In order to resolve this argument, I would take two points at opposite ends of a spectrum. On the one hand, a person might be the sole effective and controlling shareholder in a business run by a company but have no involvement in its day to day operations. He would have control of the company but not of the manner in which it conducted its operations. It is clear that such a person would not, without more, be responsible to employees injured by the negligent acts of the company and, in particular, the failure of the company to ensure that there was a safe system of work in operation in its factories. That would disregard the separate legal character of the company, the principle of limited liability and the rule in Salomon v Salomon [1897] AC 22. Counsel for the plaintiff does not suggest otherwise.
9. On the other hand, any employee owes to his fellow employees a duty to exercise at least such care in the performance of his work that he does not cause direct injury to his fellow workers. An example, mentioned in the course of argument was the careless dropping of a hammer by one worker on the foot of another.
10. The second defendant, it seems, falls between these two stools. He is the effective sole shareholder and effective day to day manager. I would reduce the issue to this: did he involve himself so closely in the operation of the factory and, in particular, in [*5] the supervision of the plaintiff as to make himself personally liable for any of the acts of negligence which injured the plaintiff?
11. The evidence discloses that the plaintiff dealt personally with the second defendant from the beginning. It is true that the latter’s two sons were more physically active on the factory floor. The second defendant was often absent from the premises. Nonetheless, it was the second defendant who, about eight months before the accident approached the plaintiff about using all the machines. He was always in and out of the machine area if the shop was busy, saw the plaintiff using the machine and the difficulties he had in moving the jig. He worked with the plaintiff on the machine on at least one occasion. He repeatedly warned the employees, on his own evidence, that there was no insurance and was aware of a history of accidents that made it impossible to get insurance. He gave instructions about not playing football for the same reason. All of these factors, even though partially disputed by the plaintiff, demonstrate the intimate involvement of the second defendant in the management of the factory and supervision of the plaintiff, in particular, and his consciousness of the danger of accidents. It is in this context that his concession, in cross-examination, that he was in undisputed control of the factory becomes significant.
McCarthy J in Ward v McMaster [1988] 337 at page 349 declared his unwillingness to “dilute the words of Lord Wilberforce….”. We are here concerned only with the first stage of the two stage test adopted by Lord Wilberforce in the passage from Anns v Merton London Borough [1987]728 at 752: [*6]
“First, one has to ask whether, as between the alleged wrongdoer and the person who has suffered the damage there is a sufficient relationship of proximity or neighbourhood such that, in the reasonable contemplation of the former, carelessness on his part may be likely to cause damage to the latter……”
12. The criterion of “control” which is proposed in this case is not an addition to the test for the existence of proximity. The open textured language of Lord Wilberforce leaves wide scope for argument as to the character of “proximity or neighbourhood”. Clearly it involves more than a mere test of foreseeability of damage. The assessment of the relevance of control as well as its nature and degree will depend on the circumstances. O’Dalaigh C.J. in Purtill v Athlone U.D.C. [1968] I.R. 205 at 213 noted that “the defendants employees were in charge and control of the detonators..” which caused injury to the plaintiff in that case. In my opinion some assessment of the element of control, in the sense of “control of the circumstances,” mentioned by Gannon J in the Tulsk case, is a useful guide to the decision as to the existence of a duty of care. A person cannot be held liable for matters which are outside his control. He will not be, as the defendant in Ward v McMaster was not, in control of the plaintiff’s independent actions and should be responsible in law only for matters which are within his own control.
13. In my view, the second defendant, on the particular facts of this case, placed himself in a relationship of proximity to the plaintiff. He had personally taken on a young and untrained person to work in a factory managed by him and personally put him to work upon a potentially dangerous machine over which he exercised control to the extent of giving some [*7] though completely inadequate instructions to the workers. He was bound to take appropriate steps to warn the plaintiff of such obvious dangers as failing to stop the circular saw from revolving while adjusting the jig or to ensure that it was guarded. In his supervision and instruction of the plaintiff, he failed to do these things and was consequently negligent.
14. I do not think the decision in Sweeney is relevant, despite its superficial resemblance to the present case. The plaintiff was also the victim of an accident at the hands of an uninsured corporate employer operating, in that case, a quarry. He obtained a judgment against the company but this was unsatisfied and he was left to prove in the liquidation. He tried to fix the defendant, Duggan, with liability in a separate action on the basis that he was the principal shareholder as well as the quarry manager. The principal basis of the claim, however, was that Duggan should have seen to it that the company was insured. His failure to do so caused damage to the plaintiff, but the claim sounded in economic loss. Insofar as the claim was made for damages for personal injury it was statute barred. It emerges clearly from the judgment of Murphy J on the appeal that the claim failed because the defendant, Duggan, could not be under a greater obligation to the plaintiff in respect of insurance than was the company, which was his employer. The plaintiff failed to establish that such a term should be implied into his contract of employment. Hence, his claim also failed against Duggan.
15. Here the plaintiff makes his claim directly in negligence against the second defendant, not as employer or as shareholder but as a person who had placed himself by his own actions in such a relationship to the plaintiff as to call upon himself the obligation to exercise care. [*8]
16. It is not necessary, on the facts of the present case to express an opinion on the issue raised in the argument as to the potential exposure generally of factory managers to personal liability. Counsel for the defendant points to the serious implications, inter alia, for insurance and industrial relations of such liability. It may, however, be relevant to observe that there has never been any doubt as to the right of the employer to be indemnified by an employee who, in the course of his employment, negligently causes injury to another. (See McCarthy J in Sinnott v Quinnsworth [1984] ILRM 523 at 537) . Counsel for the plaintiff was prepared, if necessary, to cross that bridge. In the event, I find it unnecessary to do so, because of the special facts of the case.
17. In the light of what I have said, it is unnecessary also to decide whether, as the plaintiff asks, the plaintiff was employed by the second defendant. I would dismiss the appeal.
Clabby v. Global Windows Ltd. & Anor
[2003] IEHC 53 (21 January 2003)
JUDGMENT of Finnegan P. delivered on the 21st day of January 2003.
The Plaintiff was born on the 26th February 1962 and is a postman. On the 27th March 1996 he was delivering post to a dwelling house at 21 Coolatree Park, Beaumont, Dublin. The letter plate to the premises was located at the foot of the door some two inches only above ground level. The Plaintiff had a bundle of post in his hand and his post bag with the remainder of the post on his right shoulder. He bent down on his hunkers, lifted the flap to the letter plate with his left hand and inserted a letter with his right hand. On commencing to rise from his hunkers he experienced pain in his back.
In these proceedings the Plaintiff claims damages for negligence against the Defendant as the manufacturer, supplier and installer of the door in question. The particulars of negligence pleaded in the Statement of Claim are as follows –
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1. Caused and/or permitted a doorway to be installed with a low lying letterbox/ letter plate which they knew or ought to have known represented a hazard, a trap and nuisance to persons using same.
2. Failed to have any or any adequate regard for the health and safety of persons whom they knew or ought reasonably to have known were likely to use the said letterbox/letter plate.
3. Failed to have any or any adequate regard to Irish Standard 195 of 1976 of the I.I.R.S. and the recommendations contained therein in regard to the safe location of letterboxes/letter plates in doorways.
4. Failed to comply with the provisions regarding letter plates contained in BS 2911/1974.
5. Failed to have any or any adequate regard to the recommendations of An Post as to the safe location of letter plates and requests that the manufacturers and suppliers of same have regard to these recommendations.
By letter dated 20th April 2001 an additional particular of negligence was pleaded as follows –
At all times material hereto, the Defendant knew or ought to have known that postmen would be required to use the said doorway and the low lying letterbox installed
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therein for the purposes of delivering mail to the said premises. In the premises, the Defendant owed such postmen (including the Plaintiff) a duty of care in the manufacturer, supply and/or installation of the said doorway so as to ensure that the letterbox/letter plate therein would not be so installed as to create a risk of injury to such persons by requiring them to bend or stoop so as to deliver mail to the said low lying letterbox/letter plate.
The Defence delivered denies liability and pleads that the injury sustained by the Plaintiff was as a result of his own negligence and/or contributory negligence particulars of which are as follows –
1. Exposed himself to risk of injury or damage of which he knew or ought to have known
2. Failed to take care for his own safety.
3. Failed to carry out his task properly, or safely.
4. Failed to ensure that he would not injure himself while carrying out his work.
5. Failed to mitigate his loss if any.
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6. Such further and other particulars of negligence and/or contributory negligence which may be more particularly in the knowledge of the Plaintiff and may be adduced at the hearing of this action.
On the evidence adduced by the Plaintiff I am satisfied that the door in question with the letter plate situated as described was manufactured, supplied and installed by the Defendant in December 1993. I am satisfied that the Plaintiff sustained his injuries in the circumstances and manner which he described.
Low level letter plates were recognised by the Department of Posts &Telegraphs and by An Post and postmen as a problem. In Barclay v An Post & Another 1998 2 I.L.R.M. 315 the Plaintiff was a postman who sustained injury to his lower back on the 30th June 1993 in delivering a letter to a low letter plate. He returned to work at the end of August or the beginning of September 1993. On the 21ST October 1993 he was employed on overtime to deliver post to a new development of 350 houses all of which had low letter plates and he sustained a recurrence of the injury. He instituted proceedings against An Post, his employer and against the occupier of the premises at which he sustained his injury, the second named Defendant. The action against the second named Defendant was discontinued. It appears from the report at page 394 that Senior Counsel for the first named Defendant An Post accepted that low letter plates posed a danger to the health of postmen and that the type of injury suffered by the Plaintiff was foreseeable. This was not surprising in the light of the evidence which was recorded in the Judgment at pages 389 – 393 of the efforts made by the Department of Posts & Telegraphs and by An Post from 1966 up to the date of hearing to persuade various statutory bodies to regulate the positioning of letter plates
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upon the basis that low letter plates represented a health hazard in terms of potential for back injury. It was there held that the Defendant was not negligent in relation to the injury sustained on 30th June 1993 but was negligent in relation to the injury sustained on the 21st October 1993 – at that date the Defendant was aware that the Plaintiff had suffered a severe back injury in June 1993 and his back was to the knowledge of the Defendant vulnerable at the 21st October 1993 when he was sent out to deliver mail to a development where some 350 houses had low letter plates.
It appears from the Judgment at page 391 that the Department of Posts and Telegraphs had an input into IS l95 of 1976 Standard Specification (Letter Plates) Declaration 1976 in that additional material was included with. regard to the positioning of letterboxes. The foreword to the Declaration contains the following –
“Compliance with this specification will have the following advantages:-
1. Injury to postmen will be avoided.
2. Delivery of mail will be faster as the postman will not have to stoop or reach or wait for the door to be opened except on infrequent occasions.
3. Damage due to the folding of mail which is oversize for existing letter plates will be reduced.
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The requirements for the positioning and fixing of letter plates are more appropriate to a Code of Practice but are included in an Appendix in this specification for the present “.
Insofar as injury is dealt with in the Declaration it is dealt with as follows –
4.2 The various component parts of a letter plate shall be smooth and designed to preclude injury to hands when inserting mail.
Appendix A deals with the location of letter plates. The Appendix contains nothing to suggest that the possibility of injury is intended to be addressed: rather what is addressed is convenience -see Appendix A at A1.3 –
“Apart from being inconveniently situated, a letter plate that is low down enables mail to be burgled from the floor inside “.
There is a corresponding British Standard BS 2911 of 1974 and Appendix A there is identical to Appendix A in the Irish Standard.
On my reading of I.S. 195 of 1976 I am not satisfied that it was concerned with the possibility of postmen or indeed occupiers sustaining low back injury. Appendix A to the same was concerned with convenience. I am not persuaded to the contrary by the evidence of Mr. McCabe.
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In late 1994 An Post commissioned a report from Ms Auveen Byrne which dealt with the possibility of low back injury but this is subsequent to the supply of the door with which I am concerned. Following on from this An Post took a number of steps to highlight and publicise this problem. In June 1995 they wrote to among others the Irish Homebuilders Association and the Royal Institute of Architects of Ireland letters which contained the following paragraph –
“The result of badly placed letterboxes can have a detrimental effect on the health of our delivery staff. It is necessary for them to bend down virtually to ground level while carrying a bag of mail in order to place letters in low letterboxes. It is often the case that low letter plates are fitted to many if not all doors in new housing developments “.
Again the problem as identified by An Post was set out in a leaflet which they circulated widely in late 1995 –
“Serious delivery problems can occur because of the location of letterbox plates in doors.
Low letterbox plates:
Post person has to bend down to insert mail through the aperture while carrying a bag of mail.
Where low letterboxes are located in a number of consecutive houses (in a scheme) it is a major problem. Repetitive bending can cause back strain.
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Letters on the floor:
The elderly, infirm or disabled can find it very difficult to pick up letters off the floor where low letter plates are in use “.
The correspondence and the leaflet were the work of Mr. McCabe who gave evidence before me and it is clear from his evidence that he saw the problem as one of low back injury as a result of repetitive bending and this is borne out by the wording of the leaflet.
The medical evidence and in particular that of Mr. McNamee on behalf of the Plaintiff is that the risk involved in the manoeuvre being carved out by the Plaintiff is no different from that involved in picking a pin from the floor or removing a cup from a low level kitchen cupboard. Each time any such operation is carried out there is a risk. The more frequently the operation is carried out the greater the risk in mathematical terms. However repetition does not make injury more likely in medical terms. The weight of the object to be lifted is not a factor. The injury could be sustained lying in bed. The injury can be sustained when flexing forward and the risk is increased if there is a simultaneous twisting motion. The injury can be avoided by adopting a proper posture and avoiding flexing the back. The risk is increased if the flexing is accompanied by a twisting motion.
I am satisfied on the evidence of Mr. Bolger and of the Plaintiff given in cross examination that the Plaintiff was trained in lifting techniques and that as part of that training advised as to the method of effecting delivery to low letter plates. He was
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advised as to the manner in which he should position his feet and to bend down while keeping his back straight with his head down and chin in. Mr. Bolger said that this was the technique to be employed whether one was putting on socks or picking up a paper clip. Most importantly however Mr. Bolger made it very clear that the postman in carrying out such an operation should take his postbag from his shoulder. This the Plaintiff did not do. Mr. Bolger demonstrated the correct technique in court and satisfied me that it is possible without difficulty to deliver a letter to a low letter plate using the same: he could bend down keeping his back straight and perform the operation without any discernible twisting movement. On the basis of the demonstration I prefer the evidence of Mr. Bolger to that of the Plaintiff s engineer, Mr. Romeril, which was to the effect that the operation could not be carried out without flexing the back and performing a twisting motion. I am also satisfied that the possibility of carrying out the operation without flexing and twisting is made more difficult if the post bag is not removed from, the shoulder.
Statistics in relation to injuries sustained by postmen in delivering mail to letter plates of private residences for the years 1991 -1994 were produced in evidence. Having regard to the date of installation of the door at the centre of this claim statistics up to the end of 1993 appear to me to be relevant and these are as follows:
Year No. of Incidents Region Accident Details and work involved Potential Injury No. of workdays Lost
1990 None – – – –
1991 1 Dublin Strained back bending while placing mail in low letterbox. Minor 6
1992 1 Cork Cut finger in letterbox while out on door to door delivery. Minor 2
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1993 2 Dublin Strained back bending while placing mail in low letterbox. Serious 7
Dublin Strained back bending while placing mail in low letterbox. Minor 9
The two incidents recorded in 1993 must relate to the Plaintiff in the Barclay case which I have mentioned above.
A striking feature of the concern and discussion about the positioning of letter plates is that the householder is by and large ignored. It is adverted to in An Post’s leaflet as a problem for elderly, infirm or disabled householders. It is unusual in private residences to have a letter box behind the letter plate and in the great majority of private residences post will fall to the floor and in turn have to be picked from the floor by the householder. The householder in doing so runs exactly the same risk in medical terms as the postman and which the Plaintiff’s witnesses tell me is exactly the same risk as if picking up a pin or removing an item from the bottom shelf in a cupboard or say a supermarket. Other than the concern expressed in An Post’s leaflet for elderly, infirm or disabled householders performing this operation this does not appear to have been considered: it is not considered in either the Irish or British Standards. This confirms to me that the Irish Standard was concerned only with injury from sharp edges to letter plates and in Appendix A with the convenience of postal deliveries. If the concern was with health and safety one would expect at least a recommendation that a letterbox be fitted behind the letter plate to avoid the necessity of bending down to the floor to collect post.
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In the light of the foregoing I propose to consider the law as to whether the Defendant in this case owed a duty to the Plaintiff and if so the extent of that duty and whether the Defendant is in breach of the same. The law is very succinctly stated in McMahon and Binchy Law of Torts Third Edition at page 111 –
“There are four elements in the tort of negligence. These are-
1. A duty of care, that is, the existence of a legally recognised obligation requiring the Defendant to conform to a certain standard of behaviour for the protection of others against unreasonable risks.
2. A failure to conform to the required standard.
3. Actual loss or damage to recognised interests of the Plaintiff and
4. A sufficiently close cause or connection between the conduct and resulting injury to the Plaintiff”.
As to the first of these elements it is well settled that the manufacturer of a product owes a duty of care towards those who may be injured or damaged by the product. There is a co extensive duty on the supplier of the product. In Tulsk Co-op v Ulster Bank Limited High Court 13 May 1983 unreported Gannon 7. said –
“In every case in which a claim for damages is founded in negligence it is essential to examine the circumstances which bring the parties into relation with each other and in
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which the risks of reasonably foreseeable harm can be identified, and the extent to which each or either has control of the circumstances, with a view to determining what duty of care, if any, may exist, the nature and extent of the duty, and whether and to what extent there may have been a duty of care to which the damage complained of can properly be attributed”.
In 1993 the only concern which had been expressed by a statutory body is that contained in I.S. 195 of 1976 and this in its terms is limited to the danger of sharp edges on letter plates and the inconvenience to postmen of letter plates which are too low or too high. I do not see that the concern for convenience is sufficient to impose a duty of care in relation to the injury sustained by the Plaintiff. Again in terms of the risk of back injury I am not satisfied that the same can be said to be unreasonable. It is a factor in every day life that we must bend down – the pin on the floor, the kitchen, cupboard, the supermarket shelf, tying ones shoes and a myriad of other examples come to mind. If An Post had a concern it did not clearly express the same in terms of back strain until 1995 after the date of the. installation of the door with which I am concerned. Indeed to date An Post has not succeeded in persuading any statutory authority to take measures to resolve the problem. While not determinative of liability I note that new doors with low letter plates in 1993 were very common and continued to be installed both in new developments and when glazed porch doors were installed in older houses. I am satisfied on the Defendant’s evidence that it was unaware that low letter plates posed a risk of low back injury. In all the circumstances which I have outlined above I am not satisfied that the risk was one of which the Defendant ought reasonably to have been aware. Upon these findings the Plaintiff’s claim must fail.
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As to the fourth element, causation, again I am satisfied that the Plaintiff s claim must fail. The injury was caused by the manner in which the Plaintiff carried out the delivery of the letter. As a matter of probability he did not keep his back straight. He did not remove his bag from his shoulder and this I am satisfied as a matter of probability caused him to perform a twisting motion while his back was flexed. On the evidence of Mr. McNamee this is how the injury was sustained and the fact that a twisting motion was performed made it more likely that injury would be sustained and that the injury if sustained would be more severe. In these circumstances while the low letter plate was the causa sine qua non, of the injury the causa causans was the Plaintiff s own action in failing to adopt, the correct posture and maintaining his post bag on his shoulder while effecting the delivery. The Plaintiff accordingly has failed to satisfy me that the legal cause of his injury was the conduct of the Defendant.
In these circumstances I dismiss the Plaintiff s claim. No order falls to be made on the issues between the Defendant and the Third Party.
Murphy v. County Wexford VEC
[2004] IESC 49 (29 July 2004)
THE SUPREME COURT
410/2003
McGuinness J
Fennelly J
McCracken J
Between:
Kenneth Murphy
Plaintiff/Respondent
AND
County Wexford VEC
Defendants/ Appellants
[Judgment delivered by McCracken J., McGuinness J. concurring. Fennelly J. dissenting]
Judgment of Mr Justice McCracken delivered the 29th day of July 2004
This is an action by a pupil against his school authorities for damages for personal injuries suffered by him during a lunch period in the school on 7th May 1998. At the time of the accident the Plaintiff, who was 16 years of age, was with a number of other students in what was known as the recourse area, where 5th and 6th year students could go during the lunch period. There were about fifty students in the area at the time, and one of them produced a bag of chocolate bars which he offered to share. Apparently the bag had burst and a good deal of horseplay then ensued during which a number of the pupils, put by the Plaintiff as about nine, started throwing the bars around the room at each other. The Plaintiff in evidence said that this went on for about ten minutes, although the learned trial Judge felt that that was probably an overestimate. In the course of the horseplay, one of the bars struck the Plaintiff in the eye causing him serious injuries. There had been no supervision of any kind by the Appellants on that day in the area where the incident took place. The learned trial Judge found that the school had been negligent and awarded the Respondent the sum of €50,000.
In its defence, the Appellants pleaded contributory negligence on the part of the Respondent. In opening the case, Counsel for the Respondent said:-
“The plaintiff himself will concede that he may have thrown one or two himself during the period leading up to the injury. He will freely concede that.
He also said:-
“A full defence is being delivered, including an allegation of contributory negligence alleging that the plaintiff himself indulged in excessive horseplay. I don’t think the plaintiff will dispute that, as I’ve already said in my opening.”
In fact in giving evidence the Plaintiff did dispute that he had indulged in excessive horseplay. He said that he did not throw a chocolate bar at anybody, although he threw one onto the ground. He also said that he moved into the window sill to try to avoid the bars.
The only other witness called on behalf of the Respondent was another pupil, a Mr Kevin Keane. He gave evidence of taking the Respondent to the Principal’s office after he had been injured, and that he did not come across any teachers until he got to the Principal’s office. He was not cross-examined as to how far the Respondent had taken part in the horseplay.
At the end of the Respondent’s evidence, Counsel for the Appellants applied for a direction, and stated that he was not going to go into evidence. As a result, the only evidence which the learned trial Judge had before him was that of the Respondent and of Mr Kevin Keane. From the evidence of these witnesses it emerged that about two years before this incident the Appellants had introduced a supervision rota system, whereby the school was divided into four areas, each area to be supervised by a teacher during lunch hour. This arose because there had been serious incidents in 1996 in which there had been fights in the school which had resulted in some twenty pupils being expelled. After the rota was introduced, it appeared to work efficiently, and the Respondent’s evidence was that there was reasonably good supervision, but there were still fights in the school.
Both parties accept that the duty of care owed by a school is correctly set out in Lennon v. McCarthy & Anor, an unreported judgment of the Supreme Court of 13th July 1966, in which O’Dalaigh CJ said:-
“The duty of a school master is to take such care of his pupils as a careful father would of his children (per Lord Esher MR in Williams v. Eady [1893] 10 TLR 41). But when normally healthy children are in the playground it is not necessary that they should be under constant supervision: Rassthrane v. Ottley [1937] 3 All ER 902.”
Counsel for the Appellants also relied on the decision of Laffoy J in Flesk v. King (unreported 29th October 1996), in which she said that:-
“The Irish authorities established that the law does not require children in the school playground to be under constant supervision and watched at every instance.”
Quite clearly, school authorities are not insurers of the pupils under their care. However, they do owe a duty to those pupils to take reasonable care to ensure that the pupils do not suffer injury. To do this, some degree of supervision is clearly required. The extent of such supervision will depend on a number of factors, for example, the age of the pupils involved, the location of the places where the pupils congregate, the number of pupils which may be present at any one time, and the general propensity of pupils at that particular school to act dangerously.
The evidence shows that in the Appellants’ school there had been serious disciplinary problems, following which the Appellants considered it necessary to ensure that a teacher was present in certain specific areas, including the area where this incident took place, during lunch hour. It must be made clear that the question is not what the Appellants considered necessary, but what is objectively necessary to comply with the Appellants duty of care. However, the undisputed evidence of this case is that there had been problems which had resulted in twenty pupils being expelled, that following the introduction of the rota system the supervision was reasonable, and that for some unexplained reason the rota system did not operate on the day in question, and there was no supervision. It is also the undisputed evidence of the Respondent that, had a teacher been present, the horseplay which resulted in his injury, would not have been allowed to take place.
The learned trial Judge expressed his view as follows:-
“In the absence of any explanation and in the presence of this schedule I have to take the view that the school decided …. The school is of the opinion that there should be supervision, that there was not supervision, that had there been supervision this incident would not have taken place. In those circumstances, and again I say in the absence of … this would have been a circumstance in which the school could have explained and possibly explained to my satisfaction, but in the absence of such explanation I have to find for the plaintiff.”
While the learned trial Judge can certainly be criticised for emphasising what the school had decided, the fact remains in my view that the undisputed evidence before him could only lead to one conclusion, namely that there had been a need for supervision, supervision had taken place on a consistent basis with considerable success, but that on this occasion, such supervision was not present and this unfortunate incident took place. The learned trial Judge was perfectly entitled to reach the conclusion, which was supported by the Respondent’s own evidence, that the incident would not have taken place had there been proper supervision. I am of the view that the particular circumstances of this case, and the history of indiscipline in the school, imposed a duty of care on the Appellants to provide supervision at lunch time in accordance with its rota system, and that the failure to do so constituted negligence on the part of the Appellants.
I am also of the view that there is no evidence of contributory negligence on the part of the Respondent. The learned trial Judge must decide the case on the evidence before him, and not on concessions possibly made by the Respondent’s Counsel in opening the case.
Accordingly, I would dismiss this appeal and confirm the decision of the learned trial Judge.
THE SUPREME COURT
Appeal No. 410/2003
McGuinness J.
Fennelly J.
McCracken J.
BETWEEN
KENNETH MURPHY (FORMERLY A MINOR NOW OF FULL AGE)
Plaintiff/Respondent
and
COUNTY WEXFORD VEC
Defendant/Appellant
JUDGMENT delivered on the 29th day of July, 2004 by FENNELLY J.
This is an appeal from the judgment and order of de Valera J awarding €50,000 to the plaintiff for an eye injury sustained at school. The appeal is confined to the liability issue.
At the outset of the hearing counsel for the Appellant said that the trial had been unsatisfactory, but conceded that this was the responsibility of the Appellant. It appears that counsel applied for a direction and stood on the application, when it was refused, i.e., did not call any witnesses. In fact, it appears that any witnesses had been allowed to leave. In effect, the case was heard on the Plaintiff’s evidence.
The plaintiff, who was sixteen at the time, was in fifth year at the VEC School at Enniscorthy. The plaintiff and his class were in the recourse area, an area for students to congregate before teacher arrived for the afternoon classes. This was at lunch time, a period from 12:50 to 13:40, on 7th May 1998. This area was reserved for fifth and sixth class students. There were about 50 students in the area. One of the plaintiff’s companions arrived with a packet of chocolate bars which he offered to everyone. The packet burst; there was a suggestion that the bars were out of date and that the other students did not want them. Whatever the reason, bars started to be thrown about. About nine people were throwing bars. The plaintiff’s description was:
“Well, basically, it escalated there was bars being thrown around the resource area. They were hitting off the lockers and some were hitting the windows. One actually hit me before the accident actually happened. It basically got out of hand.”
Probably correctly, the learned trial judge thought the “ten-minute” description a bit exaggerated.
The plaintiff was struck in the eye by one of the bars and sustained the quite serious injuries which warranted the award of €50,000. He said that he was sitting at the window beside one of his friends waiting for the teacher. He said: “A bar came from the left hand and struck me in the eye.”
The liability of the Appellant depends on the issue of supervision. The plaintiff said, in evidence, that there was normally supervision, but that there was none on the day. The Appellant had made discovery. The discovered documents were admitted and showed that there were four teachers who were supposed to supervise four different areas at lunch break. One of these was the resource area. The uncontradicted evidence was that there was no one supervising the resource area on the day in question.
There was some evidence to suggest that, at an earlier stage, there had been a history of quite severe fighting in the school, which led to the introduction of the rosters. The plaintiff said that there was then a full regime of supervision. “Everyone knew that if someone did something wrong there would be a teacher down on their back in minutes or seconds.”
The totality of the evidence for the plaintiff was that of the plaintiff and of one of his sixteen-year old companions, one K Keane who merely confirmed that he saw no teacher in the area at the relevant time and that the build-up of the horse play lasted only a few minutes.
The plaintiff called no other evidence, and, in particular, no expert evidence. However, it is clear that the principal, if not the sole, plank of the plaintiff’s claim on supervision was that there was a roster of teachers who were supposed to supervise the various areas of the school, including the senior resource area, at lunch break. This case was based on admitted documents produced through discovery. At any rate, there was no objection to the plaintiff’s use of these documents. Moreover, it was not disputed, through cross-examination, either that, in accordance with the roster, a teacher was assigned to supervise the area or that there was no teacher in the senior resource area at the relevant time.
In these circumstances, counsel for the Appellant applied for a direction and, at the same time, made it quite clear that, in the light of the evidence of the plaintiff, he would not go into evidence. Having cited to a number of the leading relevant authorities on the standard of care expected of school management, to which I will refer later, he submitted that the defendant (i.e. the Appellant) had no case to answer. It is clear, therefore, that the Appellant invited the learned trial judge to decide the case on the evidence before him, but by reference to the authorities cited to him.
The learned trial judge commenced by saying: “we all have experience of this sort of thing.” He continued:
“In this matter what concerns me, what I take note of, is that the school authorities themselves obviously had come to the conclusion, because of the schedule that has been discovered, that it was necessary to have lunchtime supervision for this area and they scheduled a teacher to look after that supervision.
The incident that occurred, and I have to say that things have changed since my time, if there was a packet of chocolate biscuits brought into my school the fight would have been to get them not to throw them away, but if there had been a teacher supervising, if there had been a supervisor, I have no doubt that they would have at least taken steps to control the situation.
I accept that 10 minutes is probably an exaggeration but it is probably an exaggeration of the length of time this was taking place, but is a perfectly understandable, perfectly normal sort of situation, other than my comment about fighting to get them rather than to give them away. It is a perfectly understandable situation which could be controlled by a teacher and probably would have been controlled by a teacher. I am told that the school took the view that there should be supervision by a teacher.
Now, in the absence of any explanation it may well be that the school could explain the situation and could explain it to my satisfaction, but there is nobody here from the school and I wasn’t asked for an adjournment. Had I been asked to adjourn this matter because teachers were not in a position to attend in the circumstances I would have given it sympathetic consideration, subject to anything Mr Doyle might have said.
In the absence of any explanation and in the presence of this schedule I have to take the view that the school decided – the school is of the opinion that there should be supervision, that there was not supervision, that had there been supervision this incident would not have taken place. In those circumstances, and again I say in the absence of – this would have been a circumstance in which the school could have explained and possibly explained to my satisfaction, but in the absence of such explanation I have to find in favour of the plaintiff”.
That is the entirety of the learned trial judge’s ruling on the legal issues which had been addressed to him. He did not refer in any way to the legal submissions which counsel for the Appellant had addressed to him. Nor did he identify the nature of the duty of or the standard of care. It is appropriate to refer then to those cases.
Firstly, counsel had referred to the ex tempore judgment of Laffoy J in the case of Flesk v King (High Court, Unreported 29th October Act of 1996). In that case, Laffoy J had held: “The Irish authorities establish that the law does not require children in the school playground to be under constant supervision and watched at every instant.” Laffoy J had relied on a passage from McMahon & Binchy on The Irish Law of Torts. Counsel referred to a similar passage, possibly from a later edition. Secondly, counsel then referred to the unreported decision of this Court in Lennon v McCarthy (unreported 13th July 1966), which, he stated, supported the proposition that “when normally healthy children are in a playground it is not necessary that they should be under constant supervision.” Thirdly, counsel relied, to similar effect on the English decision, cited by O’Dalaigh C.J. in Lennon v McCarthy, of Rawsthorne v Ottley and others [1937] All ER 902, where Hilbery J, presiding at the Manchester Assizes, held that: “…it is not the law and never has been the law that a schoolmaster should keep boys under supervision during every moment of their school lives.”
The authorities so cited by counsel addressed the standard of care, which objectively, lies upon school authorities in respect of their duty to safeguard pupils under their care. The standard is, as stated by O’Dalaigh C.J. “to take such care of his pupils as a careful as a careful father would of his children.” While counsel for the defendant did not articulate the standard in those express terms, he cited a number of authorities all of which were based on that proposition.
Counsel for the plaintiff, in reply, quoted, without apparent objection, from the affidavit of discovery sworn on behalf of the Appellant and stated: “That is their own system, that is what they have sworn on affidavit is the regime of supervision to which they aspire and which they aspire in their in their school.” Later, he said:
“The defendants’ own system, as they have admitted, is that they have somebody supervising every day the senior resource area; that is their system. They have singularly and very obviously failed to live up to that system….”
In reply, counsel for the plaintiff referred again to the judgment of Hilbery J referred to already regarding the standard required by the law.
In one sense, counsel for the Appellant took somewhat of a risk in not going into evidence. That aspect of the case, as counsel conceded, was something for which responsibility lies entirely on the Appellant, which cannot now complain of its failure to call witnesses who could have been made available. However, the Appellant was entitled, in my view, to expect that the learned trial judge would give a ruling based on the authorities cited to him and on the applicable legal principles. The learned trial judge chose, instead, to decide the case exclusively, as he was invited by counsel for the plaintiff, on the basis that, since, the school had adopted a roster for supervision, adherence to that standard had to be taken as the appropriate standard of care for the purpose of deciding the case. In my view, that was a mistaken approach. It substituted a new subjective approach test for that ordained by the law. The implication is that, if a schoolmaster takes an excessively cautious view, and makes provision for total and absolute supervision of pupils during every moment of the school day, the school will be liable for any departure from that standard. I do not think the school should, in law, be liable for departure from a standard not required by the law. Yet, that seems to be the consequence of the decision of the learned trial judge in this case.
Because of his reliance on the school’s own roster, the learned trial judge failed entirely to address the appropriate legal standard of care. He not only made no reference to the cases cited to him but he failed to identify any objective standard of care.
Counsel for the Appellant argued at the hearing of the appeal that the learned trial judge took a leap by applying the roster and that the result was that he applied a standard which was contrary to the authorities and which required constant supervision. I agree with this submission.
For this reason, I would allow the appeal, but in circumstances where the learned trial judge did not rule on the matter in accordance with the submissions, there should be a retrial.
Marion McKenna Plaintiff v. Best Travel Limited
trading as Cypriana Holidays and Chudleigh Limited trading as The Holiday Shop Defendants
[S.C. Nos. 73 and 79of 1997]
Supreme Court 18th November 1997
[1998] 3 IR 58
Hamilton C.J.
18th November, 1997
I have read the judgment about to be delivered by Barron J. and I agree with it.
Keane J.
I also agree.
Barron J.
The first defendant is a tour operator which arranges,inter alia, holidays in Cyprus, Egypt and Israel. The second defendant is a travel agent through whom such holidays may be booked. In August, 1990, the plaintiff and her sister booked a holiday in Cyprus with the first defendant through the agency of the second defendant. The brochure produced by the first defendant on which the plaintiff chose her holiday contained also details of a mini-cruise to Egypt and Israel which could be booked on arrival in Cyprus. It is common case that the plaintiff wished to purchase such a mini-cruise in Dublin but was informed that this could not be arranged and that that cruise was bookable only from Cyprus. In the event, on arrival in Cyprus the plaintiff booked such a cruise.
This cruise brought the plaintiff both to Egypt and to Israel. It involved,inter alia, a coach tour in Israel including both Jerusalem and Bethlehem. While in the coach and close to Bethlehem a stone was thrown through the window of the coach driver’s door striking the plaintiff on the mouth as a result of which she sustained serious injuries.
These proceedings have been brought to recover damages for the personal injuries so sustained. The claim is brought both against the tour operator and the travel agent concerned. It is founded both in contract and in tort. In the course of the trial in the High Court, the learned High Court Judge found that there had been no breach of contract on the part of either defendant but that there had been a breach of the duty of care and found for the plaintiff. The defendants have appealed to this Court from that judgment. There has been no cross-appeal.
The sole issue on the hearing of the appeal was whether or not a warning should have been given to the plaintiff concerning the state of unrest which then existed in and around Bethlehem. The learned trial judge found that such a duty was owed having regard to the then existing political situation in the area in Israel through which the plaintiff would have been travelling and where the incident occurred. This resulted in tension and confrontation between the residents of the area and the security forces controlling it, which was heightened by the Iraqi invasion of Kuwait at the beginning of August. In addition the managing director of the second defendant gave evidence to the effect that during the period concerned she would have advised her staff to advise any customers who asked them about Israel and Egypt tours not to travel on such tours.
Although the ultimate responsibility for the safety of the tourists must lie with the tour operator, the travel agent must also familiarise itself with the conditions likely to be met by such person. Although the mini-cruise was not booked through the second defendant, it was aware that the plaintiff and her sister intended to travel on it. In these circumstances, its duty of care was the same as if the tour had been booked through it.
Andrew Madden v Irish Turf Club
, the Irish National Hunt Steeplechase Committee, Cahir O’Sullivan and John Harvey
1993 No. 140
Supreme Court
17 February 1997
[1997] 2 I.L.R.M. 148
(Nem. Diss.) (O’Flaherty, Blayney and Murphy JJ)
17 February 1997
O’FLAHERTY J
(Blayney and Murphy JJ concurring) delivered his judgment on 17 February 1997 saying: This is an appeal brought by the defendants from the judgment and order of the High Court (Morris J) of 2 April 1993, awarding the plaintiff £18,930.80 damages as a result of the defendants’ alleged negligence.
Background
The plaintiff is a solicitor by profession. He is also a keen racegoer. On 12 January 1989, he went to a race meeting at Punchestown. The races that day were over jumps, with the exception of the sixth and last race on the card which was a race run on the flat under national hunt rules. All the races that day were under the rules as contained in a book entitled ‘Rules of Racing and Irish National Hunt Steeple Chase Rules’. The edition which was relevant to this case is dated 1989, and reference to ‘rules’ in this judgment are to the rules as contained in that edition. The first and second named defendants are respectively concerned with the management of flat and national hunt racing in this country. The remaining defendants are officers of the defendants.
The races and the tote
The Racing Board controls the tote. The tote management provided for a jackpot on the occasion in question. A jackpot bet is a pool bet on four races. The punter decides which horses to bet on and then buys a ticket to cover the horses, a selection is made in four races and, seemingly, these are always the third, fourth, fifth and sixth races on the card. The plaintiff entered for the jackpot and duly selected the winning horse in the third, fourth and fifth races and for the sixth race he selected a horse named Lucky Bucket . The race was won by Dell of Gold. Lucky Bucket came second.
The plaintiff testified at trial that he was a serious follower of form. He knew that Dell of Gold had run in jump races and had not shown a lot of form. He did not know that the horse had run in England, at Wolverhampton and Ripon. So, *151 he was not disposed to nominate this horse as a potential winner of the race in question.
Winner not qualified
Dell of Gold was not qualified to run in the race. This is because of rule 79(v) of the rules which provides:
No horse shall be qualified to start for an Irish National Hunt flat race which has run in a flat race as a two year old or three year old or in a hurdle race at three years old.
Dell of Gold had run on the flat as a two year old in England and that had disqualified it under rule 79(v) of the rules.
The defendants found out that the horse had not been qualified to race and so it was disqualified on 27 January 1993, and Lucky Bucket was declared the winner. It appears that Lucky Bucket had beaten the third horse home by five lengths.
The totalisator betting conditions provided at paragraph 37(2) as follows:
The result of any race shall be deemed to be the result as determined under the rules governing racing at the ‘All right’ and no subsequent event shall have any effect whatsoever and when the manager has ordered the winnings or refunds to be paid, no backer of any other horse in that race, or of any combination containing any other horse in that race, shall be entitled to receive winnings or refunds on that race notwithstanding that by a decision of the stewards or the racing authority or otherwise the race is declared void or any horse shall be declared to be the winner or to have been placed in that particular race instead of the horses declared at the “All right” to be the winner or to have been placed or whatever may afterwards result, any rule of law or rule of racing of any nature or kind to the contrary notwithstanding.
The term ‘All right’ is defined in the conditions to mean the time at which the stewards authorise the appropriate signal to be given indicating that the riders in a race have weighed-in to the satisfaction of the clerk of the scales in accordance with the rules governing the race, irrespective of whether the signal is in fact given.
So, as far as the tote management was concerned, the winner of the race was and would always be deemed to be Dell of Gold , notwithstanding subsequent events.
Defendants’ function and obligation
It is part of the defendants’ function and obligation to make sure that horses that are not qualified do not enter races for which they are not qualified. While there *152 seems to have been an extensive debate at the court of trial as to whether it would be expecting too much of the defendants to have picked up the fact that this horse was not qualified that submission, having been rejected by the trial judge, was not pursued before us to any degree. It appears that only about 150 horses (not 190 as stated in the High Court judgment) come from England each year. On the other hand, there is no doubt that since racing is such a worldwide sport and business nowadays, and horses are shipped from one end of the globe to the other, an argument based on hardship of performance might be sustainable if we were concerned with a horse brought from far away, but it is sufficient to say that issue was not raised for resolution as far as this case is concerned.
Is there a duty of care?
Instead, Mr Feeney SC, for the defendants takes a more pre-emptive position: which is to submit that in the circumstances of this case there was no duty of care owed by the defendants to the plaintiff. He rests this on two bases. He submits, in the first instance, that the frame, so to speak, in which the plaintiff was operating was that he had a contractual relationship with the tote management. The plaintiff knew the number of horses that were in the particular race; he had a choice as to which horses he would nominate; he knew the rule that once the ‘All right’ was given then that was to be the result for all time as between the tote management and himself — no matter what was uncovered afterwards. Further, he submits that there was not such a relationship of neighbourliness between the parties as to give rise to a duty of care. In this regard he referred us to two decisions of this Court, Ward v. McMaster [1988] IR 337; [1989] ILRM 400 and Sunderland v. Louth County Council [1990] ILRM 658 as well as to the High Court decision of Blayney J in McMahon v. Ireland [1988] ILRM 610. He submits that the correct test is to be found in these cases rather than in the two cases on which the learned trial judge relied: McNamara v. ESB [1975] IR 1 and Purtill v. Athlone Urban District Council [1968] IR 205. The latter cases dealt with the duty of care that may be owed by an occupier to persons coming (even as trespassers) on his premises. The three cases on which Mr Feeney relies establish, so he submits, that it is essential in the case of a claim for economic loss — whatever about claims for personal injuries or physical damage — that a duty of care must be established through the relationship of the parties.
Analysis of the cases cited
In the Ward case the local authority advanced a loan to an indigent couple in respect of a dwellinghouse which turned out to be totally uninhabitable. The council took the view that a valuer’s report would suffice to show that the house provided sufficient security for the amount advanced. And so it appeared to the valuer. The council did not think it necessary to go further and have the house professionally surveyed.
*153
This lack of care would not have given the plaintiff a right of action in the absence of the special relationship that arose between the parties because under the Housing Act 1966, the council had obligations to provide housing for those otherwise unable to fund the purchase of a house. As Henchy J said (at p. 342):
It is necessary for [the plaintiff] to show that the relationship between him and the council was one of proximity or neighbourhood which cast a duty on the council to ensure that, regardless of anything left undone by the plaintiff, he would not end up as the mortgagor of a house which was not a good security for the amount of the loan. A paternalist or protective duty of that kind would not normally be imposed on a mortgagee in favour of a mortgagor, but the plaintiff was in a special position.
McCarthy J (at p. 349), in taking a somewhat different stance to the trial judge, said that he would:
… prefer to express the duty as arising from the proximity of the parties, the foreseeability of the damage, and the absence of any compelling exemption based upon public policy. I do not, in any fashion, seek to exclude the latter consideration, although I confess that such a consideration must be a very powerful one if it is to be used to deny an injured party his right to redress at the expense of the person or body that injured him.
Sunderland’s case decided that a planning authority in the exercise of its power under the Local Government (Planning and Development) Act 1963, owes no duty of care at common law towards the occupiers of buildings erected in its functional area to avoid damage due to defective siting and construction.
McCarthy J, speaking for the court (at p. 663) pointed out the fundamental difference between planning legislation and housing legislation when he said:
… the first is regulatory or licensing according to the requirements of the proper planning and development of the area but the second is a provision in a social context for those who are unable to provide for themselves; if they are unable to provide for themselves then the duty on the provider reaches the role that would be taken by professional advisers engaged on behalf of the beneficiary. This is in marked contrast to the watchdog role that is created under the Planning Act, a watchdog role that is for the benefit of the public at large.
He also went on to refer to the role of An Bord Pleanála and thought that if a duty lay upon the board it would be a very wide one and it could not have been the intention of the legislature to make the board liable on what would be a vast scale.
See, too, the judgment of Keane J in Convery v. Dublin County Council Supreme Court 1995 No. 401, 12 November 1996.
*154
In the McMahon case, Blayney J was concerned with whether there was a sufficient relationship of proximity between the Registrar of Friendly Societies (having regard to his statutory duties and obligations) and the plaintiff, as a depositor with a provident society who had lost money, as to place the registrar under a duty of care towards her. He said (at p. 613):
It seems to me that the first issue that has to be considered is whether the registrar owed any duty of care to the plaintiff as, in the absence of such a duty, he could not have any liability in negligence. And this involves considering whether there was a sufficient relationship of proximity or neighbourhood between the registrar and prospective depositors as to place the registrar under a duty of care towards persons who came within that class, as did the plaintiff. It is clear that there was nothing the registrar could have done to save the plaintiff from loss after she had deposited the money. So the inquiry is limited to the question of whether the registrar owed her a duty when she was still a prospective or would-be depositor.
Having considered the decision of the Privy Council in Yuen Kun Yeu v. Attorney General of Hong Kong [1988] AC 175, he followed the reasoning contained in the opinion of the Privy Council in that case and held that there was not such close and direct relations between the registrar — his essential function being supervisory and regulatory — and the plaintiff as to give rise to any duty of care on the part of the registrar towards the plaintiff.
The plaintiff’s stance
Mr McCann SC, for the plaintiff agrees that, of course, there are cases where the parties are sufficiently remote from each other that a duty of care does not arise. However, he says that the activity of betting on horse racing is so integral a part of the racing scene that the parties are in sufficient proximity and that the defendants must be held to owe a duty of care to his client. The punter depends on those holding horse races to take reasonable care that only qualified horses are allowed to compete.
Policy considerations
There is no doubt that if this proposition were accepted, it would have very wide consequences. It would mean that if through any one of a myriad of circumstances a horse that should have won did not win, and it could be shown that this was due to carelessness on the part of the defendants, then there would be, to adopt the dictum of Cardozo CJ ‘liability in an indeterminate amount for an indeterminate time to an indeterminate class’: Ultramares Corporation v. Touche (1931) 255 NY 170 at p. 179. That, in turn, brings into play public policy considerations. While Mr Feeney (who did not appear in the High Court) has drawn attention to the wide ramifications attendant on imposing liability in *155 circumstances such as the present case in regard to horse races as well as sporting events in general, it must be said that the public policy argument was not advanced in the High Court.
Conclusion
I have come to the conclusion that no duty of care was owed by the defendants to the plaintiff in the circumstances of this case. The betting aspect of race meetings is separate from the defendants’ essential function which is to regulate and control horse races at various courses throughout the country. No doubt, from time to time, the defendants will incur obligations to owners, trainers and jockeys; just as these persons have duties and obligations towards the defendants. The rules expressly provide that the stewards are to take no cognisance of any disputes or claims with respect to bets (rules 19 and 23). Further, the plaintiff’s contractual relationship was with the tote management and that erected a barrier so as to prevent such close and direct relations to occur as is necessary to give rise to a duty of care between the plaintiff and the defendants.
In this regard it is apposite to recall that Lord Atkin in his formulation of the duty of care in Donoghue v. Stevenson [1932] AC 562 put it thus (at p. 580):
You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be liable to injure your neighbour. Who, then, in law, is my neighbour? The answer seems to be — persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected when I am directing my mind to the acts or omissions which are called in question. (emphasis added)
It is clear from the rules, already referred to, that the defendants did not contemplate having any liability in respect of betting mishaps and, instead, expressly provided in the rules that they were to have nothing to do with them. I appreciate the point that this is not, of course, a case about a betting dispute but, nonetheless, the rules are relevant in indicating that the betting aspect of race meetings must be kept in a separate compartment.
In this case, it is clear that the defendants’ chief function is to administer horse racing in as orderly a fashion as possible and carry out their system of checks and balances in relation to owners, trainers and jockeys as well as horses in accordance with their rules. This case provides a good example of how they discharged their obligation to the owners etc. of Lucky Bucket . The horse was awarded the first place and the owner and trainer, no doubt, were given the relevant prize money and whatever else was due to the winner. The matter of how gambling, whether on the tote or otherwise, is conducted belongs to a different regime for which they have no responsibility.
As regards the public policy argument, since it was not debated in the court *156 below and since it is not necessary for any decision in this case, I leave over consideration of that point to a case where it will be necessary for resolution of the matter in debate.
In the circumstances, I would allow the appeal.
Representation
The duty of care in tort arises from the proximity created by the contractual relationship. The duty of care extends to all matters concerning the safety, well-being and comfort of the tourists which by the nature of the relationship between the tourists and those providing the service would or should be known to the latter but not to the former. The standard of knowledge to be attributed to the tourists is that of someone who having decided to go on holiday to a particular country, or area or place within that country, might be expected to have gained from advertisements or news items relating thereto. The standard of knowledge to be attributed to someone in the travel industry is that of the person on the spot providing the service.
In the instant case, the fact that there was tension in the area does not of itself mean that tourists coming into the area would be at any risk or at any particular risk. Taking the evidence of the managing director of the second defendant to be a reference solely to the areas covered by the mini-cruise there was no evidence to suggest that she had any particular knowledge of the circumstances on the ground at that time. No doubt she genuinely wished to ensure that her customers did not get involved in what she believed was an area of unrest. Nevertheless it was a policy personal to her. There was no evidence that it was advice offered by any other travel agents in Ireland nor was there any circular from the Irish Travel Agents Association dealing with that area or persons travelling to it.
Evidence was given to the effect that the bus company providing the service would make inquiries daily as to whether it was safe to run the service. This has been suggested as an indication of something which should have been the subject of a warning to the plaintiff. Unfortunately, there are very many risks and dangers associated not only with foreign travel but with day to day living. The security industry is growing ever bigger. It cannot be suggested that persons providing services to the public have an obligation to inform the public not only that they provide security but the extent and nature of that security. To do so would be to make life practically impossible both for those providing the services and those accepting them.
The defendants in this case were not insurers that nothing would happen to injure the plaintiff. Their obligation stops at taking all reasonable steps to ensure the safety and well-being of their customers. The fact of unrest in certain parts of Israel at the material time was well known and a tour operator is entitled to assume such knowledge on the part of its
customers. What it is not entitled to assume is knowledge on the part of its customers which it acquires in its capacity as a tour operator.
The test is what a reasonably prudent tour operator exercising reasonable care would consider it necessary to inform those travelling with it. The evidence is that large numbers of tour buses had been bringing tourists to Bethlehem daily without incident. The best case for the plaintiff is that there was an incident involving a tourist nine months before. That did not warrant any particular knowledge of danger which required passing on to a tourist who must be presumed to be aware of the general conditions in the area to which she was travelling.
I would allow this appeal and dismiss the plaintiff’s claim.
Gilmer v Mayben
Circuit Court
19 March 1898
[1899] 33 I.L.T.R 35
Johnson J.
Johnson, J.
There is no right established here on the part of the plaintiff to have the fence kept in repair by the defendant even as to any part. Prima facie a person who excavates the ditch must have placed it on his own land, and the person on whose land it is is prima facie bound to repair the whole of it. In this case Gilmer, and not the defendant, is bound to do this, for the bank is on Gilmer’s side. Owing to his not having done this his cattle have strayed on Mayben’s ground on more than one occasion, and, at length, tired of taking them back to the owner, the defendant turned them out. The plaintiff’s duty at Common Law is that he must keep his own cattle on his own land, and the presumption of the Common Law is that the person whose fence it is is bound to keep it in repair. But the other party may, as alleged in this case, assume an obligation other than that at Common Law. However, I am satisfied that the story of the agreement that each was to keep half of the fence in repair is an invention. The plaintiff has no case.4
Scanlon v. Ormonde
[2000] IEHC 188 (21st June, 2000)
THE HIGH COURT
1996 No. 6894 P
BETWEEN
REGINALD CECIL SCANLON
PLAINTIFF
AND
ORMONDE BRICK LIMITED
DEFENDANT
JUDGMENT of Mr. Justice Barr delivered the 21st day of July, 2000.
THE FACTS
1. The history of the relationship between the parties and the facts which have given rise to the dispute between them do not appear to be in significant controversy and are as follows:-
2. The plaintiff is a farmer and resides at Coolbawn, Castlecomer, Co. Kilkenny. For upwards of 100 years until quite recent times coal-mining was carried out in the Castlecomer area where there were several anthracite mines, including one on the plaintiff’s lands which was mined by his ancestors as an adjunct to their farming activities. Most of the mines were underground, including that on the plaintiff’s lands, and the method of extraction adopted was to remove the anthracite leaving pillars of coal at intervals to support the land above which included a covering of shale. In short, after anthracite mining was completed on
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2
the plaintiff’s lands three products remained which are relevant to this action i.e. the shale; fireclay which was beneath the coal seams and the supporting pillars of coal.
3. The defendant is a limited liability company which is engaged in the business of making bricks. Shale and fireclay are required in that connection. In or about 1989 the defendant was known as Irish Clay Industries Limited. It was then interested in acquiring the plaintiff’s extinct mine as a source of shale and fireclay. It had no interest in the pillars of coal. I accept the plaintiff’s evidence, which was not challenged, that in 1989 the defendant company was an independent commercial entity of modest proportions with limited financial resources. Negotiations took place which led to an agreement in writing between the parties made on 9th March, 1989 under which the plaintiff conveyed to the company the adjoining properties described in folio’s 993F and 5889 of the County Kilkenny Register comprising in all 46 acres or thereabouts which were referred to in the trial as Scanlon 1 and Scanlon 2. The purchase price was £73,000 and in the interest of reducing the cash price, the parties agreed that the plaintiff would reserve to himself any coal deposits, including the pillars exposed in course of the defendant’s shale and fireclay operations i.e. as part of the purchase price the plaintiff would have the benefit of coal (in particular the pillars) as it became available in course of the defendant’s operations. The special conditions which form part of the contract include the following:-
“7. The Purchaser shall fence the boundaries marked X-X: Y-Y and P-P on the map endorsed hereon to the Vendor’s satisfaction in four strands of heavy gauge barbed wire using concrete poles 4”x 4” x 5’ embedded in concrete at 10 feet intervals with appropriate straining posts. In addition along the boundary Y-Y the Purchaser shall provide a screen of trees to the Vendor’s
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satisfaction and a drain on the Purchaser’s side of the boundary properly excavated. The said screen of trees shall provide an adequate screen and shall be put in place within one year of works commencing.
8. The Vendor reserves out of the said lands any coal deposits, pillars or otherwise exposed in the course of the Purchaser’s works and shall have the right to mine and remove any such deposits….”
4. I am satisfied that condition number 7 was intended to provide certain demarcation boundary fencing and a particular screen of trees. It does not limit such obligations as the defendant may have had regarding the protection of the plaintiff’s coal on the site from unauthorised removal by third parties.
5. A pertinent historical note relating to coal-mining at Castlecomer is that over the years a custom developed whereby miners and their families regarded themselves as being entitled to enter the mining areas and remove coal for their own use. The unauthorised removal of anthracite by miners was in some cases more extensive and they engaged in the sale of coal thus obtained. It seems that traditionally the mine owners turned a blind eye to such activities which were never formally sanctioned but were not regarded as pilfering in the strict sense of the term.
6. Subsequent to the making of the foregoing contract the defendant changed it’s name to Ormonde Brick Limited. It also ceased to be an independent enterprise and became part of the Cement-Roadstone group of companies.
7. In or about May, 1990 contractors on behalf of the defendant commenced operations at Scanlon 1 and removed shale then covering approximately 2 acres of ground on the northern side of the land. It was duly taken to the defendant’s brick factory and in
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4
accordance with the contract pillars of coal were left on site undisturbed. The plaintiff was so advised on behalf of the defendant. In or about the last week of May, 1990 the plaintiff was told by the defendants that the extraction of shale in the area in question had been completed and that he was free to enter the lands and remove coal there in accordance with the contract. The plaintiff engaged a contractor for that purpose who entered the site and removed coal from the area where the shale had been extracted by the defendant. The removal of coal continued for a period of 4 days with the knowledge and approval of the defendant company. In course of that period a substantial amount of coal was removed and brought to the plaintiffs adjoining yard for preparation and bagging with a view to sale which commenced on 7th June, 1990. At that time it was also intimated to the plaintiff on behalf of the defendant that following the removal of shale by its contractors and coal by or on behalf of the plaintiff, it was intended that the defendant’s contractors would then remove fireclay which lay under the original seam of coal.
8. On the 4th day of the coal removal operation the plaintiff was informed by a senior official of the defendant company that no further coal was to be taken from the site. The plaintiff asked for an explanation and was told that the coal was not theirs to give him. Protracted negotiations then took place and it emerged that the root of the difficulty was that there was no statutory mining licence authorising removal of the coal by the plaintiff. Subsequently negotiations also involved the State Mining Board and continued for several years. It is unnecessary to examine the ramifications of that particular problem (which ultimately was resolved) because it is irrelevant to an assessment of the defendant’s obligations to the plaintiff in connection with protecting the coal on its lands in his interest. It does explain the reason for the moratorium on the further removal of coal by the plaintiff from the lands in question until in or about 1997. The practical difficulty which that delay
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brought about was pilfering of coal pillars in Scanlon 1 as they became accessible consequent upon removal by the defendant of shale and fireclay during that period. From commencement of operations by the defendant on the site its practice on completion of the removal of shale from a given area, was to leave a small covering of shale over the coal seam and pillars. This did not provide any significant protection against pilfering. I am satisfied that for years after the defendant excluded the plaintiff from the site and terminated its original authority to enter and remove coal in accordance with the foregoing contract, wholesale pilfering on a commercial scale occurred on Scanlon 1 and the plaintiff was thereby deprived of the practical benefits of the contract in terms of extraction of coal from that area which, in effect, was part of the purchase price of the conveyance of the lands by the plaintiff to the defendant.
9. The plaintiff was excluded from the lands by the defendant in or about the first week of June, 1990. Immediately thereafter trespass on the property commenced by local persons in search of coal. It has not been disputed that removal of coal in an organised commercial way commenced about a week later and was undertaken by teams of men working with tractors and trailers and the necessary equipment to remove coal and coal pillars from the location. Such activity was carried out at all times but particularly at night. The plaintiff complained about what was going on to senior officials in the defendant’s employment. He forwarded to them the names of the persons who were removing the coal but no action was taken to prevent such trespass. The plaintiff also reported the matter to the Garda Síochána but they were also disinclined to take any action in the matter in the light of the longstanding local custom of unofficial removal of coal from mines to which I have referred. The end result is that the plaintiff has suffered substantial financial loss through being deprived of coal which is his property and which is also a readily saleable commodity. It is also not in dispute that in the course of a State Mining Board hearing in 1992 the plaintiff
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complained that he had been prevented by the defendant from working coal on the lands pursuant to the terms of his contract with the company. In response the defendant’s legal advisor assured the Mining Board at the meeting that the defendant was prepared to honour that agreement.
THE ISSUES
10. The first issue I have to consider is the proper interpretation of special condition number 8 in the contract regarding the reservation by the plaintiff of coal deposits on the land. As already stated, the condition is as follows:-
“The Vendor reserves out of the said lands any coal deposits, pillars or otherwise exposed in the course of Purchaser’s works and shall have the right to mine and remove any such deposits.”
11. It has been argued on behalf of the defendant that no liability arises on foot of that condition because the coal pillars were not “exposed” by the defendant in the course of their work and, therefore, a condition precedent to any liability they might have has not arisen. I accept that from the beginning it was the practice of the defendant’s contractor, having removed shale or fireclay from a given area, to leave the coal pillars covered by a thin layer of shale. It seems that the pillars were not, therefore, exposed in the literal sense of that word. I have no doubt that “exposed” in the context of condition number 8 means “made available for removal” i.e. made readily accessible for that purpose. That is how the clause was interpreted and operated by both parties up to the time when the defendant terminated the
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plaintiff’s right of entry to the lands for the purpose of removing the coal because of a perceived difficulty as to it’s ownership and/or the need for a State mining lease/license.
12. I am satisfied that at all material times the plaintiff did in fact “own” the coal deposits in question pursuant to a permission from McGregor and Sons (Ireland) Limited which held a 35 year lease from Wandesford Estate Co. to carry on open cast mining operations in an area of land which included that which is the subject-matter of the plaintiffs contract with the defendant. It is also conceded in the report of the Mining Board dated 14th December, 1992 that the minerals in question were State minerals “privately owned by Wandesford Estate Co.” In the context of the relationship between the plaintiff and the defendant a practical difficulty was that when entering into the contract of 7th March, 1989 neither party adverted to the necessity for obtaining a mining lease/license from the Minister for Energy under the Mineral Developments Acts, 1940 and 1979. I accept the submission made on behalf of the plaintiff that under the Acts although the coal in question falls within the definition of “State Minerals”, it does not alter the ownership thereof. In the light of the foregoing it follows that after completion of the contract the defendant was in possession of the lands containing the coal which was an asset owned by the plaintiff and forming part of the consideration for the contract. In short, the defendants were in possession of property belonging to the plaintiff which he could not legally remove.
13. It seems to me that the relationship between the parties in this case is analogous to that of bailment which may exist independent of contract. What duty did the defendant as bailee owe to the plaintiff as bailor of the coal? It was held by Barron J. in Sheehy -v- Faughnan [1991] ILRM 719 that a bailee owes a duty to a bailor to take reasonable steps to prevent loss to the bailor, and where loss has occurred, the onus of proof is on the bailee to show that it did not occur through lack of reasonable care on his part. See
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also judgment of the Court of Appeal in Houghland -v- R.R. Low (Luxury Coaches) Limited [1962] 2 AER 159 .
14. Applying the judgment of Barron J. in Sheehy -v- Faughnan I am satisfied that in the instant case the defendant had a duty to take reasonable steps to prevent loss to the plaintiff through pilfering of his coal from the defendant’s lands. The coal was inaccessible until the top soil and shale were removed by the defendant pursuant to its operations on the land in connection with the extraction of shale and fireclay. Having removed the shale and top soil from a given area the underlying pillars of anthracite became readily accessible and vulnerable to unauthorised removal as was soon clearly established. I accept the plaintiff’s evidence that organised pilfering on a commercial scale was happening throughout the period of the defendant’s operations and perhaps thereafter in consequence of which Scanlon 1 was in effect stripped of coal and the plaintiff has thereby suffered substantial loss.
15. The fact that large scale pilfering over a protracted period of time without significant let or hindrance by the defendant was happening, even though from the beginning it was made aware of what was going on, itself indicates that reasonable efforts were not made by or on its behalf to protect the plaintiff’s coal. The line taken on behalf of the defendant (vide a letter from their solicitors dated 13th January, 1993) was that they denied having any liability to protect coal from being unlawfully taken by third parties from the lands. However they did not regard themselves as having any obligation to stop the pilferers. It was contended (as was the fact) that the defendant had complied with the fencing requirements set out in clause 7 of the special conditions of the contract and that that was all they were required to do. As already stated, I am satisfied that special condition 7 did not limit their liability in the matter of protecting the coal as contended by their solicitors. It is obvious that such fencing did not and would not protect the lands from coal pilfering and that
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substantially more was required to provide reasonable protection of the plaintiff’s interest. That obligation was all the more obvious and important bearing in mind that, as the defendant was aware, the value of the coal in question was in effect part of the agreed purchase price.
16. Unauthorised access to that part of the contract lands called Scanlon 1 appears to have been through either the adjacent Delaney gates or the defendant’s gates which are shown in the photographs introduced in evidence at the trial numbered 11 and 28 respectively. Although securing the Delaney gates by ensuring that they could not be lifted off their hinges was probably a relatively simple matter, it was not until the mid 1990’s that any steps were taken in that regard. It also emerged in evidence that no action was taken to increase the height of the main gate into Scanlon 1 until after the coal had been removed from that area. Mr. Eddie Power, who is responsible for the defendant’s security arrangements, conceded in evidence that the digging of a trench at the boundary of the Scanlon/Delaney lands would have prevented unauthorised tractors and trailers being brought onto Scanlon 1 which was fundamental to the illegal removal of coal on a commercial scale. The defendant had appropriate machinery on the site to carry out such works but failed to do so. In response to the plaintiff’s contention that an important security measure would have been the provision of such a trench, it was stated on behalf on the defendant that they required to bring a large bulldozer onto Scanlon 1 via the adjacent Delaney lands about six times a year. It seen-is to me that the plaintiff’s contention that a “tracked” vehicle such as the bulldozer could have negotiated the proposed trench is probably correct. Alternatively, the trench could have been filled for a short distance to allow access and then re-excavated or a temporary metal “bridge” could have been used. It also is of interest that there was a substantial disparity between security maintained by the defendant on the other part of the land known as Scanlon 2 about which no explanation was given. Another alternative which was open to the defendant was to
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negotiate with the plaintiff the purchase of his interest in the coal in question thus avoiding the risk of deterioration in their relations with the local wrongdoers. Whatever about financial difficulties which the defendant may have had when the contract was made in 1989, they ceased to apply soon afterwards when the defendant became part of the Cement Roadstone group of companies.
17. The onus is on the defendant to show that it took reasonable care to secure coal on its land at Scanlon 1 for the benefit of the plaintiff in accordance with the contract made on 9th March, 1989. The evidence establishes that in breach of contract and in breach of duty as bailee it failed to do so in consequence of which the plaintiff suffered substantial loss. This finding is borne out by the fact that although the identity of the primary culprits was known to the defendant from the beginning nothing of any significance was done to restrain the wrongdoers or to protect the plaintiff’s interest for several years when it was too late.
18. There is one other issue on liability raised in the defendant’s defence i.e. limitation of damages under the Statute of Limitations, 1957 section 1 l(l)(a) and 2(a) which limits the loss sustained by the plaintiff to that which occurred during the period of six years ending on the date of issue of the plenary summons in the action on 7th August, 1996. The plaintiff has conceded that soon after he was prohibited from continuing the removal of coal from Scanlon 1 in or about the first week of June, 1990 substantial pilfering of coal in commercial proportions commenced and it seems continued up to the crucial date from which damages may be claimed i.e. 7th August, 1990. There is no firm information as to the quantity of coal wrongfully removed during that period of approximately two months, but a significant reduction must be made in that regard from the total value of the plaintiff’s claim.
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DAMAGES
19. I have considered all of the expert evidence and reports regarding the probable residue of coal in Scanlon 1 which was lost through pilferage. I have also taken into account the report of the Department of Industry and Commerce prepared in July, 1964 which was introduced in evidence by the defendant and indicates a remaining residue of coal amounting to about 10% in the general vicinity of Scanlon 1. All in all, it seems to me that it is fair and reasonable to both parties that I should assess the percentage residue of coal in Scanlon 1 at the time when the contract was made in 1989 as being 10% i.e. 862 tonnes of anthracite. I also accept the assessment of the plaintiff’s chartered accountant, Mr. Richard Smyth, that overheads involved in extracting such coal would have been about 8% of gross value. Accordingly, as calculated by Mr. Williams, the plaintiff’s chartered minerals surveyor, the net value of the loss of coal from Scanlon 1 after deduction of 8% overheads is £95,164. I assess the value of pilfered coal at Scanlon 1 during the defendant’s operations there up to 7th August, 1990 at £10,000 – credit should be given also for £10,173 for coal extracted from Scanlon 1 by the plaintiff (see Richard Smyth’s report) – thus reducing the net value of his claim to £74,991. He is also entitled to interest at the court rate on that amount. I shall hear further argument as to the date from which interest should run.
William Carroll v C.I.E.
The High Court On Circuit
8 October 1969
[1970] 104 I.L.T.R 171
McLoughlin J.
McLoughlin J.:
The Railway Company is clearly not required to erect walls along the railway line, which would ensure that cattle were incapable of getting on to it. Under the Railways Clauses Consolidation Act, 1845, section 68, a railway company’s duty is to, and I quote from the section,
“… make and … maintain … sufficient posts, rails … or other fences, for separating the land taken for the use of the railway from the adjoining lands not taken, and protecting such lands from trespass, or the cattle of the owners or occupiers thereof from straying thereout …”.
The whole point, then, upon which this case turns, is whether or not the cattle strayed. If they did stray, then obviously the fence in question was not “sufficient” within the meaning of the Act and the Company would be in breach of their statutory duty.
I cannot find with any certainty the cause of the cattle leaving their pasture field and escaping on to the railway line, but there is some evidence to suggest that for some reason, whatever it might be, they did force their way through the fence.
In the case before me there is conflicting evidence as to the condition of the fence. I am, however, satisfied that it was, in fact, erected and maintained in the normal way.
Because of this, it seems to me that the cattle could not have just strayed, but that they forced their way through the fence.
Therefore, I uphold the decision of Judge Maguire that the defendants were not in breach of their statutory duty section 68, of the Railways Clauses Consolidation Act, 1845, and no negligence, as alleged, has been proved by the plaintiff.