England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE QBENI 97/l085

COURT OF APPEAL (CIVIL DIVISION ) and l089 CMS l

(MR JUSTICE HOOPER )

Royal Courts of Justice

Strand, London WC2A 2LL

Thursday 2nd April l998

B e f o r e

LORD JUSTICE STUART-SMITH

LORD JUSTICE JUDGE

LORD JUSTICE MANTELL

W l-6

v.

ESSEX COUNTY COUNCIL AND ANOTHER

(Handed down transcript of

Smith Bernal Reporting Limited, l80 Fleet Street

London EC4A 2HD Tel: 0l7l 42l 4040

Official Shorthand Writers to the Court)

MR ALLAN LEVY QC and MISS E.A. GUMBEL (instructed by Messrs Sternberg Reed Taylor & Gill, Barking) appeared on behalf of the Appellants (Plaintiffs).

MR EDWARD FAULKS QC and MR ANDREW WARNOCK (instructed by Messrs Barlow Lyde & Gilbert, London EC3A 7NJ) appeared on behalf of the Respondents (Defendants).

J U D G M E N T

(As approved by the court)

©Crown Copyright

LORD JUSTICE STUART-SMITH:

l. The first two plaintiffs (the parents) and their minor children (the children), claim damages for personal injuries against the Essex County Council (the Council) and Anthony Golden, a social worker employed by the Council. The claim arises out of the fostering by the W family of a boy, then l5 years old, G. It is alleged that G was placed with the family in breach of a specific oral assurance that someone known or suspected of being a sexual abuser would not be fostered with them and, furthermore, that in answer to a specific question they were wrongly told that G was not so known or suspected. In fact G, as the defendants knew, had some three years previously received a caution for indecent assault on his sister. During the period from 7 April l993 to 7 May l993 the children, who were then between 7 and l2 years old, were all sexually abused by G with the result that they have suffered psychiatric illnesses and the parents are said to have suffered psychiatric shock.

2. These facts are said to give rise to the following causes of action:

(i) In negligence against both defendants. It is alleged that the Council are in breach of a duty of care to the plaintiffs and are also liable under the principle in Hedley Byrne Ltd v Heller & Partners for negligent misstatement. The second defendant is also alleged to be in breach of a duty of care and liable for negligent misstatement. The Council are alleged to be vicariously liable for the second defendant’s torts.

(ii) The Council are alleged to be in breach of an express and/or implied term of the contract of fostering.

(iii) The second defendant is alleged to be liable for the tort of misfeasance in a public office; the Council are said to be vicariously liable for this tort.

(iv) A claim in deceit against the second defendant was abandoned by Mr Levy QC.

3. The case came before Hooper J. on an application by the defendants to strike out the Statement of Claim as disclosing no reasonable cause of action. The Judge in W v Essex County Council [l997] 2 FLR 535, struck out the claims in contract and misfeasance in a public office. He also struck out the parents’claim in negligence on the basis that they were secondary victims but could not arguably show that their illness was the result of the ‘sudden appreciation by sight or sound of a horrifying event, which violently agitates the mind’ ( Alcock v Chief Constable of South Yorkshire [l992] l A.C. 3l0, 4l0 F). He refused to strike out the children’s claims in negligence. He held that it was arguable that a social worker placing a child with foster parents was under a duty of care to provide the foster parents with such information as a reasonable social worker should provide; that the second defendant was arguably in breach of the duty and that the Council was vicariously liable. He also held that the claim based on negligent misstatement was arguable against the second defendant and that the Council was again vicariously liable.

The proceedings in the Court of Appeal

4. The plaintiffs appeal with the leave of the Judge. The parents appeal against the dismissal of the claims in negligence. All plaintiffs appeal against the dismissal of the claims in contract and misfeasance in a public office. The defendants’ cross-appeal against the refusal of the Judge to strike out the claims on behalf of the children in negligence. Each side has served notice seeking to support some of the Judge’s conclusions on other grounds.

5. The parents applied to the Council to become full-time specialist adolescent foster carers (the term used by the Council for foster parents). The parents were required to undergo a vetting process and a course in July/August l992. At various times during this process the parents orally informed those whom they were dealing with in the Council that they were not willing to accept any adolescent who was known or suspected to be a sexual abuser. This was because of their concern for their young children. The conversations were said to have taken place with NP and PC. They received oral assurances from both these people that their objections were understood and no such adolescent would be placed with them. In October l992 the parents signed an agreement entitled ‘Specialist Foster Carer Agreement’ which was dated l8 September l992.

6. G was placed with them on 7 April l993. It is alleged that the parents made specific inquiry of the second defendant as to whether G was a sexual abuser and the second defendant deliberately lied to them about it. Those lies are said to have continued while G was in the house. During the month that G was in their house he is said to have systematically and persistently physically and sexually abused each of the children. It is alleged that in the Council’s and the second defendant’s knowledge G was an active sexual abuser and /or alternatively they had reasonable cause to believe or suspect that he was. It is further alleged that a social worker employed by the Council became aware at the end of April l993 that G was making allegations that the two youngest children had been sexually molested by another person. It is said that the social worker failed to disclose the information with the result that G remained with the plaintiffs and continued to abuse the children. It is alleged that he abused the fifth plaintiff on the night of 6/7 May l993. The parents are said to have suffered post traumatic shock when they discovered what had happened.

7. The defendants admit in the Defence that they knew that three years previously G had been cautioned for sexually abusing his sister. They also admit that during the month he was with the plaintiffs G sexually abused the children. It is only right to point out, however, that other matters are in issue. But since this is a striking out application, the Court has to proceed on the basis that the allegations in the Statement of Claim are true. None of the claims should be struck out unless it is clear and obvious that in law they cannot succeed. X v Bedfordshire Council [l995] 2 A.C. 633 per Lord Browne-Wilkinson at p740H-74lD.

8. The statutory framework governing children in care of the Council and the placement with foster parents is set out in great detail in the judgment of Hooper J. at 538H-543C. For present purposes a summary of the relevant provisions will suffice. In placing children in foster care, local authorities act pursuant to wide ranging statutory powers, duties and discretions under the Children Act l989 (the l989 Act), the Foster Placement (Children) Regulations l99l (the Children Regulations), the Arrangements for Placement of Children (General) Regulations l99l (the General Regulations) and The Children Act l989 Guidance volume 3 (“the Guidance”) which has statutory force and is issued by the Secretary of State pursuant to Local Authority Social Services Act l970, s.7. See per Lord Browne-Wilkinson in X v Bedfordshire at p746E.

9. Central to the local authority’s duties is the duty to safeguard and protect the welfare of the child taken into care (l989 Act s.22(3)(a)). This is described as the “primary duty” in the Guidance (paragraph 2.5). Further, in making any decision about the child, the local authority must ascertain and take into account, as far as reasonably practicable, the wishes and feelings of the child, the child’s parents, any person who has parental responsibility and any other person whom the local authority considers relevant (l989 Act, s.22(4) and (5)). Local authorities should use this discretion to consult all the relevant statutory agencies which are and which have been involved with the child (Guidance paragraph 2.5l). The local authority has a discretion to exercise its powers in a manner inconsistent with its duties under the l989 Act, but only if appears to the local authority that it is necessary to do so for the purpose of protecting members of the public from serious injury (l989 Act, s.22 (6)).

l0. The local authority has an express duty to provide accommodation for a child in care. This may be with foster carers, in a community home, in a voluntary home, in a registered children home or by means of making such other arrangements as seem appropriate to the local authority and which comply with any regulations made by the Secretary of State (l989 Act, s.23(l) and (2)). The General Regulations require a local authority, before placing a child, to make immediate and long-term arrangements for that placement insofar as is reasonably practicable (reg. 3). In making those arrangements the local authority has to take into account various considerations including the child’s health and educational history (reg. 4 and Schedule l-3). The arrangements are to be recorded in writing. A case record is to be created (if not already kept) in relation to the child (reg. 8). This record is to include various items, including a copy of any written report in the local authority’s possession. The record is confidential subject only to any right of access given by statute and any order of the Court (reg. 9).

ll. The Guidance envisages that the planning process, in deciding how to accommodate a child, will usually consist of 4 stages, namely inquiry, consultation, assessment and decision-making (paragraphs 2.43 to 2.6l). This process can involve many different agencies and persons (see paragraph 2.5l).

l2. A local authority may place a child with whose welfare it is concerned with a foster parent provided it is satisfied that that is the most appropriate way of performing its duty to accommodate the child and that placement with a particular foster parent is the most suitable placement having regard to all the circumstances (Children Regulations, reg. 5). The Guidance states that in choosing the most suitable placement, authorities can face a difficult task in meeting the assessed needs of the child and there are often practical limitations on choice which mean the ideal placement is not available (paragraph 4.l).

l3. Regulation 3 of the Children Regulations deals with the investigation and approval of foster parents. Regulation 4 provides for continuous review of the suitability of particular foster carers and the local authority’s right to revise the terms of the approval or terminate the same. The foster parent also has a right under that regulation to notify the local authority that he no longer wishes to act as a foster parent. Before placing any child with a foster carer, the carer should be required (except in case of emergency) to enter into a written agreement with the local authority dealing with the matters set out in Schedule 2 to the regulations (Children Regulations, reg. 3(6)(b)). This schedule addresses such matters as training, review, changes in personal circumstances, the authority’s arrangements for meeting any legal liabilities of the foster parents arising by reason of the placement, corporal punishment, confidentiality and the right of the local authority to remove the child from the carer’s home. The purpose of the agreement is to provide written confirmation about the terms and conditions of the partnership between the local authority and the foster parents. It also provides written confirmation of matters which should be discussed and agreed during the assessment (Guidance paragraph 3.52).

l4. Except in cases of emergency, the local authority has a duty not to place a child unless the foster carer enters into a written agreement relating to that particular child covering the matters specified in Schedule 3 of the Children Regulations (reg. 5(6)). This agreement is intended to set out the agreed arrangements for the care of the child. It is also intended to serve as confirmation of what is expected from the foster carer and the authority and of what has been agreed (Guidance paragraph 4.ll). The agreement is to cover matters such as financial and medical arrangements and any other arrangements made by the local authority for the child.

l5. The agreement must also contain a statement of the information which the local authority considers necessary (my emphasis) to enable the foster carer to care for the child with particular reference to the local authority’s arrangements and objectives for the child, the child’s personal history, religious persuasion, cultural and linguistic background, racial origin, medical and educational needs (Children Regulations, Schedule 3, paragraph l). The Guidance provides that this requirement acknowledges the need for communication of essential information if there is to be an effective partnership and that the foster carer will generally need to know the circumstances leading to the child being taken into care and the child’s previous experiences. It further provides that the social worker should discuss with the child according to his understanding the information which is to be given and why. Where there is a special reason for withholding significant information, the reason should be recorded on the case record (paragraph 4.l3).

l6. In paragraphs l9 and 20 of the Amended Statement of Claim the plaintiffs' plea on duty of care is as follows:

"l9. Further, and alternatively, the Plaintiffs, and each of them allege that, at all material times, the First Defendants, and/or their servants or agents, were under a Duty of Care to each of them, such Duty of Care being, inter alia, not to place a child or young person in the home of the Plaintiffs which the First Defendants knew or suspected was a sexual abuser.

20. Further, and in the further alternative, the Plaintiffs, and each of them allege that, at all material times, the First Defendants, their servants and agents, were under a further Duty of Care to each of them, such Duty of Care being to inform the First and/or Second Plaintiffs of all material circumstances of each and every child or young person placed or to be placed with the First or Second Plaintiffs and/or not to omit to inform them of such matters and/or not to negligently and/or deliberately misrepresent and/or conceal any such material particulars."

l7. The Judge did not accept the duty so formulated. He said that the only possible way in which the duty could be formulated was:

‘a duty [to take reasonable care] to provide to a foster carer before and during the placement such information about the child as a reasonable social worker would provide in all the circumstances.’ (see p547C).

The Judge did not include in his formulation of the duty the words in square brackets. But it seems to me that since what is being formulated is a duty of care, these words are necessary. And when the Judge came later to formulate the duty of the social worker, he did so in these terms (see below).

l8. So far as I can determine from his judgment, the Judge did not consider that a direct duty of care should be imposed on the Council. But he held that there was arguably a duty on the second defendant and the Council were vicariously liable for its breach. He said at p562 B-C:

‘I therefore find that a social worker placing a child with foster parents has a duty of care to provide to the foster parents such information as a reasonable social worker would provide and that the local authority is vicariously liable for the conduct of its social worker in this respect. It was not suggested that the children could not be the beneficiaries of the breach of such a duty and in these circumstances I decline to strike out those portions of the statement of claim which rely on this duty.’

l9. Paragraph 23 of the Amended Statement of Claim is as follows:

‘Further, the First Defendants were in further breach of the said agreement and/or negligent in that both before and/or at the time when the Second Defendant made the said placement, he wilfully and deliberately failed and/or recklessly and/or negligently failed to inform the First and Second Plaintiffs about the proclivities of the said G.’

This appears to be an allegation of negligent misstatement by the second defendant for which the Council are liable. That appears to be how the Judge understood it. The Judge rejected Mr Levy QC’s submission that the principles enunciated in X v Bedfordshire did not apply to negligent misstatement. He held, however, that in view of his conclusion as to the duty to provide such information as a reasonable social worker would provide, he saw no reason to strike out the claim based on negligent misstatement by the second defendant for which the Council are vicariously liable.

20. Mr Faulks QC submitted that the Judge was in error and that he should have held that there was no duty of care either on the Council or the second defendant in relation to information given to the parents. Mr Levy, while submitting, without much conviction, that the duty of care was wider and as formulated in the Amended Statement of Claim, contended that the Judge was correct.

2l. Any consideration of this question must start with an examination of the speech of Lord Browne-Wilkinson in X v Bedfordshire . The other members of the House agreed with his speech save that Lord Nolan dissented on a point that is not material to the present case. This case falls into category (c) of Lord Browne-Wilkinson’s analysis (p730H) at p735B he defined it in these terms:

‘In this category, the claim alleges either that a statutory duty gives rise to a common law duty of care owed to the plaintiff by the defendant to do or refrain from doing a particular act or (more often) that in the course of carrying out a statutory duty the defendant has brought about such a relationship between himself and the plaintiff as to give rise to a duty at common law. A further variant is a claim by the plaintiff that, whether or not the authority is itself under a duty of care to the plaintiff, its servant in the course of performing the statutory function was under a common law duty of care for breach of which the authority is vicariously liable.’

We are concerned with the second and third limbs of his analysis.

22. At p735F Lord Browne-Wilkinson said:

‘It is clear that a common law duty of care may arise in the performance of statutory functions. But a broad distinction has to be drawn between: (a) cases in which it is alleged that the authority owes a duty of care in the manner in which it exercises a statutory discretion; (b) cases in which a duty of care is alleged to arise from the manner in which the statutory duty has been implemented in practice.’

23. In dealing with cases under (a) involving the exercise of statutory discretion, Lord Browne-Wilkinson said at p763A:

‘Most statutes which impose a statutory duty on local authorities confer on the authority a discretion as to the extent to which, and the methods by which, such statutory duty is to be performed. It is clear both in principle and from the decided cases that the local authority cannot be liable in damages for doing that which Parliament has authorised. Therefore if the decisions complained of fall within the ambit of such statutory discretion they cannot be actionable in common law. However, if the decision complained of is so unreasonable that it falls outside the ambit of the discretion conferred upon the local authority, there is no a priori reason for excluding all common law liability.’

And at p737E he describes this as the first requirement in seeking to make a local authority liable at common law for negligence in the exercise of a discretion conferred by statute. If this requirement is satisfied, the claim is justiciable. Mr Faulks concedes for the purpose of this striking out application only that it is arguable that decisions in question in this case fall outside the ambit of discretion.

24. That being so, this Court has to apply the three stage approach applying the usual principles, ie. those laid down in Caparo Industries plc v Dickman [l990] 2 A.C. 605, 6l7-6l8. Was the damage to the plaintiffs reasonably foreseeable? Was the relationship between the plaintiff and the defendant sufficiently proximate? Is it just and reasonable to impose a duty of care? (per Lord Browne-Wilkinson in X v Bedfordshire at p739A).

25. The question whether there is a common law duty and if so, its ambit, is profoundly influenced by the statutory framework within which those acts complained of were done (p739C). Moreover a common law duty of care cannot be imposed on a statutory duty if the observance of such common law duty of care would be inconsistent with and have a tendency to discourage the due performance by the authority of its statutory duties (ibid p739D).

26. It is also important to bear in mind what Lord Hoffmann said in Stovin v Wise [l996] A.C. 5 923, 953:

‘If the policy of the act is not to create a statutory liability to pay compensation, the same policy should ordinarily exclude the existence of a common law duty of care.’

In this case there is no allegation of breach of statutory duty or claim for statutory compensation.

27. Again, Mr Faulks concedes for the purpose of the strike out application that it is arguable that the damage to the children was reasonably foreseeable and there was sufficient proximity. The question in this case is whether it is just and reasonable to impose a duty of care on the Council or the second defendant. It should be noted that the same considerations which lead to the conclusion that it is not just and reasonable to impose a duty on the Council apply with at least equal force to the question whether it is just and reasonable to impose such a duty on the individual social worker. (per Lord Browne-Wilkinson in X v Bedfordshire at p754A; see also Barrett v Enfield LBC [l997] 3 All ER l7l per Lord Woolf MR, at pl79D). This is of particular relevance in this case because the Judge did not consider apparently that the Council were under a duty of care; but he did hold that the second defendant was and the Council vicariously liable.

28. There are a number of other passages in the speech of Lord Browne-Wilkinson to which I must refer. After referring to the need to adopt an incremental approach in developing novel categories of negligence he said at p75lC:

‘We were not referred to any category of case in which a duty of care has been held to exist which is in any way analogous to the present cases. Here, for the first time, the plaintiffs are seeking to erect a common law duty of care in relation to the administration of a statutory social welfare scheme. Such a scheme is designed to protect weaker members of society (children) from harm done to them by others. The scheme involves the administrators in exercising discretions and powers which could not exist in the private sector and which in many cases bring them into conflict with those who, under the general law, are responsible for the child’s welfare. To my mind, the nearest analogies are the cases where a common law duty of care has been sought to be imposed upon the police (in seeking to protect vulnerable members of society from wrongs done to them by others) or statutory regulators of financial dealings who are seeking to protect investors from dishonesty. In neither of those cases has it been thought appropriate to superimpose on the statutory regime a common law duty of care giving rise to a claim in damages for failure to protect the weak against the wrongdoer: see Hill v Chief Constable of West Yorkshire [l989] A.C. 53 and Yuen Kun Yeu v Attorney-General of Hong Kong [l988] A.C. l75. In the latter case, the Privy Council whilst not deciding the point said, at pl98, that there was much force in the argument that if the regulators had been held liable in that case the principles leading to such liability “would surely be equally applicable to a wide range of regulatory agencies, not only in the financial field, but also, for example, to the factory inspectorate and social workers, to name only a few.” In my judgment, the courts should proceed with great care before holding liable in negligence those who have been charged by Parliament with the task of protecting society from the wrongdoings of others.’

29. At p74lB he said:

‘There may be cases (and in my view the child abuse cases fall into this category) where it is evident that, whatever the facts, no common law duty of care can exist.’

Even more explicit is the statement at p749F:

‘Is it, then, just and reasonable to superimpose a common law duty of care on the local authority in relation to the performance of its statutory duties to protect children? In my judgment it is not.’

Both the cases of X v Bedfordshire and M v Newham LBC were concerned with claims by the child who was the object of the Council’s statutory caring duties. But in the Newham case there was also a claim by M’s mother, a third party. Those claimants are not in the same position as the plaintiffs in the present case. But there can be no doubt that the defendants, in making the placement with the parents were acting pursuant to their statutory powers and duties. In my view it is unlikely that Lord Browne-Wilkinson in making these clear and broad statements of law, especially the second, can have overlooked the very important aspect of the local authority’s powers and duties in relation to fostering.

30. Before I consider the particular circumstances which are relevant to the question of whether it is just and reasonable to impose a duty of care on the Council or its social workers towards the plaintiffs, there are three other cases to which I would refer. The first is H v Norfolk County Council [l997] l FLR 384. In that case the applicant who was then 22 had been taken into care at the age of 4 and placed with foster parents until he was l4. He alleged that he had been sexually abused by his foster parents. It was alleged that the Council had been negligent in failing to supervise his placement, to investigate reports of abuse and to remove him from foster care. The Judge struck out the Statement of Claim as disclosing no cause of action. The Court of Appeal refused leave to appeal. An attempt was made to distinguish X v Bedfordshire on the grounds that the policy considerations in placing and continuing a child in foster care were not the same as those that were relevant when the question was whether the child should or should not be taken into care. Simon Brown LJ (with whose judgment Waite LJ agreed) rejected this argument although he recognised that the policy considerations were not precisely the same as in X v Bedfordshire .

3l. The next case is Barrett v Enfield LBC . The plaintiff had been in care of the local authority between the ages of l0 months and l8 years. During that time he had been moved nine times in different foster placements. He alleged that he had developed psychiatric illness as a result and this was due to the negligence of the local authority. The claim had been struck-out and the Court of Appeal dismissed the appeal. The decision in H v Norfolk was approved. This again is a case where the plaintiff is the child in care. But what is important for the purpose of the present case is what Lord Woolf MR said at pl76J:

‘The complaints which go to the heart of the plaintiff’s claim are all ones which involve the type of decisions which an authority has to take in order to perform its statutory role in relation to children in its care. The decision whether or not to place the child for adoption, the decision as to whether to place a child with particular foster parents, the decision whether to remove a child from a foster parent, the decisions as to the child’s relationship with his mother and sister, all involve the exercise of discretion in the performance of the differing statutory responsibilities of the local authority.’

The Court said that the case could not be distinguished in principle from X v Bedfordshire .

32. The third case is Lambert and others v Dyer and South Glamorgan CC (unreported transcript ll June l997). The defendant Council had placed the first defendant with the plaintiffs Mr & Mrs L as foster parents. After the placement was finished the first defendant harassed the plaintiffs by making false allegations of sexual abuse; and either by herself or her confederates making silent or threatening telephone calls, false telephone calls to disrupt their taxi business and breaking into their house. As the result the plaintiffs had suffered psychiatric illness. Amongst other alleged causes of action was a claim based on breach of duty of care on the grounds that the first defendant had a history of making false allegations and abuse against past carers, and that had the plaintiffs been aware of that history they would not have agreed to care for her. Toulson J struck out the Statement of Claim as disclosing no cause of action.

33. An attempt was made, as it is in this case, to distinguish X v Bedfordshire on the grounds that the alleged duty was owed to the foster parents rather than the foster child. Toulson J rejected this submission. At p23C he said:

‘It would be bizarre if a Council’s decision to put a child in an allegedly inappropriate placement could give rise to no action by the child, for whose benefit the statute is primarily intended, but could give rise to such an action by a third party.’

He considered that the considerations relevant to the question whether it was just and reasonable to impose a duty of care in X v Bedfordshire , although not precisely the same when considering a duty to foster parents, were sufficiently similar to outweigh the primary consideration of public policy that wrongs should be righted.

34. Toulson J also adverted to an important feature which is peculiar to foster parents who agree to accept difficult children and perform an invaluable service and take on very substantial risks. He said at p27F:

‘If it were the case that the local authority might place such a child in circumstances where he or she caused an obvious and grave risk to former foster parents, without taking any steps to combat it and without the possibility of compensation for the foster parents if the risk materialised, other than the possibility of remedy from the Criminal Injuries Compensation Board, or from the local authority ombudsman, it might seem very unfair and it might conceivably be at least arguable that such special circumstances made it reasonable to impose a limited duty of care towards such a person without opening the flood gates or exposing or creating wider or more general dangers. However, in this case there was a compensation scheme.’

It is plain therefore that Toulson J had this factor in mind; but nevertheless considered that it did not arguably tip the scales in favour of imposing a duty of care towards foster parents.

35. Mr Levy sought to distinguish Lambert’s case on the basis that in the present case there was additionally the negligent misrepresentation made by the second defendant. But for reasons which I shall deal with later in this judgment, in my opinion this is not a valid ground for distinction. In my view Lambert’s case is essentially on all fours with the present case.

36. In my judgment the allegations in the present case all relate to the decision of the Council to place G with the plaintiffs and the advice and information given by them or their social workers to enable the plaintiffs to decide whether to undertake that placement and in carrying it out. As such, everything was done in performance of their statutory duties and powers. Mr Levy seeks to focus on one aspect of that relationship, namely the giving of information, and the Judge seems to have accepted this in his formulation of the duty. But in my judgment it is not permissible to hive off some discreet part of activities of the Council or the social worker and impose a duty of care in relation to that matter. Moreover it does not help to postulate the worst case and say, surely there might be a duty of care to protect the plaintiffs in such circumstances. There either is a duty of care or there is not. If there is, then it will apply to all information, whether it was known or could with reasonable diligence have been known to the Council or social worker. The facts of the present case, if true, are terrible. But so they were in X, M and Lambert’s case. Moreover in my judgment the duty as formulated by the Judge is in conflict with and contrary to the statutory position as set out in the Guidance, namely that the information to be given to the foster parents is that which the authority considers necessary to enable the foster parents to care for the child. (para 4.l2).

37. I was at one time attracted by the argument that a cause of action could be sustained simply on the alleged misstatement by the second defendant as to whether G was a sex-abuser, independently of any other duty of care. But I am satisfied that this cannot be done. The significance of the conversations between the parents and the second defendant is simply to establish proximity and that is not in issue in this case. This is not one of those cases referred to by Lord Goff in Henderson v Merrett Syndicates Ltd [l995] 2 A.C. l45 at pl8l where once there is an assumption of responsibility under the Hedley Byrne principle it is not necessary to embark on the question whether it is ‘fair, just and reasonable’ to impose a duty of care. Those are cases involving economic loss.

38. In dealing with this point Hooper J said at p562:

‘Mr Levy submits, in effect, that the principles in X have no application when considering liability for negligent misstatement. I do not accept that proposition for the reasons put forward by Mr Faulks. The consequences would be absurd. The child in care who asks the social worker: “Will the proposed foster parent abuse me?” and is subsequently abused would succeed if the social worker made a negligent misstatement but would not succeed under the principles in X, H and Barrett if he had not asked the question or if the social worker had refused to answer. As Mr Faulks says: “There would be a premium for reticence”. Furthermore, whereas before Hedley Byrne , there was liability for acts and not statements, the situation would be reversed.’

I agree with the Judge’s reasoning on this point. The giving of information or advice to the foster parents is all part and parcel of the performance of their statutory powers and duties by the defendants.

39. Mr Levy submitted that if immunity was extended to the defendants in these circumstances it would amount to a blanket immunity and this would run counter to the statement of the law in Capital and Counties plc v Hampshire [l997] Q.B. l004 at l040, where it was said:

‘There is no general immunity for professionals or others carrying out difficult tasks in stressful circumstances.’

Mr Levy also relied upon a dictum of Lord Woolf MR in Barrett’s case; at pl79E he said:

‘Social workers and other members of the staff could, however, be negligent in an operational manner. They could, for example, be careless in looking after property belonging to the child or in reporting what they had observed for the purposes of an inter-disciplinary assessment of what action should be taken in relation to a child. They could also be negligent in failing to carry out instructions properly. If in implementing their decisions or the decisions of the authority, a social worker was careless, I accept there would be a case for the defendant being vicariously liable if the necessary causation of injury or other damage could be established.’

This statement is clearly obiter and in-so-far as it suggests that social workers are liable when they are acting in the operational field, as opposed to the policy or decision-making role, it appears to me to be contrary to the decision in X v Bedfordshire that this is not a suitable touchstone of liability (see per Lord Browne-Wilkinson at p738 citing Rowling v Takaro Properties Ltd [l988] A.C. 473).

40. I entirely agree with Lord Woolf that social workers do not, any more than the police, rescue services, barristers or others, have blanket immunity. In some of the examples given by Lord Woolf there would be a duty of care independent of the performance of duties as a social worker. Thus he will be a bailee of property entrusted to him. He might conceivably undertake responsibility for passing on information as in the case of Welsh v Chief Constable of Merseyside [l993] l All ER 692 where the Crown Prosecution Service undertook to communicate certain information to the Court and failed to do so. Likewise if the negligent act is simply collateral to the performance of his duties as a social worker, as for example if he were driving with a child in care or a foster parent as a passenger in a motor car and drove negligently - or while taking out a child in care he was careless in crossing the road, so that the child was injured - there would be no reason to give immunity. In these cases the fact that the defendant is a social worker is simply coincidental although it will give the occasion for the duty relationship. But I have more difficulty in accepting the examples of failing to report what they had observed for the purpose of inter-disciplinary assessment. This might well involve a question of judgment involving difficult and delicate decisions. In any event I do not consider that the imparting of advice or information to foster parents in connection with the foster placement falls within these exceptions. It seems to me to be intimately and inextricably part of the carrying out of the statutory powers and duties in relation to the placement in care.

4l. I must now turn briefly to the considerations put forward by Lord Browne-Wilkinson in X v Bedfordshire which persuaded him that it was not just and reasonable to impose a duty of care on the local authorities or the social workers in the child abuse cases. First that a common law duty would cut across the whole statutory set up for the protection of children at risk. The system is not the exclusive territory of the local authorities social services. It is multi-disciplinary, involving the participation of police, educational bodies, doctors and others. It would be unfair to single out one participant body on whom to impose a duty of care. It seems to me that the decision to place G with the plaintiffs may well have involved a multi-disciplinary process. While the implementation of that decision by giving advice and information to the foster parents may not do so in any particular instance, it must be closely interwoven and bound up with the decision.

42. Secondly the task of the local authority and its servants in dealing with children at risk is extraordinarily difficult and delicate. In my view this applies equally when the task involves foster placement as well. Almost by definition adolescent children in care are likely to have serious problems and there may often be conflicts of interest between the foster child and foster parent. The duty postulated by the Judge is not one that arises only at the outset of the placement. It clearly could be an ongoing one.

43. Thirdly, if liability in damages were to be imposed, it might well be that local authorities would adopt a more defensive approach to their duties. Decisions have to be made quickly and there would be a substantial temptation to postpone making a decision until further inquiries have been made. Although the situation with foster parents is not the same, if the authority and social worker were under a liability in damages it is easy to see that they might err on the side of caution even in the field of what information is to be communicated. Too much information, perhaps some of it based on rumour or hearsay might be thought appropriate to be given; this might be inimical to the child’s interests. Too much time might be taken trying to investigate tenuous information, lest it be said that the local authority were put on inquiry and failed to pursue the inquiry properly.

44. Fourthly Lord Browne-Wilkinson spoke of the relationship between the child’s parents and the social worker being frequently one of conflict. Mr Levy submits that in the case of foster parents, the relationship between them and the social worker is and should be one of mutual trust. That is so, but there may not infrequently be conflicts between the foster child and foster parents, especially in the case of adolescents when the social worker may have to intervene between them, act as arbitrator or advisor to both parties to try and resolve the problem, always bearing in mind the primary concern being the welfare of the child. In my view the social worker would be in an impossible position if he also was under a duty of care to the foster parents of the kind postulated by the Judge.

45. Finally there is the question of alternative remedy. In X v Bedfordshire the House of Lords considered that the statutory complaints procedure available under the l989 Act and the investigative powers of the local authorities’ Ombudsman was a sufficient remedy even though compensation was not available. But in the present case I am satisfied that the children’s injuries are compensatable under the Criminal Injuries Compensation Scheme. Since the source of the compensation is in any event public funds I do not see any particular merit in making the local authority who have failed to protect the children from G liable in preference to the statutory scheme set up for the very purpose of compensating the victims of the criminal violence such as that perpetrated by G. This is not a case therefore like White v Jones [l995] 2 A.C. 207 where it was necessary to extend the duty of care owed by the solicitor to the intended beneficiary because otherwise there would be a lacuna in the law and no compensation for a manifest injustice.

46. I am mindful of the argument that potential foster parents may be put off if they cannot sue for damages. Mr Levy sought to rely in this connection on the decision of this Court in Swinney v Chief Constable of Northumbria [l997] Q.B. 464. In that case on a striking out application the Court held that the immunity generally conferred on police officers from actions in negligence in relation to the investigation and suppression of crime had to be weighed against the need to protect the confidentiality of informants and to encourage them to come forward without fear of disclosure of their identity; that it was necessary to make a balanced assessment of all public policy considerations and that the appropriate time to do so was at trial. I do not derive any assistance from that case which depends on its own particular facts. In my judgment, particularly having regard to the alternative remedies, the consideration that potential foster parents may be put off does not outweigh the potential reasons against the imposition of a duty of care. I consider that Judge was clearly wrong to hold that arguably there was a duty of care on the second defendant in the circumstances of this case and was also wrong to hold that the Council were vicariously liable for the second defendant’s tort.

47. On l5 October l992 the parents signed a written document entitled ‘Specialist Foster Care Agreement Supplementary to Form DSS 9l and the Code of Practice’ (the Specialist Foster Carer Agreement). This document is expressed to be "between the Council and..."; there then follows a blank space, which is obviously intended to include the parents named. No one has been able to identify Form DSS 9l. The plaintiffs alleged in the Statement of Claim that this agreement, together with a number of other documents including an unsigned ‘Adolescent Foster Carer Agreement’ which on its first page has the name and address of the parents, and a ‘Specialist Foster Carer Agreement Code of Practice’, constitute a legally binding contract between the parents and the Council. The Code of Practice begins with the statement that it ‘is not legally binding or enforceable in law. It is designated (sic) to act as a guideline for both staff and carers with a view to ensuring the professional discretion is clearly defined and correctly exercised.’ There is a further reference in para 9(l) of the Code of Practice in which attention is drawn to the need to observe certain statutory requirements, to the fact that it is not legally binding.

48. Paragraph 3 of the ‘Specialist Foster Carer Agreement’ provides that the parents had the ‘right to decline any placement of a child or young person, provided such rejection was not made unreasonably’. Paragraph 6.4 of the Code of Practice provides that ‘the social worker will ensure the foster carer will be fully informed about the child’s background of any problem relating to that background legal, developmental or practical in writing’. The plaintiffs allege that this paragraph constituted an express term of the contract and that the Council was in breach of it. Alternatively they allege that there was an implied term of the contract that the defendants would inform the plaintiffs of any knowledge or suspicion of the child being a sexual abuser. And in support of the implied term they rely on the conversation and assurances to the effect that the foster child would not be a sexual abuser.

49. The Judge held that the Code of Practice was not intended to be legally enforceable. He held that the ‘Specialist Foster Carer Agreement’ was a legally enforceable agreement but that the alleged term was not to be implied. The plaintiffs’ appeal against the Judge’s conclusion as to the express or implied term. The defendants cross-appeal against his conclusion that the ‘Specialist Foster Care Agreement’ was a legally binding agreement.

50. There are, in my judgment, a number of reasons why the plaintiffs’ claim in contract must fail. First, although the ‘Specialist Foster Carer Agreement’ had a number of features which one would expect to find in a contract, such as the payment of an allowance and expenses, provisions as to National Insurance, termination and restriction on receiving a legacy or engaging in other gainful employment and other matters to which Hooper J referred at p565 E-F, I do not accept that this makes the agreement a contract in the circumstances of this case. A contract is essentially an agreement that is freely entered into on terms that are freely negotiated. If there is a statutory obligation to enter into a form of agreement the terms of which are laid down, at any rate in their most important respects, there is no contract (see Norweb plc v Dixon [l995] l W.L.R. 636 at p643F).

5l. In S v Walsall Metropolitan Borough Council [l985] 3 All ER 294, the question was whether foster parents were the agents of the defendant Council who had placed the child in care. Oliver LJ, with whose judgment Balcombe LJ agreed, reviewed the statutory provisions which are similar to those relevant in this case. He said that the statute and the regulations ‘form a statutory code and they underline the fact that the whole of this area is covered by a complicated and detailed statutory scheme’ (p298(a)). And later he said that the ‘relationship between the child and the local authority, and indeed between the child and the foster parents, is one which is regulated....simply and solely by the provisions of the statutory scheme’. It is true that he does not include the relationship between the foster parents and the Council as being so regulated; but it must, in my judgment, follow. The contents of the agreement are strictly laid down in the regulations and cannot be varied. The remuneration is set by the statutory scheme and cannot be freely negotiated.

52. Furthermore I am very doubtful whether the Judge was right to consider the ‘Specialist Foster Carer Agreement’ separate from the Code of Practice, which specifically stated that it is not to be legally binding. The plaintiffs had pleaded that this document formed part of the agreement, and if that is correct, it shows that the agreement whatever it was, was not to be regarded as a legally binding contract. Even if I am wrong in the conclusion I have reached in para 50, I would agree with the Judge that para 6.4 of the Code cannot be relied upon as an express term of the contract in view of the express disclaimer to which I have referred.

53. Furthermore even if the ‘Specialist Foster Carer Agreement’ was a contract I agree with the Judge that it is not necessary to imply the pleaded term. It is not necessary to do so in order to give business efficacy to the contract nor does it represent the obvious and unexpressed intention of both parties. Indeed as I have already pointed out it seems to me to be in conflict with the provision in the Guidance that the information to be given was that which the Council considered necessary. Furthermore the same public policy reasons for granting immunity in tort apply equally in contract (see Rondel v Worsley [l969] A.C. l9l and Saif Ali v Sidney Mitchell [l980] A.C. l98 where it was held that a solicitor acting as an advocate under contract enjoys the same immunity as a barrister who is not in a contractual relationship).

54. Finally even if there was such an implied term, it would not in my judgment avail the parties. So far as the parents are concerned I do not consider that the psychiatric shock which they suffered on learning that the children had been abused would have been within the reasonable contemplation of the parties. So far as the children are concerned there should be no privity of contract to enable them to sue. The Judge expressed the view obiter that this would not have presented a problem because the strike-out procedure is not appropriate in a developing state of the law. But there is nothing novel or developing about the law relating to privity of contract.

55. The tort of misfeasance in a public office can be committed in one of two ways, namely where a public officer has either (a) performed or omitted to perform an act with the object of injuring the plaintiff (ie. where there was targeted malice); or (b) where he has performed an act which he knew he had no power to perform and which he knew would injure the plaintiff ( Three Rivers DC v Bank of England [l996] 3 All ER 558 approved in R v Chief Constable of North Wales Police Force ex parte AB [l997] 3 W.L.R. 724 per Lord Bingham CJ at p735). Both limbs require an invalid, unauthorised or unlawful act (per Clarke J in Three Rivers ' case at p578G). Mr Levy accepts that the first limb is not applicable.

56. Like the Judge I have been unable to detect what power it is that the plaintiffs allege has been exceeded. Mr Levy sought to argue that if the second defendant had asked his immediate superior if he should answer the parents’ question in the way he did, he would unquestionably have been given a negative answer. But that is nothing to the point. It is plain in my view that the second defendant was acting pursuant to the statutory powers conferred upon the Council; the fact that while so acting he carelessly or even deliberately gives misleading information does not mean he is knowingly exceeding his powers. It should perhaps be noted in passing that the facts alleged do not constitute the peculiar tort exemplified by the case of Wilkinson v Downton [l897] 2 Q.B. 57.

57. The Judge struck out this claim. He said that the parents were secondary victims, that is to say their shock and illness was consequent upon learning of the injury to their children and that they did not satisfy the criterion laid down in the case of Alcock v Chief Constable of South Yorkshire [l992] l A.C. 3l0, 40lF. Mr Levy submits the Judge was wrong. In the light of my conclusion on the absence of a duty of care, it is not strictly necessary to deal with this point. But in my opinion the Judge was clearly right. I have not understood how Mr Levy contends that the parents are primary victims; they were not injured by G nor were they injured by the misinformation as in Wilkinson v Downton . The case can be contrasted with the situation where the inquiry related to a record of physical violence; if the second defendant wrongly said that G had none, and G had subsequently attacked the parents, the position would have been different.

58. As secondary victims the parents do not qualify having regard to the principles laid down in the Alcock case. Even if the risk of psychiatric illness is reasonably foreseeable, the law gives no damages if the psychiatric injury was not caused by shock. The shock must be sustained through the medium of the eye or ear without direct contact. Shock in this context involves the ‘sudden appreciation by sight or sound of a horrifying event which violently agitates the mind’. It does not include psychiatric illness caused by the accumulation over a period of time of more gradual attacks of the nervous system (see per Lord Ackner in Alcock’s case at p400E to 40lF).

59. For these reasons I would dismiss the plaintiffs’ appeal but allow the defendants’ cross-appeal and order that the Amended Statement of Claim be struck out.

LORD JUSTICE JUDGE: I have read Stuart-Smith LJ’s judgment in draft. I agree that the claims in contract, misfeasance in a public office and the claim by the first two plaintiffs (the parents) for damages for psychiatric illness were all rightly struck out by Hooper J. However I disagree that the claims in negligence by the third to sixth plaintiffs (the children) should also be struck out. In explaining my reasons I shall not repeat Stuart-Smith LJ’s detailed summary of the facts or his close analysis of the statutory provisions.

Notwithstanding their willingness to act as foster carers for adolescents, the adult plaintiffs made clear to the defendants that they would not be willing to accept the placement in their home of an adolescent who was known or believed or suspected to be a sexual abuser. Their reasons were perfectly understandable and fully explained to the local authority. Their four children, then aged between 7 and l2 were living in the house, and the parents were not prepared to expose them to any inappropriate risks. The local authority understood and accepted these conditions and assured the parents that the placements would exclude anyone known or reported to be a sexual abuser. G’s subsequent placement contravened the conditions laid down by the parents and agreed by the local authority, and indeed disregarded the assurance given immediately before the placement that G was not an abuser, when it was known that he was. Thus the local authority introduced a potential menace into this home. The parents were not alerted to the need to take particular precautions to protect their children nor that the placement was being made contrary to their express wishes. Sadly, within a very short time, the children were all sexually abused by G. The parents themselves were not attacked and only discovered what had happened after the youngest child made a complaint to them. For all the members of the family these were catastrophic events.

The arrangements were made when the local authority was exercising the statutory obligations created by the child welfare legislation analysed by Stuart-Smith LJ. This legislation, creating an administrative system promoting communal welfare, is complicated and the problems involved in its practical operation are many faceted. Two areas of potential liability have already been examined by the House of Lords. It has been held that of itself the negligent performance of these statutory obligations does not give rise to a cause of action in private law in relation, first, to an erroneous, potentially damaging, decision to remove a child from the home of her mother on the grounds that the child may have been a victim of sexual abuse by the mother’s boyfriend ( M (A Minor) and Another v Newham LBC [l995] 2 A.C. 633) and, second, the wrongful failure of the local authority, despite warnings over several years from numerous respectable sources that the children were at risk of sexual abuse and alarming physical neglect, to place children on the Child Protection Register. ( X (Minors) v Bedfordshire CC [l995] 2 A.C. 633). These decisions are referred to compendiously hereafter as X (Minors ).

In H v Norfolk County Council [l997] l FLR 384, on an application for leave to appeal, the Court of Appeal extended this prohibition to a claim made by a child placed in foster care and abused by the foster father. It was decided that the local authority’s failure to exercise its powers in relation to a child boarded out to a foster parent could not be distinguished from inactivity in the context of potential damage suffered by children in the home of their natural parents. In Barrett v Enfield LBC [l997] 3 All ER l7l this decision was approved, and the claim by a plaintiff who had spent a childhood living with unsuitable foster parents and in inappropriate community homes was struck out. The principles identified in X (Minors) were extended to children after they had been placed in care. Several decisions of the type “which an authority has to take in order to perform its statutory role in relation to children in its care” were criticised. Lord Woolf MR pointed out that some of the criticisms made of the local authority were similar to those regularly faced by parents and concluded that it would be inappropriate for such decisions, even if wrong, to form the basis for a claim in damages. Evans LJ considered that the “nature of the responsibilities .... makes it inappropriate to measure their performance by the standards of the hypothetical reasonable man”.

These authorities, all binding on this Court, form the basis for the contention by Mr Edward Faulks QC that the claim by the children against the local authority should be struck out. In effect the local authority was immune from actions for negligence whenever performing its statutory obligations in relation to child welfare. Assuming that it is right to regard X (Minors ) as having created an “immunity”, the starting point is the principle that some decisions apparently falling within the purported ambit of a statutory discretion are so unreasonable that on analysis they fall outside it. Lord Browne-Wilkinson quoted the observations of Lord Reid in Dorset Yacht Co Ltd v Home Office [l970] A.C. l004 at l03l:

"There must come a stage when the discretion is exercised so carelessly or unreasonably that there has been no real exercise of the discretion which Parliament has conferred. The person purporting to exercise his discretion has acted in an abuse or in excess of his power. Parliament cannot be supposed to have granted immunity to persons who do that."

Lord Jauncey of Tullichettle, having referred to a different passage from the speech of Lord Reid in the Dorset Yacht case, said

"Where a statute empowers or ordains the doing of an act which, if done with due care, will cause no harm to a third party but which, if done carelessly will be likely to cause harm, and the circumstances also satisfy the other two requirements in Caparo Industries PLC v Dickman [l990] 2 AC 605, namely that the relationship between plaintiff and defendant is sufficiently proximate and that it would be just and reasonable to impose a duty of care, an action will lie at common-law. But it will lie simply because careless performance of the act amounts to common-law negligence and not because the act is performed under statutory authority."

For present purposes the significant feature of X (Minors ) is that the decision to strike out the actions by or derived from the children for whom the local authority was responsible depended on the conclusion that even where the decisions could be said to have fallen outside the ambit of the statutory discretion, it was not, in the language of Lord Browne-Wilkinson, just and reasonable to “superimpose a common law duty of care”.

An analysis of the circumstances in which it has been held that liability under the child welfare legislation will not arise (for example, decisions about policy matters, or decisions which may hinder or discourage due performance of statutory duties) is unnecessary. Hardly surprisingly Mr Faulks accepts that it is at least arguable that the decision to place G with this particular family was so wholly unreasonable as to fall outside the proper ambit of the statutory discretion exercised by the defendants. In addition it is undisputed that the local authority could have foreseen damage to the plaintiffs if the statutory duties were performed negligently and that the relationship between them and the plaintiffs was sufficiently proximate to found an action in negligence if the other necessary ingredients were established.

The critical issue is whether the reasoning which led to the policy decision on which X (Minors ) was based applies to the claims by the children abused by G. X (Minors ) was focused on children in respect of whom the local authority was exercising its statutory function: so was H v Norfolk County Council, so was Barrett v Enfield LBC . The victims in the present appeal were not children for whom the local authority carried out any immediate “caring” responsibilities under the child welfare system, but children who were living with parents who had agreed to act as foster carers and for the well being of whose children the authority had accepted the express condition, “no sexual abusers”.

Mr Faulks submitted that the policy considerations analysed in Lord Browne-Wilkinson’s speech applied to the present appeal. The local authority was operating within “the statutory scheme set up for the protection of children at risk”, later summarised by him, at page 75l, as “a scheme designed to protect weaker members of the community (children) from harm done to them by others”. Lord Browne-Wilkinson drew attention to the analogies between the functions of the police and pointed out that in Hill v Chief Constable of West Yorkshire [l989] A.C. 53 it was decided that the police did not owe a common-law duty of care to protect the weak against the wrong doer. The significance of this analogy is considered later in the judgment.

Assuming (which I do not accept) that the policy considerations which arise in the present appeal are identical to and do not extend beyond those identified by Lord Browne-Wilkinson in X (Minors ), I shall examine the salient features briefly and consider their application to the claim by the plaintiff children. Lord Browne-Wilkinson highlighted the way in which the imposition of a common law duty of care would “cut across the whole statutory system set up for the protection of children at risk”. The system depended on inter-disciplinary co-operation designed to achieve the best possible outcome for the child in care. In such a system sometimes apparently irreconcilable points have to be considered, and after a reasonable level of “give and take”, eventually resolved. The many questions to be decided include whether or not the child should be removed from its parents or existing home and placed elsewhere, as well as the home and environment into which the placement (if there is one) will be made and its suitability for him. In effect therefore a number of responsible organisations are seeking to discover the answer to the question “What would be the best placement for him or her?” I doubt, and there is no evidence that the same multi-disciplinary input is necessary when answering a different, second question, “Is there any danger that the placement will adversely affect the family already living in the foster home?” This question presupposes that the multi-disciplinary process has been completed and resolved by a decision to make the placement. Therefore the “manifest unfairness” and “intractable problems” arising when the first question is under consideration do not appear nearly as obvious when attention is directed to the second question. The delicacy of the task of dealing with children at risk, as well as the potential conflict between the wishes of the parents when the child is in care, and the sometimes contrary judgment of the social workers and other responsible individuals, do not apply when the possible adverse affect of the placement on those already living in the intended foster home is considered.

If liability were imposed in the present circumstances the burden on local authorities might increase, but, again, there is no evidence that it will. The ascertainment of the facts about the child in care forms part of the decision making process, and there is a duty to make enquiries and provide information to the foster parents before the placement is made. Thus, under the regulations, detailed information is required about the “prospective foster parent and other members of his household and family”, including particulars of the children in the family and their ages and sex. The foster placement agreements are to include information about the “personal history...state of health and need for health care and surveillance and the...educational needs” of the child whose placement is under consideration. The requirement for this information

"acknowledges the need for communication of essential information if there is to be an effective partnership between parents, authorities and foster parents. Foster parents need to have a full understanding of the background and history of children on whose behalf they are undertaking an exacting and responsible role ... will generally need to know the circumstances leading to the child being looked after or the child’s admission to care and the child’s previous experiences. The social worker should discuss with the parents and any other previous carers and with children according to their understanding, the information which is to be given to a foster parent and why. Where there is a special reason for withholding significant information, the reason should be recorded on the child’s case record.”

(See 4.l3 & 4.l4 of the relevant Guidance issued under the Local Authority Special Services Act l970).

The Guidance makes clear that the purpose of this information is to enable the “foster parent to care for the child”. However as it is necessary to obtain the information for this purpose, and it is normally anticipated that the foster parents should be given details of the personal history of the child before placement, its disclosure to the foster parents in their own interests and in the interests of their family would not add unduly to the burden already imposed on the local authority. It is difficult to envisage how the disclosure of facts already known to the local authority should result in an inappropriate degree of caution in the decision making process. Damage might possibly arise in the sense that some foster parents might be reluctant to accept the placements carrying the greatest risks, but there is no evidence that it would. Even if it did an essential feature of the process is that the decision made by the foster parents should be based on as much knowledge of the facts as possible. That is envisaged by the Guidance itself, and if disclosure had been thought likely to give rise to an inappropriate degree of caution the need for effective communication would not have been so heavily emphasised.

In X (Minors ) the existence of an alternative system for the investigation of grievances or recovery of compensation was addressed. We were informed that an application might have been made under the statutory scheme and that despite the delay, an extension might well be granted by the Criminal Injuries Compensation Board. I shall assume that the scheme would apply to these children. Set in the balance against that consideration is that if they believed that local authorities could deliberately elect to keep them ignorant of crucial facts about the risk posed to them and their families by any individual placement potential foster parents might very well be discouraged from coming forward and offering to provide homes for children in desperate need of them. Approaching this question with deliberate caution I cannot avoid the conclusion that actual or potential foster parents would be profoundly disturbed by the possibility that the local authority can with apparent impunity make decisions which leave them uninformed about known risks. If so the number of potential foster parents would be reduced.

While recognising the difficulties of compartmentalising the obligations of the local authority under the child welfare legislation into those owed to children being placed (or not placed) in care in circumstances in which consistent with X (Minors ) and the subsequent authorities liability would not be imposed, and those owed to foster parents and children into whose homes placements are made, in my judgment it is at least arguable that the considerations which led the House of Lords in X (Minors ) to consider that it was not “just and reasonable to superimpose a common law duty of care on the local authority in relation to the performance of its statutory duties to protect children” do not apply when the children whose safety is under consideration are those in respect of whom it is not performing any statutory duty at all.

The single authority cited in support of “immunity” in these circumstances is the unreported decision of Toulson J dated llth June l997 in Lambert and Others v South Glamorgan County Council . In that case foster parents claimed damages against the local authority for placing into their home a young woman with a disturbed history of fabricated allegations of abuse. After examining X (Minors ) Toulson J commented:

"It would be bizarre if a Council’s decision to put a child in an allegedly inappropriate placement could give rise to no action by the child, for whose benefit the statute is primarily intended, but could give rise to such an action by a third party."

He added:

"The considerations which have caused it to be held that such a claim could not be advanced by (the child) apply with as much, and indeed added, force to a claim by a third party namely the plaintiff."

However he ended his judgment by acknowledging that when a child was placed

"where he or she caused an obvious and grave risk to former foster parents, without taking any steps to combat it and without the possibility of compensation for the foster parents if the risk materialised, other than the possibility of remedy from the Criminal Injuries Compensation Board, or from the local authority ombudsman, it might seem very unfair and it might conceivably be at least arguable that such special circumstances made it reasonable to impose a limited duty of care towards such a person without opening the floodgates or exposing or creating wider or more general dangers."

In view of the compensation scheme in place, without reference to the Criminal Injuries Compensation Board, he decided that the case should be struck out. In his final observations Toulson J was not considering any express conditions or assurances which might have resulted in a special assumption of responsibility, to which it will be necessary to turn shortly. The feature described as bizarre simply reflects one consequence of the public policy which was held in X (Minors ) to preclude successful proceedings by children in care which, for the reasons given earlier in this judgment, at least arguably do not obtain when the plaintiffs are the foster parents themselves or their children. Immunities (whether partial or complete) and decisions based on public policy sometimes create anomalies, and decisions about where the appropriate line should be drawn tend to produce results in cases on one side or the other which can be analysed and described as “illogical” or “bizarre”. An obvious example is the advocate’s immunity from suit. Whenever it applies apparent anomalies will be produced. Significantly, Toulson J was prepared to contemplate the possibility of a claim by foster parents when the child placed with them represented “an obvious and grave risk”. This is consistent with my conclusions.

It is not necessary to consider whether the local authority should be held liable for any negligent failure to make sufficient enquiries to discover whether there are any risk factors in the individual child’s background or character which might adversely affect those living in the home in which he or she is to be placed. The question does not arise in a case concerned with the disclosure of known risks, and I recognise, without deciding its full extent, the force of the concern that to impose a duty in relation to what the local authority ought to have known, might genuinely inhibit the proper discharge of its responsibilities. Another consideration which does not arise is whether liability may be established when the local authority exercises its discretion against disclosure of known information for “a special reason”. My preliminary view is that the issues would have to be resolved by evidence, rather than by resort to the striking out procedure. The court would have to decide on the available evidence whether any special reason did in fact exist, and if so, its impact on the claim.

I can now turn to the additional feature of the present case, the assurances sought and given to the plaintiffs that no sexual abuser would be placed in their home, referred to in the pleadings and argument as negligent mis-statement but perhaps better expressed as an assumption of responsibility. In my judgment the relevance of the assurances is not limited to the question of proximity. If it were so, as proximity is conceded for the purposes of the present argument, the assurances would add nothing to the plaintiff’s case. This would be astonishing: in my judgment they are integral to it.

The present case is not concerned with what Lord Hoffmann in Stovin v Wise [l996] A.C. 923 described as general reliance which takes the form of the “general expectation in the community” or the “widespread assumption” about the way in which a statutory power might be exercised, but rather with the “special circumstances” identified by Lord Nicholls of Birkenhead. Although Lord Nicholl’s conclusion was not shared by the majority of the members of the House of Lords I cannot find anything in Lord Hoffmann’s reasoning which undermines the observation made by Lord Nicholls in the context of statutory framework:

"This leads naturally to a further feature of the typical statutory framework. This feature points away from public bodies being subject to concurrent common law obligations. When conferring the statutory functions Parliament stopped short of imposing a duty in favour of the plaintiff ...... For this reason there must be some special circumstance, beyond the mere existence of the power, rendering it fair and reasonable for the authority to be subject to a concurrent common law duty sounding in damages. This special circumstance is the foundation for the concurrent common law duty to act, owed to a particular person or class of persons. It is the presence of this additional, special circumstance which imposes the common law duty and also determines its scope. Viewed in this way there is no inconsistency in principle between the statutory framework set up by Parliament and the parallel common law duty."

Lord Nicholls then proceeded to consider the question of a special circumstance in the context of proximity:

"What will constitute a special circumstance, and in combination with all the other circumstances amount to sufficient proximity, defies definition and exhaustive categorisation save in the general terms already noted regarding proximity. The special circumstance must be sufficiently compelling to overcome the force of the fact that when creating a statutory function Parliament abstained from creating a cause of action, sounding in damages, for its breach."

It is unlikely that Lord Nicholls would have expressed himself in this way, in two separate paragraphs, divided by a heading “Statutory powers and proximity” if the assumption of responsibility were relevant only to proximity. As Steyn LJ observed in Elguzouli-Daf v Commissioner of Police of the Metropolis [l995] Q.B. 335, “these considerations inevitably shade into each other”. In doing so he was echoing what Lord Roskill said in Caparo Plc v Dickman [l990] 2 A.C. 605 at 628

"Phrases such as ‘foreseeability’, ‘proximity’, ‘neighbourhood’, ‘just and reasonable’, ‘fairness’ ...... are not precise definitions. At best they are but labels or phrases descriptive of the very different factual situations which can exist in particular cases and which must be carefully examined in each case before it can be pragmatically determined whether a duty of care exists and, if so, what is the scope and extent of that duty."

The continuing process of analysis and increasing refinement of these concepts can sometimes obscure the practical realities. In my judgment the question whether it would be “just and reasonable” to impose a duty on the local authority and the evaluation of the claim for immunity could not properly be decided without reference to the assurances. My view is reinforced by a developing line of authority in cases where on the basis of existing authority it might have been thought that liability would be excluded on public policy grounds. Nevertheless where an assumption of responsibility was shown the case was allowed to proceed.

The qualification was first identified by Steyn LJ in Elguzouli Daf v Commissioner of Police of the Metropolis , approving on the basis of an assumption of responsibility, the decision at first instance in Welsh v the Chief Constable of the Merseyside Police [l993] l All ER 692, in relation to the Crown Prosecution Service. Morritt LJ adopted the same approach, not wishing to cast “doubt” on the decision in Welsh “insofar as that decision was grounded on the assumed fact that there had been a voluntary assumption of responsibility”. Notwithstanding a series of decisions in which claims for negligence against the police were excluded in accordance with the principles identified in Hill v Chief Constable of West Yorkshire (for example, Alexandrou v Oxford [l993] 4 All ER 328, Osman v Ferguson [l993] 4 All ER 344 and Ancell v McDermott [l993] 4 All ER 355) in Swinney v Chief Constable of Northumbria [l997] Q.B. 464 it was decided that a claim against the police by a police informant should be allowed to proceed. The plaintiff was an individual for whose safety the police had assumed responsibility.

Although the connection between a police informer and intending foster parents is not immediately apparent, it is arguable that the relationship between an informant and the police, and the public interest in providing a reasonable measure of protection for the informant, is not dissimilar to the assumption of responsibility for the safety of the plaintiffs and their children which underpinned the assurances sought from and given by the local authority. In fact, as already noted, the link between the work done by the police to protect the public and the responsibilities of the local authority exercising their child welfare obligations was identified by Lord Browne-Wilkinson in X (Minors ). If the “public policy” ground which normally has the effect of excluding liability for negligence by the police in this area of their responsibility was not sufficient to preclude the claim by Swinney, the foundation for that conclusion - assumption of responsibility -applies equally to the present claim.

In my judgment the local authority assumed responsibility for the accuracy of its positive assurances to the parents about G. Relying on these assurances they accepted G into their home. If so the question whether it would be just and reasonable to superimpose a duty of care should not be decided as if the misleading assurances had not been given when they had. Even if contrary to the conclusion expressed earlier the policy considerations in this case were otherwise indistinguishable from those identified in X (Minors ) the express assurances that a sexual abuser would not be placed in the foster parent’s home would have led me to conclude that this particular claim was arguable, either on the basis that in accordance with the authorities the policy grounds for exclusion were qualified, or because these additional features undermine the public policy argument in favour of the immunity advanced by Mr Faulks.

In these circumstances I do not propose to consider the argument that Lord Woolf’s observation in Barrett v Enfield LBC about the circumstances in which a local authority might be found vicariously liable ran counter to the policy/operational dichotomy which Mr Faulks suggested had been rejected by Lord Browne-Wilkinson in X (Minors ) and the inadequacy of which was analysed by Lord Hoffmann in Stovin v Wise [l986] A.C. 923.

I shall deal briefly with the discreet claim based on negligent mis-statement. If the plaintiffs relied on the accuracy of the information given to them by the local authority that G was not a sexual abuser, the local authority knew, first, that the plaintiffs were indeed relying on the accuracy of this information before making their decision to accept G into their home and second, that the information given to the plaintiffs was wrong, prima facie this claim fell within Hedley Byrne & Co Ltd v Heller & Partners Ltd [l964] A.C. 465. (See Welton v North Cornwall District Council [l997] l W.L.R. 570). In X (Minors ) Lord Browne-Wilkinson contrasted the potential liability to a purchaser of a surveyor instructed by a building society ( Smith v Eric Bush [l990] l A.C. 83l) with the reasoning which led to the exclusion of liability in child abuse cases. He said:

"Even if the advice tendered by the professionals to the local authority comes to the knowledge of the child or his parents they will not regulate their conduct in reliance upon the report. The effect of the report will be reflected in the way in which the local authority acts."

The present case raises the opposite consideration: the advice tendered by the local authority was precisely reflected in the way in which the parents acted. Hedley Byrne was concerned with economic loss: the consequential damage is usually, but not invariably financial. Damages for physical injury may also be recovered ( Clay v Crump [l964] l Q.B. 534). In a slightly different context in X (Minors ) Lord Browne-Wilkinson rejected the submission that the third Caparo requirement - that it must be just and reasonable to impose a common law duty of care - only applied where the claim was for pure economic loss and not to claims for physical damage. He said

"Although Caparo and many other of the more recent cases were decisions where only pure economic loss was claimed, the same basic principle would apply to claims for physical damage and were applied in, for example, Hill v Chief Constable of West Yorkshire."

The ingredients for a claim under Hedley Byrne are established. For the reasons already given it is at least arguable that “immunity” would not extend far enough to exclude it.

Throughout the judgment no distinction between the possibility of a direct claim against the local authority and a claim based on its vicarious liability for the negligence of its employees has been drawn. Although the distinction may require attention during the course of the evidence, and any subsequent judgment, much will depend on the decision by the judge about the precise assurances which were sought and given by the local authority, the state of knowledge of the person or persons responsible for accepting the conditions laid down by the plaintiffs and providing the inaccurate information, and the circumstances in which the placement of G came to be made.

In my judgment this claim by the children should proceed on the basis identified by Hooper J in his judgment. Both the appeal and cross appeal should be dismissed.

LORD JUSTICE MANTELL: I would dismiss the appeals of the foster parents and their children for the reasons given by Stuart-Smith LJ. In agreement with Judge LJ but not Stuart-Smith LJ I would also dismiss the cross appeal by the local authority.

Because the Court is divided I should give my reasons for refusing to strike out the children’s claims. I, too, gratefully adopt Stuart-Smith LJ’s summary of the facts and analysis of the relevant statutory provisions.

I take as my starting point Lord Jauncey’s clear exposition of the law in X v. Bedfordshire County Council [l995] 2 A.C. 633 at p.728:

"Where a statute authorises that to be done which will necessarily cause injury to someone no action will lie if the act is performed with reasonable care. If, on the other hand, the authorised act is performed carelessly whereby unnecessary damage is caused a common law action will lie. This is because the act would, but for the statute, be actionable at common law and the defence which the statute provides extends only to the careful performance of the act. The statute only authorises invasion of private rights to the extent that the statutory powers are exercised with reasonable and proper regard for the holders of such rights. Thus careless performance of an authorised act rather than amounting to breach of a new duty simply removes a defence to a common law right of action."

and later at p. 729:-

"Where a statute empowers or ordains the doing of an act which, if done with due care, will cause no harm to a third party but which, if done carelessly will be likely to cause harm, and the circumstances also satisfy the other two requirements in Caparo Industries PLC v. Dickman [l990] 2 A.C. 605, namely that the relationship between plaintiff and defendant is sufficiently proximate and that it will be just and reasonable to impose a duty of care, an action will lie at common law. But it will lie simply because careless performance of the act amounts to common law negligence and not because the act is performed under statutory authority."

It was put somewhat differently by Lord Browne-Wilkinson at p.738:

"Where Parliament has conferred a statutory discretion on a public authority, it is for that authority, not for the courts, to exercise the discretion: nothing which the authority does within the ambit of the discretion can be actionable at common law. If the decision complained of falls outside the statutory discretion, it can (but not necessarily will) give rise to common law liability. However, if the factors relevant to the exercise of the discretion include matters of policy, the court cannot adjudicate on such policy matters and therefore cannot reach the conclusion that the decision was outside the ambit of the statutory discretion. Therefore a common law duty of care in relation to the taking of decisions involving policy matters cannot exist."

Earlier at p.735F Lord Browne-Wilkinson had said this:

"It is clear that a common law duty of care may arise in the performance of statutory functions. But a broad distinction has to be drawn between (a) cases in which it is alleged that the authority owes a duty of care in the manner in which it exercises a statutory discretion; (b) cases in which a duty of care is alleged to arise from the manner in which the statutory duty has been implemented in practice."

So it seems clear to me that the immunity does not necessarily extend either to (a) where a discretion has been exercised or a decision taken which does not involve policy matters, or (b) in the words of Lord Browne-Wilkinson “cases in which a duty of care is alleged to arise from the manner in which the statutory duty has been implemented in practice” or in the words of Lord Jauncey where there has been “careless performance of an authorised act.”

Barrett v. Enfield LBC [l997] 3 All ER l7l was a case in which decisions by the local authority to move a child in care between placements were called into question. It was therefore a case in which the exercise of discretion was under consideration. As Lord Woolf, MR said at p.l76J:

"The complaints which go to the heart of the plaintiff’s claim are all ones which involve the type of decisions which an authority has to take in order to perform its statutory role in relation to children in its care. The decision whether or not to place a child for adoption, the decision as to whether to place a child with particular foster parents, the decision whether to remove a child from a foster parent, the decisions as to the child’s relationship with his mother and sister, all involve the exercise of discretion in the performance of the differing statutory responsibilities of the local authority."

For those reasons with which the other members of the court agreed the court held that the plaintiff’s claim was properly struck out. However the Master of the Rolls acknowledged the distinction which may be made between decisions involving the exercise of a discretion conferred by statute and what may be termed acts or omissions of those charged with carrying the decisions into effect. At p.l79 he said:

"Social workers and other members of staff could, however, be negligent in an operational manner. They could, for example, be careless in looking after property belonging to the child or in reporting what they had observed for the purposes of an inter disciplinary assessment of what action should be taken in relation to a child. They could also be negligent in failing to carry out instructions properly. If in implementing their decisions or the decisions of the authority a social worker was careless, I accept there would be a case for the defendant being vicarious liable if the necessary causation of injury or other damage could be established."

It is true that in Stovin v. Wise [l996] A.C. 923 Lord Hoffmann was unenthusiastic about the distinction made between policy and operations. At p.95l he described it as:

"An inadequate tool with which to discover whether it is appropriate to impose a duty of care or not."

He cited with approval the passage from the speech of Lord Keith of Kinkell in Rolling v. Takaro Properties Ltd [l988] A.C. 473 at p.50l:-

"Classification of the relevant decision as a policy or planning decision in this sense may exclude liability; but a conclusion that it does not fall within that category does not, in their lordships opinion mean that a duty of care will necessarily exist."

That I take to mean no more and no less than was intended by Lord Browne-Wilkinson in X v. Bedfordshire CC in the passage already cited and simply underlines the point made by Lord Wilberforce in Anns v. Merton London Borough Council [l978] A.C. 728, p.754 that the classification or labelling as “operational” of acts or omissions which may give rise to a common law duty is too simplistic. What has to be looked to in any particular case is the act or omission complained of to see whether or not the threefold test laid down in Caparo Industries PLC v. Dickman is satisfied; namely, whether harm was reasonably foreseeable, whether the relationship between plaintiff and defendant was sufficiently proximate and whether it would be just and reasonable to impose a duty of care. In this last regard it will be necessary to look at the relevant statutory framework and to consider whether the considerations of public policy identified by Lord Browne-Wilkinson in X v. Bedfordshire have any application. Certainly I find no support in the speech of Lord Hoffmann for the broad proposition advanced by Mr Faulks that local authorities are immune from suit whatever the nature and quality of the acts or omissions of its servants or agents provided those acts or omissions have some connection with the local authorities statutory responsibility towards a child in care. I am comforted that Lord Woolf MR apparently took the same view in Barrett v. Enfield in saying at p.l79:

"That social workers “could also be negligent in failing to carry out instructions properly. If in implementing their decisions or the decisions of the authorities a social worker was careless, I accept there would be a case for the defendant being vicarious liable if the necessary causation of injury or other damage could be established."

The allegations in the present case are twofold. First that there was a breach of a duty of care owed to the children not to place a sexual abuser with the family and secondly that there was a duty of care to inform the first and/or second plaintiffs of the fact that G had a history of being a sexual abuser. The second allegation has been reformulated to allege the breach of “a duty to take reasonable care to provide to a foster carer before and during the placement such information about the child as a reasonable social worker would provide in all the circumstances.” It being accepted for present purposes that the first two tests in Caparo v. Dickman are satisfied, the question becomes, therefore, in relation to each allegation: is the act or omission alleged of such a character to make it just and reasonable to impose a common law duty of care. In deciding that question regard must be had to the nature and quality of the act and or omission, the relevant statutory framework and the extent to which, if at all, the considerations of public policy enumerated by Lord Browne-Wilkinson in X v. Bedfordshire have any application to the act or omission. I would hold that on the particular facts of this case it is arguably just and reasonable to impose a common law duty of care, more obviously so in the second case than the first. In my judgment decisions which have gone the other way including X v. Bedfordshire County Council are distinguishable on the facts. Having held that it is at least arguable that there was a common law duty of care to provide to the foster parents such information that a reasonable social worker would have provided I agree with Hooper J (W v. Essex County Council [l997] 2 FLR 535 at p. 562 that there is no reason either to strike out the claim for negligent miss-statement.

Because of the route by which I have reached my conclusion I have not thought it necessary to consider whether the decision, if such it was, by the social worker not to impart the information was so irrational or outrageous as to be outwith the discretion conferred by Parliament or with the interesting point dealt with by Judge LJ as to a possible distinction between the duty owed to children in care and the duty to third parties.

Accordingly I would uphold the Judge.

Order: Appeal dismissed; issue of costs adjourned;

application for leave to appeal to the

House of Lords allowed for only one

representation to be made.