Judgment
Title: | Walsh -v- Jones Lang Lasalle Ltd |
Neutral Citation: | [2017] IESC 38 |
Supreme Court Record Number: | 69/2007 |
High Court Record Number: | 2001 15154 P |
Date of Delivery: | 06/01/2017 |
Court: | Supreme Court |
Composition of Court: | O'Donnell Donal J., McKechnie J., MacMenamin J., Laffoy J., O'Malley Iseult J. |
Judgment by: | O'Donnell Donal J. |
Status: | Approved |
Result: | Appeal allowed |
Details: | Dissenting judgment also by McKechnie J. |
| Judgments by | Link to Judgment | Concurring | Dissenting | O'Donnell Donal J. | | O'Malley Iseult J. | McKechnie J., MacMenamin J. | Laffoy J. | | O'Malley Iseult J. | | MacMenamin J. | | | | |
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THE SUPREME COURT [Supreme Court No.: 69/2007]
O’Donnell J.
McKechnie J.
MacMenamin J.
Laffoy J.
O’Malley J.
David Walsh
Plaintiff/Respondent
And
Jones Lang Lasalle Limited
Defendant/Appellant
Judgment of O’Donnell J. delivered on the 1st June of 2017
1 The evidence in this case in the High Court was brief indeed. Unusually, it was presented to this Court not in a verbatim transcript, but in a comprehensive, agreed note prepared by junior counsel. This may be simply happenstance, or it may be an indication that the parties did not consider the case to be of particular importance, or to have merited the extended consideration which it has received. The note is, however, concise but comprehensive, and allows the legal issues to be placed in context. After a two-day hearing in November, 2006, the High Court delivered judgment in January, 2007 ([2007] I.E.H.C. 28), awarding the plaintiff, a property investor, €350,000 in damages in respect of a negligent misstatement in particulars contained in a sales brochure produced by the defendants, a well known firm of estate agents and auctioneers. The defendants have appealed against the finding of liability only. There is no appeal in relation to quantum.
Facts
2 The plaintiff was in the business of management training, and it is said, also invested in property. It is not entirely clear if his property investment interests extended much beyond investing in premises in which he carried on business and renting out any spare space, but it was not contested that he was a person who had significant experience in the property market. In the year 2000, he owned premises at Cumberland Street on the north side of Dublin city, but was considering selling these premises and moving. In the middle of 2000, he saw an advertisement in a newspaper that premises at 77 Upper Gardiner Street, Dublin 1, were for sale. At around the same time, he received a call from an agent in the firm of Palmer McCormack, who knew that he was looking for premises and thought that the premises at 77 Upper Gardiner Street might be suitable. Mr. Walsh went to see the premises with the agent for Palmer McCormack who was, however, not formally acting as his advisor. He was also accompanied by the training manager from his own business, who was to view the premises from the point of view of suitability for the training enterprise. Mr. Walsh’s plan was to perhaps acquire the premises if they were suitable for the business, occupy so much of them as that required, and to rent out the remainder of the premises. It is hardly necessary to recall that this was the year 2000 and the property market was starting to move dramatically. Rents and capital appreciation were likely to be strong, and development was particularly profitable.
3 The plaintiff went back to the premises again on the 14th July, 2000. There, he met a Mr. Woody O’Neill of Jones Lang Lasalle who gave him the brochure in question which has been almost the sole focus of this case. To call this document a brochure is, perhaps, an overstatement. It was two pages stapled together in a format familiar to anyone who has visited estate agents’ premises or viewed property, even casually. It was on what appears to be standard Jones Lang Lasalle Industrial Property headed notepaper and contained the name, address and contact details of Jones Lang Lasalle and a photograph of the premises. Above the photograph, the words “For Sale (By Private Treaty) Excellent Redevelopment Opportunity” appeared in large print. Immediately underneath the photograph was set out the address of the premises and the following details:
There were some further details as to location and zoning and the names of persons within Jones Lang Lasalle who could be contacted about the premises. At the bottom of the page in smaller print (although roughly the same size print as the name, address and telephone and email details of Jones Lang Lasalle at the top of the page, and certainly not illegible) was the following disclaimer:
“Whilst every care has been taken in the preparation of these particulars, and they are believed to be correct, they are not warranted and intending puchusers (sic) /lessees should satisfy themselves as to the correctness of the information given.”
The core fact in this case is that the measurement of the premises (23,057 sq ft) was incorrect. The legal issue is whether, in the light of the disclaimer, the estate agents are liable to the plaintiff in respect of that misstatement.
4 It seems likely, to me at least, (and there was no dissent on this at the hearing in this Court) that this was in a standard form, and was produced from a template used for all brochures and flyers produced by Jones Lang Lasalle, and that the details of any individual premises are printed out on note paper containing this heading and this disclaimer. It was, and I think would probably be understood as, a general disclaimer invoked by the agents. Indeed, the reference to intending purchasers/lessees shows that this was a general statement which applied to all cases, whether the premises were for sale or for rent, rather than a statement specifically adapted to any particular case such as this which was clearly only a sale of the premises and directed towards development. There was evidence that all substantial firms active in the property market in Dublin at the time had a similar form of disclaimer, although there was no evidence as to the precise terms of the different disclaimers.
5 Litigation has the capacity to focus with great intensity upon the critical issues in any case. Here, the disclaimer is central to the legal issue which must be determined on this appeal, and it will be necessary to return to that in some detail. However, it is important to place such details in their broader factual and legal context. For that reason, I think it is necessary to set out what was contained on both pages of the brochure.
The Brochure
6 As already set out above, the first page contained a photograph of substantial premises on Upper Gardiner Street. The second page contained a large map of the north city area in Dublin with an indication of the location of this property. The text on the first page above the photograph was, as already set out:
Underneath the photograph in slightly smaller type were the words:
On a further line and in smaller print again were the words:
After a space were the words:
“Contact: Nigel Healy, Woody O’Neill or David Browne”.
And at the bottom of the page in smaller print again was the disclaimer already quoted.
7 On the second page of the brochure, underneath a location map, were the following words:
“Location
• Situated in the heart of Dublin’s north inner city approx. 5 minutes walk from Dublin city centre
• Short distance from Mountjoy Square at the southern end of Upper Gardiner Street
• Nearby occupiers include Dublin Institute of Technology, DID Electrical and Discount Electric
Description
• High profile two storey corner property with extensive frontage to Upper Gardiner Street and Belvedere Court
• Comprises a mixture of retail and showroom, storage and office accommodation over two floors
Accommodation
M2 Sq Ft
Ground Floor 1,170 12,594
First Floor 972 10,463
Total 2,142 23,057
Site Area 0.13 Hectares (0.31 Acres)
Opportunity
• Provides an excellent redevelopment opportunity and, subject to the necessary planning permission, would be ideally suitable for residential, commercial or mixed scheme. Vacant possession will be provided in Autumn 2000
Title
• Freehold/Long leasehold
Price
• On application”
8 It should be observed immediately that the information contained on both pages of the brochure is incorrect. The true area of the first floor was 8,573.5 sq ft making the overall area 21,248 sq ft. This represented a 20% discrepancy on the first floor figure and an overall 8% discrepancy in the total area. The shortfall was just over 1,800 sq ft, which, as observed by one member of the Court, is the size of a reasonably sized suburban home. It is also worth observing at this point that while some of the information contained in the brochure might reasonably be expected to have been obtained from other sources, the figures for area would perhaps be thought more likely to have come from the agents themselves, or at least to be within their field of expertise. In the event, it seems probable that the error was made by the defendant firm. Furthermore, the precision of the figures, 23,057 sq ft and 10,463 sq ft, might suggest a fairly specific measurement exercise. It is also important to be aware that the internal area of a building is important for the rental market, since rents, particularly those of commercial property, may be agreed on a per square foot basis.
9 Mr. Walsh showed interest in the premises, and he may have made an initial offer. He also commissioned a survey of the premises which was carried out by Mr. Val O’Brien. This was a condition survey and did not involve any measurement. He was informed that there was substantial interest in the premises from some 12 to 14 other bidders, and that the agents were seeking the final and best offer by the 28th July, 2000. Mr. Walsh gave evidence that he did a back-of-the-envelope calculation. He allowed a figure of £8 per sq ft for the storage area, and a figure of £20 per sq ft for both the ground floor and first floor area. This, he said, suggested a rental value of £320,000 per annum and therefore a value of £4 million for the premises (on an assumed yield of 8%, presumably). He then had to allow for refurbishment and other costs. He thought that this suggested the premises were worth £2.5 million and decided to bid something less than this. He submitted a bid of £2.342 million which was successful. The sale closed on the 28th September, 2000.
10 Thereafter, Mr. Walsh sought the assistance of Palmer McCormack in letting the property. It transpired that what was then the North Eastern Health Board was very interested in the property and was willing to rent the first floor area at a figure in the region of £20 per sq ft. There were other provisions agreed between the parties including very substantial refurbishment, most of which was paid for by the North Eastern Health Board and which would clearly have an impact on the purchase price and the rental value. In the process of letting, it was, however, necessary to obtain precise figures for the area to be let to the Board. Mr. O’Brien was requested to carry out that exercise, and in the course of doing so, the discrepancy already identified came to light.
11 It is, perhaps, fair also to point out that the calculation carried out by Mr. Walsh was a crude and speculative one. As was pointed out, the figures contained in the brochure did not give any indication as to whether they were internal or external measurements, and perhaps more particularly, whether they were gross or net figures. It is only the net area (that is the gross area less areas such as stairwells, hallways and bathrooms) which can be rented, and therefore the calculations made by Mr. Walsh were very rough indeed. The judge, however, accepted that Mr. Walsh did this exercise, and for that purpose utilised the figures contained in the brochure.
12 There is no direct evidence as to how the particular error was made. The documentation in the appeal book includes a letter from Jones Lang Lasalle to its own client, the vendor, of the 22nd June, 2000, recording a figure as supplied by the vendor of approximately 2,084 sq m or 22,439 sq ft. It appears that this figure, in turn, was derived from a detailed table of measurements of unknown origin which had been faxed to the agents on the same day along with a floor plan. It will be noted that this is a third figure for the area and differs both from the figure contained in the brochure (23,057 sq ft) and the correct figure subsequently measured by Mr. O’Brien (21,248 sq ft). It appears possible that the (erroneous) figure included in the brochure was derived from some calculation carried out on the floor plan since the author of the letter, Mr. Healy, stated that the site area had been derived from the plans supplied. There is, however, no precise evidence on this. It appears likely that the figure of 23,057 sq ft was something which was arrived at by Jones Lang Lasalle because there is a hand written draft of the brochure containing that figure. Incidentally, the same letter of the 22nd June, 2000, indicated Jones Lang Lasalle’s view that the main use likely to be made of the premises was residential redevelopment (in which case the relevant figure would be the site area). Furthermore, Jones Lang Lasalle advised the vendor that on this basis, they considered that a figure of £1 million might be achieved for the premises. Even allowing for some degree of underestimation on the part of the agents, the discrepancy between this figure, some of the bids, and the ultimate price paid by Mr. Walsh is some indication of the buoyancy of the property market at that time. It also illustrates the difficulty of suggesting a precise value for the premises as of the 28th September, 2000.
13 Mr. Walsh said that when he discovered the error in the printed brochure, he was horrified. These proceedings were commenced in 2001 but did not come to trial until 2006. At that stage, it appears that the property was worth a significant multiple of the purchase price. Indeed, it was suggested to Mr. Walsh without demur that it was worth in the region of €7.6 million. The plaintiff claimed, however, that he had suffered a loss of €590,000 based on an estimate of the lost rental value into the future. The trial judge took the view that this was not the appropriate measure of damages, and considered that the correct approach was to calculate the amount by which it could be said that Mr. Walsh had overpaid for the premises in reliance on the mistaken floor area and awarded €350,000 in damages. There is no appeal in relation to the quantum of damages.
14 On the question of liability, and in particular, the significance of the disclaimer, the evidence was limited. Mr. Walsh frankly admitted that he had seen the disclaimer. He said, however, that he considered it dealt with minor matters. It was acknowledged that disclaimers in some form were a common feature in the industry and were used by all firms then operating in the market in Dublin. Mr. Barry Smith, a well known and respected valuer, gave evidence for the plaintiff. He considered that where measurements were provided by a reputable firm of agents, the prospective purchaser did no go to the expense of carrying out their own measurement exercise. He agreed, however, with Peter Rowan of Lambert Smith Hampton, the expert called on behalf of the defendants, that a prudent investor or intending purchaser should carry out a detailed inspection and measure all floor areas before purchasing a property. Mr. Rowan said it would not be normal or prudent and would not be considered acceptable practice to rely solely on the measurements set out in a sales brochure prepared by the vendor’s agent. It was acknowledged on behalf of Jones Lang Lasalle that none of the prospective purchasers had reverted to that firm and queried the measurements or suggested there was any discrepancy in them. This might have suggested that none of those purchasers had carried out a detailed measurement exercise, although there is no evidence as to whether any of them intended to rent the existing premises rather than to develop them.
15 This evidence, while useful background, does not resolve the issue in this case. That ultimately turns on an analysis of the applicable law, the test to be applied, and a consideration of the terms of the disclaimer in the light of the applicable law. Relying in part on the then relatively recent decision of the Supreme Court in Wildgust & anor v. Bank of Ireland & anor [2006] 1 I.R. 570, the High Court concluded that the defendant was liable and that the disclaimer did not operate to protect the defendant. The reasoning of the learned trial judge is contained in a number of passages commencing at the following paragraph where he addressed the question as follows:
“It seems to me that the question for determination in relation to the ‘waiver’ is, whether its presence within the brochure and its precise terms, are together sufficient to exclude the defendant from liability to the plaintiff in respect of negligence by the defendant in the incorrect measurement of the floor area of the property and negligent misstatement on the part of the defendant in publishing the incorrect measurements of the floor area. On the evidence I do not believe that they are sufficient.”
16 The trial judge elaborated on this and concluded:
` “If the defendant wished to reserve to itself the right (a) to publish within its sales brochure, precise measurements which were in fact grossly inaccurate and (b) to relieve itself of liability to the category of persons to whom the brochure and its contents were directed, then there was an obligation upon the defendant to draw to the attention of the plaintiff and other prospective purchasers the fact that the seemingly precise measurements published were likely to be wholly unreliable and should not be relied upon in any circumstances.
By including within its brochure an enigmatic sentence in small print claiming to have taken particular care in the preparation of all of the particulars within the brochure but advising prospective purchasers to ‘satisfy themselves as to the correctness of the information given’ the defendant failed to discharge that obligation.
On the evidence of the practice adopted by buyers and sellers of commercial property in Dublin at the relevant time the defendant’s ‘disclaimer’ was a quite inadequate means of notifying prospective purchasers that the seemingly precise measurements of the floor areas so prominently published within the sales brochure were wholly unreliable.
It follows that the ‘waiver’ published at the bottom of the front page of the defendant’s brochure was not effective to relieve the defendant of liability in respect of negligence and negligent misstatement of the type contended for on behalf of the plaintiff.” (emphasis added)
17 I appreciate that the way in which the case was approached in the High Court meant that this judgment was not likely to make precise distinctions of law, or to provide elaborate reasons for its conclusion. I think it is fair to summarise the decision in the following way. It appears that the Court concluded, in effect, that there was sufficient proximity between the parties to give rise to a duty of care (and perhaps that it was not necessary to distinguish between negligent acts and negligent statements) and that the disclaimer was not effective to relieve the defendant of liability for negligence in making such a statement.
18 There is an undeniable attraction in taking the approach of treating this case as an individual instance having no broader implications for the law and capable of being decided on its own facts by reference to the well known principles of Hay v. O’Grady [1992] I.R. 210 which sets out the limitations of appellate review. This is indeed the way in which many negligence actions are resolved. Although the vast majority of civil claims depend at bottom upon the law of negligence, almost all of them are resolved without any dispute about, or even reference to, legal principles. Such cases are resolved almost by rules of thumb that mean that most cases are decided on the issue of whether some element which can be described as negligence has been proven in fact. This is not to say that the resolution of such cases is not of considerable importance for the individuals involved and does not require considerable skill; merely that detailed analysis of law is rare. Once some carelessness can be shown, it is assumed that the plaintiff should succeed. There is, indeed, a lot to be said for the pragmatic approach. The settlement of difficult cases may be a form of soft law, but it can be a useful way to achieve some broad justice. Here, indeed, there was much to be said for not having pressed these matters to a determination. On the plaintiff’s side, by the time the case came on, it was certainly artificial to speak of the plaintiff having suffered any losses from an investment that was extremely successful. On the defendant’s side, whatever the legal effect of the waiver, attention would be directed to an error which must surely have been embarrassing for a firm conscious of its reputation for expertise. Many mathematical and measurement errors can indeed be made even though time and care is taken. But once an error is identified, it is hard to dispute that if more care had been taken, it would not have been made.
19 However, this case proceeded to hearing and was determined in favour of the plaintiff. Again, if it were permissible to take a broad brush approach to this case, then the result is certainly not one which is demonstrably unfair. Jones Lang Lasalle did not deny that it was careless in providing inaccurate measurements, something which was well within its expertise. Furthermore, the waiver upon which it now relies stated that “every care” had been taken. Again, therefore, if it were permissible to approach this case as simply one more instance of the “wilderness of single instances” of the law of negligence and raising no broader issue, it would not call for much judicial attention. However, this appeal, whether viewed narrowly or broadly, raises important issues of law which this Court cannot, at least in my view, and should not properly avoid.
20 It is necessary to place this claim in a wider context. Insomuch as it is contended that that there was sufficient proximity, indeed neighbourhood between the parties here, sufficient to justify the imposition of a duty of care on Jones Lang Lasalle in respect of the plaintiff, such proximity, is created by a transaction in this case, the purchase of land which is itself regulated by contract in terms familiar to lawyers, and to members of the public, particularly those who engage in property investment. The plaintiff here entered into a contract to buy the property from the vendor. Jones Lang Lasalle acted as agents for the vendor in marketing the property. The relationship between the vendor and Jones Lang Lasalle was itself, essentially, contractual. Neither of these two contracts were discussed in evidence or in the judgment of the High Court, but they create two sides of a triangular relationship which the plaintiff contends justifies the imposition of a duty of care on Jones Lang Lasalle towards the plaintiff. The absence of any contractual claim against the vendor either for rescission for misrepresentation (admittedly an unlikely and undesirable remedy from the plaintiff’s point of view given the intervening movement of the market) or, more realistically, a claim for damages for breach of warranty suggests that here, the statement or misstatement by Jones Lang Lasalle in relation to the area of the premises did not have contractual significance at least as between the purchaser and the vendor. It does not appear that the area of the premises was a term of the contract between the vendor and purchaser. An important starting point, therefore, is that the misstatement as to the size of the premises does not appear to have had legal consequences as and between the primary parties to the sale, and therefore, and in consequence, between Jones Lang Lasalle and its client who was, after all, paying for Jones Lang Lasalle’s services. It is against this background that the claim that the vendor’s agents owed to the purchaser a duty of care must be approached. This reinforces, in my view, the importance of recalling that the starting point of the analysis in Hedley Byrne v. Heller [1964] A.C. 465 was that normally a party does not owe a duty in tort to another in respect of statements made by them. This is an important distinction. In the area of actions it can be said the starting point is normally “duty of care unless”, whereas for statements it is a case of “duty of care only if”.
The Broad or Narrow Approach to Liability
21 The narrow version of the plaintiff’s claim depends solely on the interpretation of the waiver for the purposes of the traditional law of negligent misstatement. The question here is whether the relationship between the parties is sufficient to create a duty of care and a disclaimer can be an important piece of evidence in that regard. The plaintiff’s case, on this narrow version, is simply that the terms of the waiver here are not sufficient to mean that a duty of care did not arise. A broader version of the claim, which appears to be discernible at points in the judgment of the High Court and in the submissions made to this Court, would, however, involve a significant development of the law, and a blurring of the distinction between negligent misstatement and the law of negligent acts, if not its removal. In the context of this case, these two approaches have significant differences for the analysis of the waiver clause. On the traditional principles of negligent misstatement, a waiver is relevant when considering whether a duty of care arose at all. A waiver is interpreted fairly broadly in considering whether the defendant can be said to have assumed, as between itself and a plaintiff, the risk of error. However, if the case is approached on the basis that there was an existing duty of care by reason of the proximity of the parties, then the waiver becomes a clause excluding or limiting liability to which courts have traditionally applied a very strict analysis. It is clear, therefore, that the manner in which the case is approached may have significant, indeed decisive, impact on the outcome.
The decision in Hedley Byrne v. Heller
22 The landmark decision in Hedley Byrne v. Heller [1964] A.C. 465 established the principle that the author of a statement could, in certain circumstances, be liable for financial loss caused by it to a person relying on it. This principle was almost immediately adopted in Ireland in Securities Trust Ltd. v. Hugh Moore & Alexander Ltd. [1964] I.R. 417, and Bank of Ireland v. Smith & Ors. [1966] I.R. 646 and since then it has been accepted that the development of Irish law flows from the analysis originally made in that case. Hedley Byrne contained an important statement that, in principle, liability in negligence could extend beyond negligent acts causing physical damage and consequential loss covered by the principle in Donoghue v. Stevenson [1932] A.C. 562. The House of Lords made it clear, however, that different principles applied in the case of damages claimed as a result of statements made rather than acts done or omitted to be done. Importantly, the House of Lords also held (indeed it was the ratio decidendi of that case) that any duty of care for negligent misstatement could be negatived by an appropriate disclaimer. For these reasons, Hedley Byrne is particularly relevant to this case.
23 In that well known case, advertising agents who were contemplating acting on behalf of a company and placing advanced advertisements for which the agents would be personally liable sought information as to the prospective clients’ financial stability. They requested their bank to make inquiries from Heller & Partner who were bankers to the client company. Heller replied “in confidence and without responsibility on our part” that the company was believed to be “respectably constituted and considered good for its normal business engagements”. It was also stated that the bank believed “that the company would not undertake any commitments they were unable to fulfil”. This information was passed on to the plaintiff advertising agents by letter stating that it was “for your private use and without responsibility on the part of [the plaintiff’s bankers]”. Some months later, the request was repeated. On that occasion, Heller & Partner sent a letter to the plaintiffs bankers headed “CONFIDENTIAL For your private use and without responsibility on the part of this bank or its officials” the advice given was that the company in question was “a respectably constituted company, considered good for its ordinary business engagements. Your figures are larger than we are accustomed to see”.
24 As is well known, the House of Lords decided that in principle, statements such as this could give rise to a liability, but that in that case, any such duty of care was negatived by the terms of the disclaimer. It is worth, however, considering in rather greater detail the terms of the speeches delivered and, in particular, those of Lords Reid, Devlin and Pearce.
25 At pp. 482-484, Lord Reid stated:
“The appellants' first argument was based on Donoghue v. Stevenson. That is a very important decision, but I do not think that it has any direct bearing on this case. That decision may encourage us to develop existing lines of authority, but it cannot entitle us to disregard them. Apart altogether from authority, I would think that the law must treat negligent words differently from negligent acts. The law ought so far as possible to reflect the standards of the reasonable man, and that is what Donoghue v. Stevenson sets out to do. The most obvious difference between negligent words and negligent acts is this. Quite careful people often express definite opinions on social or informal occasions even when they see that others are likely to be influenced by them; and they often do that without taking that care which they would take if asked for their opinion professionally or in a business connection. The appellant agrees that there can be no duty of care on such occasions, and we were referred to American and South African authorities where that is recognised, although their law appears to have gone much further than ours has yet done. But it is at least unusual casually to put into circulation negligently made articles which are dangerous. A man might give a friend a negligently-prepared bottle of homemade wine and his friend's guests might drink it with dire results. But it is by no means clear that those guests would have no action against the negligent manufacturer.
Another obvious difference is that a negligently made article will only cause one accident, and so it is not very difficult to find the necessary degree of proximity or neighbourhood between the negligent manufacturer and the person injured. But words can be broadcast with or without the consent or the foresight of the speaker or writer. It would be one thing to say that the speaker owes a duty to a limited class, but it would be going very far to say that he owes a duty to every ultimate ‘consumer’ who acts on those words to his detriment. It would be no use to say that a speaker or writer owes a duty but can disclaim responsibility if he wants to. He, like the manufacturer, could make it part of a contract that he is not to be liable for his negligence: but that contract would not protect him in a question with a third party, at least if the third party was unaware of it.
So it seems to me that there is good sense behind our present law that in general an innocent but negligent misrepresentation gives no cause of action. There must be something more than the mere misstatement. I therefore turn to the authorities to see what more is required. The most natural requirement would be that expressly or by implication from the circumstances the speaker or writer has undertaken some responsibility, and that appears to me not to conflict with any authority which is binding on this House. Where there is a contract there is no difficulty as regards the contracting parties: the question is whether there is a warranty. The refusal of English law to recognise any jus quaesitum tertii causes some difficulties, but they are not relevant, here. Then there are cases where a person does not merely make a statement but performs a gratuitous service. I do not intend to examine the cases about that, but at least they show that in some cases that person owes a duty of care apart from any contract, and to that extent they pave the way to holding that there can be a duty of care in making a statement of fact or opinion which is independent of contract.” (Emphasis added)
26 I have set out this passage at length because it makes it clear at the very outset that a clear distinction is being made between liability for negligent acts and misstatements. Lord Reid’s reference to contract and those cases where English law refused to recognise rights of a third party to sue on contracts is also instructive since it sets up an important point of comparison by reference to which any claim of the duty of care must be analysed. Again, the emphasis on the undertaking of responsibility for a statement is important. This leads to the portion of the speech containing the decision in principle at p. 486:
“A reasonable man, knowing that he was being trusted or that his skill and judgment were being relied on, would, I think, have three courses open to him. He could keep silent or decline to give the information or advice sought: or he could give an answer with a clear qualification that he accepted no responsibility for it or that it was given without that reflection or inquiry which a careful answer would require: or he could simply answer without any such qualification. If he chooses to adopt the last course he must, I think, be held to have accepted some responsibility for his answer being given carefully, or to have accepted a relationship with the inquirer which requires him to exercise such care as the circumstances require.”
27 This analysis led to the important conclusion that the decision of the Court of Appeal in Candler v. Crane, Christmas & Co. [1951] 2 K.B. 164 was wrongly decided, and that the dissent of Denning L.J. was correct. That case was one where accountants to a company had been asked to complete the preparation of accounts in order that they be shown to a prospective purchaser. The accountants went further and showed the accounts to the purchaser themselves, discussed them with him, and allowed him to take a copy. In those circumstances, Lord Reid considered, a duty of care arose. Again, this is perhaps an important illustration of circumstances in which liability can arise: the defendant accountants have done more than issue general accounts which might be considered by the world at large; they had engaged in a personal interaction with the plaintiff as to the terms of the accounts and did so in the specific context of the likely purchase by the plaintiff of the company.
28 However, having held that a duty of care in respect of statements made could arise in principle, Lord Reid considered that no such duty arose in the particular case because of the terms of the disclaimer. In so doing, he made an important distinction between disclaimers in such circumstances, and an exemption clause purporting to excuse a party from a liability which he or she had undertaken under contract, or which already exists in tort (at p. 492):
29 The speech of Lord Devlin was broadly to the same effect. At pp. 524-525, he observed:
30 At pp. 528-529 of the report, Lord Devlin made the important point that the absence of a contract was not dispositive since there may be circumstances where a person or business gets indirect benefit from the provision of information outside of a contractual relationship, and it was therefore entirely reasonable to find that the duty of care arose:
“I think, therefore, that there is ample authority to justify your Lordships in saying now that the categories of special relationships which may give rise to a duty to take care in word as well as in deed are not limited to contractual relationships or to relationships of fiduciary duty, but include also relationships which in the words of Lord Shaw in Nocton v. Lord Ashburton are ‘equivalent to contract,’ that is, where there is an assumption of responsibility in circumstances in which, but for the absence of consideration, there would be a contract. Where there is an express undertaking, an express warranty as distinct from mere representation, there can be little difficulty. The difficulty arises in discerning those cases in which the undertaking is to be implied. In this respect the absence of consideration is not irrelevant. Payment for information or advice is very good evidence that it is being relied upon and that the informer or adviser knows that it is. Where there is no consideration, it will be necessary to exercise greater care in distinguishing between social and professional relationships and between those which are of a contractual character and those which are not. It may often be material to consider whether the adviser is acting purely out of good nature or whether he is getting his reward in some indirect form. The service that a bank performs in giving a reference is not done simply out of a desire to assist commerce. It would discourage the customers of the bank if their deals fell through because the bank had refused to testify to their credit when it was good.”
31 While acknowledging that the categories could be expanded, Lord Devlin approached the case on the basis that “wherever there is a relationship equivalent to contract, there is a duty of care”. As he said at page 532:
“The question is whether the appellants can set up a claim equivalent to contract and rely on an implied undertaking to accept responsibility.”
However, on the facts of the present case, he held that there was no assumption of responsibility and therefore no duty of care. At page 533, he said:
“I agree entirely with the reasoning and conclusion on this point of my noble and learned friend, Lord Reid. A man cannot be said voluntarily to be undertaking a responsibility if at the very moment when he is said to be accepting it he declares that in fact he is not. The problem of reconciling words of exemption with the existence of a duty arises only when a party is claiming exemption from a responsibility which he has already undertaken or which he is contracting to undertake.”
32 Lord Pearce also addressed the argument that the disclaimer in that case was not sufficiently precise to exclude liability for negligence. At page 540, he said:
“Nothing, however, except negligence could, in the facts of this case, create a liability (apart from fraud, to which they cannot have been intended to refer and against which the words would be no protection, since they would be part of the fraud). I do not, therefore, accept that even if the parties were already in contractual or other special relationship the words would give no immunity to a negligent answer. But in any event they clearly prevent a special relationship from arising. They are part of the material from which one deduces whether a duty of care and a liability for negligence was assumed. If both parties say expressly (in a case where neither is deliberately taking advantage of the other) that there shall be no liability, I do not find it possible to say that a liability was assumed.”
33 The decision in Hedley Byrne v. Heller was accepted as representing Irish law in the case of Securities Trust Ltd v. Hugh Moore & Alexander Ltd. [1964] I.R. 417. In Bank of Ireland v. Smith & Ors [1966] I.R. 646, an advertisement of land for sale in court in a mortgage suit stated, erroneously, that a portion of the land was sown with barley and undersown with permanent pasture. The statement was made by auctioneers who were agents for the vendors. Kenny J. held that it would be against conscience that the vendor in a court sale should not be bound by a representation made by the agent in connection to the sale. Accordingly, the purchaser was entitled to cover damages for breach of warranty from the vendor. However, Kenny J. rejected the further claim that the auctioneers were liable in tort for negligent misstatement, and at page 659, he said:
“It was said that an auctioneer acting for a vendor should anticipate that any statements made by him about the property will be relied on by the purchaser and that he, therefore, owes a duty of care to the purchaser and is liable in damages to him if the statement was incorrect and was made carelessly. In my opinion the decision in Hedley Byrne & Co. v. Heller does not give any support to this startling proposition. It decides that if a person seeks information from another in circumstances in which a reasonable man would know that his judgment is being relied on, the person giving the information must use reasonable care to ensure that his answer is correct, and if he does not do so he is liable in damages: but the relationship between the person seeking the information and the person giving it, if not fiduciary or arising out of a contract for consideration, must be, to use the words of Lord Devlin, ‘equivalent to contract before any liability can arise’.”
From these extracts, it is clear that, at least at the outset, the approach to any disclaimer in negligent misstatement was to view it as a piece of evidence relevant to the question of whether a relationship existed sufficient to give rise to a duty of care, and that was not appropriate to approach a disclaimer with the strictness that the courts analyse exemption clauses seeking to exclude liability which already exists.
34 The law has developed in the intervening period and there are some instructive examples of purchasers succeeding in claims against estate agents acting ostensibly on behalf of vendors. In McAnarney v. Hanrahan [1993] 3 I.R. 492, Costello J. upheld a plaintiff’s claim against an auctioneer in respect of statements made in the course of a sale. In that case, the defendant had considerable interaction with the plaintiff, and misrepresented to them that the premises had been withdrawn at auction at a price, and furthermore that the owners of the freehold had indicated a willingness to sell it for approximately £3,000. On those representations, the plaintiff agreed to pay £55,000 for the leasehold interest although they had previously intended to pay no more than £45,000. The purchase proved disastrous for the plaintiff, who sued in respect of the misrepresentation. Costello J. held that the dealings between the parties were such that a special relationship had arisen between them, imposing on the defendant auctioneer a duty of care in giving the information. This is an example of a situation in which an auctioneer or estate agent can owe a duty of care to a person other than his or her client. Here, however, liability arose because of quite extensive dealings with the plaintiff in circumstances where, to borrow the analysis of Lord Devlin, while the plaintiff was not formally a client of the agent/auctioneer, they had a relationship which was of indirect benefit to the estate agent/auctioneer. Accordingly, the plaintiff was entitled to recover, but only the difference between the price paid and the true value of the land. Similarly, in McCullough v. Gunne, (Unreported, High Court, Carroll J., 17th January 1997), the High Court held that where plaintiffs who had never dealt in property before went to a defendant auctioneer/estate agent and “asked him to keep them straight”, the auctioneer owed a duty of care to them as well as to the owners of the premises for whom he was acting, when the plaintiffs bought it. In neither of these cases was a disclaimer relied upon, and the dealings between the parties extended far beyond the provision of standard particulars of sale. Both of these cases are consistent, therefore, in that while a duty of care did not arise generally from the fact that an auctioneer may have been acting on behalf of a vendor, the particular dealing between the parties gave rise to a special relationship on the facts of the individual case. Doran v. Delaney [1998] 2 I.R. 61 is a variation on this theme. In that case, vendor’s solicitors were, unusually, held to owe a duty of care to a purchaser in circumstances where, as provided in the headnote to the judgment, they passed on information to them “while having reason to believe that it was not wholly truthful”.
McCullagh v. Lane Fox and Partners Ltd.
35 Perhaps the case which is closest to the facts of the present matter is an English case referred to in passing in Doran v. Delaney [1998] 2 I.R. 61. In McCullagh v. Lane Fox and Partners Ltd. [1996] P.N.L.R. 205, a firm of estate agents had prepared particulars of a substantial private residence in London adjoining the Thames. The house was described as being set on 0.92 acres. In fact, the gardens only measured 0.48 of an acre. The plaintiff bought the property but later sued the agents for negligent misrepresentation. The particulars contained what, in the words of the headnote to the reported judgment, were described as “typical estate agents disclaimers”. It is right to acknowledge that these were more extensive than the disclaimer in the present case. Thus, the disclaimer was set out in five paragraphs:
“1. These particulars do not constitute, nor constitute any part of, an offer or contract.
2. All statements contained in these particulars as to this property are made without responsibility on the part of Lane Fox or the vendors or lessors.
3. None of the statements contained in these particulars as to this property are to be relied on as statements of representations of fact.
4. Any intending purchasers must satisfy themselves by inspection or otherwise as to the correctness of each of the statements contained in these particulars.
5. The vendors do not make or give and neither Lane Fox nor any person in their employment has any authority to make or give any representation or warranty whatever in relation to this property.”
36 The High Court of England and Wales found that the defendant was liable, applying the principle in Donoghue v. Stevenson and holding that the exemption clause was not sufficiently precise to exclude liability in this case. The defendant was a reputable firm of competent surveyors who could be expected to measure the site correctly; the purpose of the provision of the information was to encourage offers by potential purchasers; it was obvious to the defendant that the plaintiff would rely on the information and it was reasonable to do so. There was nothing, in the circumstances, making it unjust to impose liability on the defendant. However, the Court also held that since the true value of the premises was the price paid by the plaintiff, the plaintiff had suffered no loss.
37 The Court of Appeal of England and Wales overturned both conclusions. For present purposes, it is particularly significant that the Court of Appeal held that the disclaimer prevented any assumption of responsibility, and therefore duty of care, from arising. Having quoted Hedley Byrne v. Heller [1964] A.C. 465, Hobhouse L.J., continued at pages 222-223:
“Thus the relevance of the disclaimer is to negative one of the essential elements for the existence of the duty of care. It negatives the assumption of responsibility for the statement. It implicitly tells the recipient of the representation that if he chooses to rely upon it he must realise that the maker is not accepting responsibility for the accuracy of the representation. The disclaimer is part of the factual situation which the court has to take into account in deciding whether or not the defendant owed a duty of care to the plaintiff. Put another way, the question is whether the plaintiff was entitled to treat the representation as one for which the defendant was accepting responsibility. This is primarily a factual question.”
Subject to the qualification that once the facts are found, the question of whether, on those facts, a duty of care arises becomes an issue of law, I would agree with this analysis. It is an orthodox application of the decision in Hedley Byrne v. Heller.
38 It is of some interest that the Court of Appeal, however, upheld that part of the decision of the High Court (approved of in Doran v. Delaney) which held that, in principle, a duty of care in tort by an agent to a prospective purchaser could coexist with a contractual liability by the vendor to a purchaser. At pages 230-231, Hobhouse L.J. observed:
39 Hobhouse L.J. acknowledged at page 224 that in cases such as Smith v. Bush [1990] 1 A.C. 831 and Caparo Industries v. Dickman [1992] 2 A.C. 605, there had been some criticism of the importance of the concept of assumption of responsibility, but that it was again recognised as important by Lord Goff of Chieveley in Henderson v. Merrett Syndicates Ltd. [1995] 2 A.C. 14 , in an important passage at page 181 which explained the importance of the concept in the analysis of the law of negligent misstatement:
“In addition, the concept provides its own explanation why there is no problem in cases of this kind about liability for pure economic loss; for if a person assumes responsibility to another in respect of certain services, there is no reason why he should not be liable in damages for that other in respect of economic loss which flows from the negligent performance of those services. It follows that, once the case is identified as falling within the Hedley Byrne principle, there should be no need to embark upon any further enquiry whether it is “fair, just and reasonable” to impose liability for economic loss - a point which is, I consider, of some importance in the present case. The concept indicates too that in some circumstances, for example where the undertaking to furnish the relevant service is given on an informal occasion, there may be no assumption of responsibility and likewise that an assumption of responsibility may be negatived by an appropriate disclaimer.”
This passage reinforces the continuing relevance of the concept of assumption of responsibility, and the significance of the disclaimer in analysing whether such a responsibility has been assumed.
40 Applying this principle to the case of the estate agents providing a statement of acreage, Hobhouse L.J. had regard to the structure of the transaction. Having observed that in many cases the estate agent’s fee may be paid indirectly by the purchase price, and in principle therefore, there was nothing to negative the duty of care, he continued at page 235:
“In a transaction for the sale of land, it will normally be contemplated that there will be pre-contract enquiries which will be used by the prospective purchaser to obtain specific represen¬tations verifying important facts. Similarly parties will very frequently instruct a surveyor to carry out a structural survey before deciding to make an offer or to exchange contracts. Thus, it does not follow that a representation, although intended to influence the representee, will be relied upon in the relevant way without an intermediate check. It is therefore necessary to examine further the significance of the representation in the transaction. This is not something which is peculiar to estate agents nor does it amount to some special principle of qualified liability for estate agents.”
41 In that particular case, Hobhouse L.J. considered that the disclaimer put the case on all fours with the decision in Hedley Byrne. He then addressed the contrary argument at page 237:
“The judge avoided this conclusion by approaching the disclaimer as if it were a contractual exclusion. On such an approach it would need to be strictly construed and the argument was available that it did not as such cover an oral statement. But that is not, in my judgment, the right approach. It is not an exclusion to be construed. The right approach, as is made clear in Hedley Byrne, is to treat the existence of the disclaimer as one of the facts relevant to answering the question whether there had been an assumption of responsibility by the defendants for the relevant statement. This question must be answered objectively by reference to what a reasonable person in the position of Mr McCullagh would have understood at the time that he finally relied upon the representation. In this context, it is obvious that the statement that the acreage of the property is 0.92 was a statement which was taken from the particulars and that the defendants were not assuming responsibility for that statement.”
42 Hobhouse L.J. also observed at page 239 that:
“The normal structure of contracts for the purchase of land is that the intending purchaser, before he exchanges contracts, is able through his own solicitor to interrogate the proposed vendor and is entitled to rely upon the answers to such enquiries as representations which have induced the contract with all the legal consequences that flow from that situation. The use of disclaimers to insulate the estate agent, and the estate agent's principals, from responsibility for representations made by estate agents is commonplace and is the normal basis upon which house sale transactions are carried out every day across the country.”
43 Accordingly, Hobhouse L.J. considered that the disclaimer was not an unfair contractual term. While that specific issue does not arise in this case because the plaintiff was not, here, dealing as a consumer, it is, in my view, relevant to the overall question as to whether a duty of care arose or was negatived by the terms of this disclaimer. As I have said earlier, the proximity of the parties here is created by the contract between the purchaser and the vendor, and arguably the contract between the vendor and its agents. It is relevant to know how those contracts assigned the risk of error. Finally, it is notable that Nourse L.J., concurring, was prepared to agree with Slade L.J. that even in the absence of a disclaimer no duty of care arose.
44 This is obviously an important case, and if it correctly represents the law of Ireland, it is strong authority against the plaintiffs in this case. . It is important to recognise that it is not possible to distinguish Mc Cullagh on the basis merely that the disclaimer was in more extensive terms than the disclaimer in this case. Recognising perhaps the difficulty posed by the disclaimer, the plaintiff in Mc Cullagh had focused entirely on an oral statement of acreage made to the plaintiff when he was viewing the property and before he had received the printed particulars. This case, therefore, is authority for the continued application of the approach set out in Hedley Byrne v. Heller [1964] A.C. 465 where the disclaimer is viewed not as an exemption clause, but rather as part of the evidence as to whether a risk had been assumed, and a duty of care arisen.
45 The narrow point made by the plaintiff/respondent does not seek to argue that Irish law is in any respect different to that set out in Hedley Byrne and McCullagh v. Lane Fox and Partners Ltd. Rather, it is simply that the words in the disclaimer here, which are concededly less clear and less elaborate than those in the McCullagh case, for example, are simply not sufficient to exclude or avoid liability. It seems to me, however, for the reasons already addressed, that this is not the correct approach. The disclaimer should not be approached in an attempt to exclude a pre-existing liability whether contractual or tortious, and accordingly strictly construed. Instead, it is to be considered as one, albeit an important, piece of evidence as to whether the agent, retained by the vendor, assumed responsibility in this case to the plaintiff purchaser (without consideration) for the accuracy of the statements contained in the particulars. This must be assessed in the light of all of the facts, and in particular, the structure of the transaction which takes place in a relationship between each of the parties controlled by contract in familiar and well understood terms. It is relevant, in my view, that the special relationship and assumption of liability are alleged to arise from the terms of particulars made available generally rather than from any specific interaction between any employee of Jones Lang Lasalle and the plaintiff. It is also relevant that the general structure of the transaction is one where the agent acts for and owes duties to the vendor. Again, it is not irrelevant that the purchasers did not apparently obtain any provision in the contract, in a warranty or otherwise in relation to the size of the premises. It would be unusual for an agent to undertake a gratuitous responsibility when the principal, who was receiving consideration, had not. Again, it is relevant that even though this was a substantial commercial transaction, which can carry significant fees for the agents, (suggested to be in the region of 1.5%) that the element of that fee which should represent profit to the agent is a tiny fraction of the potential liability here, excluding costs. Again, it would be unusual that an agent would gratuitously assume that risk. Against that background, I cannot see the disclaimer as anything other than an assertion, unsurprising to anyone dealing in the property market, that Jones Lang Lasalle was not responsible for the accuracy of anything contained in the particulars.
46 I think this conclusion can be tested in a number of ways. The plaintiff’s case is undoubtedly strengthened by the fact that the error here is in relation to measurements, which would fall into the area of expertise and responsibility of the agent. But the particulars are not confined to the measurements, on which almost all of the attention was focused in this case. Among a number of other things, details are given in relation to tenure, zoning, development potential and likely vacant possession. It is difficult, if not impossible, to read the particulars including the waiver/disclaimer against the known background of the transaction and its well understood structure as being nevertheless an assumption of responsibility on the part of the agents in respect of these matters. But if this is the case, then it is equally, if not more difficult, to read the particulars as assuming responsibility for errors in measurements alone. No such distinction is discernible in the terms of the disclaimer. By the same token, given the very substantial amounts involved in property transactions, it hardly makes sense to understand Jones Lang Lasalle as precluding any duty of care in respect of minor matters, but assuming responsibility for errors (however large or small in themselves) which could give rise to very extensive liability. There is one further feature which is difficult to accommodate if the plaintiff is correct, which was touched on in the judgment in McCullagh v. Lane Fox and Partners Ltd. On the assumption that a purchaser was induced to pay too much for premises and should now be compensated, then the natural source of that compensation is the vendor who, at least on this hypothesis, has been unjustly enriched in obtaining more than they should have for the premises. In a contractual claim, the plaintiff purchaser will be able to recover that amount from the vendor, and if the agent was responsible for the error, the vendor might be able to obtain indemnity in respect of any consequential costs. But if an independent duty of care arises in tort on the part of the agent, then payment of damages by the agent to the purchaser will leave the vendor with, on this hypothesis, an undeserved gain. This lack of congruence of remedy, if not fatal to the plaintiff’s case, is at least troubling and requires to be addressed.
47 I accept that, adopting a strict approach, it might be possible to argue that the reference to “every care” being taken is itself a form of representation that such care was taken which, it must be assumed, did not occur in this case. However, that is, I think, an unduly legalistic reading of the clause, designed to defeat it rather than to understand it in its context. It is necessary to read the disclaimer fairly and in its entirety. If read as not excluding, but rather positively accepting responsibility for the risk of error due to negligence, it becomes not merely surprising, but superfluous, since arguably such a duty would arise in the absence of a disclaimer. Again, it might be said, adopting the highly strict approach to exemption clauses, that the disclaimer here is apt to exclude a contractual liability for error without fault, but does not exclude liability for negligence. But such an interpretation is highly implausible. Why would a party, in framing a disclaimer, seek to exclude liability under a contract which it does not have, but not to exclude, indeed positively to embrace the only liability which might arise to a party with whom it did not have a contract controlling the terms of the relationship? Again, it might be said (although I do not think this was argued) that the fact that the disclaimer uses the passive voice might mean that it sought to exclude the contractual liability of the agent’s principal, in this case the vendor. Again, this is, however, highly implausible, particularly if it is read as excluding a potential contractual liability, which did not in fact arise, on the part of the vendor, but accepting direct liability on the part of the agent (and for which the agent obtains no payment from any party) for an error attributable to negligence. The provision asserting that every care has been taken cannot be taken out of context or divorced from the structure of the sentence in which it is placed. In my view, the most reasonable interpretation of the disclaimer, and thus the manner in which it would be understood at the time, was that while Jones Lang Lasalle asserted that they took every care in the preparation of the particulars and believed them to be correct, if they did not do so, and/or if the particulars were incorrect, they did not accept responsibility. If the detail of the particulars was important to a prospective purchaser, he or she should verify them independently or, if they did not, they would bear the risk of any inaccuracy.
48 The evidence here that parties did not routinely check measurements (although lenders apparently do require such detail) and that no one in this case came back to the vendors or to Jones Lang Lasalle to suggest that the measurements were wrong (which might suggest that none of the other prospective purchasers measured the premises) does not, in my view, lead to a conclusion that in this market, there was a general assumption that agents accepted responsibility for the accuracy of the particulars. These premises were themselves marketed for a development opportunity which was no doubt the primary factor in setting its value. There is no evidence that any other purchaser considered the premises to be a letting opportunity and still less that the figures were considered to be crucial to the value of the bid. Indeed, in that regard, if the letting value of the property determined its value on the market, it is difficult to understand how Jones Lang Lasalle’s initial advice was so far removed from the price ultimately achieved. All this evidence may provide one further insight in to the progress of the property market even in the early 2000s, but it cannot, in my view, go so far as to establish an assumption of responsibility by Jones Lang Lasalle or other agents of a duty of care in relation to particulars made generally available on the market without more.
A Broader Approach
49 On one reading of the judgment of the High Court, however, it can be said that the High Court took a broader approach which could have important consequences for the law of negligence generally. Rejecting an argument based on Caparo Industries Plc. v. Dickman [1990] 2 A.C. 605, and relying on the judgment of the Supreme Court in Wildgust & anor v Bank of Ireland & anor [2006] 1 I.R. 570, the High Court held that “[p]rima facie therefore, the relationship between the plaintiff and the defendant was sufficiently proximate to give rise to a “special relationship” of the kind identified by the Supreme Court (Geoghegan and Kearns JJ.) in Wildgust”. It had been argued on behalf of Jones Lang Lasalle that the disclaimer precluded the existence of a special relationship and was, furthermore, a justification for rejecting the existence of duty of care based on the third element in Caparo (and adopted in Glencar), namely that it was an element making it unfair, unjust and unreasonable to impose a duty of care. The High Court rejected this and, assuming a prima facie duty of care, posed the question:
“It seems to me that the question for determination in relation to the ‘waiver’ is whether its presence within the brochure and its precise terms are together sufficient to exclude the defendant from liability to the plaintiff in respect of negligence by the defendant in the measurement of the floor area of the property and negligent misstatement on the part of the defendant in publishing the incorrect measurements of the floor area. On the evidence I do not believe that they are sufficient.”
50 On this reading, the judgment runs together a claim for a negligent act (of measurement or non-measurement) and negligent misstatement (contained in the particulars). The analysis then proceeds on the assumption that there exists a duty of care, and the question becomes whether the disclaimer is sufficient to exclude that duty of care. This is of course the analysis applicable to an exemption clause which seeks to limit a contractual or tortious liability. It is a short step from that analysis to the conclusion that the waiver clause here is insufficient. At the following paragraph, the High Court judge expressed himself in the following terms:
51 It is I think apparent that the judge did not seek to offer any interpretation of the disclaimer, but instead simply found it ineffective to exclude a prima facie duty of care. This, as already observed, is to apply the standard approach to contractual exemption clauses which seek to exclude a liability which otherwise exists, whether in contract or in tort, and therefore, the approach represents a significant (if unacknowledged) movement away from the analysis in Hedley Byrne v. Heller [1964] A.C. 465, where the disclaimer is considered simply as part of the evidence as to whether a duty of care arose in the first place. The approach in the High Court appears to be based upon a blurring of the distinction between liability for a negligent act and liability for a negligent statement which was identified in Hedley Byrne v. Heller and the succeeding case law, and in doing so, reliance on the decision of the Supreme Court in Wildgust.
52 I do not doubt that the resolution of standard claims for injuries and loss which are disposed of in civil courts on a daily basis, do not call for any careful consideration of legal analysis or precise language or reference to case law. If the function of this Court was simply to make some broad assessment of whether any particular disposition in such a case should be allowed to stand, then I would have no real difficulty with the result in this case. If it were to be reduced, as at times the submissions seem to suggest it should be, to a form of reverse beauty contest between a purchaser/investor making a bid for substantial property on the basis of a back-of-the-envelope calculation in reliance on information which he did not himself commission or pay for, and a professional firm which provided erroneous measurements, it might be a close call but I might favour the individual investor over the corporate firm, albeit without much enthusiasm. But I do not think the function of this Court can be reduced to the resolution of individual cases on a basis that can be plausibly considered fair, or at least not obviously unfair. In truth, if a plausible case could not be made for both sides in a case, the parties involved would rarely engage in costly litigation. If all this Court had to do was to make broad ad hoc conclusions on equally broad judgments made in individual cases in a trial court, then the jurisprudence in this area would quickly become little more than an exercise of unbounded discretion normally stigmatised as the antithesis of justice according to law. The case law in the area would rapidly become little more than that “codeless myriad of precedent, that wilderness of single instances” criticised by Tennyson. This is more than an objection that the law cannot be fitted in to some pleasing intellectual pattern. If the decisions of the appellate courts are only individualised determinations on the grounds of some general conception of fairness, then all cases would, in principle, have to be appealed since it would be impossible to predict in any given case the likely outcome, other than by a process of amateur psychological forecasting some distance removed from legal analysis.
53 But, as I conceive it, the function of this Court is, with the discipline, structure, illumination and focus provided by the individual case, to analyse the law in such a way as may permit issues to be resolved without the considerable cost in time and money involved in litigation and appeals in other cases. The results should not merely be certain and predictable, but also promote rational, efficient and fair behaviour. In my view, it is necessary, therefore, to look more rigorously at the analysis offered here.
54 First, I do not think that the difficulties in this case can be avoided by treating the case as one of a negligent act to which the general principle in Donoghue v. Stevenson applies. In many cases of negligent misstatement, it is possible to identify an antecedent, allegedly negligent act. Thus, the accountant who wrongly certifies a company’s accounts may have either failed to investigate the matter sufficiently, or have wrongly analysed the information available (Caparo Industries v. Dickman [1992] 2 A.C. 605, Candler v. Crane, Christmas & Co. [1951] 2 K.B. 164). The banker who wrongly states that a company is good for such debts as it may incur may have failed adequately to investigate its financial status, or misconstrued the information available. (Hedley Byrne v. Heller [1964] A.C. 465). It is, as Keane C.J. pointed out in Glencar, wrong to speak of somebody being negligent in the abstract. Negligence in law means a breach of an existing duty of care. Assuming for the moment, however, that the defendants in this case were careless in the way in which they measured (or indeed failed to measure) the premises, they did not owe any duty to prospective purchasers when they did so and did not cause them any loss as a result of that act, or failure to act, without more. Any duty, contractual or tortious, was owed at that point to the client. The question of a potential duty of a prospective purchaser, including the plaintiffs, and the question of any loss being incurred only arose when the product of the measurement exercise was included in the brochure as a statement and provided to prospective purchasers. This conclusion can, indeed, be tested by considering that if the statement had not been made and provided to prospective purchasers (most obviously by being contained in Jones Lang Lasalle’s brochure), it could not be said that any claim could arise on the part of the plaintiff, even if Jones Lang Lasalle had been grossly careless in the act of measurement. The case must be analysed, in my view, as a case of negligent misstatement.
55 I also consider that the argument, attributed in the judgment to the defendant, that the disclaimer was to be considered as addressing the so-called third limb of the test set out in Australia in Sutherland Shire, approved in the United Kingdom in Caparo Industries v. Dickman [1992] 2 A.C. 605 and adopted in this jurisdiction in Glencar Explorations p.l.c. v. Mayo County Council [2002] I.R. 84, i.e. whether it was just and reasonable to impose a duty of care, was unhelpful. Caparo did not involve any disclaimer. Indeed, if the auditor’s statement on the statutory accounts that they provided a true and fair view of the business of the company had contained a disclaimer (assuming that was legally possible), it is probable that the issue in Caparo would not have arisen at all. The question in Caparo was whether the very particular circumstances created in that case by the statutory obligation on a company to employ an auditor, and on that auditor to provide his or her opinion as to whether the accounts provided a true and fair view of the business of the company, could give rise to a duty of care to parties who invested in, or perhaps acquired a company in reliance on the financial picture presented by the accounts. The House of Lords considered that in the circumstances, although there was sufficient proximity, it would not be fair and reasonable to hold that auditors in such cases owed a duty of care to third parties with whom they had no contractual relationship. It may well be that some of the factors that were in the background in that analysis may also be relevant to the issue here. But here the question is whether, in the light, in particular, of the disclaimer, there was, in truth, sufficient proximity to give rise to a duty of care. It was the brochure which created the potential relationship between Jones Lang Lasalle and the plaintiff, and the question was, in the light of the terms of the brochure, whether such a relationship was created as to give rise to a duty of care so that Jones Lang Lasalle would be responsible to the plaintiff for any error in the particulars.
56 It is also fair, I think, to acknowledge that although this case cannot, in my view, be treated as one of liability for a negligent act, that that does not dispose of the argument based upon Wildgust. The plaintiff sought to put the case on a somewhat different basis. It was argued that Wildgust now permitted a court to approach a case of negligent misstatement on the same legal basis as any claim made in reliance on negligent acts, and in consequence, that the traditional issues arising in the area of negligent misstatement such as special relationship, assumption of responsibility, reliance etc. could be dispensed with, and the issue approached simply on the basis that the relationship gave rise to a duty of care, and whether the disclaimer successfully excluded any liability for breach of that duty. That would, of course, be a very large movement away from the law which was thought to have emerged from Hedley Byrne v. Heller [1964] A.C. 465 and those cases in this jurisdiction which followed it. However, this reading of Wildgust has received some impetus from some of the commentary on the case and it is accordingly necessary to consider that decision in some greater detail.
57 The facts in Wildgust were very complex, unusual and far removed from the situation in this case. Thus, the case might only be relevant here if it is understood as stating some principle (or refinement of principle) of general application. The first named plaintiff, Mr. Wildgust, was the principal of a business (“the company”) which was the second named plaintiff, and which borrowed money from bankers, Hill Samuels (“HS”). Security for that loan was a personal guarantee from both Mr. Wildgust and his wife which was, in turn, supported by life insurance policies taken out with Norwich Union (“the insurers”) at the behest of the bank on the lives of Mr. Wildgust and his wife, and which were mortgaged to the bankers. This is, of course, a common arrangement. Premiums were paid by direct debit by the company’s bank account with Bank of Ireland. There was thus a reasonably complex web of legal relationships between the plaintiff, his wife, the company, the bankers (Bank of Ireland) who made the direct payment to the insurers Norwich Union, and finally the bankers (HS), who had advanced the loan, which was secured by the personal guarantees, the same themselves supported by the insurance polices.
58 It appears that due to a problem on one occasion with the direct debit, the premium was not paid. The insurers notified the bank (HS) (but neither of the plaintiffs nor Mrs. Wildgust) that the premium was unpaid, and if left unpaid that the policy would lapse. This was particularly relevant because Mrs. Wildgust was unfortunately in poor health, having been diagnosed with cancer. A manager in HS contacted Mr. Wildgust, who assured him that the premium had been paid by bank draft. In fact, that draft had been returned (properly it seems) to the second named plaintiff company as an excess payment. Commendably, it appears that HS was still concerned, and the manager in the bank contacted the insurance company and was assured (it appears bona fide but erroneously) that the premium had indeed been paid and the policy was in force. This, indeed, was the same mistake under which Mr. Wildgust was labouring. Accordingly, the bank manager took no further steps, and neither sought to ensure that the premium was paid by Mr. Wildgust or the company, nor to exercise the right that the bank had to make premium payments to preserve the policy. If HS had been informed that the premium was unpaid, they would have paid the premium to keep the policy alive. The information that the policy was believed by the insurers to be in full force was not communicated to Mr. Wildgust. In due course, unfortunately, his wife died, but the insurers refused to pay on the policy, contending that it had lapsed by reason of the non-payment of the premium. Proceedings were commenced by Mr. Wildgust and the company against a number of defendants, but ultimately were reduced to a claim against the insurers. The initial proceedings were somewhat confused, and indeed the claim in negligent misstatement was only added after a successful appeal to the Supreme Court which permitted the amendment of the claim. When that case proceeded in the High Court, the plaintiff’s case against the insurers was dismissed on the grounds that while the insurers had negligently assured HS that the policy was in force and as a result of which HS had neither sought to have a premium paid nor paid it themselves, nevertheless the statement made by the insurers to HS had not been communicated to the plaintiffs, and therefore it could not be said that the plaintiff, Mr. Wildgust, and his company had relied on the negligent statement. On appeal to the Supreme Court, (Denham, Geoghegan and Kearns JJ.) allowed the plaintiff’s appeal. Lengthy and considered judgments were delivered by Geoghegan and Kearns JJ.
59 First, I should say that I have little doubt that the result in Wildgust was correct and just. It is also apparent, however, that the legal analysis was complicated. There may have been many potential routes which would have allowed the plaintiffs to recover against the insurance company, although some of them may have required some degree of novelty. It may be correct to analyse the case as one of negligent misstatement, and it may be that in future years, it will be possible to place this case in its proper place in that jurisprudence, whether as an outlier representing a very specific finding depending on particular and unusual facts, or as an important straw in the wind supporting a new and broader approach, or something in between. But I think it is clear at this stage that Wildgust cannot be taken as itself justifying a single unified approach to all cases of negligence, whether of negligent act or misstatement, and jettisoning traditional considerations such as proximity, and undertaking of responsibility in such a way that this case can be approached as one in which there is a duty of care and the only relevant consideration is whether liability was successfully excluded by the terms of an exemption clause.
60 First, and most obviously, Wildgust was not treated by the Court as representing a substantial revision of the general law of negligence. Indeed, if the case had been considered to call for such an exercise, it would not have been heard by a court of three, and if the Court considered that substantial issues of principle arose, the case could have been adjourned to be heard by a larger court. In fact, as Geoghegan J. observed, “the facts of the case were most unusual and there was no reported case sufficiently analogous to be of assistance”. The case was dependent on those unusual facts and understood by the Court to be, at most, a modest extension of the existing law to take account of the difficulties posed by the almost unique set of circumstances posed in that case. Geoghegan J. did observe that concepts running through the English case law relating to negligent misstatement and representation such as reliance, assumption of risk, special relationship, relationship to contract, or even, as he described it, the “will- o’- the- wisp” concept of “proximity” might not be all that necessary. This observation was immediately followed, however, by the statement that he was prepared to assume for the purposes of the case “that the law of negligent misstatements is a separate code from the law of negligent acts”. Furthermore, both of the judgments carefully analysed and considered the leading cases such as Hedley Byrne v. Heller and certainly do not suggest that the analysis in that case has been entirely discarded.
61 The central issue raised in Wildgust, and the issue for which it is authority, is on the question of reliance. That was the issue upon which the plaintiffs failed in the High Court and succeeded in the Supreme Court. The decision of the Supreme Court was, in effect, that in the particular and unusual circumstances of the case, the plaintiff did not have to prove personal reliance on the assurance given by the insurers to the bank that the premiums had been paid and the policy was in force. Indeed another way of looking at that case is perhaps that given the close relationship between the plaintiffs and the bank in relation to the insurance policy, the plaintiffs had a community of interest with the bank and were entitled to rely upon the representation made to the bank, and the bank’s reliance on it. But however viewed, it is clear that the case is only authority for the proposition that it is not necessary to show individual reliance by the plaintiffs in a particular situation like that of Mr. Wildgust. Indeed, the case is not authority for the proposition that reliance is not necessary. Instead, it established that the plaintiffs in that situation were entitled to rely on the reliance placed by HS on the assurance given. It is not authority for the proposition that cases of negligent misstatement do not require a consideration of whether there has been an assumption of risk on the part of the maker of a statement, or more broadly whether the circumstances are such as to give rise to a duty of care.
62 Even if Wildgust was taken at its broadest as suggesting, perhaps, that by analogy with the decision in that case it might, in any given case, be possible to dispense with a requirement of an assumption of responsibility that, in my judgment, would still not avail the plaintiffs in this case. The logic of Geoghegan J.’s judgment was that those tests were essential control mechanisms necessary to limit the scope of liability in cases where a statement was capable of general dissemination, giving rise to the possibility of indeterminate liability of an indeterminate amount to an indeterminate group, as in Ultramares v. Touche (1931) 255 NY 170. In Wildgust, Geoghegan J. found there was no need for such a control mechanism because the particular circumstances of the case meant that any statement was not generally disseminated. Instead both the individuals affected by the statement (arguably a single individual, the holder of the insurance policy, albeit that the interest was here divided between the individual and the lender to whom the policy was assigned) and the amount of financial exposure if an error made (the amount of the policy) were known (or capable of being known) and limited, at the time it was made. But the same cannot be said here. The statement relied upon by the plaintiff here was made in a brochure which was generally available. There are in truth a number of potential claims arising from this type of error. In addition to a purchaser like Mr. Walsh who buys property and finds it smaller than he claims he expected, it is possible to conceive of claims by a bidder who did not purchase the property because they thought it too big, or the disappointed developer underbidder who would have been successful if Mr Walsh had not paid “too much” for the premises. Both these claimants could claim that they lost a valuable property which increased in value dramatically in the subsequent years, particularly if the test is merely proximity forseeability and damage. It would be difficult to assess loss in such cases. These considerations are similar to those which have hitherto justified the limitations on liability for misstatement and are in sharp contrast to the considerations which influenced the Court in Wildgust. Furthermore, there was, in Wildgust, no disclaimer or waiver of liability, and thus that issue, which is central to this case, did not arise. In those circumstances, I do not think that Wildgust provides justification for adopting an approach to this case, which would involve a dramatic departure from the law of negligent misstatement, which has existed since it was first identified in Hedley Byrne v. Heller and approved in this jurisdiction in Securities Trust v. Moore and Bank of Ireland v. Smith. If that step is to be taken it would require more elaborate consideration (and by a full court) than was involved in this case or, indeed, in Wildgust. Accordingly, since in my view, on the established test, the plaintiff should not have succeeded, I would allow the defendant’s appeal.
63 Finally, and while not in any sense dispositive, it seems to me this is an outcome which provides clarity and promotes efficiency. This case is, ultimately, about the allocation of risk. At first blush, it might appear reasonable that the agent uttering the statement, should bear the risk of damage flowing from error, but when put in context this is less clear. Everyone involved in this transaction is selling or buying something. The provision of information or advice which can be relied on (and sued on if incorrect) has a value, sometimes substantial. Why should one party, be able to acquire this information backed by the resources of a substantial firm, for nothing? If the agent is unable to limit liability (or be confident that it can do so, which if a disclaimer is to be assessed with the severity of an exemption clause, it cannot be), it must seek to price its services at a sufficient price to cover the risk. Given the potential exposure to damages in property transactions and the costs involved in litigation, this is a substantial cost that must be built into the price either directly, or indirectly through insurance. This means that the cost is spread across the agent, its client, and all other purchasers. But those purchasers may have no interest in accuracy of information as to area, and will not be relying on the brochure in other respects, such as title or tenure. To these participants this would be an additional and unnecessary cost. It is only a special purchaser, who has a particular interest in the square footage for whom the information has value, and there is no reason why that purchaser should be able to avoid the cost of being able to rely on that information, and spread it across other market participants. It is reasonable in my view, that if a purchaser has a particular interest in reliance on the information in the brochure, the starting point should be that he should contract for that, either with the vendor, the vendor’s agent, or his own expert, and otherwise bear the risk of reliance in error, unless the agent has, and for whatever reason, clearly assumed the risk. This is, as I understand, the essential approach to claims of negligent misstatement in cases such as this and is consistent with the outcome of those cases, whether the claims succeed or fail. In my view, it cannot be said from the circumstances of this case (which here resolve themselves on the terms of the brochure), that the agent assumed that responsibility to this plaintiff.