England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		21/02/2018

Justine Thornton QC:

I. Introduction

1. This is the trial of a preliminary issue of law, as to whether the Defendant, the Driver & Vehicle Licensing Agency (DVLA), an executive agency of the Department for Transport, owes a duty of care to the Claimant, Mr Seddon, on the facts arising in this case.
2. The claim stems from Mr Seddon's purchase of a classic sports car, an AC Cobra 289. The car had been previously registered by the DVLA in the 'historic car' taxation class. Unbeknownst to Mr Seddon, the DVLA had come into possession of the advertisement for the sale of the car around the same time that Mr Seddon was considering purchase of the car. Information in the sales particulars led the DVLA to consider that the car may have been incorrectly classified as historic. On receipt of Mr Seddon's application for registration, the DVLA commenced an investigation which concluded that the car could not continue to be classed as historic and issued a registration certificate to this effect to Mr Seddon. The decision had unfortunate consequences for Mr Seddon. Having bought the car for £250,000, relying in part on the DVLA's categorisation of the car as historic, the car was now only worth £100,000.
3. Mr Seddon contends that the DVLA owed him a duty of care once it became aware that the car might be wrongly classified, to alert the then registered owner to the prospect of an investigation into the car's historic status. In this context, the Claimant relies heavily on an extract from INF26, a guidance document issued by the DVLA, on registration of reconstructed classic cars:

"Q/QNI registration numbers are issued where the age or identity of the vehicle is not known. Although seen by many enthusiasts as a seal of disapproval, they have proved to be a useful consumer protection aid. The display of a Q/QNI registration number is a visible sign to a prospective purchaser that the age or identity of the vehicle is in doubt" (Section 7)

4. The scope of the duty asserted by the Claimant is set out in the Amended Particulars of Claim as follows:

"in circumstances where a reinvestigation is to be undertaken by the DVLA, INF 26 creates a clear duty of care (where [the DVLA] knew the car was being marketed for sale) to protect the interests of prospective purchasers" (Paragraph 32 of the Amended Particulars of Claim)

5. The issue is tried pursuant to the Order of Master Kay QC, dated 7^th April 2017. The parties produced an agreed schedule of facts, set out in this judgment.
6. This judgment is not concerned with whether the DVLA was careless in its dealings with Mr Seddon or the regrettable consequences for Mr Seddon. The purpose of this judgment is confined to the question of law as to whether the DVLA can be said to owe a duty of care to Mr Seddon. For the reasons explained below, in light of established legal authority, I have concluded that the DVLA does not owe a duty of care to Mr Seddon.

II. Facts

7. The following facts are agreed between the parties.
8. In 2008, Adrian Hamilton of Duncan Hamilton and Co Ltd commissioned Brooklands Motor Company to construct a classic sports car, a continuation AC Cobra 289. The vehicle was allocated vehicle chassis number CSX 2620 and was granted a 'Historical Vehicle' passport on 20 August 2009 to race in the FIA GTS12 Class. The original date of manufacture was asserted to be 1964.
9. Mr Hamilton completed the requisite application for the vehicle to be registered with the DVLA as a 'Historic Vehicle'. On 1 October 2009, the vehicle was allocated the Vehicle Registration Number PTF 47B, following a DVLA investigation and physical examination. The DVLA registration document, known as the V5C, named Adrian Hamilton as the registered keeper. Section 3 of the document is headed Special notes. The notes include the statement "Was registered and / or used. Declared Manufactured 1964". In section 4B, the date of first registration is cited as 01.01.1964, which is not correct as the vehicle was first registered in 2009.
10. The car was subsequently advertised for sale. The vehicle was bought by an Austrian individual and exported to Vienna.
11. In October 2013, Mr Rod Leach, sole proprietor of "Nostalgia", acquired the AC Cobra vehicle, and applied for re-registration of the vehicle following importation back into the UK. The vehicle was registered and the V5C was issued by the DVLA describing the new keeper as Rod Leach's Nostalgia. The date of acquisition of the vehicle was recorded as 16 October 2013. The chassis number remained CSX 2620 and the registration of the vehicle remained PTF 47B. There is no evidence of any vehicle inspection by the DVLA at the time of Mr Leach's application to re-register the vehicle.
12. Mr Leach subsequently advertised the vehicle for sale.
13. On 12 August 2014, the DVLA were in possession of a print-out of the advertisement on the "classic cars for sale" website. The advertisement described the vehicle as a 1964 "Historic Vehicle".
14. On 13 August 2014, a Policy Adviser at the DVLA, by way of internal email, emailed another DVLA employee, referring to information in the sale advert that the car was built in 2002 and requesting that the vehicle's identity was investigated on receipt of notification of a change in keeper. The DVLA knew that the vehicle was on sale and being marketed by Rod Leach's Nostalgia, who was the registered keeper.
15. The Claimant purchased the vehicle on 10 October 2014 for £250,000. The Claimant was a bona fide purchaser for value in good faith. He relied in part on the existing V5C (in the name of Rod Leach's Nostalgia) as evidence of the provenance of the car as a 'UK registered 1964 Historic Vehicle'. Had the Claimant known that the registration of the vehicle was in doubt, and was liable to investigation on his application for a new registration document, he would not have purchased the vehicle.
16. The Claimant applied to be registered as the new keeper of the car on 10 October 2014. His application was made on the basis that the car was a historic vehicle. He did not receive a new V5C as expected. He received no acknowledgement or written response from the DVLA, nor did the DVLA make him aware of their investigation.
17. Not having received any response, the Claimant telephoned the DVLA 14 days or so after his application when he was told that the vehicle's registration was under investigation.
18. On 21 November 2014, the DVLA commenced an investigation into the registration of the vehicle. The DVLA communicated with Mr Leach in connection with the investigation, despite having received the Claimant's application for registration as the new keeper (usually denoting a change of ownership).
19. Throughout their investigation of the vehicle, the DVLA did not communicate with the Claimant. The DVLA did not make the Claimant aware that they were dealing with the matter via Mr Leach.
20. On 26 March 2015, a representative of the DVLA wrote to Mr Leach indicating that the DVLA had decided to allocate a new Vehicle Identity Number and the allocation of a "Q" plate to the vehicle. The original registration was now void. The outcome of the investigation was not communicated by the DVLA to the Claimant.
21. On 13 May 2015, the Claimant wrote to the DVLA querying the non-receipt of the new V5C. A representative responded on 21 May 2015, informing the Claimant that she had been conferring with Mr Leach throughout the investigation. She informed the Claimant that following investigation the vehicle PTF 47B could no longer be classified as historic and would be allocated a new VIN and "Q" plate. She enclosed a copy of her letter dated 26 March 2015 to Mr Leach. This was the first item of correspondence by the DVLA to the Claimant.
22. Further correspondence took place in May and July 2015. In response to a solicitor's letter, the DVLA advised the Claimant to ask an affiliated AC Owners Club to date the major components of his vehicle under reconstructed classic car guidelines.
23. In October 2015, the vehicle was inspected by a representative for the AC Owners Club and a recognised expert on AC Cobras. On 13^th October 2015, the representative emailed the DVLA, giving his opinion on the provenance of the car. He concluded that the chassis, body and suspension parts were all manufactured in the 2000s, but to the correct 1964 specification. He urged the DVLA not to allocate the vehicle a "Q" plate. His recommendation was not accepted by the DVLA.
24. The DVLA wrote to the Claimant on 12 November 2015 confirming the decision to re-register the car with a "Q" plate.
25. The Claimant contacted Brooklands Motor Company, who originally built the car, and was provided with a document showing that the chassis of the vehicle had been manufactured in 2008. Until this date the Claimant had never seen this document or been provided it by any party.
26. The Claimant mitigated his losses and sold the vehicle for £100,000, incurring a financial loss of £150,000, being the difference between the purchase price and the price obtained for the vehicle on sale.

III. Statutory Framework

27. The DVLA is an executive agency, sponsored by the Department for Transport. The specific statutory functions of the Secretary of State for Transport, which the DVLA is charged with performing, are set out in the Vehicle Excise and Registration Act 1994. The purpose of the Act is to: (a) to collect tax and raise revenue for Government; and (b) to ensure vehicles operating on the roads in the UK are registered.
28. Vehicle excise duty is charged in respect of every car registered under the Act (section 1(1)). The duty is payable upon the licence to be taken out by the person in whose name the vehicle is registered (section 1(1) (c)). Duty is chargeable by reference to the currently applicable annual rate (section 2 and schedule 1). Any vehicle constructed over 40 years previously is exempt from vehicle excise duty. This is the Historic Taxation class (section 5 and Schedule 2). For the purpose of levying vehicle excise duty, the Secretary of State and his officers (i.e. the DVLA) have the same powers, duties and liabilities as the Commissioners of Customs & Excise and their officers (section 6).
29. The Secretary of State is responsible for registering vehicles (section 21(1)). Section 22(1)(dd) permits him to make regulations which require a person, by or through whom a vehicle is sold or disposed of, to furnish the person to whom it is sold or disposed of with documents relating to the vehicle's registration. Section 22A (3) (c) specifically permits the Secretary of State to make regulations which provide for the correction of errors in certificates.
30. The principal regulations made under the Act are the Road Vehicles (Registration and Licensing) Regulations 2002 (No. 2742). Regulation 3(1) refers to the register of vehicles maintained, on behalf of the Secretary of State, by the DVLA. Before issuing a registration document to the keeper of a vehicle, the Secretary of State may require him to produce the vehicle for inspection or to produce other evidence that the vehicle accords with the particulars furnished when a vehicle licence was applied for in respect of it (regulation 10(6)). The Secretary of State may refuse to issue a registration document for a vehicle if he is not satisfied that the vehicle accords with those particulars (Regulation 10(7)).
31. Where the Secretary of State believes that the particulars in the registration document recorded in the register for a particular vehicle are inaccurate, he may correct the particulars in the Register (regulation 14(4)). The Secretary of State has the power to inspect any vehicle which is sought to be registered to ensure that it accords with the particulars furnished when the licence was issued (regulation 15(1) (a)). The keeper of a vehicle may appeal against any decision of the Secretary of State following any such inspection (schedule 3, paragraphs 3 and 4).

IV. DVLA Guidance document INF26

32. DVLA guidance document INF26 is headed "Guidelines on how you can register kit cars and rebuilt or radically altered vehicles".
33. The introduction states as follows:

"A vehicle must be properly taxed, insured and registered before it can be used or kept on the road. When a vehicle is first registered, we give it a registration number which must be properly displayed on the vehicle's number plate. The registration number stays with the vehicle until it is broken up, destroyed, permanently exported or transferred to another vehicle by what is known as a 'cherished transfer'…

However, sometimes a vehicle needs to be rebuilt or it is radically altered and this can affect the identity of the vehicle – is it the original vehicle which has been repaired or have so many new or different parts been used that the original vehicle no longer exists?"

When giving a registration number to a rebuilt vehicle or radically altered vehicle, our main priority is to decide whether or not the vehicle is newly built, with no previously registered identity (in its present form). Vehicles which have been substantially rebuilt or altered from the manufacturer's original specification may need to be re-registered and the DVLA may inspect any altered vehicle. Checks will be made to establish if the donor vehicle major component parts have been subject to a Vehicle Identification Check ("VIC") or Certificate of Destruction ("COD").

34. Section 6 is headed "Reconstructed Classics". It states as follows

The Reconstructed Classic category is intended to support the restoration of unregistered classic vehicles. Reconstructed vehicles must comprise of genuine period components all over 25 years old and of the same specification. The appropriate vehicle enthusiast club for the marque (make) must confirm in writing that following inspection they authenticate that the vehicle is a true reflection of that marque and that it meets the above criteria. This written confirmation must be sent along with an "application for first vehicle tax and registration of a used motor vehicle – (V55/5) to DVLA Swansea, SA99 1BE". An age-related registration number will be issued based on the age of the youngest component used.

Reconstructed classics or replica classic vehicles built to original specifications using a mixture of new and used components will be issued a "Q"/"QNI" registration number…

35. Section 7 is headed "Q/QNI Registration Numbers"

"Q"/"QNI" registration numbers are issued where the age or identity of the vehicle is not known. Although seen by many enthusiasts as a seal of disapproval, they have proved to be a useful consumer protection aid. The display of a Q/QNI registration number is a visible sign to a prospective purchaser that the age or identity of the vehicle is in doubt.

V. Overview of submissions

Submissions on behalf of Mr Seddon

36. In his submissions on behalf of Mr Seddon, Mr Black emphasised the narrow scope of the duty of care arising on the facts of this case. The DVLA knew that the car was being marketed for sale. The DVLA came to an internal view that the car's identity required investigation. Whilst the DVLA was not to be criticised for acting on the receipt of new information, it had made a deliberate decision to delay any investigation until the car was sold. The effect of the decision was that Mr Seddon purchased the car in good faith, totally unaware that its historic status was subject to question. Had Mr Seddon known that the registration was being questioned, he would not have bought the car and to that extent he had been prejudiced by the decision.
37. By virtue of paragraph 7 of INF26 the DVLA has assumed responsibility to a particular class of prospective purchaser in the position of Mr Seddon, in circumstances where, as here, the DVLA itself had identified a question over the authenticity of the vehicle and therefore the correctness of its current registration. Mr Black made clear that he was not suggesting the DVLA had responsibility to check every car that might be subject to re-registration. He acknowledged that this would be unrealistic. The presence of the statutory scheme should not blind the Court to the nub of the issue, which was the position that arose when the DVLA decided to delay its investigation of the vehicle, despite having doubts about its currently registered taxation class and despite being aware that the car could be sold on the basis of an incorrect registration.
38. Once it had decided to investigate the car's origins, the DVLA should have informed the registered keeper (the vendor), thereby alerting prospective purchasers to the DVLA's doubts about the vehicle's identity. A duty of care in this narrow respect was consistent with good public policy. As regards the statutory regime, an additional purpose of the regulatory scheme is that of accuracy, as the DVLA itself acknowledged in a letter to the Claimant dated 16 July 2015:

"The DVLA has a legal responsibility to ensure that all the records they hold are accurate. Where doubt is cast over the accuracy of the records held by DVLA thorough and proportionate investigations are necessary".

Submissions on behalf of the DVLA

39. On behalf of the DVLA, Mr Arumugam focussed his submissions on the statutory regime in which the DVLA operates and on whether the DVLA could be said to have assumed responsibility to the Claimant. The purpose of the statutory regime is to collect tax and raise revenue for the Government and to ensure that vehicles on roads in the UK are registered. Its purpose is not to protect the private commercial interests of buyers of private cars. Nor is it the DVLA's function to underwrite investments in classic cars. Buyers like the Claimant should inform themselves and get professional advice, not rely on the DVLA. The DVLA had not assumed responsibility to the Claimant. The cases of In St John Poulton's Trustee In Bankruptcy v Ministry of Justice [2011] Ch 1, Customs and Excise Commissioners v. Barclays Bank [2007] 1 AC 181 and Rowley v. Secretary of State for Work and Pensions [2007] 1 WLR 2861 at [54] are authority for the proposition that a body exercising statutory powers cannot be said to be assuming responsibility on the basis 'it has no choice' in its actions.
40. Mr Arumugam invited the Court to find that Section 6 of the INF26 is the key section of the guidance, not Section 7, as contended for by Mr Black. Section 6 is entirely consistent with the DVLA's statutory functions (e.g. "an age-related registration number will be issued on the age of the youngest component"). Mr Black is seeking to elevate one sentence in Section 7 to amount to an assumption of responsibility by the DVLA, which was not how the sentence should be interpreted.
41. Whilst Mr Black had attempted to narrow the class to whom he said the duty was owed by the DVLA, it was still a large and undefined class which would give rise to considerable longer term implications for the DVLA and the Department for Transport.

VI. The authorities

Introduction

42. The parties were agreed that I should adopt the approach taken by the House of Lords in Customs & Excise Commissioners v Barclays Bank Plc [2007] 1 AC 181 to considering a duty of care in respect of economic loss. The Court held that a bank which had been notified of a freezing order against one of its customers owed no duty of care to the party which had obtained the order. Lord Bingham' judgment begins by listing the three well established tests used when deciding whether a defendant sued as causing pure economic loss to a claimant owes him a duty of care in tort [189]:

(1) The first test is whether the defendant assumed responsibility for what he said and did vis-à-vis the claimant, or is to be treated by the law as having done so.

(2) The second test is commonly known as the three fold test;

a. whether loss to the claimant was a reasonably foreseeable consequence of what the defendant did or failed to do;

b. whether the relationship between the parties was one of sufficient proximity; and:

c. Whether in all the circumstances it is fair just and reasonable to impose a duty of care on the defendant towards the claimant.

(3) The third test is the incremental test, based on the understanding that the law should develop novel categories of negligence incrementally and by analogy with established categories.

43. Lord Bingham went on to make five general observations on the tests, which I refer to below when analysing each of the three tests. Lord Bingham's fifth observation was that the outcomes (or majority outcomes) of the leading cases are in every, or almost every, instance sensible and just, irrespective of the test applied to achieve that outcome. This was not, he said, to disparage the value of and need for a test of liability in tortious negligence, which any law of tort must propound if it is not to become a morass of single instances. But, the tests concentrate attention on the detailed circumstances of the particular case and the particular relationship between the parties in the context of their legal and factual situation as a whole ([192]). Similarly, in the case of Caparo Industries plc v Dickman [1990] 2 AC 605, Lord Roskill observed that the threefold test does not provide precise definitions of a duty of care. The three tests are, at best, 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.

Assumption of responsibility:

44. As analysed by the Court in Customs and Excise Commissioners v. Barclays Bank plc, the question is whether the defendant assumed responsibility to the claimant. In cases in which the loss has been caused by the claimant's reliance on information provided by the defendant, it is critical to decide whether the defendant (rather than someone else) assumed responsibility for the accuracy of the information to the claimant (rather than someone else) or for its use by the claimant for one purpose (rather than another). The answer does not depend upon what the defendant intended but upon what would reasonably be inferred from his conduct against the background of all the circumstances of the case (Lord Hoffman at [199]).
45. There are cases in which one party can accurately be said to have assumed responsibility for what is said or done to another, the paradigm situation being a relationship having all the indicia of contract save consideration. Hedley Byrne would, but for the express disclaimer, have been such a case (Lord Bingham's first general observation at [190]). However Barclays Bank did not assume responsibility to the Customs and Excise Commissioners by virtue of the court order freezing the assets of a customer with the bank. The notion of assumption of responsibility could not be said to apply because the bank had no choice but to obey the court order [194].
46. Similarly, in Rowley v. Secretary of State for Work and Pensions [2007] 1 WLR 2861 at [54], Dyson LJ held that where the Secretary of State was performing his functions, via the Child Support Agency, under the Child Support Act 1991, he was not assuming responsibility to a person applying for an assessment under the Act. The Secretary of State was obliged to make the assessment: "he is not a volunteer in any sense". "He is not doing anything that is 'akin to contract'".
47. Assumption of responsibility is a sufficient but not a necessary condition of liability. It is a first test which, if answered positively, may obviate the need for further inquiry. If answered negatively, further consideration is called for (Lord Bingham in Customs & Excise v Barclays Bank [190])).

The threefold test (foreseeability; proximity; fair just and reasonable)

48. In Caparo Industries plc v Dickman [1990] 2 AC 605, an unsuccessful claim against the auditors of a company for inaccurate accounts was brought by investors who purchased shares in the company on the basis of the audited accounts. Lord Bridge identified the salient features underlying the imposition of a duty of care to ensure the accuracy of a statement which one party makes and the other party foreseeably relies on to his detriment. The defendant giving advice or information must be fully aware of the nature of the transaction which the plaintiff has in contemplation. He must know that the advice or information will be communicated to him directly or indirectly and he must know that it is very likely that the plaintiff will rely on that advice or information in deciding whether or not to engage in the transaction in contemplation. The situation was however entirely different:

"where a statement is put into more or less general circulation and may foreseeably be relied on by strangers to the maker of the statement for any one of a variety of different purposes which the maker of the statement has no specific reason to anticipate. To hold the maker of the statement to be under a duty of care in respect of the accuracy of the statement to all and sundry for any purpose for which they may choose to rely on it is not only to subject him, in the classic words of Cardozo C.J. to 'liability in an indeterminate amount for an indeterminate time to an indeterminate class:' see Ultramares Corporation v. Touche (1931) 174 N.E. 441 , 444; it is also to confer on the world at large a quite unwarranted entitlement to appropriate for their own purposes the benefit of the expert knowledge or professional expertise attributed to the maker of the statement." [621]

49. In the same case Lord Oliver examined the relevant statutory requirement that a company's account shall be audited annually. The primary purpose of the provision was to enable the informed exercise by those interested in the property of the company of the powers vested in them by the virtue of their respective proprietary interests. Whilst the information in question was capable of serving as the basis for the giving of financial advice to others:

"I find it difficult to believe however that the legislature, in enacting provisions clearly aimed primarily at the protection of the company and its informed control by the body of its proprietors, can have been inspired also by consideration for the public at large and investors in the market in particular" [ 632].

The incremental test

50. In Customs and Excise Commissioners v Barclays at [4] Lord Bingham's fourth general observation concerned the incremental test:

"the incremental test is of little value as a test in itself and is only helpful when used in combination with a test or principle which identifies the legally significant features of a situation. The closer the facts of the case in issue to those of a case in which a duty of care has been held to exist, the readier a court will be, on the approach of Brennan J adopted in Caparo Industries plc v Dickman, to find that there has been an assumption of responsibility or that the proximity and policy conditions of the threefold test are satisfied. The converse is also true." [192]

51. The formulation of the test by Phillips LJ in Reeman v Department of Transport [1997] PNLR 618, a case which Mr Arumugam for the DVLA places considerable reliance on, is that:

"When confronted by a novel situation the court does not … consider [the stages of the three-fold test] in isolation. It does so by comparison with established categories of negligence to see whether the facts amount to no more than a small extension of a situation already covered by authority, or whether a finding of the existence of a duty of care would effect a significant extension to the law of negligence".

52. In Reeman, the Claimants purchased a fishing vessel which had the benefit of a certificate issued by the Department of Transport indicating compliance with relevant regulations concerning seaworthiness. It transpired that the surveyor who had issued the certificate had made an arithmetical error when calculating the vessel's stability and the certificate was withdrawn a year after the Claimant's purchase. The Claimants could not use the vessel and could not afford to pay for the necessary modifications to make the ship seaworthy.
53. At first instance, the Judge held that the virtual certainty that the certificate would be communicated to prospective purchasers, the likelihood that such prospective purchasers would rely on the certificate in deciding whether to purchase, and the overwhelming probability that they would do so without independent verification were all facts known, actually or inferentially, to the Department of Transport, which thereby established the requisite degree of proximity between the claimants and the Department of Transport.
54. The Court of Appeal overturned the decision, on the grounds that:

a. The statutory framework was one designed to promote safety at sea, which imposed duties as to seaworthiness on the owners of vessels and provided for the Department of Transport to check and certify those duties had been complied with. The purpose of issuing certificates was to help to prevent fishing vessels which were uncertified and which might be unseaworthy from putting to sea.

b. The argument that a subsidiary purpose of the certification regime was to inform those who might in the future consider entering into commercial transactions such as purchase, in relation to the certified vessels could not be accepted. The protection of those whose commercial interests might foreseeably be affected by unseaworthiness of vessels formed no part of the purpose of the legislation and no part of the purpose for which the certificates were issued;

c. It would not be fair, just and reasonable to impose a duty of care on a body like the Department of Transport charged with the duty of certifying with a view to promoting safety at sea. The Department when performing its regulatory functions under the Merchant Shipping Act performed a similar role to that of classification societies, i.e. they existed for the purpose of furthering safety at sea rather than for the protection of commercial interests.

55. In his judgment, Lord Justice Phillips considered that if there was insufficient proximity of relationship to give rise to a duty of care in respect of economic loss directly caused to the owner of the vessel at the time of the certification, it was hard to accept that such proximity existed between the Department of Transport and 'those who may rely on the existence of a certificate in relation to commercial transactions that involve the risk of economic loss". Pursuant to X (Minors) v Bedfordshire County Council [1995] 2 AC 633 at 739 the question of whether there is such a common law duty and, if so, its ambit must be profoundly influenced by the statutory framework within which the acts complained of were done. The statutory framework in the present case was one designed to promote safety at sea.

"What I cannot accept is Mr Ullstein's further submission that, in the case of fishing vessel certificates, a subsidiary purpose for which the certificate is issued is to inform those who may, in the future, consider entering into commercial transactions, such as purchase or charter in relation to the certified vessels. No trace of such a purpose is to be found in the statute under which the rules are issued, which is entitled 'Fishing Vessels (Safety Provisions) Act' [631]

56. Membership of the class of persons to whom the advice is given should probably be capable of ascertainment at the time that the advice was given, e.g. shareholders who could be identified by consultation of the share register. The class certainly ought to be in existence at the time of giving the advice:

When a British fishing vessel certificate is issued those who may in the future place reliance on that certificate when deciding whether to purchase the vessel do not form part of the class that is capable of definition and de-limitation by identifiable characteristics….

Not only did potential future purchasers not form an identifiable class when the certificate was issued, the certificate was not issued for the purpose of providing information to assist them in deciding whether or not to purchase the vessel. The fishing vessel certificate was not provided in order to convey information to possible future purchasers, any more than to possible future mortgagees or insurers. It was issued as part of the scheme designed to prevent fishing vessels putting to sea when unseaworthy [632]

57. Lord Phillips explained why it would not be fair, just and reasonable to impose a duty of care on the Department of Transport:

Although Mr Ullstein has sought to restrict the duty of care for which he contends to the narrow facts of the present case, it seems to me that if the duty exists, it ought logically to exist in respect of the wide range of analogous cases where authorities certify that the property complies with safety requirements. Certainly it ought to apply to all certifications of the Department of Transport or its agencies under the provisions of the Merchant Shipping Acts [634]

Application of the law to the facts of this case

58. I start by considering the statutory regime in which the DVLA operates, before applying the three well established legal tests. I remind myself that the tests are, in large degree, labels and that I should focus on the detailed circumstances of the case and the particular relationship between the parties.

Purpose of the statutory regime

59. The DVLA's actions throughout this case were taken pursuant to its statutory functions. I reject Mr Black's attempt to downplay the statutory context. As Lord Browne-Wilkinson observed in X (Minors) v Bedfordshire County Council [1995] 2 AC 633 at 739:

"The question whether there is such a common law duty and if so its ambit, must be profoundly influenced by the statutory framework within which the acts complained of were done".

60. The purpose of the Vehicle Excise and Registration Act 1994 is, as its title suggests: to collect tax, thereby raising revenue for Government, and to ensure vehicles operating on the roads in the UK are registered. Vehicle excise duty is charged in respect of every car registered under the Act. The duty is chargeable by reference to the currently applicable annual rate. Any vehicle constructed over 40 years previously is exempt, under the Historic Taxation class. Under the Road Vehicles (Registration and Licensing) Regulations 2002, the DVLA can refuse to issue a registration document for a vehicle if it is not satisfied that the vehicle accords with those particulars. Where the DVLA believes that the particulars in the registration document recorded in the register for a particular vehicle are inaccurate, it can correct the registration.
61. Whilst I accept Mr Black's submission that the accuracy of registration documents may be said to be a purpose of the statutory regime, accuracy is important for ensuring that the correct vehicle excise is charged. There is nothing in the legislative regime to suggest that accuracy is for the purpose of enabling prospective third party purchasers to rely on the registration to value a car they are intending to purchase. I return to the question of reliance for other purposes below.

Assumption of responsibility

62. In Customs and Excise v Barclay's Bank, Lord Bingham considered that the notion of assumption of responsibility could not be said to apply to Barclays bank because it had no choice but to obey the court order [194]. In Rowley v. Secretary of State for Work and Pensions [2007] 1 WLR 2861 at [54], Dyson LJ considered that the Secretary of State was not assuming responsibility in that he was obliged to make the assessment under the Child Support Act.
63. Similarly, in issuing the registration documents for the AC Cobra 289, the DVLA was doing so in the performance of its functions under the Vehicle Excise and Registration Act 1994. It was not doing so 'voluntarily' and nor can the DVLA be said to be doing anything akin to contract in this regard.
64. Mr Black's case on assumption of responsibility rests on a particular sentence in section 7 of guidance document, INF26:

"Although seen by many enthusiasts as a seal of disapproval, they have proved to be a useful consumer protection aid".

65. I reject the weight that Mr Black sought to attach to the particular sentence. The document must be read as a whole and in the statutory context. Section 6 is the core provision. It explains the classic car category of tax exempt cars and the registration process "An age-related registration number will be issued based on the age of the youngest component used". The sentence which Mr Black relies on is to be read, in my judgment, as the DVLA acknowledging, in passing, that people may choose to rely on the registration documents for another purpose, that of consumer protection. However, the sentence cannot be read as the DVLA voluntarily accepting responsibility to protect consumers, which would, in any event, be inconsistent with the ambit of the statutory regime.

Reliance for other purposes

66. Mr Seddon relied on the V5C registration document for the purpose of valuing the car he wished to purchase. Yet, the large boiler plate heading on the front of the document makes clear this is not its purpose:

"This document is not proof of ownership. It shows who is responsible for registering and taxing the vehicle".

67. In my judgment, Mr Seddon's reliance on the car registration document is akin to the investors who chose to rely on the audited accounts in Caparo v Dickman. The salient features identified by Lord Bridge as underlying the imposition of a duty of care are not present in this case. In issuing the (incorrect) registration certificates in 2009 and 2013, the DVLA could not have been 'fully aware' of Mr Seddon's future purchase of the car, in 2015. The V5C document is more akin, in the words of Lord Bridge, to the 'statement put into more or less general circulation' which 'may foreseeably be relied on by strangers to the maker of the statement for any one of a variety of different purposes". The primary purpose of the statutory requirement for car registration is to raise vehicle excise duty.

The Three fold test (proximity, foreseeability and fair just and reasonable)

68. On behalf of the DVLA, Mr Arumugam sought to submit that Mr Seddon's reliance on the car registration document could not have been foreseeable to the DVLA. I reject the submission, given the sentence in section 7 of the INF 26 guidance which provides that:

"Q"/"QNI" registration numbers are issued where the age or identity of the vehicle is not known. Although seen by many enthusiasts as a seal of disapproval, they have proved to be a useful consumer protection aid".

69. The sentence suggests the DVLA was aware that people may rely on the registration document in classic car purchases. Moreover, in Mr Seddon's case, the DVLA was in possession of the sale advert for the car. In my judgment, it should have been foreseeable to the DVLA that a purchaser in the position of Mr Seddon could suffer loss in circumstances where the DVLA delayed its decision to investigate the provenance of the car.
70. Mr Black sought to emphasise the narrow membership of the class to whom, he said, the DVLA should owe a duty of care, which is prospective purchasers of cars in circumstances when the DLVA itself had decided to question and investigate the correctness of the vehicle's taxation class without informing the current owner of its intention to do so. The class of persons to whom the duty was owed was, he said, capable of definition and delineation by identifiable characteristics.
71. On first blush, Mr Black's submission is attractive, in suggesting a manageable class size, in circumstances where the effect of the DVLA's actions on Mr Seddon has clearly been unfortunate.
72. However, I accept Mr Arumugam's submission in response that even the class size contended for by Mr Black is indeterminate. In this context Mr Arumugam emphasised the large numbers of cars registered every year and the wider implications of any duty of care for the DVLA and the Department of Transport. Moreover, in Reeman v Department of Transport Phillips LJ considered that membership of the class of persons to whom the advice is given should probably be capable of ascertainment at the time that the advice was given and the class certainly ought to be in existence. He gave as an example, shareholders who could be identified by consultation of the share register. In contrast:

"When a British fishing vessel certificate is issued those who may in the future place reliance on that certificate when deciding whether to purchase the vessel do not form part of the class that is capable of definition and de-limitation by identifiable characteristics"

73. Mr Black's submissions focussed on August 2014. This was the point at which the DVLA had become aware of the sales particulars, had decided that the car's identity required investigation but that investigation should take place on receipt of the notification of a change in keeper. Mr Black sought to characterise the DVLA's conduct as a deliberate decision rather than an omission. However, the cases of Caparo v Dickman and Reeman v Department of Transport instruct this Court to focus on the class of those within the circle of responsibility when the statement is made. In 2009 and 2013, when the incorrect registration certificates were issued, Mr Seddon was part of an unascertainable and potentially unlimited class.
74. On the facts of this case, I am not persuaded that it is fair, just and reasonable for the DVLA to owe a duty of care to prospective purchasers who find themselves in the admittedly unfortunate position that Mr Seddon has found himself in.
75. As Phillips LJ observed in Reeman:

"it will always be open to a party entering into a commercial transaction in relation to a certificated vessel to take steps, such as surveying the vessel or stipulating for contractual warranties that will provide protection against the risk that the certificate does not reflect the true condition of the vessel." [635]

76. Similarly, Mr Seddon could have taken steps to protect himself; by appointing an expert to investigate the car or by stipulating a warranty as to the car's historic status. Mr Arumugam made the powerful policy argument that the cost of vehicle excise duty is currently approximately £245 a year. Yet the imposition of a duty of care will expose the DVLA to liability of £150,000, in this case alone.

Incremental Test

77. I accept Mr Arumugam's submission that the case of Reeman and anor v Department of Transport [1997] PNLR 618 is powerful authority for denying the existence of any duty of care, on the facts of this case. The Court of Appeal found the Department of Transport did not owe a duty of care to the purchaser of a vessel who relied on a negligently issued certificate of seaworthiness in the boat, as a consequence of which the purchaser incurred economic loss. In Philcox v. Civil Aviation Authority (unrep 25 May 1995), the Court of Appeal was not prepared to find a duty of care owed to the purchaser of a plane, for economic loss, when the negligent issue of a certificate of airworthiness resulted in the plane crashing.
78. Mr Black sought to distinguish the case of Reeman on its facts. Unlike Reeman, Mr Seddon is not questioning the correctness or legitimacy of the V5C certificate issued to him (which did not class the AC Cobra in the historic category). Mr Seddon is in a narrow identifiable class of prospective purchasers in circumstances where the DVLA had itself decided to investigate the identity of the vehicle, without informing the currently registered keeper. I accept that any such category of prospective purchaser is likely to be narrower (possibly considerably narrower) than the general class of prospective purchaser. Nonetheless, in my judgment, the boundaries of the sub category of prospective purchaser, relied on by Mr Black, are still not identifiable. I am not persuaded that the factual distinctions relied on by Mr Black are material enough for this Court to ignore the decision in Reeman.

Conclusion

79. I have applied the well-established legal tests set out in authorities which are binding on this Court. I have considered the tests separately. I have also 'cross checked' the factors against one another to enable me to step back from the labels and consider matters in the round. I have borne in mind that I consider it should have been foreseeable to the DVLA that a purchaser in the position of Mr Seddon could suffer loss in circumstances where the DVLA delayed its decision to investigate the provenance of the car.
80. Nonetheless, I have arrived at the clear view that I am not persuaded that the DVLA owes a duty of care to Mr Seddon. The DVLA was performing its functions under a statutory regime designed to raise vehicle excise duty. Mr Seddon chose to rely on the car registration document for a purpose of his own – the purchase of a historic car. Analogous case law does not permit a duty of care. In entering into a private commercial transaction for the purchase of the car, Mr Seddon could have taken steps to protect himself against the loss he subsequently incurred.