This appeal case discusses the actions (or inactions) of public bodies, when operating under the guidance of statute and a prerequisite (albeit narrow) duty of care towards the general public.
After a number of road traffic accidents had occurred in a well-known intersection, the focus of complaint by drivers at the time, centred around a small patch of land on one of the number of corners, which obscured vision and thereby contributed to the now growing number of injurious collisions.
When consideration was taken by the highways agency operating under the local authority to try and remove the affected area, the decision was taken to write to the land owners British Rail, and request that either the State body take steps to remove the blockage, or that permission might be granted for the local authority themselves to carry out the work, at cost to the State under s.79 of the Highways Act 1980.
Under the power of such statute, the local authority were at their own discretion, able remove the land at cost to themselves, in order to circumvent any undue objections, and while acting in the interest of public safety. Unfortunately, while the local authority did write to the corresponding public body, and a meeting was held to examine how best to proceed, the letter was ignored by the recipients, and the sender was later moved to another council department, without explaining to anyone that the matter was under review, and that further action was needed.
When the claim for negligence and breach of statutory duty was initiated by the victim of the accident, damages were awarded, and shared liability placed upon the driver and local authority (in varying degrees), after which an appeal was made by the defendant public body.
During the hearing, judge Lord Hoffman’s view of operational policy translated that:
“The distinction between policy and operations is an inadequate tool with which to discover whether it is appropriate to impose a duty of care or not.”
In other words, just because the highways agency and local authority were obligated to provide safe roads and road surfaces to the general public, private land that prevented an unobscured field of view did not render those same bodies liable for a duty of care, even if they had decided to take steps outside of prescribed statute to remove the obstruction at cost to themselves.
This case ties strongly with the constitutional concept of ‘justiciability’, which is to say that because public bodies are created by statute through the democratic process, the court recognises the limitations of their capabilities, and subsequently hesitates to challenge them.
Duty of care under accusations of negligence, particularly within the carelessness of speech, forms the basis of a claim between a corporate entity and a merchant bank. On this occasion, the appellant advertising agency had taken steps to ascertain the financial credibility of a new client; which while careless in its execution, left them at a considerable loss when the information proved worthless.
In 1957, the appellants received instruction from a new client requiring a number of advertisements, which was later followed by a request for a structured advertising programme with estimated costs of around £100,000 p.a. Given the short-term trading history between them, the appellants asked their bank to consult their client’s bank so as to establish their financial standing.
The reference, which was by no means official, read that their client was ‘a respectably constituted company whose trading connection is expanding speedily’ and that ‘We consider the company to be quite good for its engagements’. Upon this positive note, the appellants proceeded to organise scheduled television and newspaper slots at cost to themselves, on the strength of the bank’s statement.
Several months later, the appellants concerns for the financial integrity of their client grew to the point where a second reference was requested. This time, an oral banker’s report was provided for by the respondents, that while detailed enough to warrant a sound response, was issued under the express notice that it was given with no responsibility for the outcome of the enquiry. Within this report was knowledge that the client was a subsidiary of a parent corporation in the throes of liquidation, but the bank similarly emphasised that they had confidence in the director and his integrity as a businessman.
With written confirmation of the report sent by the bank to the appellants, the terms expressed were relied upon when in light of their client’s liquidation, the appellants suffered losses of around £17,000. It was this somewhat unsurprising event that triggered a claim for damages, based upon negligence by the respondents when offering statements that were contributory to the appellant’s extension of credit.
In the first instance, the court awarded in favour of the respondents, and when taken to the Court of Appeal, the outcome remained unchanged on grounds that such principles were unreasonably applied to the unrehearsed statements of a banker, and not an official credit report. Presented to the House of Lords, the principles of negligence peripheral to any contract, were examined for exactness, whereupon the dicta of Sir Roundell Palmer in Peek v Gurney initially proposed that:
“[I]n order that a person may avail himself of relief founded on it he must show that there was such a proximate relation between himself and the person making the representation as to bring them virtually into the position of parties contracting with each other…”
There was also mention of Candler v Crane, Christmas & Co, in which a proposed corporate takeover involved the presentation of company accounts to the prospective buyers, accounts that by all intentions had been carelessly prepared, and on which the investors had relied when purchasing the firm. While in Robinson v National Bank of Scotland Ltd, a guarantor was left facing huge debts when it was argued he had been falsely induced into signing by the lenders, prior to the borrowers lapsing into bankruptcy. In this matter, Haldane LJ commented:
“[W]hen a mere inquiry is made by one banker of another, who stands in no special relation to him, then, in the absence of special circumstances from which a contract to be careful can be inferred, I think there is no duty excepting the duty of common honesty…”
While in Shiells v Blackburne, Loughborough LJ stressed that:
“[I]f a man gratuitously undertakes to do a thing to the best of his skill, where his situation or profession is such as to imply skill, an omission of that skill is imputable to him as gross negligence.”
In Cann v Willson, the claimants sought the professional opinion of valuers when borrowing against the worth of their home; and having provided what was suggested as a moderate valuation, the claimant defaulted on the required payments, whereupon the sale of the property failed to cover the debt owed. On this occasion, the court awarded in favour of the claimant on grounds of negligence, want of skill, breach of duty and misrepresentation.
In Nocton v Lord Ashburton,Shaw LJ propagated the principle that:
“[O]nce the relations of parties have been ascertained to be those in which a duty is laid upon one person of giving information or advice to another upon which that other is entitled to rely as the basis of a transaction, responsibility for error amounting to misrepresentation in any statement made will attach to the adviser or informer, although the information and advice have been given not fraudulently but in good faith.”
This translated to a recognition by the House that while there was no question that a duty of honesty was inherent to the words of the bankers, there was no evidence to suggest fraudulent or misrepresentative intention, particularly when at the time the advice or report was issued, the respondents had expressed their abject unwillingness to be held to account for the actions of the company discussed. This left the appellants with no substance upon which to claim damages and so the appeal was uniformly dismissed, while the House held that:
“[I]f someone possessed of a special skill undertakes, quite irrespective of contract, to apply that skill for the assistance of another person who relies upon such skill, a duty of care will arise. The fact that the service is to be given by means of or by the instrumentality of words can make no difference.”