Negligent misstatement contained in answer to pre-contract inquiries — Whether solicitor entitled to rely on disclaimer in standard form — Whether issue suitable to be tried under Ord 14A — Whether law certain on duty of care — Order to strike out statement of claim as disclosing no reasonable cause of action discharged
A conveyancing transaction took place in 1988 involving a loan of £1.2m by the plaintiffs for the purchase of two adjoining houses. The defendants were the solicitors who acted for the owners of both houses and eventually, on completion alone, for the bank. In August 1988 inquiries before contract were made using the standard Oyez form which included a disclaimer. The material inquiry asked for the names of persons in actual occupation of the property and received the answer that the property was vacant. In fact it had been occupied since June 1988. The bank claimed damages for negligent misstatement.
Hearing the defendants’ application, which was treated as a summons under RSC Ord 14A r 1, the master, relying upon Cemp Properties (UK) Ltd v Dentsply Research & Development Corporation [1989] 2 EGLR 205 and Gran Gelato Ltd v Richcliff (Group) Ltd [1992] 1 EGLR 297 dismissed the action on the ground that it disclosed no reasonable cause. The judge took the point that the defendants owed no duty of care and were absolved by the valid disclaimer. The plaintiffs appealed and contended that the two issues raised by the judge were not suitable to be decided under Ord 14A.
Held The appeal was allowed and the master’s order dismissing the action discharged.
1. The court could not be confident that the question of duty of care was suitable to be decided as a discrete point under Ord 14A because of the uncertain state of the law. Since the observations of Lord Griffiths in Smith v Eric S Bush (a firm) [1989] 1 EGLR 169 at p175, the law had moved on: see Henderson v Merrett Syndicates Ltd [1995] 2 AC 145 per Lord Goff at p180 which rehabilitated “the assumption of responsibility” referred to in Hedley Byrne v Heller & Partners [1964] AC 465 and McCullagh v Lane Fox & Partners Ltd [1996] 1 EGLR 35 at p45.
2. Furthermore, the issue of the disclaimer was not suitable to be decided under Ord 14A because it was for the defendant to establish that the disclaimer was reasonable: see Unfair Contract Terms Act 1977 section 2(2). The question was whether it was fair and reasonable to allow the defendants to rely on the disclaimer having regard to all the circumstances. It was therefore unnecessary to decide whether the disclaimer was effective to protect a solicitor who had not checked the accuracy of the replies with his client.
James Townend QC and Stephen Shay (instructed by Stewarts) appeared for the plaintiffs, First National Commercial Bank plc; Mark Lomas (instructed by Reynolds Porter Chamberlain) appeared for the defendants, Loxleys.
