1. I have read in draft the judgments which have been prepared by Henchy J. and McCarthy J. and I agree with them.

2. I agree with the judgment of McCarthy J.

3. Louth County Council (‘the Council’) are a housing authority for the purposes of the Housing Act, 1966. By virtue of s. 39 of that Act they were empowered, subject to regulations made under the Act, to make a loan for the acquisition of a house. The first plaintiff (‘the plaintiff’) having agreed to buy a house on the outskirts of Dundalk, Co. Louth, for £24,000, applied to the Council for a loan of £12,000. Under the relevant regulations made under the Act, and under the terms of the written scheme prepared and issued by the Council for the making of such a loan, the Council were bound, before making any advance, to satisfy themselves, by means of a report by their valuer, as to the actual value of the house and that the house provided adequate security for the loan.

4. For the purpose of satisfying those requirements the Council sent out a local auctioneer and valuer to make a report on the house in question. His report consisted of the replies he gave to a series of questions set out in a typed form furnished to him by the Council. Amongst the replies given by him was one saying that in his opinion the house was a reasonable risk for a loan over 30 years and one giving his valuation of the house as approximately £25,000.

5. It turned out that those opinions were wildly incorrect. The house was not a reasonable security for the loan and it was grossly overvalued at £25,000. Although, as events proved, it was not a good security for the loan of £12,000 applied for, the loan was granted. With the aid of the loan the plaintiff bought the house from the man who a few years earlier had built it, but when the plaintiff and his wife went into occupation they found that it was riddled with defects, most of them concealed structural defects. So fundamental and widespread were those defects that the plaintiff and his wife had to abandon the house. They moved into rented premises. Apparently the house still remains unoccupied. It seems to have been written off as a habitable dwellinghouse.

6. In the proceedings which the plaintiff and his wife brought in the High Court, Costello J. found in favour of the plaintiff in his claim in negligence against the first defendant (the vendor); and also against the Council, based on an allegation that they were negligent in not having a proper valuation carried out, so that, to his detriment, he was induced to rely on the adequacy of their valuation. The issue in this appeal by the Council is (apart from the question of the amount of the damages awarded) whether that finding of negligence should be upheld.

7. It was held by Costello J. in the High Court that the auctioneer who carried out the valuation for the Council was not negligent, and there is no appeal against that finding. The auctioneer was absolved on the ground that he was only an auctioneer and estate agent and, as such, is not to he blamed for not having the skill and competence necessary for the discovery of the hidden defects in the house. That unappealed finding must be accepted in this appeal as being correct.

8. As to the Council, the allegation of negligence against them does not necessarily fail because the valuer engaged by them was acquitted of negligence. What is relied on as negligence on their part is their failure to engage as a valuer a person who was competent to value the house in the light of (amongst other things) its structural condition. This, it is said, could have been done by engaging a person who was both an auctioneer and a surveyor, or, alternatively, by engaging as well as an auctioneer or valuer a person qualified to investigate the structural condition of the house. As I understand the submissions made in this Court on behalf of the Council, they do not deny that they were wanting in care in employing as a valuer a person who was lacking in the skill necessary to appraise the structural condition of the house. In effect they concede a want of due care on their part, but they say that the care in which they were wanting arose, not out of any duty of care owed to the plaintiff but as part of the duty of care owed by them to the public, or more specifically, to that section of the public who by paying rates or taxes funded the Council as a housing authority.

9. For my part I gratefully acknowledge the assistance given by counsel on both sides in presenting an extensive array of decided cases relevant to the liability of public authorities in circumstances similar to those in this case. I do not propose to analyse or assess the different and not always reconcilable approaches adopted in those cases, because I consider that the salient features of this case are sufficiently clear and distinctive to enable the point at issue to be decided on well-established principles.

10. The Council were plainly in breach of their public duty, imposed by the Regulations made under s. 39 of the Act, to ensure by a proper valuation that the house was worth £24,000 and that it was a good security for a loan of £l2,000 repayable over a period of 30 years. However, the breach of such a public duty would not in itself give a cause of action in negligence to the plaintiff: see Siney v. Corporation of Dublin [1980] I.R. 400. It is necessary for him to show that the relationship between him and the Council was one of proximity or neighbourhood which cast a duty on the Council to ensure that, regardless of anything left undone by the plaintiff, he would not end up as the mortgagor of a house which was not a good security for the amount of the loan. A paternalist or protective duty of that kind would not normally be imposed on a mortgagee in favour of a mortgagor, but the plaintiff was in a special position.

11. It has to be remembered that one of the primary duties imposed on the Council by the Act was the elimination of all uninhabitable dwellings in their area. It follows that they should have realised that it would be in breach of their statutory functions if they granted a loan for the purchase of a house which turned out to be uninhabitable. The consequences to the plaintiff of a failure on their part to value the house properly should have been anticipated by the Council in view of factors such as that, in order to qualify for the loan, the plaintiff had to show that he was unable to obtain the loan from a commercial agency such as a bank or a building society and that his circumstances were such that he would otherwise need to be re-housed by the Council. A borrower of that degree of indigency could not have been reasonably expected to incur the further expense of getting a structural survey of the house done. The plaintiff, like the Council, relied on the opinion of a man who was only an auctioneer. He considered that the Council would have the house approved by a surveyor and that it would be superfluous for him to engage a surveyor. That was an understandable attitude and one that ought to have been foreseen by the Council, particularly when regard is had to the fact that one of the preconditions of the loan required the plaintiff to insure the house against fire for at least its full value. The Council must be taken to have impliedly assured the plaintiff that the house would be a good security for the loan.

12. In the light of the special relations between the plaintiff and the Council I consider that, apart from their public duty in the matter, the Council owed a duty to the plaintiff to ensure by a proper valuation that the house would be a good security for the loan. It would be unconscionable and unfair if they were to be allowed to escape liability in negligence on the ground that the plaintiff himself should have taken the necessary steps to ascertain that the house was sound. In the light of the statutory rights and duties of the Council it must, in my view, be held that they owed a duty to the plaintiff to observe due care in the valuation of the house and that they failed to carry out that duty. If they wished to avoid the incidence of that duty they could have so provided in one of the pre-conditions of the loan.

13. I would dismiss this appeal by the Council against the finding of liability in negligence made against them.

14. I agree with the judgments of Henchy J. and McCarthy J.

15. The County Council appeals against so much of the order of the High Court (Costello J.) as held it liable to compensate the first plaintiff, the husband of the second plaintiff, for damage suffered because of the breach by the Council of its common law duty of care to the husband who was the purchaser for £24,000 of part of the lands described in folio 3708 County Louth being site 13 on a map attached to the contract and situated at Faughart, Dundalk, Co. Louth. He sought and obtained from the County Council a loan of £12,000 to enable him to purchase “a dwellinghouse at Lower Faughart, Dundalk.” The house turned out to be unfit for human habitation, although, before the loan was sanctioned, the County Council had obtained a “valuer’s certificate” that the house was in good sanitary condition and repair, and if necessary, readily saleable. The plaintiffs left their home and sued the vendor, who was also the builder and, clearly, at the time no mark for damages, the County Council and the firm engaged by the County Council as “valuer”. The vendor/builder had no answer, was decreed and has not appealed; the “valuer” was held by the trial judge not to have fallen short of the standard of care required of him; the County Council was decreed with a right of contribution of 90 per cent from the vendor/builder (a right which is worthless) and it appeals against the award made to the first plaintiff. The second plaintiff succeeded against the vendor/builder and no appeal has been pursued in that respect. In my judgment, the appeal by the County Council fails.

16. Regulation 12 provided:-

17. Louth County Council, in carrying out its statutory duty, published a scheme for the making of loans by the Council under s. 39 of the Act of 1966 and the Regulations of 1972, as amended. I quote the following:-

18. As part of the scheme the Council further published an application form, which contained the following provision:-

19. The first plaintiff duly applied for a loan of £12,000; the County Council retained the third defendant acting through Pascal McLoughlin, who had 25 years experience of this kind of work, to prepare a valuer’s certificate. Mr. McLoughlin did so in the form (dated 12th August, 1980) appended to this judgment, valuing the house at approximately £25,000. On foot of that valuer’s certificate, the Council allocated a loan of £12,000 to the first plaintiff and by letter of the 29th August, 1980, duly notified him with the requirement that the house should be insured against fire for the sum of £26,000 at least.

20. The plaintiffs, who lived in Newry, were moving to Dundalk in 1980 and had asked Mr. Matthews, an auctioneer, to be on the look out for a house, resulting in the house at Lower Faughart. They visited the house with Mr. Matthews in the summer of 1980 and could see nothing wrong with it; Mr. Matthews told them that it was a good buy. The first plaintiff applied for the loan and paid what he described as “a surveyor’s fee” thinking that “if the surveyor passed the house then the house was okay, the County Council would not have given me the loan if the house was not alright.” When asked that maybe he should have got an engineer or surveyor on his own behalf he replied:-

21. Finally, the trial judge put to him:-

22. Costello J. held [1985] I.R. 29 at p. 52:-

23. Depending his view on s. 39 of the Act of 1966, the learned trial judge held that there was a private law duty of care in favour of the first plaintiff it being “just and reasonable” that the Court should so hold.

24. Mr. O’Flaherty S.C., on behalf of the second defendant, has rested his appeal upon three main propositions:-

25. It is convenient first to deal with the third proposition. The monetary argument does not bear critical examination. The County Council would not require to have an engineering inspection in any case in which the relevant house is newly built since procedures for grants involve inspections at the material times with regard to such things as foundations etc., whilst the house is being built. Likewise, houses of significant age would not require such inspections to deal with defects arising from subsidence; visual inspection by a relatively unqualified person would be quite adequate to disclose such defects. In any event, I see no bar to the County Council expressly excluding any representation to be inferred from the fact that it sanctions a particular loan.

26. Since preparing the draft of this judgment my attention has been drawn to the decision of the Court of Appeal in England in Harris v. Wyre Forest D.C. [1988] 1 All E.R. 691 where, in a somewhat analogous case, a local authority was relieved of liability in negligence because of such an exclusion clause.

27. Having regard to this conclusion, it is not necessary for me to express an opinion as to whether or not what so-called policy considerations are, in that context, free from review in the courts in an action of this kind. The argument traversed a wide field of authority all but four of which were cited to Costello J. Curran v. Northern Ireland Co-Ownership Housing Association Ltd. (1985) 8 N.I.L.R. Bulletin 22 was decided by Carswell J. in the Northern Ireland High Court after the High Court hearing in the instant appeal although before judgment was delivered. With the able assistance of counsel, we have travelled well charted legal seas seeking, for my part, to find a well marked haven, whether it be in Australia, Canada, Northern Ireland or England. Certainly, the judicial complements manning the several ports are not marked by unanimity. The Canadian Supreme Court divided three to two, the High Court of Australia similarly, and whilst the House of Lords in Curran [1987] A.C. 718 was unanimous it did not deal with a case like to the present one, the point in which it was dealt with in the Court of Appeal in Northern Ireland (1986) N.I.L.R. Bulletin 1 was not the subject of an appeal itself. Much judicial eloquence and invention has been spent on examining and analysing the observations of Lord Atkin in Donoghue v. Stevenson [1932] AC 562. Anns v. Merton London Borough [1978] AC 728 was described by Lord Bridge in Curran as being the high water mark of the application of Donoghue with particular reference to the words of Lord Wilberforce identifying two stages of establishing liability for breach of duty to take care. The elaborate analysis of Brennan J. in the High Court of Australia in Sutherland Shire Council v. Heyman (1985) 59 A.L.J.R. 564 led to the verbally attractive proposition of incremental growth in this branch of the law; such a proposition, however, suffers from a temporal defect – that rights should be determined by the accident of birth. Albeit that Anns v. Merton London Borough [1978] AC 728 is the high-water mark, I would not seek to dilute the words of Lord Wilberforce at pp. 751 and 752 :-

28. In the Court of Appeal in Northern Ireland (1986) 8 N.LL.R. Bulletin 1, Gibson L.J. delivering the judgment of the Court, carried out a like exercise in the review of authority, identifying s. 30 of the Building Society Act (Northern Ireland), 1967, and s. 30 of the English Building Society Act, 1962, as creating a statutory warranty by a Building Society to a member that the purchase price is reasonable in the event of it making an advance to the member to defray the purchase price. Again, the conclusion (p. 17) was that:

29. The latter quotation identifies a circumstance that did not help the resolution of the difficult legal issue in Curran that the case was tried and disposed of without evidence upon issues raised by what were clearly defective pleadings.

30. Insofar as it is used to support the appellant’s case, I find the reasoning lacking in force. Whilst Costello J. essentially rested his conclusion on the “fair and reasonable” test, I prefer to express the duty as arising from the proximity of the parties, the foreseeability of the damage, and the absence of any compelling exemption based upon public policy. I do not, in any fashion, seek to exclude the latter consideration, although I confess that such a consideration must be a very powerful one if it is to be used to deny an injured party his right to redress at the expense of the person or body that injured him.

31. Later at p. 412 he said:-

32. Again, at p. 414, he said:-

33. Henchy J., having referred to the Act of 1966, said at p.419:-

34. Later, at p. 421 he said:-

35. I turn then to the two main propositions advanced in support of the appeal:-

36. The proximity of the parties is clear: They were intended mortgagors and mortgagee. This proximity had its origin in the Housing Act, 1966, and the consequent loan scheme. This Act imposed a statutory duty upon the County Council and it was in the carrying out of that statutory duty that the alleged negligence took place. It is a simple application of the principle in Donoghue v. Stevenson [1932] AC 562 confirmed in Anns v. Merton London Borough [1978] AC 728 and implicit in Siney v. Corporation of Dublin [1980] I.R. 400 that the relationship between the first plaintiff and the County Council created a duty to take reasonable care arising from the public duty of the County Council under the statute. The statute did not create a private duty but such arose from the relationship between the parties.

37. In my view, it does not require much imagination for the officers of the Housing Authority to contemplate that a purchaser under the scheme will both lack the personal means of having an expert examination and may well think, as the first plaintiff thought, that the very circumstances of the housing authority investing its money in the house was a badge of quality.

38. These two considerations are both involved in the first leg of the Anns principle. I do not understand it to be argued that there are considerations which ought to negative or to reduce or limit the scope of duty or the class of person to whom it is owed or the damages to which a breach of it may give rise, within the second leg of the observations of Lord Wilberforce. It follows, in my view, without entering into the question of whether or not it is “just and reasonable” to impose the duty, that the duty arose from the proximity of the parties, the injury caused was reasonably foreseeable, the breach was established, and the first plaintiff was entitled to succeed.

39. The appeal on liability should be dismissed.