Negligence –– Duty of care –– Local authority enquiries –– Sale of land –– Local authority providing reply in relation to public highways and highways maintainable at public expense –– Local authority replying that identified highway maintainable at public expense –– Whether local authority owing duty of care –– Whether local authority aware of purpose of enquiry and purchase –– Whether local authority negligent
In 1988, the appellant wished to acquire a property that he intended to develop as three blocks of flats. In front of the property was a highway known as the Banks, and between the Banks and the property was a footpath known as the Slope. The appellant’s solicitor made enquiries of the respondent local authority as to whether the adjoining highways were maintainable at public expense. In respect of the Banks, the respondents stated that it was maintainable at public expense, but they stated that a “shared private access” was not (the reply). The appellant completed the purchase and then commenced the development of the flats. However, in January 1990 the respondents informed the appellant that the Slope was not, in fact, part of the maintained highway. An adjoining owner brought proceedings alleging unlawful interference with the Slope and was awarded damages, although the Court of Appeal concluded that the Slope was built on the public highway. The appellant then brought proceedings against the respondents alleging that they had been negligent in their reply to the enquiries, and claiming damages based upon financial loss arising as a consequence of the dispute over ownership of the Slope. In the court below, the judge held that the reply was false, and in the absence of any special undertaking of liability, the duty of care owed by the respondents was limited to the provision of information to enable the appellant to know whether he would have any liability as a frontager for the upkeep of the Banks. Accordingly, there was no duty of care so far as the purpose of developing the property was concerned. The respondents had not been aware of any special purpose that the appellant had in making his search. Further, the respondents had not been negligent. The appellant appealed and the respondents cross–appealed.
Held: The appeal and the cross–appeal were dismissed.
Per Arden LJ: (1) The reply amounted to a statement by the respondents that the Slope was included in the Banks. (2) The evidence at trial had not established that the Slope was maintainable at public expense. (3) The information that the appellant asked for in his enquiry of the respondents was not comparable to the information that the purchaser of registered land sought from the local land charges registry in Ministry of Housing and Local Government v Sharp (1970) 213 EG 1145. To found a duty of care satisfying the conditions for liability for negligent misstatement summarised by Lord Bridge in Caparo Industries plc v Dickman [1990] AC 605 required the appellant to establish that the reply was plaintiff–specific, purpose–specific and transaction–specific. The appellant had satisfied the first condition, since he (by his solicitor) applied for the information. He had also satisfied the second condition, and had been owed a duty of care with respect to the reply for the purpose of deciding whether to acquire the property. But in relation to the third condition, the respondents could not have known that the appellant proposed to develop the property; the appellant had failed to satisfy that condition. (4) The fact that the reply was inaccurate did not mean that it had been negligently given; the respondents had not been negligent. (5) As the respondents had not provided the reply for the purposes of developing the property, the costs of development would not have been recoverable.
Per Buxton LJ: Consistently with Lord Bridge’s formulation in Caparo, a claimant intending to acquire property for development must show that it was from development losses that a local authority owed a duty to save him harmless. The appellant had failed to establish that the respondents had had knowledge that the appellant intended to develop the property, and had therefore failed to establish the duty of care for which he was contending. If the respondents had owed a duty of care, they had not been negligent in discharging that duty.
Per Sir Andrew Morritt V-C dissenting: The respondents had known that the purpose of the appellant’s enquiry was to ascertain whether certain highways were maintainable at public expense because of the effect it might have on the appellant’s ability to develop the land and provide access. The scope of the duty of acre had extended to the consequences of the Slope not enjoying the status of a highway maintainable at public expense. The respondents had been in breach of their duty of care.
The following cases are referred to in this report.
Banque Bruxelles Lambert SA v Eagle Star Insurance Co Ltd [1997] AC 191; [1996] 3 WLR 87; [1996] 3 All ER 365; [1996] 2 EGLR 93; [1996] 27 EG 125, HL
Candler v Crane Christmas & Co [1951] 2 KB 164; [1951] 1 All ER 426, CA
Caparo Industries plc v Dickman [1990] 2 AC 605; [1990] 2 WLR 358; [1990] 1 All ER 568, HL
Gold Coin Joailliers SA v United Bank of Kuwait plc [1997] PNLR 217
Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465; [1963] 3 WLR 101; [1963] 2 All ER 575; [1963] 1 Lloyd’s Rep 485, HL
Ketley v Gooden (1997) 73 P&CR 305, CA
Ministry of Housing and Local Government v Sharp [1970] 2 QB 223; [1970] 2 WLR 802; [1970] 1 All ER 1009; (1970) 68 LGR 187; 21 P&CR 166; [1970] EGD 139; 213 EG 1145, CA
Platform Home Loans Ltd v Oyston Shipways Ltd [2000] 2 AC 190; [1999] 2 WLR 518; [1999] 1 All ER 833; [1999] 1 EGLR 77; [1999] 13 EG 119
Reeman v Department of Transport [1997] 2 Lloyds Rep 648; [1997] PNLR 618
Scott Group v MacFarlane [1978] 1 NZLR 553
Ultramares Corporation v Touche (1931) 174 NE 441
Overseas Tankship (UK) Ltd v Morts Dock & Engineering Co (The Wagon Mound) (No 1); sub nom Morts Dock & Engineering Co v Overseas Tankship (UK) Ltd [1961] AC 388; [1961] 2 WLR 126; [1961] 1 All ER 404, PC
This was the hearing of an appeal by the claimant, Sidney Gooden, and a cross–appeal by the defendants, Northamptonshire County Council, in proceedings by the claimant for damages for negligence.
Andrew de la Rosa (instructed by Bower & Bailey, of Oxford) appeared for the appellant; Thomas Jefferies (instructed by Shoosmiths, of Nottingham) represented the respondents.
Giving judgment, ARDEN LJ said:
1. This appeal arises out of the dismissal by Mr John Martin QC, sitting as a deputy judge of the Chancery Division, of the action brought by the appellant, Mr Gooden, in negligence against the respondents, Northamptonshire County Council (the council). Mr Gooden alleges that the council were negligent in their reply to enquiries that his solicitor made. After the reply was received, Mr Gooden, and his then partner Mr Thompson, proceeded to buy the property to which the enquiries related.
2. The property to which the enquiries related comprised 1 The Banks, Long Buckby, Northamptonshire, and a separate piece of property owned by the owner of 1 The Banks, behind that property, known as Bradshaws Yard. I will refer to these sites together as “the property”. Access to 1 The Banks was obtained via a highway known as the Banks. Between the carriageway of this highway and the frontage of no 1 is a pavement that is on a slope built up from the road. This slope has a railing in front of it, and it is known as “the Slope”. The Slope leads to a private right of way that, in turn, leads from the Banks to Bradshaws Yard. This right of way also leads to a footpath in front of 3–15 The Banks before stopping altogether. The dispute in this case has arisen in connection with the Slope. The judge found that Mr Gooden purchased the property believing that the Slope was maintainable at public expense, and that, accordingly, the local authority had statutory powers to alter it. In fact, the owners of nos 3–15 subsequently alleged that they had rights of way over the Slope, and indeed claimed ownership of it. They contended that they had maintained it. The property is now vested to Mr Gooden alone, and accordingly I will omit further reference to Mr Thompson.
3. Mr Gooden wished to acquire the property for the purpose of developing it as three blocks of flats. For this purpose, he would need to make a vehicular access to the Banks over the Slope, which would have to be lowered for the purpose. Mr Gooden appreciated that he needed to be sure that he could get access to the property. In April 1988 he contacted Mr Ian Davies, of Daventry District Council, who advised that he would need an adopted access agreement, that is an agreement with the local authority under which the local authority agreed to maintain the access once constructed. Mr Gooden than contacted the council’s highways department. There were a number of site meetings with representatives of the council. In particular, there was one on 10 June 1988, for which an attendance note was prepared by Mr Mansfield, an officer in the highways department of the council. The meeting was attended by Mr Mansfield, Mr Ian Davies, chief planning officer of Daventry District Council, and Mr Gooden. The judge found that at this meeting, access to the property was extensively discussed. The meeting note is short, but it contains the following:
1. applicants to prepare survey to meet area surveyor to discuss the position of the HWB [the highway boundary] and step along frontage.
2. Applicant to discuss surface water outfall with Daventry Engineer
3. Possibility of access area road was 2.5m x 40m splays. If possible close off existing access in Church Street. Ian Davies no great objection planningwise.
4. Before purchasing the property, Mr Gooden’s solicitor made the usual enquiries, including enquiries of the council as highway authority. The form of enquiry (form LLZ 2862) contains headnotes as follows:
(1) This Form of Enquiry is approved by the Law Society, the Association of County Councils, the Association of District Councils and the Association of Metropolitan Authorities and is published by their authority.
…
(3) The Replies below are furnished after appropriate enquiries and in the belief that they are in accordance with the information presently available to the officers of the respective Councils, but on the distinct understanding that neither the District Council nor the County Council, nor any officer of either council, is legally responsible therefor, except for negligence
…
(8) Where no plan of the property is furnished with the Requisition for Official Search or this Form of Enquiry, neither the District Council nor the County Council can be expected to know the boundaries of the property, and the Replies are given on the basis of the information as to these available to the Councils in their offices. The furnishing of a plan in duplicate will help the Councils to give accurate Replies and may save time. The Councils must reserve the right in any particular case to call for a plan in duplicate sufficient to enable the boundaries of the property to be identified on the ordnance survey map before furnishing Replies.
5. The Form was divided into Part I and Part II, but only Part I is directly relevant. It contains questions as to the public maintenance of highways, and such matters as proposals for new roads and trunk roads, and proposals for compulsory purchase of the land for highway improvement. On 16 June 1988 Mr Gooden’s solicitor submitted a search request in this form to the council. The form identified the relevant property as “1, The Banks, Long Buckby and land nearby”. A large–scale plan was attached, upon which the property was identified by cross–hatching and a thick line showed the boundaries of the component parts of the property.
6. The relevant enquiry (referred to below as the Enquiry) was as follows:
1. (A) Are all the roadways, footpaths and footways referred to in the Description of the Property maintainable at the public expense within the meaning of the Highways Act 1980?
(B) if not, please state whether the Council have passed any resolution either to
(i) make up any of the roadways, footpaths or footways at the cost of the frontagers,
(ii) adopt any of them without cost to the frontagers.
(C) (i) have the Council entered into any outstanding agreement relating to the adoption of any such roadway, footpath or footway?
(ii) if so, is such agreement supported by a bond?
The expression “highway maintainable at public expense” is defined in section 329(1) of the Highways Act 1980, but nothing turns on that definition. The word “highway” is defined in section 328 of the Highways Acts 1980, and it means the whole, or part, of a highway.
7. The council replied to enquiry 1(A). The reply (the reply) was as follows:
The Banks – Yes
Shared private access – No
The council answered enquiry 1(B)(i) and (ii) and 1(C)(i) “No”. In those circumstances, enquiry 1(C)(ii) did not arise. After receiving the reply, Mr Gooden acquired the property and applied for planning permission to redevelop the property as three blocks of flats. This application was opposed by local residents, and the solicitor for the owner of 11 The Banks wrote to the council claiming that the Slope was owned by residents of The Banks.
8. On 4 January 1990, the council, having considered the reply further, wrote to Mr Gooden’s solicitor, notifying it that:
the footway abutting the Banks [ie the Slope] is not part of the maintained public highway.
9. Subsequently, Mr Gooden obtained planning permission and demolished 1 The Banks. He constructed two of the three blocks of flats with an access, which he agreed with the local authority. However, Mr and Mrs Ketley, the owners of no 3, started proceedings against him. The Ketleys also obtained an injunction against further interference with the Slope. However, on 29 February 1996 the injunction was discharged by the Court of Appeal, which awarded damages in lieu of the injunction. The owners of no 3 had claimed that the right of way that they had over the Slope was a private right of way. However, in the course of giving judgment, Pill LJ, with whom Hurst LJ agreed, stated that:
The Slope was a continuation to the east of what was plainly a public highway. The photograph from about 1900 supports the view that the ground on which the Slope was built was within the hedgeline which was the probable boundary of the then existing highway. Neither party has sought to argue to the contrary before this Court.
10. This position has been accepted by the parties, who, since 1996, have accepted that the Slope is built on the public highway.
11. Mr Gooden started the development after receiving the council’s letter dated 4 January 1990. Indeed, at the time he started the development he had no agreement with the council as to access under section 38 of the Highways Act 1980. In consequence of the dispute over ownership of the Slope, the third block of flats was never built. Mr Gooden alleges that, as a result, he suffered substantial financial loss.
Judgment of Mr Martin QC
12. The trial before the judge was on liability alone. It was not, therefore, anticipated that the trial would deal with any issue as to damages, nor, indeed, did the trial deal with other matters raised in the action, such as the council’s plea of contributory negligence alleged to arise out of the way in which the form of enquiry was completed, and other matters.
Meaning of the reply
13. The judge held that the reply meant that the Slope was maintainable at public expense on the basis that, by the time of the trial, the parties accepted that the Slope formed part of the highway known as the Banks.
Duty of care
14. The judge held that, absent any special undertaking of liability, the duty of care owed by the council was limited to the provision of information to enable Mr Gooden to know whether he would have any liability as a frontager for the upkeep of The Banks. Accordingly, there was no duty of care in the present case so far as the purpose of the purchase of property was development. The judge recognised that damages for breach of the duty of care as found by him could extend to loss incurred on the acquisition of property, at least where the position regarding frontager liability had influenced the claimant’s decision to purchase the property.
15. The judge also held that the council were not aware of any special purpose that Mr Gooden had in making his search.
Negligence
16. The judge held that the council were not negligent, even though the planning and transportation department of the council (which had provided the reply) had information that the Slope was not maintainable at public expense. (I refer to this information below.) The reply was not self–evidently wrong by reference to the information available to the council; if the council had had regard to the further information, they would have concluded that the Slope was not part of the Banks. Mr Gooden should have asked specifically about the Slope if he required information about it.
Reliance after 4 January 1990
17. The judge held that Mr Gooden was not entitled to rely upon the reply after 4 January 1990, when, as explained above, the council sent a letter correcting the position.
Issues on this appeal
18. Five issues are raised by this appeal and the council’s respondents’ notice:
(1) Did the reply amount to a statement by the council that the Slope was included in the Banks or in the shared private access?
(2) If the reply stated that the Slope was maintainable at public expense, was the reply untrue?
(3) What was the scope of the council’s duty of care?
(4) Were the council in breach of their duty of care?
(5) Did the letter from the council dated 4 January 1990 sufficiently correct any misrepresentation so as to preclude Mr Gooden from recovering any damages for loss incurred thereafter?
19. The judge found that Mr Gooden relied upon the reply when he purchased the property, and there is no issue on this appeal as to reliance, although there is an issue (see issue 1 above) as to what the reply meant.
Issue 1
20. Mr Thomas Jefferies, for the council, relies upon the precise words of the enquiry. The enquiry refers back to the “Description of the Property”. There is a box immediately above the enquiry headed “Description of the Property”, which is completed with the name of 1 The Banks, Long Buckby, and the words “and land nearby”. There is then a space for inserting details of any relevant roadway, footpaths and footways in connection with the relevant enquiry, in addition to those specified in the address given. This space was left blank. Mr Jefferies submits that to find the meaning of the words “The Banks” in the reply the court can look only at the box headed “Description of the Property”, and the information in it, and not to the plan that was attached to the search form. He submits that it is not possible to make the assumption that a verge is included with a road. Difficult legal problems can arise over ownership of a verge. The reply did not make any representations to what was included in the Banks, or that it abutted the property. The council did not have to maintain details as to the width of highways.
21. Mr Andrew De La Rosa, for Mr Gooden, submits that the meaning of the reply has to be ascertained objectively against the factual matrix of the enquiry. This included the plan. The plan included a line to indicate the footpath at the side of the Banks. The plan directly invited an answer as to the Slope. The description of the property had to be read together with the plan.
22. I conclude, for different reasons from those of the judge, that, on this issue, the judge was correct. The court can, and should, have regard to the plan that was attached to the form containing the enquiry and was clearly intended to be read with it. Headnote (8), set out above, contemplates that the council will have regard to any attached plan. The council’s reference in the reply to “shared private access” shows that the council must have used the plan to identify “the land nearby”. The plan shows the road marked as the Banks. Between the area in which “The Banks” is written is a thin path. This was the Slope, but its name was not shown. Headnote (8) makes it clear that the council will take account of the boundaries. In all the circumstances, if the council had intended to limit their reply to the carriageway of the road and not the footpath, they would, in my judgment, have had to say so. It was reasonable for anyone making an enquiry of this kind to assume that the reply related to the pavement and verges, as well as to the metalled part of the road. There is no finding that the description “The Banks” was applied by local inhabitants only to the carriageway.
Issue 2
23. Mr Jefferies submits that the burden of showing that the reply was false rests on Mr Gooden. The evidence showed that the Slope was constructed between around 1900 and 1913. The judge held, as a matter of law, that highways that were in existence in 1835 were generally maintainable at public expense. The judge found that it was likely that the Banks was a highway before then. In addition, he found that there was evidence to suggest that the Slope had been maintained since 1914 by the occupants of nearby houses. We are told that there was evidence that repairs had been carried out to the railings that run up the carriageway side of the Slope, and that it was possible that those repairs took place after 1980. Certainly, the Ketleys contended that maintenance work to the Slope had been funded by the owners of 3-15 The Banks, and there is a statutory declaration supporting this.
24. Mr Jefferies submits that the judge should have held that Mr Gooden had failed to discharge the onus of proof, since he had failed to show that it was not likely that the Banks was there in 1835, or that it had been adopted only in part. He submits that the council’s failure to maintain the Slope could have been due to a misunderstanding on their part as to their obligations, or to a default in compliance with their obligations. He submits that either the Slope was a footpath that is comprised in the highway, which it is common ground is maintainable at public expense, or, alternatively, it is a “footpath” not forming part of the highway. In
25. In his submissions, Mr De La Rosa points out that this issue arose only under a late amendment to the pleadings, to which the appellant had objected and which the judge permitted only on the basis that it would involve no further evidence. He submits that section 47 of the NPACA 1949 does not answer the issue, and that the true position is that the Slope had never been maintained by the council and was therefore not maintainable by it. Neither side had suggested that the Slope was maintainable at public expense until the Court of Appeal held that the Slope was built on the highway.
26. In my judgment, the evidence at trial did not establish that the Slope was maintainable at public expense. As the judge said, there was no evidence that the Banks had been a highway before 1835, and, accordingly, the judge’s finding that it was likely that that was the case cannot be treated as a finding of fact. I proceed to consider the matter on that basis. The Slope itself was constructed only in the early 20th century. In my judgment, having regard to the evidence that the Slope was maintained by the local residents, it would have been necessary for there to be evidence showing that the highway authority adopted the Slope for it to become maintainable at public expense. There is no evidence that this ever occurred. It has not been suggested that the local authority could not have adopted the carriageway without the Slope. In the circumstances, it is not necessary for me to deal with the point that this issue arose as a result of a late amendment to the pleadings. The provisions of the NPACA 1949, upon which counsel relied, were repealed before the events with which this action is concerned, and, accordingly, it is unnecessary for me to deal with them.
Issue 3
27. Mr De La Rosa attacks the judge’s conclusion that the duty of care extended only to providing information for the purpose of ascertaining potential liability as a frontager. He submits that the judge’s conclusion was too narrow, but accepts that there is no case law to assist on this point. He submits that the enquiry was directed to determining the status of the Banks, with the consequences set out as in sections 38, 62 and 76 of the Highways Act 1980. These would give the local authority a wide range of powers, including the power to improve, modify or alter the course of the highway. It was crucial to a developer that the local authority had control over the Slope.
28. In the alternative, Mr De La Rosa relies upon the site meeting of 10 June 1988. The judge held that at this meeting access was discussed. Thus, submits Mr De La Rosa, the council knew that Mr Gooden wished to acquire the property for the purpose of developing it, and he would be looking to the local authority to exercise their powers to modify the Slope as part of the highway, and thus facilitate the access. Access was fully discussed before the search enquiry was made.
29. Mr Jefferies seeks to uphold the judge’s conclusion. He submits that the enquiry was plainly about frontager liability. He submits that the correct approach is to ascertain the purpose for which the information was provided. In this regard, he relies particularly upon Caparo Industries plc v Dickman [1990] 2 AC 605. That case shows (on his submission) that in order for the liability to attach to the relevant statement, it must be shown that the advice was required for a purpose made known to the person giving the information at the time that the advice was given: see especially per Lord Bridge at pp620–621 and per Lord Oliver at p638. Mr Jefferies submits that the council could not know that Mr Gooden required the information for the purpose of developing the property. The enquiry was not directed to the actual boundary of the highway, but simply to whether it was maintainable at public expense. He also submits that it is necessary to look at the statutory duty of the council under section 36(6) and (7) of the Highways Act 1980. The council were not required to maintain details of the width of streets maintainable at public expense.
30. Mr Jefferies also submits that the mere fact that there was a site meeting between officers of the council and Mr Gooden does not mean that the council knew that Mr Gooden wanted to rely upon the reply for purposes connected with access. This site meeting was a technical meeting. It would not be reasonable to impute knowledge of the discussion regarding development to the officer preparing the reply.
31. Mr Jefferies relies upon section 205 of the Highways Act 1980, which empowers local authorities to carry out work on private streets at the expense of frontagers. Thus, even if a street is not maintainable at public expense, a frontager may have a liability to pay for its repair. Mr De La Rosa submits that this is directed to repairs of streets remaining in private hands. Mr De La Rosa submits that if the council were aware of Mr Gooden’s proposed development, they must have known that access was necessary for the purposes of the development. The council had not used all the information available to them.
32. I now turn to my conclusions on this issue. It is important to note that the council had no statutory obligation to provide the reply. Their statutory obligation was to maintain a list of the streets maintainable at public expense and to provide access to this list to any member of the public who wished to inspect it:
(6) The council of every county, metropolitan district and London borough and the Common Council shall cause to be made, and shall keep corrected up to date a list of the streets within their area which are highways maintainable at the public expense.
(7) Every list made under subsection (6) above shall be kept deposited at the offices of the council by whom it was made and may be inspected by any person free of charge at all reasonable hours and in the case of a list made by the council of a county in England, the county council shall supply to the council of each district in the county an up to date list of the streets within the area of the district that are highways maintainable at the public expense, and the list so supplied shall be kept deposited at the office of the district council and may be inspected by any person free of charge at all reasonable hours.
(Highways Act 1980, section 36(6) and (7)).
33. For the purposes of the Highways Act 1980, a street includes any part of a highway or footpath: see section 48 (1) of the New Roads and Street Works Act 1991, incorporated into the Highways Act 1980 by section 329 of that Act.
34. Thus, the information that Mr Gooden asked the council to provide was not comparable to the information that the purchaser of registered land sought from the local land charges registry in Ministry of Housing and Local Government v Sharp [1970] 2 QB 223*. In that case, the local land charges registrar was held liable in negligence to an incumbrancer who lost his security as a result of a negligently prepared certificate issued by him to a purchaser of the land. The local land charges registrar was bound by statute to issue a certificate. There is no equivalent here. Furthermore, parliament has not expressed any view about the consequences where the list of streets maintainable at public expense pursuant to section 36(6) of the Highways Act 1980 is incorrect, and who, if anyone, should be entitled to rely upon the information in the list. Furthermore, it has not been suggested, or pleaded, that the council owed a statutory duty, actionable by a person harmed, to maintain an accurate list, although, clearly, the obligation is to maintain a list that is correct. Nor has it been suggested that the council (which accept responsibility for their employees providing the reply upon the basis of vicarious liability) can in some way escape liability on the basis that they are performing a public service and, accordingly, that no duty of care should be imposed upon them, or that a claimant should be in no better position than if he had inspected the register personally. It is clear from headnote (3) that the council accept that they may be liable in negligence for inaccurate replies.
* Editor’s note: Also reported at (1970) 213 EG 1145
35. However, it is the conventional practice of solicitors, when acting in conveyancing matters on behalf of the purchaser of an interest in land,
36. In Caparo, above, the issue was whether auditors of a company who had reported on its annual accounts owed a duty of care to a shareholder of that company that made an over–generous takeover bid for its shares in reliance on those accounts. It was said that the company was vulnerable to a takeover and that it was highly likely that a bidder would rely upon the annual accounts as the plaintiff had done. None the less, that claim failed. Lord Oliver, with whom Lord Ackner and Lord Roskill agreed, considered at p652E that:
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.
37. Several members of the House cited with approval what Lord Denning MR (dissenting) had said in Candler v Crane Christmas & Co[1951] 2 KB 164. Thus, Lord Oliver said at p636F:
In his dissenting judgment in Candler v Crane Christmas & Co [1951] 2 KB 164, Denning LJ 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 on which others rely in the ordinary course of business, such as accountants, surveyors, valuers and the like: p179. 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: p180. 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: p182. It is plain, however, from other passages in his judgment, that Denning LJ 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.
38. Lord Oliver summarised the requirements for liability for misstatement as established by Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 as follows at p638B:
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 on 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 on by the advisee for that purpose without independent inquiry, and (4) it is so acted on 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.
39. Likewise, Lord Bridge summarised the condition for liability for negligent misstatement in these terms at p621D:
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 on the liability of a wrongdoer towards those who have suffered economic damage in consequence of his negligence” (see the Candlewood Navigation Corporation Ltd v Mitsui OSK Lines Ltd case [1986] AC 1, 25) rested on 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 (eg 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 on that transaction or on a transaction of that kind.
40. Accordingly, it was not enough for the shareholder in Caparo to show that a takeover bid was foreseeable or even highly probable. The duty of care was limited to action that the shareholders took in general meeting on the basis of the accounts, not as individual investors. On the other hand, it was not suggested that the auditors needed to know the precise action that shareholders in general meeting preferred to take on the basis of the annual accounts. In the nature of things, they could not know this at the time they signed their audit report, but they would know the kind of transaction that the shareholders in general meeting could, as a matter of law, carry out on the strength of the accounts. The most obvious example would be the making of a distribution.
41. In Reeman v Department of Transport [1997] PNLR 618 at pp639–640, Lord Bingham CJ has summmarised the relevant requirements of the law in the following epigrammatic terms at p639F:
The cases show that before a plaintiff can recover compensation for financial loss caused by negligent mis–statement his claim must meet a number of conditions. Among these are three particularly relevant here. The statement (whether in the form of advice, an expression of opinion, a certificate or a factual statement) must be plaintiff–specific: that is, it must be given to the actual plaintiff or to a member of a group, identifiable at the time the statement is made, to which the actual plaintiff belongs. Secondly, the statement must be purpose–specific: the statement must be made for the very purpose for which the actual plaintiff has used it. Thirdly, and perhaps overlapping with the second condition, the statement must be transaction–specific: the statement must be made with reference to the very transaction into which the plaintiff has entered in reliance on it. If these conditions are met, it is necessary to turn to other conditions which the plaintiff must satisfy.
42. In my judgment, using Lord Bingham’s terminology, read in the light of the speeches in Caparo, from which I have set out extracts above, Mr Gooden can satisfy the first of these conditions, namely that the reply should be plaintiff–specific, since he (by his solicitor) applied for information, and, indeed, he probably paid a fee for this service. The difficult question is whether he can satisfy Lord Bingham’s second and third conditions. In other words, was the reply purpose–specific and transaction–specific?
43. As to the second and third of Lord Bingham’s conditions, Mr Gooden contends that the purpose for which the information was provided was to decide whether to go ahead with the development (on the basis that the local authority would exercise their powers over publicly–maintainable highways so as to facilitate access to the site), and Mr Gooden seeks to recover the losses he made on the development of the property. The council might, if they had thought about it, have realised that the property was ripe for development, and it may be, on the facts, that it was highly probable that there would have to be an entrance to the development from the Banks.
44. The question then is: what purpose was made known to the council actually or inferentially? (See per Lord Oliver in Caparo above.) The judge’s conclusion was that the reply was for the purpose of determining frontager liability. As I have explained, in this case there is no statutory scheme under which a highway authority provides information of this nature. Rather, it is provided by local authorities on the basis that that they hold the information and have an obligation as a public authority to make it available to members of the public who want it. In Caparo, there was a statutory scheme from which the purpose of the audit report could be deduced. But while such a scheme is a relevant factor where it exists, the fact of its absence does not mean that a purpose cannot be found; Lord Oliver’s formulation admits that the necessary purpose may be made known (viz from any source) actually
45. In those circumstances, it seems to me to be ignoring reality to say that local authorities are not very well aware that the answers to searches in the form of the enquiry made of highway authorities are commonly used by purchasers of property in deciding whether to buy property, and the law could be criticised if it ignored this reality or failed to provide a remedy.
46. I recognise that the law draws a sharp distinction between foreseeing that information may be used in a particular way and providing information for that purpose. Enquiries of the highway authority are not restricted to purchasers of property, and the highway authority will not know whether a transaction is proposed or precisely what that transaction is. However, it is not necessary for the auditor to know when he signs his report whether a particular resolution, for example for a distribution, is to be proposed on the basis of the accounts upon which he is reporting. Nor is it necessary for the company to remind the auditor each year that his report may be used for this purpose. Because he makes his report within a statutory framework, he provides it so that it may be so used by shareholders in general meeting, and the existence of the statutory framework is sufficient knowledge and communication of the purpose. Likewise, in this situation the highway authority (here the council) provides the replies to the standard enquiries within a well–worn conveyancing framework.
47. I have had the benefit of reading drafts of the judgments of the Vice–Chancellor and Buxton LJ. In respectful contradistinction to the Vice–Chancellor, I do not consider that the purpose for which the reply was given extended to informing Mr Gooden whether the council’s statutory powers over publicly maintainable highways had arisen in respect of the Banks. In these circumstances, it may well be foreseeable that the searcher will want information for this purpose, but that purpose is not, as I see it, a matter that the council knows actually or inferentially. In any event, the searcher in those circumstances requires the information for a quite separate transaction, which would take place if the council agreed to exercise those powers at the request of the purchaser.
48. In these circumstances, in my judgment, the judge’s conclusion that the purpose for which the reply was required was simply to enable the recipient to determine frontager liability is too narrow. In my judgment, having regard to the well–known conveyancing practice described above, authorities in the position of the council also owe a duty of care to the searcher where their replies are required by the person to whom they are given and relied upon by him for the purpose of making a decision to acquire an interest in the property to which the search relates. Accordingly, I do not consider that the judge was right to hold that the council’s duty of care was limited to a duty of care in relation to frontager liability. The purpose known to the authority is, in my judgment, a wider purpose, namely that of acquiring an interest in land. There may, however, be little difference in the result of this case, since the judge held that it was within the contemplation of the council that Mr Gooden would rely upon the reply in deciding to purchase the property, and that loss resulting from the purchase of the property would be recoverable on that basis.
49. Accordingly, in my judgment, Mr Gooden was owed a duty of care with respect to the reply for the purpose of deciding whether to acquire the property. He relied upon the reply for that purpose, and the judge further found that he would not have acquired the property if he had been given an accurate answer to the enquiry. In those circumstances, it must follow that if the council were negligent in giving the reply, they are liable to Mr Gooden for the loss he suffered in acquiring the property in reliance upon the inaccurate reply, in addition to any loss resulting from liability as a frontager. Thus, to the extent that the reply was for the purpose of enabling Mr Gooden to acquire the property, Lord Bingham’s second condition is, in my judgment, satisfied.
50. As to the third condition set out by Lord Bingham, the information was, in my judgment, specific only to the transaction whereby Mr Gooden acquired an interest in land. The council could not, simply because they were the highway authority and had received the enquiry, know that he proposed to develop the property.
51. Accordingly, to the extent of the purchase of the property, the council owed Mr Gooden a duty of care to provide an accurate reply to his enquiry for the purpose of his acquisition of the property. In the event of a breach of that duty, the council’s liability would be limited to the foreseeable consequences of the information being wrong: see per Lord Hoffmann in Banque Bruxelles Lambert SA v Eagle Star Insurance Ltd [1997] 2 AC 191* at p214F. The question of what consequences were foreseeable was not determined by the judge, as he was not concerned with liability, but it must be arguable that the council could not reasonably foresee that a person making a search in terms of the enquiry would start to develop the property in reliance upon the reply, and that the council were entitled to assume that if (as here) access was crucial, a developer would first ensure that he had an agreement with the relevant highway authority under section 38 of the Highways Act 1980.
* Editor’s note: Also reported at [1996] 2 EGLR 93; [1996] 27 EG 125
52. In order to recover any further damages, such as development losses, Mr Gooden would have to show that the council were actually made aware that he proposed to acquire the property for development. In my judgment, this is not shown on the evidence. The evidence of the site meeting on 10 June 1988 is inconclusive. It is not clear whether there was to be a further meeting with the site surveyor to discuss the then existing boundary. We do not know what oral evidence was given about this meeting. The judge was not satisfied that any special purpose in making the enquiry was communicated. He held that at the meeting Mr Gooden had simply been exploring possibilities. Even if there had been discussion to the effect that the local authority would be expected to provide access, he held, in my judgment rightly, that the enquiry would have to have made it clear that the purpose of the enquiry was to ensure that the local authority had powers available to them to grant access to the property because of the Slope. Moreover, in answering the enquiry, the council simply undertook to make reasonable enquiries. There was no evidence that the officer handling the enquiry knew of the site meeting and, in my judgment, it would have been unreasonable to expect her to have made enquiries of her colleagues in the same department to see whether any of them had had any meeting or contact with Mr Gooden, or in connection with l The Banks. In those circumstances, any wider purpose than that of acquiring the property is not, in my judgment, established.
Issue 4
53. In preparing the reply, the council consulted a map with a scale 1:2,500 for the purpose of locating the property. They then consulted a map with a scale of 1 mile to 6ins (1:10,560) for the purpose of determining whether the Banks was maintainable at public expense. They maintained the second map as part of its statutory list of highways so maintainable. However, there was a further map in their possession, which was not consulted, that showed that the Slope was not maintainable at public expense. This particular map was not produced either at the trial or on this appeal. However, the judge was satisfied that this further map existed and was in the council’s possession at the time when they answered the enquiry. It appears that it is a map used by the council when deciding what highway maintenance is required. The council did not look at the map when providing the reply. It appears that it was not their practice to do so, and they may have used it only when the owner of 11 The Banks claimed that the Slope was a private right of way. Mr De La Rosa submits that the judge was wrong not to conclude on these facts that the council were negligent. The council answered some 26,000 enquiries each year, apparently by reference to the 1:2,500 scale map and the statutory (map–based) list. He submits that the council had notice of the purpose of Mr Gooden’s enquiry (and thus of
54. In my judgment, the judge was right in his conclusion that the council were not negligent. However, I have reached this conclusion for (in part) different reasons to those of the judge. As I see it, the council’s primary duty was to provide information that could have been obtained by a member of the public inspecting the statutory list. The object of para 1(A) of the enquiry is to obtain the information that could be obtained from personal inspection of the list of publicly maintained highways. Having received the enquiry, the appropriate enquiry for the council to make for the purposes of headnote (3) was to consult this list. That list in this instance was apparently incorrect. The particulars of negligence do not explain why it is said that the council were negligent. They merely state that the reply was inaccurate. The fact, however, that the reply was incorrect and did not accord with other information in the council’s possession does not mean that it was negligently given. It is not pleaded that the council were negligent in their belief that the list was accurate. Moreover, if it had been alleged that it was appropriate for the council to have consulted the map maintained for road maintenance purposes, this should have been pleaded, and it would have been necessary for there to have been some evidence about this, including production of the map in order to determine whether the council should have incorporated information from it on to their statutory list, or otherwise used it. We have not been shown any evidence about this map, and we do not know what points were put to the council’s witnesses as to why it was not consulted originally. There was a failure to produce this map on disclosure of documents, but it is not clear whether the claimant made any point about this. In any event, that did not prevent some formulation of the case against the council even at a late stage in the trial. In the absence of such information and elucidation of the claimant’s case on negligence, I do not consider that the council can be held to have been negligent in answering the enquiry in the way they did. Additionally, we have not, in any event, had full argument on the scope of the council’s obligation, if any (in contract or tort), to provide information that is not, or need not be, included in the statutory list, or on the question whether the further information about the Slope was negligently omitted from the statutory list, and accordingly I express no view on these points.
Issue 5
55. Mr Gooden went ahead with the development even after the council corrected the information that they had given to him on 4 January 1990. There was no evidence of any commitment that he had on that date that was unavoidable. Mr De La Rosa submits that the losses recoverable by Mr Gooden should be dealt with in the second stage of the trial on liability, and that the judge should not have held that there was a cut-off date at 4 January 1990. There was no evidence at the trial on liability as to when expenditure on development took place or was contracted for. In the light of my decision on issue 4, this issue does not, in my judgment, arise.
56. In my judgment, the council did not provide the reply to Mr Gooden for the purposes of developing the property, so that the costs of development would not have been recoverable in any event unless they were shown to have been the foreseeable consequence of the council’s breach of the duty of care. Moreover, on the facts, it would seem that Mr Gooden may not have been relying upon the reply when he started the development. Furthermore, in so far as any commitment had been entered into that would have been recoverable, Mr Gooden would, under general principles, have owed a duty to the council to mitigate his loss. Accordingly, the judge was quite possibly correct in his conclusion in principle about the effect of the letter dated 4 January 1990. However, even so, it was also possible that some loss was recoverable because it was (for example) unavoidable at that date, in which case (if liability had been found) damages would have to be investigated in the second stage of the trial.
Disposition
57. In these circumstances, in my judgment, the appeal and cross–appeal should be dismissed.
Agreeing, BUXTON LJ said:
58. I gratefully adopt the statement of the facts set out in the judgment of Arden LJ. I agree with her that the appeal should be dismissed. Because I have found some aspects of this appeal not entirely easy, I venture to add some words of my own. I follow in broad terms the issues in the order that they are analysed by Arden LJ.
Reply, its meaning and its accuracy
59. The cross–appeal raised issues, only somewhat lightly contested at the trial, as to the meaning of the council’s reply to the enquiry, and, in particular, as to whether the reply, in the meaning that the judge found it to bear, had in fact been inaccurate. These issues have to be confronted, not only because they are a necessary preliminary to the rest of the case but also because the issues as to negligence and reliance are inevitably affected by what the reply meant, or could have been taken to mean.
60. As to the meaning of the reply, the judge found, at p5 of his judgment, that:
The reply can only be taken to mean that whatever was comprised in the description “The Banks” was maintainable at public expense… Once it is accepted (as it now is) that the slope forms part of the highway known as The Banks, it follows that the reply means that the slope is maintainable at public expense.
It will be noted, however, that the confident assumption that the Banks included the slope was based upon an acceptance of the fact, apparently a matter of dispute until the judgment of this court in Ketley v Gooden (1997) 73 P&CR 305 (the case referred to by Arden LJ in para 6 of her judgment), that the slope is, and for the reasons set out by Pill LJ, in the extract from his judgment cited by the judge on pp4–5, has always been, part of the highway, so that any enquiry in terms of that highway necessarily encompassed an enquiry about the slope. The judge did not, for instance, find that the verbal expression the Banks read in the physical context of its natural meaning encompassed the slope, or that inspection of the site would cause an observer to say without question that the slope was part of the Banks, just like any other pavement on a public road. Rather, the matter was concluded by the objective legal status of the slope as part of the highway.
61. These apparently pedantic observations are, in fact, of some importance in addressing the issue of the falsity of the representation. I quite accept that the council have blown hot and cold on the issue of whether the slope is, in fact, maintainable at public expense, in a way that may well be thought to give Mr Gooden cause of complaint as a citizen using their services. However, in terms of the present litigation, the issue must be whether it is established as a matter of fact that the slope is not so maintainable.
62. I put the question in that form because it is accepted that the burden is on Mr Gooden to show that the representation, deduced from the council’s reply, that the slope was maintainable was a false representation. At the trial, the council said that the point was a simple one. It was accepted that the carriageway of the Banks was maintainable. Since the slope was part of the highway that was contained within the Banks, as the judge had found in the course of finding that the council’s reply related to the slope, it also must be maintainable.
63. The judge, in para 13 of his judgment, was not persuaded of this. He said that since there was no evidence of how and when the Banks had been adopted, it could not be known whether the adoption had taken place after the creation of the slope in about 1914. Second, “such evidence as there is” suggested that the inhabitants themselves had maintained the slope, the council having declined to do so.
64. I cannot agree with this approach. First, there is no reason to think, and the considerations adduced by Pill LJ in Ketley v Gooden stand strongly against any such suggestion, that the carriageway of the Banks
65. If, therefore, this point were open to the council, I would hold that they had succeeded on it. But the issue was raised by the council only by amendment at the start of the trial, and only admitted by the judge on the basis that it required no further evidence: see para 12 of the judgment. In the form that the argument properly takes, as set out in para 6 above, it does require further evidence, in that the claimant fails on the evidence before the court because he had not discharged the burden resting on him. Accordingly, had the point been put before the judge in a form that made it potentially successful, he would not have permitted it to be taken. We must clearly respect that position, and, accordingly, I would hold that, for the limited purpose of determining in this appeal whether the representation was false, the slope was not maintainable.
66. This produces the very unsatisfactory position that we have to approach this part of the case on the basis that the carriageway is a highway maintainable as public expense, but the slope is not, despite the fact that the slope forms part and parcel of the same highway as the carriageway having been the basis of the judge’s finding that the reply was false. That position is, however, produced by the form in which the case was argued below. When we turn to consider how, as a matter of fact, the conduct of the parties should be characterised, we are able, and obliged, to take a more realistic view of the facts.
Council’s duty: general considerations
67. Both parties accepted, as had the judge, that the extent of the council’s duty was to be determined according to the test set out by Lord Oliver of Aylmerton, with the terms of whose speech Lords Roskill and Ackner specifically agreed, in Caparo Industries v Dickman [1990] 2 AC 605 at p638B:
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…
I do not set out the rest of Lord Oliver’s criteria, since it was agreed that they were fulfilled in this case.
68. The judge also referred to a summary of the Caparo requirements set out in the judgments in this court in Gold Coin Joailliers SA v United Bank of Kuwait plc [1997] PNLR 217 at p225D:
The representor must know or should reasonably foresee the nature of the transaction which the representee has in mind and the purpose for which he might rely on the representation in entering into it
I do not, however, pursue that formulation further, not least because it is plain that in Gold Coin the appeal was determined not on the basis of the representee’s position or intentions, but by reference to the terms and meaning of the representation itself, which was as to creditworthiness of the bank’s customer, and not, the matter of which the plaintiff complained, as to the identity of the person with whom the plaintiff was dealing: see, in particular, [1997] PNLR 217 at p 225F.
69. The present case raises, in a form that I, at least, find a matter of some difficulty, the terms and limits of any rule that the representor only has a duty to take care in relation to a “purpose” of the representee, relevant to the seeking of the information, of which he is or ought to be aware. The claimant was adamant throughout as to what his purpose had been in making enquiry 1(A). Both in his witness statement and in his counsel’s opening before the judge, he said that the reason why it was of “key importance” or of “paramount importance” that he should know whether the slope was maintainable at public expense was that if it were maintainable it was under the “control” of the council, and the latter could use its powers under section 72 of the Highways Act 1980 to “level” the slope in order to provide access to the development that the claimant contemplated. He argued that the council should have been aware that such considerations could, in general terms, lie behind any enquiry as to the maintainability of highways fronting onto a property; and that, in any event, it had been known to officers of the council, albeit officers other than those dealing with the highway enquiry, that the claimant wished to develop the site, and was concerned about access to it. From that knowledge, they should have inferred the particular implications of the highways enquiry.
70. The judge rejected both of these claims, in terms to which I shall have to return at a later stage of this judgment. He held that the ordinary purpose of a maintainability enquiry was to ascertain frontager liability, and the representor’s duty was limited to a duty in relation to that liability. That was not the duty asserted by the claimant, nor the failing of which he made complaint. As to the council’s knowledge of the claimant’s actual purpose in making the enquiry, the judge held, on the facts, that the exchanges relied upon by the claimant had not brought home to the council that knowledge of the correct position as to maintainability was crucial to the claimant’s development plans, and thus to his decision to buy the land.
71. It would, of course, be an error to treat even as authoritative a statement as that of Lord Oliver as if it were a statute, and thus, in seeking to elucidate its implications for the present case, I will, with I hope appropriate deference, venture to say something about the background and circumstances of Caparo itself.
72. It will be recalled that in Caparo the defendants were the auditors of F plc, in which company the plaintiff was a shareholder in a minor way. Acting in reliance upon the (allegedly) negligently prepared annual accounts, the plaintiff made further substantial investments in F plc with a view to taking it over. This court held, at [1989] QB 653, that while auditors owed no duty to potential investors at large, they did owe a duty to individual shareholders, so that a shareholder who invested on the strength of the accounts could recover for loss caused to him by that reliance. The House of Lords held, as expressed for instance by Lord Bridge of Harwich [1990] 2 AC 605 at pp626C–627F in a speech that, like that of Lord Oliver, was specifically agreed with by Lords Roskill and Ackner, that the content of the duty towards the shareholder was only to enable him to exercise his rights in the management of the company. As an investor, he was in no different a position from anyone else. The decisive issue was, therefore, the capacity in which the advisee sought or was given the advice. The claimants could recover for losses, if any, suffered qua shareholders; but, like anyone else, not for losses suffered qua investors.
73. Lord Oliver’s formulation, drawn from Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465, is one explanation of how that limitation is achieved. It is simply unreasonable to impose a duty upon accountants in respect of the use of their report for a purpose that they could not be expected to foresee. As it was put by Richmond P in Scott Group v MacFarlane [1978] 1 NZLR 553 at p566, in a passage specifically approved by Lord Bridge at [1990] 2 AC p624E:
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 his advice or information would be relied on.
A similar explanation of this outcome is based upon the requirement of proximity between plaintiff and defendant that is a general feature of liability in negligence. At [1990] 2 AC p621E–F, Lord Bridge held,
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 (eg 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.
74. These formulations are based upon the nature of the plaintiff’s interest, but the same outcome is achieved by reference to the nature of the loss of which the plaintiff complains. As Lord Bridge put it at [1990] 2 AC 605 p627B–D, in a passage part of which was relied upon by the judge in our case:
A loss… resulting from the purchase of additional shares would result from a wholly independent transaction having no connection with the existing shareholding… 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
I would emphasise that, in this analysis, consideration of the foreseeable loss has to be undertaken at the stage of determining the extent of the duty, rather than only at the stage of determining the extent of liability. I venture to refer in that connection to the observations of Lord Hobhouse of Woodborough, with whose speech Lords Lloyd of Berwick and Hope of Craighead specifically agreed, in Platform Home Loans Ltd v Oyston Shipways Ltd [2000] 2 AC 190* at p209A–B.
* Editor’s note: Also reported at [1999] 1 EGLR 77; [1999] 13 EG 119
75. I would respectfully suggest that the House of Lords in Banque Bruxelles adopted the same approach as that in Caparo. Lord Hoffmann, [1997] AC at 212B, cited and adopted the passage from Lord Bridge in Caparo that was relied upon by the judge in our case and is quoted in para 17 above. On the basis of that approach, the duty of a person supplying information is to save harmless the advisee from the foreseeable consequences of the information being wrong: see [1997] AC at p214F. The particular application of that approach in Banque Bruxelles Lambert SA v Eagle Star Insurance Co Ltd [1997] AC 191 was to apply the limiting condition not just in the context of “kinds” or “categories” of damage, but also in the context of the quantification in money terms of what might be thought to be a single category of damage. I trust that I am justified in citing Lord Hobhouse in Platform Home Loans at p209F in support of that analysis.
Duty in this case
76. In Caparo, the considerations related above all pointed without difficulty to protection of the auditors from liability in respect of the shareholders’ interests as potential investors, however much the auditors had a duty of some sort towards them as existing shareholders. The present case is less simple. The loss that the claimant asserts is not, unlike in Caparo, a loss that is equally suffered by many other people, the indeterminate class of Cardozo J in Ultramares Corporation v Touche (1931) 174 NE 441. It is very far from clear, to pick up the rationale of Richmond P mentioned in para 15 above, that in performing as comparatively mechanical a task as replying to routine search enquiries, the council would conduct themselves differently if told of the claimant’s further or special purpose in making the frontager enquiry. And it must be a matter for enquiry as to what loss was foreseeable as flowing from the giving of erroneous information as to the status of the slope.
77. Even more pressingly, this appeal demonstrates the potential for uncertainty inherent in mechanisms for limiting liability that rest upon consideration of the “purpose” for which the information is sought or of the “transaction” in respect of which the claimant is foreseen as using the information. The enquiry and the reply were routine exchanges, entered into in the context of the potential purchase of the property, and plainly known by the council to be relied upon in making a purchase decision. Purchasers of property may have all sorts of reasons for making the purchase, which it may be difficult to separate into different transactions. As such a purchaser, the claimant in this case was much less obviously than in Caparo playing two roles in relation the information that he was given, or entering into two different “transactions” on the basis of that information. Nor is it a case like Reeman v Department of Transport [1997] PNLR 618, where the certificate of seaworthiness was not issued with the claimants in mind at all, let alone in relation to their purchase of the vessel.
78. For those reasons, there is some danger, if simply applying the ipsissima verba quoted by the judge from Lord Oliver, that it might appear that a division of the claimant’s status into two different capacities, purchaser and developer, is on the facts artificial; that it is undoubted that the council had some sort of duty towards him in and about the “transaction” in relation to which the reply was given, namely the purchase; and that if that duty were broken, the loss suffered on account of the breach must be recoverable. And, if applying the Banque Bruxelles approach, there is a danger of thinking that all loss to the advisee flowing from the incorrect information should be recoverable.
79. The latter danger is, however, avoided by recalling that it is only loss that is foreseeable that is recoverable. That is also the effect of the application of Caparo. As I have sought to demonstrate, Lord Oliver’s formulation in terms of the advisee’s purpose was but one way of expressing the general rule and approach laid down by Caparo. Equally expressive of that approach, and of equal authority, is the damage–based analysis of Lord Bridge, set out in para 17 above. The “kind of damage” engaged in the present case was the claimant’s development losses. Consistently with Lord Bridge’s formulation, the claimant must show that it was from that kind of damage that the council owed a duty to save him harmless. And as, again, Lord Hobhouse pointed out in Platform Home Loans at p209A, it has been clear at least since the decision in Overseas Tankship (UK) Ltd v Morts Dock & Engineering Co (The Wagon Mound) (No 1) [1961] AC 388 that the defendant is only liable in negligence for foreseeable damage.
Was the loss upon which the alleged duty is founded foreseeable by the council?
80. The claimant acknowledged, on the basis of the authority just discussed, that to succeed he must obtain an affirmative answer to this question, by demonstrating that the development losses were foreseeable by the council. He accordingly set himself to establish either that the enquiry, of its nature, put the council on notice as to a potential development interest, or that the council had sufficient actual knowledge of the claimant’s particular interests to create a duty in terms of those interests. The judge rejected both of those contentions, and he was right to do so.
81. As to the general nature of the enquiry, the judge held, in para 7 of his judgment, that the duty in replying to the question was limited to frontager liability. That had two aspects: first, if an unexpected liability to contribute subsequently arose, the council would be liable to damages in that amount; second, if it could be shown that the representee would not have purchased on account of frontager liability if the correct answer had been given, then damages would be assessed in terms of any loss that had flowed from the fact of the purchase. This analysis realistically bases itself upon the reason why the particular question the answer to which is complained of in this case is included in the enquiries. In the normal course, there is no reason to think that the enquirer is concerned not merely about frontager liability, but about the carrying through of a complex scheme for creating access to the property, requiring the co–operation of a highway authority that has a maintenance obligation in respect of the highway abutting the property.
82. As to the particular knowledge of the council, the judge considered the note of a meeting with officers of the council shortly before the requisition was filed, accepted that access over the area of the slope was discussed, but declined to hold that the crucial importance of the status of the highway to the claimant’s development plans had been indicated,
Mere knowledge that the claimant hoped to develop, and to provide access over the area of the slope, does not carry with it any inference that the claimant will rely on the answer as indicating his ability to implement his plans.
That was a conclusion well open to the judge, both as to the nature of the exchanges at the meeting and as to the implications that the officers should have drawn from those exchanges. I would not disturb that conclusion.
83. The claimant accordingly failed to establish the duty for which he contended, and that he had to establish if he were to make good his claim.
Were the council negligent?
84. On my conclusions as to duty, this issue does not arise, but it is right that I should set out my view upon it.
85. For the reasons set out in paras 8-9 above, we are obliged to find that the council’s reply was false because the slope, although an integral part of the Banks, is to be taken not to be maintainable at public expense. However, in deciding whether the council was negligent in giving that deemed to be false answer we are, in my view, not only able but also obliged to look at the actual facts.
86. It was strongly argued before us that the council officers, in answering this, and apparently all, highway enquiries, should not rely only upon the Highways Act register, which effectively consists of the 6″ to a mile map referred to in para 11 of the judge’s judgment but also should have looked at the larger scale map, apparently used for operational highway purposes, from which, when it was consulted after the reply had been given, it had been deduced that the slope was not maintainable. The council had simply not used all the material at their disposal, and the judge was wrong as a matter of fact to hold, as he did, that the answer that the Banks (including the slope) was maintainable was “correct on the material that was in fact available to the defendant”.
87. That criticism is, in verbal terms, correct, but it does not sufficiently regard the context in which the judge approached this question. He took the view that the request being in terms, and only in terms, of “The Banks”, the council were entitled to answer it without detailed enquiry as to whether everything comprised in “The Banks” was maintainable. The impression that the enquiry was a routine enquiry about a routine piece of road was, I might add, reinforced by the plan annexed to the enquiry, that showed the area covered by the slope as if it were an ordinary piece of pavement, such as would in ordinary course automatically march with the carriageway as far as maintainability was concerned. In the context of a very unusual physical state of affairs, that (as assumed in this appeal) what was part of the highway known as the Banks was not in fact maintainable, though the carriageway of the the Banks was maintainable, the question inevitably arises as to whose responsibility it was to ensure that a separate reply was given in respect of the slope. It was, in my view, entirely open to the judge to resolve that question by holding:
It was not the task of the defendant to identify what was included in the description The Banks: if the claimant had wanted specific information about the slope, he should have asked for it.
88. There is a further and different reason why I would hold that, even if the council are to be fixed with knowledge of the defendant’s intentions, as a result of the meeting discussed in para 25 above, none the less that knowledge did not render their reply negligent in the terms contended for by the claimant. It is one thing to say that the council “knew” those facts, but quite another to say that they should have put that knowledge together with the request received in a different department of the council in order to appreciate that, and that if they did not do so they were liable on the basis that the claimant sought information about maintainability in order to assess the viability of access to his development. On the basis on which the case was put on his behalf, the claimant’s approach to the council was unreasonable. If he was concerned about maintainability because maintainability would at least potentially ease construction of access to his site, then the place to raise that issue was in his meetings with the council officers. It was for the claimant to make clear why he was interested in maintainability, and what he wanted from the council on the basis of that maintainability. It was unreasonable for him to seek information about that issue not in those meetings, but through formal pre-contract enquiries addressed to a different department of the council. And it was unreasonable for him to place on the council the burden of putting those disparate pieces of information together in order to realise that the pre-contract enquiry was really an enquiry about, or in relation to, the council’s ability to provide access to the site over the slope.
89. Even, therefore, if a duty had existed on the council in the terms contended for by the claimant, I would hold that the council had not been negligent in failing to discharge that duty.
Council’s change of mind
90. If the council were not under a duty in relation to development expenses, or, alternatively, were not negligent in their discharge of that duty, then their change of mind, as communicated in the letter of 4 January 1990, was irrelevant. If such negligence is established, the date at which the claimant learned that he could not in fact obtain the access that he sought, in the way that he sought it, does become relevant. Although, on a trial of liability only, the judge theoretically should not have entered upon this point, it was helpful, and correct, for him to indicate that on any view damages could not keep running irrespective of the new state of knowledge of the claimant, knowledge that placed him under a duty to take steps to mitigate his loss. Whether the cut-off point comes on 4 January 1990 or at some later date, by which time that claimant could be expected to have re-arranged his affairs, and the extent to which expenses of mitigation arose and should be brought into account, are, however, issues that would have to await a proper investigation.
Dissenting, SIR ANDREW MORRITT V-C said:
91. The facts relevant to this appeal have been fully described by Arden LJ, and I gratefully adopt her account of them. Nevertheless, it may be helpful if I reiterate a few of those that I consider to be of the most significance.
92. The topography was described by the judge in para 2(1) of his judgment. The part of the slope with which we are concerned lies to the east of the land bought by Mr Gooden and to the west of the carriageway of The Banks. But it is not on the same level as that carriageway, in that, although the footpath carried by the slope runs horizontally from south to north, the carriageway goes downhill. The slope was constructed long after the formation of the carriageway and appears from the maps to have been constructed outside, that is to say to the east of, the building line of the properties fronting on the carriageway.
93. The claim of Mr Gooden gave rise to a number of issues. In summary they are:
1. What was the representation in respect of which the council is sued?
2. Was that representation false?
3. Did Mr Gooden rely upon that representation?
4. What was the scope of the council’s duty of care arising from that representation?
5. Were NCC in breach of that duty?
6. Did the letter from the council dated 4 January 1990 limit the damages recoverable for such breach, and, if so, to what extent?
It is important to deal with them separately and in that order.
94. The terms of the enquiry and the council’s answer to it have been fully described by Arden LJ. The judge concluded that the answer
can only be taken to mean that whatever was comprised in the description “the Banks” was maintainable at public expense… Once it is accepted (as it now is) that the slope forms part of the highway known as the Banks, it follows that the reply means that the slope is maintainable at public expense.
95. The council contend that the judge was wrong. They submit that the answer did not amount to a representation as to the extent of the Banks,
96. I do not accept these submissions. The enquiry related to all roadways, footpaths and footways referred to in the description of the property. There was no enquiry specifically related to a roadway, footpath or footway known as “the Banks”. That was identified by the council in their answer as being one of the items to which the enquiry referred. The obvious inference to be drawn from such identification, without further elaboration, was that it included both the carriageway and the footpaths and footways that constituted what was known as the Banks. It is plain, both from the topography and the plan submitted with the enquiry, that the slope was one such footpath or footway.
97. Accordingly, I approach the second issue on the basis that the council did represent that the slope was maintainable at the public expense within the meaning of the Highways Act 1980. The judge held that such representation was false. He recorded that he had allowed the point to be raised at a late stage on the basis that it required no further evidence. He stated that there was no evidence, how the carriageway of the Banks became maintainable at the public expense, so that there could be no presumption relating to the slope. He continued in para 12:
Such evidence as there is suggests that the slope has been maintained since 1914 by the occupants of the nearby houses, the defendant having been asked to maintain it and having refused.
It is not disputed that there was evidence before the judge of the nature he described. Such evidence only dealt with events down to the end of the 1930s. But the judge considered that it was sufficient for Mr Gooden to satisfy the burden of proof of showing that the representation was false.
98. The council contend that it was not. It is suggested that the refusal of the council and the maintenance of the slope by the householders was equally consistent with a mistaken belief or a simple failure to perform a duty. It is submitted that the slope was maintainable at public expense either because it was built on the site of the highway, or, if it was not part of the highway, because it was maintainable as a footpath pursuant to sections 27(6) and 47 of the National Parks and Access to the Countryside Act 1949.
99. I do not accept either submission. Highways may or may not be maintainable at the public expense. There can be no presumption relating to the slope as part of the highway if it is not shown how and when the liability to maintain it at public expense arose. Section 47 of the National Parks and Access to the Countryside Act 1949, which was repealed and not replaced by section 312(2) of, and Schedule 25 to, the Highways Act 1959, provided that all public paths are repairable by the inhabitants at large. But the combined definitions of “public path” and “footpath” in section 27, likewise now repealed, in effect, exclude a footpath “at the side of a public road”.
100. In my view, the judge came to the correct conclusion on the second issue as well as the first. It follows that I would dismiss the council’s cross-appeal. There is no dispute that Mr Gooden relied upon the representation. That was the conclusion of the judge in para 4 of his judgment, and the council did not contest it.
101. The fourth issue concerns the scope of the duty of care that arises from the fact of the representation. It is not disputed that the principles to be applied are those set out in the speeches of Lord Bridge of Harwich and Lord Oliver of Aylmerton in Caparo Industries plc v Dickman [1990] 2 AC 605 at pp621 and 638. The relevant principle, as summarised by Auld LJ (with whom Sir Patrick Russell and Nourse LJ agreed) in Gold Coin Joailliers SA v United Bank of Kuwait plc [1997] PNLR 217 at p225 is that:
“The representor must know or should reasonably foresee the nature of the transaction which the representee has in mind and the purpose for which he might rely on the representation in entering it…
102. In para 7 of his judgment, the judge recognised that the council must be taken as knowing that the answer to the enquiry was likely to be required in connection with the acquisition of an interest in land. But he held that:
the purpose for which the information is ordinarily required is to enable the intending purchaser to see if he is likely to be under a liability to contribute to road repairs as a frontager. This is made clear in particular by paragraphs (B) and (C) of enquiry 1 which asks about resolutions or agreements to make up unadopted highways and whether there will be cost to frontagers. In ordinary circumstances, therefore a duty of care will arise, but will be confined to a duty in relation to frontager liability. If the answer is negligently given and a liability to contribute to repairs subsequently arises, the loss caused will fall within the scope of the obligation assumed by the representor and will give rise to an entitlement to damages
103. The council support the judge’s conclusion. They rely upon para 5.6.3.2 of Searches and Enquiries: A Conveyancer’s Guide by Frances Silverman, a solicitor and reader at the College of Law. It is true that the author points to the liability of a frontager as the primary object of this form of enquiry. But she does not suggest that it is the only one. Counsel for Mr Gooden submitted that the judge had taken too narrow a view of the normal purpose of this form of enquiry.
104. I accept the submission of counsel for Mr Gooden. It is apparent from the terms of the question that the representee seeks to ascertain whether any roadway, footpath or footway is maintainable at the public expense in the context of whether to acquire an interest in the land. Liability as a frontager for the repair of private streets is one possible consequence if the answer is in the negative. If the answer is in the affirmative then there is a different range of possible consequences arising from the application to that roadway, footpath or footway of the extensive powers of improvement and alteration contained in Part V of the Highways Act 1980. Of particular relevance to this case are sections 62 and 76, which would have given the highway authority sufficient control to enable them to provide access from the Banks to the development proposed by Mr Gooden.
105. In my view, the normal purpose for which the information is required is to ascertain the status of the roadways etc, that is whether or not they are maintainable at public expense. Thus the scope of protection of any duty of care is from the consequences of a wrong answer. Liability as a frontager is only one of them. In my view, the protection also extends to the consequences to the representee of the absence of the powers in relation to the roadway that would have existed if it had enjoyed the status represented by the council, that is maintainability at public expense.
106. It is clear from the statements of principle to which I have referred in para 11 above that the normal scope of protection may be extended by reference to the circumstances of any particular case. As Lord Oliver of Aylmerton put it in Caparo at p638 the purpose may be “particularly specified or generally described”. In the case of enquiries such as this, the general purpose is apparent from the standard form of requisition. But on the facts of this case it is necessary also to consider the effect of the meeting held on 10 June 1988. The council accept that, in consequence of that meeting, they knew both that Mr Gooden wished to develop no 1 the Banks and the land at the rear and that he wished to provide access to the development from the Banks over the slope.
107. The judge did not accept that the events of the meeting gave rise to any wider scope of protection than the normal. He said:
The claimant does not assert, and the note does not suggest, that at the meeting there was any express communication to the defendant that the status of the Banks as a highway maintained at public expense was vital to his ability to create the access they were discussing. At that stage the claimant was doing no more than exploring possibilities with the local authorities concerned: he had not reached the stage of considering who owned or controlled the slope. In my view the purpose for which the claimant required the answer about highways is so far outside the normal purpose of the relevant enquiry that it would require clear communication of that purpose before the defendant could be taken to have assumed a duty in relation to it. Mere knowledge that the claimant hoped to develop, and to provide access over the area of the slope does not carry with it any inference that the claimant will rely on the answer as indicating his ability to implement his plans. Indeed the claimant’s ambitions for the site were not at all inconsistent with his wanting the information about highways for the ordinary purpose of assessing if any frontager liability attached to the land since that might affect his ability to sell the developed site. I can find nothing in the circumstances of the case to indicate that the defendant came under any greater
108. For the reasons I have already given, in my view the judge took too narrow a view of the normal purpose of such an enquiry. If, as I think, the normal purpose is to protect a purchaser of the land from the consequences to him of the absence of the powers in relation to the roadway that would have existed if it had enjoyed the status of being maintainable at public expense, then the effect of the prior events must be assessed against that background. I do not agree that those events did not extend that protection to the consequences to a purchaser intending to develop the land with access to it over the slope. As the council accept, they knew from the events of the meeting on 10 June 1988 the purpose for which Mr Gooden wished to buy the land and his hopes and intentions with regard to the slope. Thus, the purpose of this enquiry was to ascertain whether the roadways, footpaths and footways were maintainable at public expense for the effect it might have upon the ability of Mr Gooden to develop the land and provide the access that had been discussed. On this basis also, the scope of protection afforded by any duty of care is much wider than the judge thought.
109. In summary, therefore, I would hold that the scope of the protection of the duty of care assumed by the council extends to the consequences of the slope not enjoying the status of a roadway, footpath or footway maintainable at public expense to Mr Gooden, both as a purchaser of the land and as a purchaser intending to develop the land with access to it from the Banks by means of the slope. In either case, the damages recoverable in the event of a breach will be limited by the normal rules as to remoteness and as to mitigation of loss.
110. We were not referred to the decision of the House of Lords in Banque Bruxelles Lambert SA v Eagle Star Insurance Co Ltd [1997] AC 191. Although we did not have the benefit of argument, it appears to me to have some bearing on the problems we have to solve. That case concerned the scope of the duty of care owed by a valuer employed by a mortgage lender. The valuations were negligent, but the mortgagee sought to recover losses attributable to the subsequent fall in the property market. The Court of Appeal upheld that claim on the ground that, but for the negligent valuation, the transaction would not have proceeded at all. The House of Lords disagreed. Lord Hoffmann, with whom the other members of the committee agreed, pointed out at p232C that the real question in the case was “the kind of loss in respect of which the duty was owed”. He then posed the question: “How is the scope of the duty determined?”
111. Lord Hoffmann considered duties of care arising from statute, tort and contract. In the case of a statutory duty, its purpose is deduced from the language and context of the statute, in the case of tort from the purpose of the rule imposing the duty, and in the case of contract from the terms of the contract. In the case of liability in negligence, he concluded at p233C that this would mean “liability for the consequences of the information being inaccurate”. In my view, this directly supports the case for Mr Gooden.
112. It is not suggested that the council were under any statutory duty to provide the information Mr Gooden’s search sought. But they received a fee for their services and voluntarily answered the questions. The consequences of the information being inaccurate extend to those that may arise from the fact that the Slope is not maintainable at public expense. Such consequences are not limited to an unforeseen liability as a frontager. In my view, the scope of the duty so ascertained is such as, prima facie, to cover the claims of Mr Gooden as both a purchaser and a developer of the land. Whether damages are recoverable in relation to any particular head of claim will depend upon the usual questions of remoteness and mitigation. The trial before the judge was on liability alone, so that if there was a breach of duty there will have to be a further hearing to determine whether, and, if so, how much is recoverable by way of damages.
113. I turn then to the fifth issue: were NCC in breach of duty? The judge thought not. He referred, in para 11, to the maps to which the employee of NCC had referred in answering the enquiry, and concluded that the respective scales were too small to differentiate between the carriageway of the Banks and the Slope. He then referred to the third map, which did, and which led to NCC writing the corrective letter dated 4 January 1990. He correctly observed that the obligation of NCC was to take reasonable care to give an accurate answer to the enquiry. He continued:
If it had considered all the material it had, it would have concluded that the slope was not part of the highway at all. The only roadway referred to in the description of the property on the requisition form was The Banks: the slope was not separately mentioned. The answer that was given means that anything comprised in the highway known as the Banks is maintainable at public expense, and that answer would have been entirely correct on the material that was in fact available to the defendant. It was not the task of the defendant to identify what was included in the description The Banks: if the claimant had wanted specific information about the slope, he should have asked for it. It may be that the answer, which properly understood means that the slope is publicly maintained, is wrong: but the defendant does not guarantee to provide an accurate answer, merely to take care to be accurate on the available information. Given the uncertainty about the true status of the slope, the information it had was not self-evidently wrong; and the answer it gave, without examination of all the material, was accurate as far as that information went.
114. It is unfortunate that the third plan was not produced at the trial. But the judge was satisfied that it showed that the Slope was not part of the maintained highway. The judge gave no further information as to the use to which this plan was put within the highways department of NCC, and the witness statements of those who gave evidence for NCC throw no further light on the matter.
115. The obligation of NCC was to take reasonable care to answer the question accurately. The answer was not accurate. Not only was the answer not accurate, NCC discovered the inaccuracy from the third map in their own possession. The reason why that map was not consulted before the answer was given has not been vouchsafed by NCC; and this in the context that headnote (3), quoted by Arden LJ, represented that the replies were furnished “after appropriate enquiries and in the belief that they are in accordance with the information presently available” to NCC. In my view, these facts, as to which there is no dispute, raise a prima facie case of negligence, which it was incumbent upon NCC to rebut. In the absence of both the plan and any proper explanation from NCC as to what it was for and why it had not been consulted, I consider that this burden was not discharged.
116. NCC were obliged by section 36 of the Highways Act 1980 to create and provide for inspection by the public an up-to-date list of highways maintainable at the public expense. They were also obliged to maintain the highways on that list. The evidence indicated that NCC had not maintained the slope. The material that led to NCC treating the Slope as something different to the rest of the Banks, whether the third plan or something else, should also have been consulted before answering enquiries such as that of Mr Gooden. For these reasons, I disagree with the judge. In my judgment, NCC were in breach of their duty of care.
117. The sixth issue is whether the letter from NCC, correcting their earlier answer, serves to limit the damages recoverable by Mr Gooden. I have no doubt that it may affect the damages recoverable by Mr Gooden in requiring him to mitigate his loss. But whether, and to what extent, the damages otherwise recoverable will be so limited must await a trial on the amount of his claim. For example, there has been no enquiry when Mr Gooden was committed to the various heads of development expenditure, and whether, and, if so, to what extent, he might have reduced the amount of his commitment undertaken before 4 January 1990.
118. For all these reasons, I would allow the appeal, give judgment to Mr Gooden for damages to be assessed and direct an assessment of such damages. But in the circumstances that the other members of the court reach the opposite conclusion, the appeal and the cross-appeal will be dismissed.
Appeal and cross-appeal dismissed.
