In Smith, the lender instructed a valuer who knew that the buyer and mortgagee were likely to rely on his valuation alone. The valuer said his terms excluded responsibility. The mortgagor had paid an inspection fee to the building society and received a copy of the report, and relying on it, had bought the house. In Harris, the plaintiffs applied to the council for a mortgage, and paid the inspection fee. The form said that the valuation was confidential, and solely for the benefit of the council, which itself denied responsibility for the valuation or condition. The plaintiffs were advised to obtain their own survey. The council instructed their own employee valuer, who recommended it subject to minor repairs. His report was not shown to the plaintiffs. When the plaintiffs came to sell, the same valuer recommended a structural survey. Extensive structural repairs were required, and the property was uninhabitable and unsaleable. The plaintiffs claimed against the council and the valuer.
Held: The valuers each owed a duty of care to the buyer: ‘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, and there is a sufficiently proximate relationship between the parties and that it is just and reasonable to impose the liability.’ The court did not think that ‘voluntary assumption of responsibility is a helpful or realistic test of liability.’
Lord Templeman said: ‘the relationship between the valuer and the purchaser is ‘akin to contract’. The valuer knows that the consideration which he receives derives from the purchaser and is passed on by the mortgagee, and the valuer also knows that the valuation will determine whether or not the purchaser buys the house.’ and ‘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 Griffiths: ‘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’ and ‘I have already given my view that the voluntary assumption of responsibility is unlikely to be a helpful or realistic test in most cases. 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 sufficient proximate relationship between the parties and that it is just and reasonable to impose the liability.’ and
With regard to sections 11(3) and 13(1) of the 1977 Act, Lord Griffiths said: ‘I read these provisions as introducing a ‘but for’ test in relation to the notice excluding liability. They indicate that the existence of the common law duty to take reasonable care, referred to in section 1(1)(b), is to be judged by considering whether it would exist ‘but for’ the notice excluding liability.’
Lord Jauncey: ‘The words `liability’ for negligence in section 2(2) must be read together with section 13(1) which states that the former section prevents the exclusion of liability of `notices which exclude or restrict the relevant obligation or duty’. These words are unambiguous and are entirely appropriate to cover a disclaimer which prevents a duty coming into existence. It follows that the disclaimers here given are subject to the provisions of the Act and will therefore only be effective if they satisfy the requirements of reasonableness.’ The terms were unfair under the Act.
Also Harris v Wyre Forest District Council;
Orse Smith v Bush
Judges:
Lord Griffiths, Lord Jauncey, Lord Templeman
Citations:
[1989] 2 WLR 790, [1990] 1 AC 831, [1989] 17 EG 68, [1989] 2 All ER 514, [1990] UKHL 1
Links:
Statutes:
Unfair Contract Terms Act 1977 1 2 11(3) 13(1)
Jurisdiction:
England and Wales
Citing:
Approved – Ross v Caunters (a firm) ChD 1979
The court upheld a finding of negligence against a firm of solicitors for failing to ensure the correct attestation of a will, and also the award of damages in favour of a disappointed beneficiary.
A solicitor owes a duty of care to the party . .
Cited by:
Cited – Merrett v John RH Babb CA 15-Feb-2001
The applicant had been employed as a surveyor by a firm which had subsequently become insolvent. The firm’s run off professional indemnity insurance had lapsed. He had provided the negligent survey, and he was sued in person.
Held: He was . .
Cited – Merrett v John RH Babb CA 15-Feb-2001
The applicant had been employed as a surveyor by a firm which had subsequently become insolvent. The firm’s run off professional indemnity insurance had lapsed. He had provided the negligent survey, and he was sued in person.
Held: He was . .
Cited – Caparo Industries Plc v Dickman and others HL 8-Feb-1990
Limitation of Loss from Negligent Mis-statement
The plaintiffs sought damages from accountants for negligence. They had acquired shares in a target company and, relying upon the published and audited accounts which overstated the company’s earnings, they purchased further shares.
Held: The . .
Cited – National Westminster Bank v Utrecht-America Finance Company CA 10-May-2001
An agreement between the parties for assignment or novation of a credit agreement, contained a ‘take out’ agreement (‘TOA’). The defendant began proceedings in California to rescind the agreement, and the claimants obtained summary judgement under . .
Cited – Platform Home Loans Ltd v Oyston Shipways Ltd and others HL 18-Feb-1999
The plaintiffs had lent about 1 million pounds on the security of property negligently valued at 1.5 million pounds. The property was sold for much less than that and the plaintiffs suffered a loss of 680,000 pounds. The judge found that the . .
Cited – Commissioners of Customs and Excise v Barclays Bank Plc ComC 3-Feb-2004
The claimant had obtained orders against two companies who banked with the respondent. Asset freezing orders were served on the bank, but within a short time the customer used the bank’s Faxpay national service to transfer substantial sums outside . .
Cited – Customs and Excise v Barclays Bank Plc CA 22-Nov-2004
The claimant had obtained judgment against customers of the defendant, and then freezing orders for the accounts. The defendants inadvertently or negligently allowed sums to be transferred from the accounts. The claimants sought repayment by the . .
Cited – First National Commercial Bank Plc v Loxleys (a Firm) CA 6-Nov-1996
The plaintiff claimed damages from the seller of land and from their solicitors for misrepresentation in the replies to enquiries before contract. He appealed a striking out of his claim.
Held: A lawyer’s disclaimer placed on his Replies to . .
Cited – JD v East Berkshire Community Health NHS Trust and others HL 21-Apr-2005
Parents of children had falsely and negligently been accused of abusing their children. The children sought damages for negligence against the doctors or social workers who had made the statements supporting the actions taken. The House was asked if . .
Cited – Farraj and Another v King’s Healthcare NHS Trust and Another QBD 26-May-2006
The claimants sought damages after the birth of their child with a severe hereditary disease which they said the defendant hospital had failed to diagnose after testing for that disease. The hospital sought a contribution from the company CSL who . .
Cited – HM Customs and Excise v Barclays Bank Plc HL 21-Jun-2006
The claimant had served an asset freezing order on the bank in respect of one of its customers. The bank paid out on a cheque inadvertently as to the order. The Commissioners claimed against the bank in negligence. The bank denied any duty of care. . .
Cited – Welton, Welton v North Cornwall District Council CA 17-Jul-1996
The defendant authority appealed a finding that it was liable in negligence from the conduct of one of its environmental health officers. The plaintiff had set out to refurbish and open a restaurant. He said the officer gave him a list of things he . .
Cited – Platform Funding Ltd v Bank of Scotland Plc (Formerly Halifax Plc) CA 31-Jul-2008
The parties disputed the extent of duty owed by a surveyor to a lender relying on his valuation of a property to be loaned.
Held: The valuer’s appeal failed. The valuer had valued the wrong property, after being misled by the borrower. The . .
Cited – Glaister and Others v Appelby-In-Westmorland Town Council CA 9-Dec-2009
The claimant was injured when at a horse fair. A loose horse kicked him causing injury. They claimed in negligence against the council for licensing the fair without ensuring that public liability insurance. The Council now appealed agaiinst a . .
Cited – Cramaso Llp v Ogilvie-Grant, Earl of Seafield and Others SC 12-Feb-2014
The defenders owned a substantial grouse moor in Scotland. There had been difficulties with grouse stocks, and steps taken over years to allow stocks to recover. They had responded to enquiries from one Mr Erskine with misleading figures. Mr Erskine . .
Cited – Steel and Another v NRAM Ltd (Formerly NRAM Plc) SC 28-Feb-2018
The appellant solicitor acted in a land transaction. The land was mortgaged to the respondent bank. She wrote to the bank stating her client’s intention to repay the whole loan. The letter was negligently mistaken and the bankers allowed the . .
Cited – Banca Nazionale Del Lavoro Spa v Playboy Club London Ltd and Others SC 26-Jul-2018
The Playboy casino required a reference for a customer, but asked for this through a third party. The bank was not aware of the agency but gave a good reference for a customer who had never deposited any money with them and nor to whom it had issued . .
Cited – Poole Borough Council v GN and Another SC 6-Jun-2019
This appeal is concerned with the liability of a local authority for what is alleged to have been a negligent failure to exercise its social services functions so as to protect children from harm caused by third parties. The principal question of . .
Lists of cited by and citing cases may be incomplete.
Professional Negligence, Contract
Leading Case
Updated: 11 February 2022; Ref: scu.192619