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Cite as: [1998] IESC 66
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Doran v. Delaney [1998] IESC 66 (9th March, 1998)
The
Supreme Court
Doran
v Delaney
9
March
1998
BARRINGTON J:
I agree with the judgment of Keane J about to be delivered.
KEANE J:
Introduction
In September, 1990, the plaintiffs agreed to buy a site near Greystones in County Wicklow, on which they hoped to build a house, from the second and third defendants (hereafter "the vendors"). They employed the first defendant (hereafter "the plaintiffs' solicitor") to act as their solicitor in the purchase: the vendors were represented by the fourth and fifth defendants (hereafter "the vendors' solicitors").
The property was sold with the benefit of a planning permission from Wicklow County Council for the erection of a dormer-style bungalow. After the sale had been closed, the builders (Ballymore Homes Limited) began work on the site. They entered he site from a private roadway which served three existing dwellings. One of the householders having objected to the builders using that roadway, the first plaintiff and the builders decided to enter the site from the main road, in the belief that the site sold to the plaintiffs had a frontage on to that road. For the purpose of gaining access the builders knocked down part of the boundary wall.
At that stage, the plaintiffs and their builders were notified by the adjoining landowner, Mrs McKimm, that the area in question was in her ownership and was not part of the site sold to the plaintiffs. It then emerged that there was a discrepancy between the boundaries of the site sold to the plaintiffs as delineated on the map lodged with the application for planning permission and the boundaries as delineated on the Land Registry map of the land comprised in the two folios which constituted the legal title of the vendors to the site. The former erroneously included a triangular area of 54 square metres as being included in the vendors' site. That triangular area included the road frontage the plaintiffs' builders were using to get access to the site. Without that frontage, they were unable to get access to the site, save along the private roadway, which was also not available because of the refusal of one of the householders to consent. Apart altogether from the problem of access, the discrepancy between the planning map and the Land Registry map clearly raised a question as to the validity of the planning permission, since it purported to extend to land which was not owned by the vendors.
The plaintiffs then initiated negotiations with Mrs McKimm with a view to acquiring the 54 square metres. Those negotiations eventually proved abortive and the plaintiffs thereupon abandoned their plan to build the dormer bungalow and sold the site to one of the adjoining householders.
Before the plaintiffs signed the contract for the purchase of the site, their builder had advised them that, since there was no physical boundary between their site and the adjoining land, it should be staked out. The plaintiffs' solicitor was asked by them to include such a condition in the contract, but he advised that it would be sufficient to stipulate that an ordnance survey map with the boundaries marked thereon be provided. The vendors' solicitors objected to that condition and the plaintiffs' solicitor agreed to omit it without, it would seem, so informing the plaintiffs.
The plaintiffs instituted these proceedings claiming damages for negligence, breach of duty and breach of contract against the plaintiffs' solicitor and for negligence, breach of warranty and misrepresentation against the remaining defendants. The action was heard by Hamilton P., as he then was, who in a reserved judgment found both the plaintiffs' solicitor and the vendors liable in damages, but dismissed the claim against the vendors' solicitors. The plaintiffs have appealed to this Court from the dismissal of their claim against the vendors' solicitors, the assessment of damages having been deferred pending the hearing of the appeal.
The factual background
The facts must now be considered in more detail.
The vendors bought the site in April, 1989, from a company called Roheryn Limited. The first vendor applied to Wicklow County Council for permission to erect a two storey dwelling on the site and a decision to grant such permission was made on the 19th July, 1989. On the 25th July, 1989, the solicitors acting for Mrs McKimm, Cunningham & Company, wrote to the first vendor as follows:-
"We are instructed by our client that you have encroached upon her above mentioned lands.
We hereby give you notice that if you do not immediately withdraw from her property that we shall have no alternative but to apply to court for an injunction restraining you from the continued trespass and apply to have your planning permission invalidated.
Please note that we shall apply to the courts to have the full costs of her application awarded against you."
They wrote again on the 29th August, 1989, to the first vendor saying that their client had, with her engineer, staked out the correct boundary lines of her property "per up to date ordnance survey sheet". The vendors' solicitors replied on the 4th September, 1989, disputing the assertion that the boundary as staked out was correct and enclosing a copy of "our client's ordnance survey map" which was described as "the correct map". Cunningham & Company replied on the 19th September, 1989, saying that it was possible that the Land Registry map was not accurate. The vendors' solicitors replied on the 26th September, 1989, as follows:-
"From our instructions it is quite clear that the actual boundaries on the site itself support our client and his belief that the Land Registry map is correct."
Cunningham & Company replied on the 21st November, 1989, as follows:-
"We refer to our letter of 26th September last. Our client's architect has checked the map furnished by your client and compared same with the planning documents as lodged by your client in Wicklow County Council. There is no doubt in his view that there are discrepancies as between these maps and as between the planning map and the site on the ground.
It would appear to our client's architect that your client has obtained planning permission on the basis of incorrect information.
If your client does not take immediate steps to retreat from our client's land then she will have no alternative but to apply to Wicklow County Council to have your client's planning permission quashed. Please be in no doubt that our client will be seeking the costs of this action and any legal action required from your client."
Having informed their clients of this development, the vendors' solicitors retained, on their instructions, a firm of civil engineers and architects, David L. Semple & Associates, to check the boundaries of the site on their behalf. Mr Semple of that firm duly carried out the inspection and reported as follows to the vendors' solicitors by letter on the 1st February, 1990:-
"I met with (the first vendor) on site and we looked at the various maps. The only interesting point is that part of its northern boundary which is the top of the triangle where map ref. 151 is marked in and where it borders the property with the house on it (ruin). I gave him measurements so that he could set out a point on the ground corresponding with where the former boundary fence met the roadside fence and I was to have a look at it. I haven't heard from him as yet.
I think when this is done we should put in a series of pegs and then invite the people on both sides who are getting agitated including the old ladies in Chrysanthemum Cottage (Gunning - Bill Jolley of Bowler Geraghty acts for them) to inspect the boundary and if everybody is in agreement then your client can start to build."
Mr Semple went on to make some comments on the difficulties the vendors might encounter in building their house, since the ground had been built up and the foundations might turn out to be expensive. The vendors' solicitors reported to the vendors as follows on 8th February, 1990:-
"I confirm that we have now received correspondence from David Semple who informs me that he is giving new measurements so that you set out a point on the ground corresponding to where the former boundary fence met the roadside fence.
He informs me that you are to contact him once that has been done and he can carry out a further inspection of the boundary.
He indicated that he proposes to put a series of pegs marking out the new boundary so that this can be discussed with the owners of Chrysanthemum Cottage so that when agreement has been reached you can start to build. From a different point he asked me to draw your attention to the difficulties that may arise with your foundations when building the premises in that he states it is imperative that you dig down to virgin ground when excavating the said foundations.
Perhaps you might advise me when you have contacted David Semple and agreed the boundaries so that we can take the matter further."
The correspondence dealing with the dispute between the vendors and Mrs McKimm as to the boundaries of their respective sites came to an end at that point. The fourth defendant, the partner in the vendors' solicitors who had been dealing with the matter up to that stage, said in evidence that in December, 1989, he had rung Cunningham & Company about the matter but did not succeed in making contact with the member of the firm who was dealing with the dispute and left a message that he had rung. He also gave evidence that he spoke to the first vendor in March, 1990 and was told by him that "the dispute had all been sorted out".
In January, 1990, the first plaintiff discovered that the site was for sale and was given by the estate agents a copy of the map which had been lodged with the first planning application. (On the 20th August, 1990, the first vendor was granted a further permission in respect of the same site but this time for a dormer bungalow.) Having entered into an agreement with the builders as to the costs of the works involved, the first plaintiff agreed with the estate agents that he would purchase the site for L25,000, subject to the granting of planning permission based on the second application by the first vendor. The latter called to the first plaintiff's house in August, 1990, and they discussed the projected sale. The first plaintiff said that, at that meeting, he asked the first vendor about the staking out of the site and was told by him that there was already a stake on the adjoining neighbour's boundary. He also produced the second planning map (which was identical as to boundaries with the first) and pointing to it said "what you see is what you get".
The plaintiffs' solicitor was then instructed by them to act on their behalf in connection with the purchase of the site. The contract was signed on the 14th September, 1990 and provided for the sale to the plaintiffs of:-
"ALL THAT AND THOSE the lands presently comprised in folios 10461 and folio 9267F of the register County Wicklow. Held in fee simple."
The Special Conditions provided at para. (7) that:-
"The contract herein includes the benefit of planning permission reg. ref. No 90/005807 dated the 20th day of August 1990 from Wicklow County Council."
As already noted the draft contract also included at para. 10, a condition, which the vendors' solicitors required to be deleted, in the following terms:-
"Vendor shall furnish Ordinance Survey map showing the site being sold and all boundaries clearly marked thereon."
The boundary dispute between the vendors and Mrs McKimm had been handled by the fourth defendant, who normally dealt with litigation matters in the practice: the conveyancing side was usually the concern of the fifth defendant. She, in any event, had been on maternity leave from the end of November, 1989 and said in evidence that, when she dealt with the sale to the plaintiffs on her return to the office, she was unaware of any difficulty in relation to the boundaries. She also said that there was no map attached to the planning permission and that the only maps she saw were the folio maps.
Requisitions were raised by the plaintiffs' solicitor in the normal way and included the following standard requisition (No 13.8):-
"Is there any litigation pending or threatened in relation to the property or any part of it or has any adverse claim thereto been made by any person "
The first vendor at the request of the fifth defendant came into her office and went through the Requisitions with her. The latter was aware at this stage, from reading the file, that there had been a boundary dispute, and said in evidence:-
"I asked (the first vendor) about it and he confirmed it had been settled and sorted out and that there were no queries. I had no reason to doubt him."
She also said she spoke to the fourth defendant about it. Both she and the fourth defendant agreed in cross examination that they had never ascertained from the vendors on what terms the dispute had allegedly been resolved.
The reply to requisition 13.8 given by the fifth defendant was:-
"Vendor says none."
The sale was closed on the 15th October, 1990 and the builders then moved on to the site. Following the objections from the householder as to the use of the private roadway, the builders effected an entry from the roadway by knocking down part of the boundary wall. At that stage, for the first time, the plaintiffs became aware of the claim by Mrs McKimm that the triangular area of 54 square metres was owned by her. On the 18th October, 1990, Cunningham & Company wrote to the builders as follows:-
"As indicated to you, your agents or servants have trespassed on to our client's property at Blacklion causing considerable damage thereto. We call upon you to immediately withdraw from our client's land and refrain from making further incursions to our client's lands. If you continue, you do so at your peril.
Please note that our client will be holding you totally liable for all damage to her property including damage to the pillars at her entrance and the boundary wall."
Negotiations between the plaintiffs and Mrs McKimm having failed to resolve the problem, the plaintiffs decided not to proceed with the building of the house and sold the site to the householder who had raised the objection to the use of the private roadway for L20,000.
The plaintiffs thereupon instituted the present proceedings in which they claimed to recover the losses they had sustained in connection with the transaction from the various defendants. As against the vendors' solicitors, it was alleged that they had been negligent and in breach of duty, inter alia, in:-
(a) representing and warranting to the plaintiffs that there was no boundary dispute between the vendors and Mrs McKimm;
(b) representing and warranting to the plaintiffs that the site contained the 54 square metres;
(c) representing and warranting to the plaintiffs that the plaintiffs had access to the site from the public highway;
(d) failing to inform the plaintiffs as to the correct size and extent of the site and inducing the plaintiffs to believe that the extent and area of the site was in accordance with the planning map furnished and on which the plaintiffs had relied.
In addition to evidence by the first plaintiff, the plaintiffs' solicitor and the vendors' solicitors, there was also evidence at the trial from other solicitors as to the professional duties of the solicitors in relation to transactions such as this. Neither of the vendors gave evidence, although they were represented by solicitors and counsel.
In his judgment the learned trial judge found that:-
"By virtue of being deprived of the said area of land [the 54 square metres] the remainder of the site was landlocked and the plaintiffs were prevented from having access to lands purchased by them for the purpose of erecting their home thereon."
He also found as a fact that, at the time requisition 13.8 was answered:-
"The vendors and the vendors' solicitors were fully aware that there had been a dispute with Mrs McKimm in regard to the ownership of the disputed 54 square metres of land adjoining the public road, that she had claimed to be the owner of the said lands and had threatened litigation in respect thereof.
It is reasonable to infer from the circumstances, in the absence of any evidence from the vendors . . . that the reason why they did not proceed with the erection of the building on the site in accordance with the planning permission which they had obtained from Wicklow County Council was because of the difficulties they had encountered because of the claim by Mrs McKimm to ownership of the disputed area of land and their failure to secure access to the site over the said area. Having regard to the attitude of Mrs McKimm as disclosed in the correspondence, it should have been anticipated by the vendors that the plaintiffs would encounter similar difficulties.
In spite of this it was represented to the plaintiffs that the area of land which they were purchasing was the area shown on the map which was submitted to Wicklow County Council with the application for planning permission.
The vendors failed to inform the plaintiffs or the plaintiffs' solicitor of the dispute with Mrs McKimm and of her claim to ownership of the portion of the land which adjoined the public carriageway (which claim incidentally, has not been challenged by any party to these proceedings) and which was shown on the said map as in the ownership of the vendors."
In these circumstances, the learned trial judge found that the vendors had made untrue representations to the plaintiffs on which they had relied to their detriment and accordingly held that they were entitled to recover damages for misrepresentation and breach of contract from the vendors.
The learned trial judge further found that, having regard to the importance of gaining access to the site for the purpose of erecting the dwelling house, the plaintiffs' solicitor was negligent in not having the boundaries staked out, as suggested by the plaintiffs, or by insisting on the provision of an ordnance survey sheet showing the vendors' property and enabling a comparison to be made with the planning map.
As to the possible liability of the vendors' solicitors, the learned trial judge said:-
"No evidence was adduced by the plaintiffs which established that [the vendors' solicitors] were aware of the existence of this map [the planning permission map] or that it had been given to the plaintiffs or that they had made representations to the plaintiffs or their solicitor in regard thereto.
In fact the fourth defendant gave evidence, which I accept that he only became aware of the map when it was discovered in the course of these proceedings."
Having cited a statement of the law by Jauncey LJ in Midland Bank v Cameron, Thom Peterkin and Duncans [1988] S.L.T. 611, as to the duties of solicitors to third parties the learned trial judge found as follows:-
"Before the fifth defendant replied to the requisitions, she sought her clients' instructions thereon and was informed by the first vendor that the dispute with Mrs McKimm had been settled. Both the fourth and fifth defendants stated that they had no reason to doubt the first vendor's instruction in this regard.
As stated in Jackson & Powell on Professional Negligence (1992 ed.) para. 4 -72:-
'It is, therefore, a good defence for an action for negligence that the solicitor was acting on express instructions from the client.'
It is clear from the nature of the replies to the requisitions that the fourth and fifth defendants were transmitting their clients' instructions and were not assuming responsibility for or the role of principal in relation to that information so far as the plaintiffs or their solicitor was concerned.
Consequently, the plaintiffs' claim against these defendants based on the replies to requisition must fail and is dismissed."
The learned trial judge also found that, in refusing to agree to the condition as to an ordnance survey map in the contract, the vendors' solicitors were not in breach of any duty of care which they owed to the plaintiffs.
Submissions on behalf of the parties
On behalf of the plaintiffs, counsel submitted that it was well settled as a result of the decision in Hedley Byrne & Co Ltd. v Heller & Partners Limited [1964] AC 465, that a person suffering economic loss as a result of a negligent misstatement had a cause of action against the maker of the statement. Accordingly, the solicitors acting for the vendors in a case such as the present could be liable to the purchaser where it could be shown that they owed a duty to take reasonable care in relation to the making of particular statements. He cited in support passages from the judgment of Jauncey LJ. in Midland Bank v Cameron, Thom Peterkin and Duncans [1988] S.L.T. 611 referred to in the judgment under appeal, Wall v Hegarty [1980] ILRM 124, Allied Finance and Investments Ltd. v Haddow [1983] N.Z.L.R. 22 and McCullagh v Lane Fox & Partners Ltd. [1994] 8 E.G. 118.
Counsel for the plaintiffs said that, in the circumstances of the present case, the vendors' solicitors knew, or ought to have known, that their reply to requisition 13.8 would be relied on by the plaintiffs and their solicitor, since they knew that the plaintiffs and their solicitor were wholly unaware of the boundary dispute between the vendors and Mrs McKimm. He submitted that the manner in which the requisition had been answered was in breach of that duty of care in two respects: first, because the vendors' solicitors had failed to ascertain, as they should have done the terms on which the dispute had been resolved and, secondly, because they went further than any instruction they had been given in saying that the vendors had instructed them that no adverse claim to the property being sold was being made by any person.
Counsel for the plaintiffs further submitted that, while this Court was bound by any findings of fact made by the learned trial judge which were supported by credible evidence, the Court was not bound by any findings which were not supported by such evidence. He said that, contrary to what had been found by the trial judge, the evidence established that the fourth and fifth defendants were aware of the existence of the planning map, although neither of them had actually seen it until the present proceedings were instituted.
Counsel on behalf of the vendors' solicitors submitted that the findings of the learned trial judge were supported by credible evidence and should not be set aside by this Court. He said that it was clear from the decision in Midland Bank v Cameron, Thom Peterkin and Duncans [1988] S.L.T. 611, that a solicitor could not become liable to a third party simply by reason of transmitting to that third party in good faith information which had been furnished to him by his own client. In the present case, the fifth defendant had been careful to word the reply to the requisition in such a way as to make it clear that she was doing no more than conveying her clients' instructions. He submitted that it would be extending the duties of solicitors to third parties further than was warranted by principle or authority to impose on them an obligation, in a case such as the present, to question the veracity of the instructions they had received from their own clients.
Counsel for the vendors' solicitors further submitted that, contrary to what was urged on behalf of the plaintiffs, the reply did accurately reflect the fifth defendant's instructions. The first part of requisition 13.8 clearly related to litigation which is pending or threatened at the time the requisition is raised: on the fifth defendant's instructions there was none. As to the second part of that requisition it was submitted that, since claims in the past were clearly embraced by the first part of the requisition, the second part could only relate to a claim being pursued at the time the requisition was raised. Again, on the fifth defendant's instructions, no such claim was being pursued.
The applicable law
In the course of his speech in Hedley Byrne & Co Ltd. v Heller & Partners Ltd. [1964] AC 465, the case which, as applied in a number of decisions in this jurisdiction, is authority for the proposition that liability for negligent mis-statements can arise in our law, even in the absence of a contractual relationship, Devlin LJ. said, at pp. 528 and 529:-
"I think, therefore, that there is ample authority to justify your Lordships in saying now that the categories of special relationship, which may give rise to a duty to take care in word as well as in deed are not limited to contractual relationships or to relationships of fiduciary duty, but include also relationships which in the words of Lord Shaw in Nocton v Lord Ashburton [1914] AC 932 at p. 972 are 'equivalent to contract' that is, where there is an assumption of responsibility in circumstances in which, but for the absence of consideration, there would be a contract. Where there is an express undertaking, an express warranty as distinct from mere representation, there can be little difficulty. The difficulty arises in discerning those cases in which the undertaking is to be implied. In this respect the absence of consideration is not relevant. Paying for information or advice is very good evidence that it is being relied on and that the informer or adviser knows that it is. Where there is no consideration, it will be necessary to exercise greater care in distinguishing social and professional relationships and between those which are of a contractual character and those which are not. It may often be material to consider whether the adviser is acting purely out of good nature or whether he is getting his reward in some indirect form."
The latter part of that passage is of assistance in determining the nature of the duty of care, if any, which a vendor's solicitor owes to the purchaser in circumstances such as arose in the present case. While there was no contractual relationship between the vendors' solicitors and the plaintiffs, that would not of itself negate the existence of a duty of care. Moreover, in determining whether such a duty of care arose in the particular circumstances, it is a material factor that statements such as replies to requisitions are made by a solicitor acting as such and not in some casual social context. Again, while the primary duty of the solicitor acting for the vendor in circumstances such as arose here, is, under common law and by virtue of contract, to protect his own client, that obligation is perfectly consistent with the existence of a duty of care in certain circumstances to the purchaser.
It is also clear that the transmission by a solicitor to a third party of information which turns out to be inaccurate and upon which the third party relied to his detriment does not, of itself, afford a cause of action in negligence to the injured third party. The factors necessary to give rise to liability were set out by Jauncey LJ. in the passage so frequently referred to in the present case in Midland Bank v Cameron, Thom Peterkin and Duncans [1988] S.L.T. 611 as follows at p. 616:-
"In my opinion four factors are relevant to a determination of the question whether in a particular case a solicitor, while acting for a client, also owed a duty of care to a third party:-
(1) the solicitor must assume responsibility for the advice or information furnished to the third party.
(2) the solicitor must let it be known to the third party expressly or impliedly that he claims, by reason of his calling, to have the requisite skill or knowledge to give the advice or furnish the information;
(3) the third party must have relied upon that advice or information as a matter for which the solicitor has assumed personal responsibility; and
(4) the solicitor must have been aware that the third party was likely so to rely."
It is clear that, at least in cases where those four factors are present, a solicitor may be held liable in negligence to a third party under the more general principle laid down in Hedley Byrne & Co Ltd. v Heller & Partners Ltd. [1964] AC 465. An example of a case in which they were clearly met is the New Zealand decision of Allied Finance and Investments Ltd. v Haddow [1983] N.Z.L.R. 22, to which we were also referred.
In that case, the plaintiff, a money lending company, lent a person money on the security of a yacht which the plaintiff understood that he was buying. Before the loan was made, the plaintiff's solicitors forwarded to the borrower's solicitors an instrument by way of security and asked them for a certain certificate. The borrower's solicitors returned the instrument signed by him and certified, inter alia, "that the instrument by way of security is fully binding on RKH". In fact, and to the knowledge of RKH's solicitors, the yacht was being purchased by a company of which he was a director and controlling shareholder. When the yacht was seized by the unpaid seller and H. became bankrupt, the plaintiff sued his solicitors for the balance of the loan. The New Zealand Court of Appeal held that the solicitors were liable, Cooke J saying:-
"The relationship between two solicitors acting for their respective clients does not normally of itself impose a duty of care on one solicitor to the client of the other. Normally the relationship is not sufficiently proximate. Each solicitor is entitled to expect that the other party will look to his own solicitor for advice and protection . . .
But surely the result of the established principle is different when on request a solicitor gives a certificate on which the other party must naturally be expected to act. That is a classic duty of care situation, now that it is accepted that the likelihood of economic loss only does not automatically rule out a duty. The proximity is almost as close as it could be short of contract . . ."
The fact that the vendors in this case have been found to be liable to the plaintiffs for misrepresenation made directly by themselves to the plaintiffs or (as the learned trial judge found) in the form of statements transmitted in good faith by their solicitors is not a relevant consideration in determining whether the solicitors themselves were in breach of a duty of care which they owed to the plaintiffs. A different view was taken in England in Gran Gelato Ltd. v Richcliff (Group) Ltd. [1992] Ch. 560, but was not accepted in a subsequent English decision of McCullagh v Lane Fox & Partners Ltd.[1994] 8 E.G. 118. I would adopt the view taken by Coleman J in the latter case that, in general, the fact that there will be a duplication of remedy should not negate the existence of liability.
Finally, it should always be borne in mind, in considering whether a particular statement amounts to a negligent mis-statement, that the omission of significantly relevant facts may be sufficient to convert a literally accurate statement into a mis-statement.
Conclusions
There are many occasions when, in furnishing replies to objections or requisitions in a contract for the sale of land, the solicitor for the vendor cannot be said to assume any responsibility for information being transmitted to the purchaser's solicitor. Typically in the course of such a contract the solicitor or counsel for the purchaser may raise an objection or requisition to the effect that, for example, a particular estate has not been got in or appropriate words of limitation have not been used in a deed forming part of the proffered title. The vendor's solicitor or counsel, in reply, may refer to some other document furnished or some legal principle as meeting the difficulty. In such cases, it cannot be said that the vendor's solicitor or counsel, in drafting the reply, is assuming responsibility for information being furnished in the sense in which that expression is used in Midland Bank v Cameron, Thom Peterkin and Duncan [1988] S.L.T. 611. The solicitors and counsel on either side are dealing with the same set of documents and doing no more than expressing their professional opinion on matters of title.
Similarly, there are many circumstances in which the vendor's solicitor in drafting a reply could be described as transmitting information but could not reasonably be regarded as assuming any particular responsibility for that information. Thus, in the present case, the standard requisition 11 asked whether any notice, certificate or order had been served on the vendor under a long series of listed statutes or "under any other Act. . ." The answer was a terse "no". The purchasers' solicitor from his own experience would be well aware that the most that could be inferred from such a reply was that the vendors' solicitor's clients had so instructed her. It would be wholly unreal to suppose that the vendors' solicitor was accepting any responsibility for the accuracy of the information being furnished.
But that is not to say that there are no circumstances in which the vendors' solicitor will not assume at least some degree of responsibility for the information being furnished to the purchaser's solicitors. Specifically, in a case such as the present, where the vendor's solicitor is asked whether there is any litigation pending or whether any adverse claim has been made to the property and is aware of his or her own knowledge of threats of litigation and adverse claims having been made, he or she assumes at least some responsibility for the information given in reply and cannot be exonerated from responsibility solely on the ground that he or she is simply transmitting the vendor's instructions. Whether he or she can be regarded as so relieved from responsibility must depend upon the circumstances of the particular case and whether it was reasonable, in those circumstances, for the vendor's solicitor simply to transmit what he or she was told without further enquiry.
It is also clear that, in such a situation, the vendor's solicitor in assessing the instructions he or she is given, determining whether further enquiries should be made and deciding on the information to which the vendor's solicitors are entitled is acting in a professional capacity and must be assumed to be applying the skill and knowledge to be expected of a solicitor in such circumstances.
I would, accordingly, take the view, differing with respect from the learned trial judge, that the first two requirements indicated in Midland Bank v Cameron, Thom Peterkin & Duncans [1988] S.L.T. 611, before a duty of care can arise as between a solicitor and a third party are met in this case.
As to the third and fourth requirements, that the plaintiffs were relying upon the reply and that the vendors' solicitors must have been aware that they were likely so to rely, the context in which the reply was given is crucial. The contract for sale had expressly provided that the site was being sold with the benefit of a specified planning permission. Not merely were the vendors' solicitors aware of this: they were also aware that there was no physical boundary between the site and Mrs McKimm's land and that she had threatened to institute proceedings if the vendors continued to gain access to the land from the main road, on the ground that they would be trespassing on the triangular area. They were also aware that she had claimed through her solicitors that the map on which the planning permission was based erroneously included the triangular area and that, accordingly, the planning permission was invalid. They were also aware of the first plaintiff's concerns as to the boundary in question, since he had unsuccessfully sought to have the boundary staked out or an ordnance survey map incorporated in the contract. In these circumstances, they must have known that, whether or not their reply accurately reflected the vendors' instructions to them, it would unquestionably be relied on by the plaintiffs. In the event, of course, it was relied on, since the plaintiffs closed the sale wholly unaware of the fact that the vendors had been embroiled in a dispute concerning this very boundary which, as the learned trial judge found, had led to their selling on the property to the plaintiffs and the reply to the requisition, however else it may be viewed, certainly gave not the slightest hint of any trouble as to the boundary to the plaintiffs.
I conclude, accordingly, that the vendors' solicitors owed a duty of care to the plaintiffs when they replied to requisition 13.8. It remains to be considered whether they were in breach of that duty. In the circumstances of this case, I am satisfied that they were. There are many instances in which a solicitor acting in a transaction such as this would be perfectly entitled to convey without comment the information furnished to him by his client, but this was not one of them. It is not a question of the vendors' solicitors having to query the veracity of the instructions being furnished to them by their own client: even if those instructions were perfectly correct, it could have meant that the dispute had been settled on terms that the vendors acknowledged the title of Mrs McKimm to the triangular area. In failing to ascertain the terms on which the dispute had been settled and conveying that information to the plaintiffs, they were in breach of their duty of care to them. On one view, that urged on behalf of the plaintiffs, they had, in any event, not accurately transmitted the vendors' instructions, since those merely indicated that the dispute had been settled: they did not indicate, as the reply to the requisition on one reading did, that no claim to the triangular portion was at the date of the reply being made by Mrs McKimm. At the very least, however, the reply, because of the manner in which it was framed did not convey all the information to which the plaintifffs were entitled and, as I have already said, a partial statement in such circumstances may be equivalent to a mis-statement or misrepresentation. It is right to say that no one in this case has suggested that the vendors' solicitors deliberately intended to mislead the plaintiffs or their solicitor: unfortunately, however, they had, in all the circumstances insufficient regard to the duty which they clearly owed to the plaintiffs. Had they got in touch with Cunningham & Co, it would have transpired that Mrs McKimm had not abandoned her claim to the 54 square metres and that her claim was well founded in law. The plaintiffs would then clearly have been in a position to rescind the contract and recover their deposit because of the vendors' misrepresentations.
I would allow the appeal and vary the order of the learned trial judge by finding the fourth and fifth defendants liable in damages for negligence to the plaintiffs. The action should then be remitted to the High Court for the assessment of damages.
BARRON J:
I agree with the judgment which has just been delivered by Keane J
In my view a solicitor's responsibility, if any, for replies to requisitions should not depend upon the wording used. Answers such as "vendor says no", "no", or "not to vendor's knowledge", all mean the same thing: "it is believed that there is no information of relevance".
The solicitor is not a conduit pipe. Once he is acting professionally he warrants that so far as his own acts are concerned he has taken the care and applied the skill and knowledge expected of a member of his profession. He cannot therefore accept his client's instructions without question when it is reasonable to query them. That is the difference between innocent and negligent mis-statement. It is not enough that the solicitor was acting bona fide. For that reason, the submission made by the defendants' counsel sought to apply the wrong test. Of course, as against his own client, if the solicitor acted on the client's express instructions, this is generally a good defence to a claim by his own client.
The question which is involved here is the normal rule. If reliance is going to be placed upon what you say, then you have a duty of care towards the person who will rely upon that to ensure that he will not be injured as a result of any lack of the required care on your part. The standard of care depends upon the person making the statement. In the case of a professional person the standard is that laid down in the relevant authorities.
In the circumstances of the present case, I regard the words of Cooke J in Allied Finance and Investments Ltd. v Haddow [1983] N.Z.L.R. 22, as particularly appropriate:-
"But surely the result of the established principle is different when on request a solicitor gives a certificate on which the other party must naturally be expected to act."
The question in the instant case is, is this a case of information being supplied by the vendor's solicitor on which the purchaser's solicitor must naturally be expected to act Will the latter rely upon the truth of the answer to the requisition because it has been made but also because it is warranted by the solicitor that acting professionally he believes it to be true. The answer to that question must be, yes.
The learned trial judge has applied the first of the four requirements of Jauncey LJ. in Midland Bank v Cameron, Thom Peterkin and Duncans [1988] S.L.T. 611, as requiring the solicitor to assume responsibility for the answers "and thus the role of principal in relation thereto", as involving the intention of the solicitor. I prefer the view of Keane J that, if in law he can be made liable for giving misleading information, he is assuming responsibility for the answers.
In any event, it is important in relation to the facts of that case that the plaintiffs conceded that, if the solicitors were a mere mouthpiece for their client and known to be such by the plaintiffs, no liability could attach to them in respect of information which they provided on behalf of their client. That is not the case here. Jauncey LJ. himself suggested that the answer to the following question required to be asked: is he however careless if, without checking, he merely passes on information, of whose accuracy he has no reason to doubt Even though he answered the question in the negative, I am sure that, if he had changed the word "no" in that question to "any" not alone to "good" he would have answered it in the affirmative.
In the present case the solicitors ought to have known that the answer in the form in which it was given was not necessarily either the truth or the whole truth. They were under a duty to inquire further. Not having done so and the answer proving to be misleading, they cannot avoid liability to the plaintiffs.
I would allow the appeal.
BARRINGTON J:
I agree with the judgment of Keane J about to be delivered.
KEANE J:
Introduction
In September, 1990, the plaintiffs agreed to buy a site near Greystones in County Wicklow, on which they hoped to build a house, from the second and third defendants (hereafter "the vendors"). They employed the first defendant (hereafter "the plaintiffs' solicitor") to act as their solicitor in the purchase: the vendors were represented by the fourth and fifth defendants (hereafter "the vendors' solicitors").
The property was sold with the benefit of a planning permission from Wicklow County Council for the erection of a dormer-style bungalow. After the sale had been closed, the builders (Ballymore Homes Limited) began work on the site. They entered he site from a private roadway which served three existing dwellings. One of the householders having objected to the builders using that roadway, the first plaintiff and the builders decided to enter the site from the main road, in the belief that the site sold to the plaintiffs had a frontage on to that road. For the purpose of gaining access the builders knocked down part of the boundary wall.
At that stage, the plaintiffs and their builders were notified by the adjoining landowner, Mrs McKimm, that the area in question was in her ownership and was not part of the site sold to the plaintiffs. It then emerged that there was a discrepancy between the boundaries of the site sold to the plaintiffs as delineated on the map lodged with the application for planning permission and the boundaries as delineated on the Land Registry map of the land comprised in the two folios which constituted the legal title of the vendors to the site. The former erroneously included a triangular area of 54 square metres as being included in the vendors' site. That triangular area included the road frontage the plaintiffs' builders were using to get access to the site. Without that frontage, they were unable to get access to the site, save along the private roadway, which was also not available because of the refusal of one of the householders to consent. Apart altogether from the problem of access, the discrepancy between the planning map and the Land Registry map clearly raised a question as to the validity of the planning permission, since it purported to extend to land which was not owned by the vendors.
The plaintiffs then initiated negotiations with Mrs McKimm with a view to acquiring the 54 square metres. Those negotiations eventually proved abortive and the plaintiffs thereupon abandoned their plan to build the dormer bungalow and sold the site to one of the adjoining householders.
Before the plaintiffs signed the contract for the purchase of the site, their builder had advised them that, since there was no physical boundary between their site and the adjoining land, it should be staked out. The plaintiffs' solicitor was asked by them to include such a condition in the contract, but he advised that it would be sufficient to stipulate that an ordnance survey map with the boundaries marked thereon be provided. The vendors' solicitors objected to that condition and the plaintiffs' solicitor agreed to omit it without, it would seem, so informing the plaintiffs.
The plaintiffs instituted these proceedings claiming damages for negligence, breach of duty and breach of contract against the plaintiffs' solicitor and for negligence, breach of warranty and misrepresentation against the remaining defendants. The action was heard by Hamilton P., as he then was, who in a reserved judgment found both the plaintiffs' solicitor and the vendors liable in damages, but dismissed the claim against the vendors' solicitors. The plaintiffs have appealed to this Court from the dismissal of their claim against the vendors' solicitors, the assessment of damages having been deferred pending the hearing of the appeal.
The factual background
The facts must now be considered in more detail.
The vendors bought the site in April, 1989, from a company called Roheryn Limited. The first vendor applied to Wicklow County Council for permission to erect a two storey dwelling on the site and a decision to grant such permission was made on the 19th July, 1989. On the 25th July, 1989, the solicitors acting for Mrs McKimm, Cunningham & Company, wrote to the first vendor as follows:-
"We are instructed by our client that you have encroached upon her above mentioned lands.
We hereby give you notice that if you do not immediately withdraw from her property that we shall have no alternative but to apply to court for an injunction restraining you from the continued trespass and apply to have your planning permission invalidated.
Please note that we shall apply to the courts to have the full costs of her application awarded against you."
They wrote again on the 29th August, 1989, to the first vendor saying that their client had, with her engineer, staked out the correct boundary lines of her property "per up to date ordnance survey sheet". The vendors' solicitors replied on the 4th September, 1989, disputing the assertion that the boundary as staked out was correct and enclosing a copy of "our client's ordnance survey map" which was described as "the correct map". Cunningham & Company replied on the 19th September, 1989, saying that it was possible that the Land Registry map was not accurate. The vendors' solicitors replied on the 26th September, 1989, as follows:-
"From our instructions it is quite clear that the actual boundaries on the site itself support our client and his belief that the Land Registry map is correct."
Cunningham & Company replied on the 21st November, 1989, as follows:-
"We refer to our letter of 26th September last. Our client's architect has checked the map furnished by your client and compared same with the planning documents as lodged by your client in Wicklow County Council. There is no doubt in his view that there are discrepancies as between these maps and as between the planning map and the site on the ground.
It would appear to our client's architect that your client has obtained planning permission on the basis of incorrect information.
If your client does not take immediate steps to retreat from our client's land then she will have no alternative but to apply to Wicklow County Council to have your client's planning permission quashed. Please be in no doubt that our client will be seeking the costs of this action and any legal action required from your client."
Having informed their clients of this development, the vendors' solicitors retained, on their instructions, a firm of civil engineers and architects, David L. Semple & Associates, to check the boundaries of the site on their behalf. Mr Semple of that firm duly carried out the inspection and reported as follows to the vendors' solicitors by letter on the 1st February, 1990:-
"I met with (the first vendor) on site and we looked at the various maps. The only interesting point is that part of its northern boundary which is the top of the triangle where map ref. 151 is marked in and where it borders the property with the house on it (ruin). I gave him measurements so that he could set out a point on the ground corresponding with where the former boundary fence met the roadside fence and I was to have a look at it. I haven't heard from him as yet.
I think when this is done we should put in a series of pegs and then invite the people on both sides who are getting agitated including the old ladies in Chrysanthemum Cottage (Gunning - Bill Jolley of Bowler Geraghty acts for them) to inspect the boundary and if everybody is in agreement then your client can start to build."
Mr Semple went on to make some comments on the difficulties the vendors might encounter in building their house, since the ground had been built up and the foundations might turn out to be expensive. The vendors' solicitors reported to the vendors as follows on 8th February, 1990:-
"I confirm that we have now received correspondence from David Semple who informs me that he is giving new measurements so that you set out a point on the ground corresponding to where the former boundary fence met the roadside fence.
He informs me that you are to contact him once that has been done and he can carry out a further inspection of the boundary.
He indicated that he proposes to put a series of pegs marking out the new boundary so that this can be discussed with the owners of Chrysanthemum Cottage so that when agreement has been reached you can start to build. From a different point he asked me to draw your attention to the difficulties that may arise with your foundations when building the premises in that he states it is imperative that you dig down to virgin ground when excavating the said foundations.
Perhaps you might advise me when you have contacted David Semple and agreed the boundaries so that we can take the matter further."
The correspondence dealing with the dispute between the vendors and Mrs McKimm as to the boundaries of their respective sites came to an end at that point. The fourth defendant, the partner in the vendors' solicitors who had been dealing with the matter up to that stage, said in evidence that in December, 1989, he had rung Cunningham & Company about the matter but did not succeed in making contact with the member of the firm who was dealing with the dispute and left a message that he had rung. He also gave evidence that he spoke to the first vendor in March, 1990 and was told by him that "the dispute had all been sorted out".
In January, 1990, the first plaintiff discovered that the site was for sale and was given by the estate agents a copy of the map which had been lodged with the first planning application. (On the 20th August, 1990, the first vendor was granted a further permission in respect of the same site but this time for a dormer bungalow.) Having entered into an agreement with the builders as to the costs of the works involved, the first plaintiff agreed with the estate agents that he would purchase the site for L25,000, subject to the granting of planning permission based on the second application by the first vendor. The latter called to the first plaintiff's house in August, 1990, and they discussed the projected sale. The first plaintiff said that, at that meeting, he asked the first vendor about the staking out of the site and was told by him that there was already a stake on the adjoining neighbour's boundary. He also produced the second planning map (which was identical as to boundaries with the first) and pointing to it said "what you see is what you get".
The plaintiffs' solicitor was then instructed by them to act on their behalf in connection with the purchase of the site. The contract was signed on the 14th September, 1990 and provided for the sale to the plaintiffs of:-
"ALL THAT AND THOSE the lands presently comprised in folios 10461 and folio 9267F of the register County Wicklow. Held in fee simple."
The Special Conditions provided at para. (7) that:-
"The contract herein includes the benefit of planning permission reg. ref. No 90/005807 dated the 20th day of August 1990 from Wicklow County Council."
As already noted the draft contract also included at para. 10, a condition, which the vendors' solicitors required to be deleted, in the following terms:-
"Vendor shall furnish Ordinance Survey map showing the site being sold and all boundaries clearly marked thereon."
The boundary dispute between the vendors and Mrs McKimm had been handled by the fourth defendant, who normally dealt with litigation matters in the practice: the conveyancing side was usually the concern of the fifth defendant. She, in any event, had been on maternity leave from the end of November, 1989 and said in evidence that, when she dealt with the sale to the plaintiffs on her return to the office, she was unaware of any difficulty in relation to the boundaries. She also said that there was no map attached to the planning permission and that the only maps she saw were the folio maps.
Requisitions were raised by the plaintiffs' solicitor in the normal way and included the following standard requisition (No 13.8):-
"Is there any litigation pending or threatened in relation to the property or any part of it or has any adverse claim thereto been made by any person "
The first vendor at the request of the fifth defendant came into her office and went through the Requisitions with her. The latter was aware at this stage, from reading the file, that there had been a boundary dispute, and said in evidence:-
"I asked (the first vendor) about it and he confirmed it had been settled and sorted out and that there were no queries. I had no reason to doubt him."
She also said she spoke to the fourth defendant about it. Both she and the fourth defendant agreed in cross examination that they had never ascertained from the vendors on what terms the dispute had allegedly been resolved.
The reply to requisition 13.8 given by the fifth defendant was:-
"Vendor says none."
The sale was closed on the 15th October, 1990 and the builders then moved on to the site. Following the objections from the householder as to the use of the private roadway, the builders effected an entry from the roadway by knocking down part of the boundary wall. At that stage, for the first time, the plaintiffs became aware of the claim by Mrs McKimm that the triangular area of 54 square metres was owned by her. On the 18th October, 1990, Cunningham & Company wrote to the builders as follows:-
"As indicated to you, your agents or servants have trespassed on to our client's property at Blacklion causing considerable damage thereto. We call upon you to immediately withdraw from our client's land and refrain from making further incursions to our client's lands. If you continue, you do so at your peril.
Please note that our client will be holding you totally liable for all damage to her property including damage to the pillars at her entrance and the boundary wall."
Negotiations between the plaintiffs and Mrs McKimm having failed to resolve the problem, the plaintiffs decided not to proceed with the building of the house and sold the site to the householder who had raised the objection to the use of the private roadway for L20,000.
The plaintiffs thereupon instituted the present proceedings in which they claimed to recover the losses they had sustained in connection with the transaction from the various defendants. As against the vendors' solicitors, it was alleged that they had been negligent and in breach of duty, inter alia, in:-
(a) representing and warranting to the plaintiffs that there was no boundary dispute between the vendors and Mrs McKimm;
(b) representing and warranting to the plaintiffs that the site contained the 54 square metres;
(c) representing and warranting to the plaintiffs that the plaintiffs had access to the site from the public highway;
(d) failing to inform the plaintiffs as to the correct size and extent of the site and inducing the plaintiffs to believe that the extent and area of the site was in accordance with the planning map furnished and on which the plaintiffs had relied.
In addition to evidence by the first plaintiff, the plaintiffs' solicitor and the vendors' solicitors, there was also evidence at the trial from other solicitors as to the professional duties of the solicitors in relation to transactions such as this. Neither of the vendors gave evidence, although they were represented by solicitors and counsel.
In his judgment the learned trial judge found that:-
"By virtue of being deprived of the said area of land [the 54 square metres] the remainder of the site was landlocked and the plaintiffs were prevented from having access to lands purchased by them for the purpose of erecting their home thereon."
He also found as a fact that, at the time requisition 13.8 was answered:-
"The vendors and the vendors' solicitors were fully aware that there had been a dispute with Mrs McKimm in regard to the ownership of the disputed 54 square metres of land adjoining the public road, that she had claimed to be the owner of the said lands and had threatened litigation in respect thereof.
It is reasonable to infer from the circumstances, in the absence of any evidence from the vendors . . . that the reason why they did not proceed with the erection of the building on the site in accordance with the planning permission which they had obtained from Wicklow County Council was because of the difficulties they had encountered because of the claim by Mrs McKimm to ownership of the disputed area of land and their failure to secure access to the site over the said area. Having regard to the attitude of Mrs McKimm as disclosed in the correspondence, it should have been anticipated by the vendors that the plaintiffs would encounter similar difficulties.
In spite of this it was represented to the plaintiffs that the area of land which they were purchasing was the area shown on the map which was submitted to Wicklow County Council with the application for planning permission.
The vendors failed to inform the plaintiffs or the plaintiffs' solicitor of the dispute with Mrs McKimm and of her claim to ownership of the portion of the land which adjoined the public carriageway (which claim incidentally, has not been challenged by any party to these proceedings) and which was shown on the said map as in the ownership of the vendors."
In these circumstances, the learned trial judge found that the vendors had made untrue representations to the plaintiffs on which they had relied to their detriment and accordingly held that they were entitled to recover damages for misrepresentation and breach of contract from the vendors.
The learned trial judge further found that, having regard to the importance of gaining access to the site for the purpose of erecting the dwelling house, the plaintiffs' solicitor was negligent in not having the boundaries staked out, as suggested by the plaintiffs, or by insisting on the provision of an ordnance survey sheet showing the vendors' property and enabling a comparison to be made with the planning map.
As to the possible liability of the vendors' solicitors, the learned trial judge said:-
"No evidence was adduced by the plaintiffs which established that [the vendors' solicitors] were aware of the existence of this map [the planning permission map] or that it had been given to the plaintiffs or that they had made representations to the plaintiffs or their solicitor in regard thereto.
In fact the fourth defendant gave evidence, which I accept that he only became aware of the map when it was discovered in the course of these proceedings."
Having cited a statement of the law by Jauncey LJ in Midland Bank v Cameron, Thom Peterkin and Duncans [1988] S.L.T. 611, as to the duties of solicitors to third parties the learned trial judge found as follows:-
"Before the fifth defendant replied to the requisitions, she sought her clients' instructions thereon and was informed by the first vendor that the dispute with Mrs McKimm had been settled. Both the fourth and fifth defendants stated that they had no reason to doubt the first vendor's instruction in this regard.
As stated in Jackson & Powell on Professional Negligence (1992 ed.) para. 4 -72:-
'It is, therefore, a good defence for an action for negligence that the solicitor was acting on express instructions from the client.'
It is clear from the nature of the replies to the requisitions that the fourth and fifth defendants were transmitting their clients' instructions and were not assuming responsibility for or the role of principal in relation to that information so far as the plaintiffs or their solicitor was concerned.
Consequently, the plaintiffs' claim against these defendants based on the replies to requisition must fail and is dismissed."
The learned trial judge also found that, in refusing to agree to the condition as to an ordnance survey map in the contract, the vendors' solicitors were not in breach of any duty of care which they owed to the plaintiffs.
Submissions on behalf of the parties
On behalf of the plaintiffs, counsel submitted that it was well settled as a result of the decision in Hedley Byrne & Co Ltd. v Heller & Partners Limited [1964] AC 465, that a person suffering economic loss as a result of a negligent misstatement had a cause of action against the maker of the statement. Accordingly, the solicitors acting for the vendors in a case such as the present could be liable to the purchaser where it could be shown that they owed a duty to take reasonable care in relation to the making of particular statements. He cited in support passages from the judgment of Jauncey LJ. in Midland Bank v Cameron, Thom Peterkin and Duncans [1988] S.L.T. 611 referred to in the judgment under appeal, Wall v Hegarty [1980] ILRM 124, Allied Finance and Investments Ltd. v Haddow [1983] N.Z.L.R. 22 and McCullagh v Lane Fox & Partners Ltd. [1994] 8 E.G. 118.
Counsel for the plaintiffs said that, in the circumstances of the present case, the vendors' solicitors knew, or ought to have known, that their reply to requisition 13.8 would be relied on by the plaintiffs and their solicitor, since they knew that the plaintiffs and their solicitor were wholly unaware of the boundary dispute between the vendors and Mrs McKimm. He submitted that the manner in which the requisition had been answered was in breach of that duty of care in two respects: first, because the vendors' solicitors had failed to ascertain, as they should have done the terms on which the dispute had been resolved and, secondly, because they went further than any instruction they had been given in saying that the vendors had instructed them that no adverse claim to the property being sold was being made by any person.
Counsel for the plaintiffs further submitted that, while this Court was bound by any findings of fact made by the learned trial judge which were supported by credible evidence, the Court was not bound by any findings which were not supported by such evidence. He said that, contrary to what had been found by the trial judge, the evidence established that the fourth and fifth defendants were aware of the existence of the planning map, although neither of them had actually seen it until the present proceedings were instituted.
Counsel on behalf of the vendors' solicitors submitted that the findings of the learned trial judge were supported by credible evidence and should not be set aside by this Court. He said that it was clear from the decision in Midland Bank v Cameron, Thom Peterkin and Duncans [1988] S.L.T. 611, that a solicitor could not become liable to a third party simply by reason of transmitting to that third party in good faith information which had been furnished to him by his own client. In the present case, the fifth defendant had been careful to word the reply to the requisition in such a way as to make it clear that she was doing no more than conveying her clients' instructions. He submitted that it would be extending the duties of solicitors to third parties further than was warranted by principle or authority to impose on them an obligation, in a case such as the present, to question the veracity of the instructions they had received from their own clients.
Counsel for the vendors' solicitors further submitted that, contrary to what was urged on behalf of the plaintiffs, the reply did accurately reflect the fifth defendant's instructions. The first part of requisition 13.8 clearly related to litigation which is pending or threatened at the time the requisition is raised: on the fifth defendant's instructions there was none. As to the second part of that requisition it was submitted that, since claims in the past were clearly embraced by the first part of the requisition, the second part could only relate to a claim being pursued at the time the requisition was raised. Again, on the fifth defendant's instructions, no such claim was being pursued.
The applicable law
In the course of his speech in Hedley Byrne & Co Ltd. v Heller & Partners Ltd. [1964] AC 465, the case which, as applied in a number of decisions in this jurisdiction, is authority for the proposition that liability for negligent mis-statements can arise in our law, even in the absence of a contractual relationship, Devlin LJ. said, at pp. 528 and 529:-
"I think, therefore, that there is ample authority to justify your Lordships in saying now that the categories of special relationship, which may give rise to a duty to take care in word as well as in deed are not limited to contractual relationships or to relationships of fiduciary duty, but include also relationships which in the words of Lord Shaw in Nocton v Lord Ashburton [1914] AC 932 at p. 972 are 'equivalent to contract' that is, where there is an assumption of responsibility in circumstances in which, but for the absence of consideration, there would be a contract. Where there is an express undertaking, an express warranty as distinct from mere representation, there can be little difficulty. The difficulty arises in discerning those cases in which the undertaking is to be implied. In this respect the absence of consideration is not relevant. Paying for information or advice is very good evidence that it is being relied on and that the informer or adviser knows that it is. Where there is no consideration, it will be necessary to exercise greater care in distinguishing social and professional relationships and between those which are of a contractual character and those which are not. It may often be material to consider whether the adviser is acting purely out of good nature or whether he is getting his reward in some indirect form."
The latter part of that passage is of assistance in determining the nature of the duty of care, if any, which a vendor's solicitor owes to the purchaser in circumstances such as arose in the present case. While there was no contractual relationship between the vendors' solicitors and the plaintiffs, that would not of itself negate the existence of a duty of care. Moreover, in determining whether such a duty of care arose in the particular circumstances, it is a material factor that statements such as replies to requisitions are made by a solicitor acting as such and not in some casual social context. Again, while the primary duty of the solicitor acting for the vendor in circumstances such as arose here, is, under common law and by virtue of contract, to protect his own client, that obligation is perfectly consistent with the existence of a duty of care in certain circumstances to the purchaser.
It is also clear that the transmission by a solicitor to a third party of information which turns out to be inaccurate and upon which the third party relied to his detriment does not, of itself, afford a cause of action in negligence to the injured third party. The factors necessary to give rise to liability were set out by Jauncey LJ. in the passage so frequently referred to in the present case in Midland Bank v Cameron, Thom Peterkin and Duncans [1988] S.L.T. 611 as follows at p. 616:-
"In my opinion four factors are relevant to a determination of the question whether in a particular case a solicitor, while acting for a client, also owed a duty of care to a third party:-
(1) the solicitor must assume responsibility for the advice or information furnished to the third party.
(2) the solicitor must let it be known to the third party expressly or impliedly that he claims, by reason of his calling, to have the requisite skill or knowledge to give the advice or furnish the information;
(3) the third party must have relied upon that advice or information as a matter for which the solicitor has assumed personal responsibility; and
(4) the solicitor must have been aware that the third party was likely so to rely."
It is clear that, at least in cases where those four factors are present, a solicitor may be held liable in negligence to a third party under the more general principle laid down in Hedley Byrne & Co Ltd. v Heller & Partners Ltd. [1964] AC 465. An example of a case in which they were clearly met is the New Zealand decision of Allied Finance and Investments Ltd. v Haddow [1983] N.Z.L.R. 22, to which we were also referred.
In that case, the plaintiff, a money lending company, lent a person money on the security of a yacht which the plaintiff understood that he was buying. Before the loan was made, the plaintiff's solicitors forwarded to the borrower's solicitors an instrument by way of security and asked them for a certain certificate. The borrower's solicitors returned the instrument signed by him and certified, inter alia, "that the instrument by way of security is fully binding on RKH". In fact, and to the knowledge of RKH's solicitors, the yacht was being purchased by a company of which he was a director and controlling shareholder. When the yacht was seized by the unpaid seller and H. became bankrupt, the plaintiff sued his solicitors for the balance of the loan. The New Zealand Court of Appeal held that the solicitors were liable, Cooke J saying:-
"The relationship between two solicitors acting for their respective clients does not normally of itself impose a duty of care on one solicitor to the client of the other. Normally the relationship is not sufficiently proximate. Each solicitor is entitled to expect that the other party will look to his own solicitor for advice and protection . . .
But surely the result of the established principle is different when on request a solicitor gives a certificate on which the other party must naturally be expected to act. That is a classic duty of care situation, now that it is accepted that the likelihood of economic loss only does not automatically rule out a duty. The proximity is almost as close as it could be short of contract . . ."
The fact that the vendors in this case have been found to be liable to the plaintiffs for misrepresenation made directly by themselves to the plaintiffs or (as the learned trial judge found) in the form of statements transmitted in good faith by their solicitors is not a relevant consideration in determining whether the solicitors themselves were in breach of a duty of care which they owed to the plaintiffs. A different view was taken in England in Gran Gelato Ltd. v Richcliff (Group) Ltd. [1992] Ch. 560, but was not accepted in a subsequent English decision of McCullagh v Lane Fox & Partners Ltd.[1994] 8 E.G. 118. I would adopt the view taken by Coleman J in the latter case that, in general, the fact that there will be a duplication of remedy should not negate the existence of liability.
Finally, it should always be borne in mind, in considering whether a particular statement amounts to a negligent mis-statement, that the omission of significantly relevant facts may be sufficient to convert a literally accurate statement into a mis-statement.
Conclusions
There are many occasions when, in furnishing replies to objections or requisitions in a contract for the sale of land, the solicitor for the vendor cannot be said to assume any responsibility for information being transmitted to the purchaser's solicitor. Typically in the course of such a contract the solicitor or counsel for the purchaser may raise an objection or requisition to the effect that, for example, a particular estate has not been got in or appropriate words of limitation have not been used in a deed forming part of the proffered title. The vendor's solicitor or counsel, in reply, may refer to some other document furnished or some legal principle as meeting the difficulty. In such cases, it cannot be said that the vendor's solicitor or counsel, in drafting the reply, is assuming responsibility for information being furnished in the sense in which that expression is used in Midland Bank v Cameron, Thom Peterkin and Duncan [1988] S.L.T. 611. The solicitors and counsel on either side are dealing with the same set of documents and doing no more than expressing their professional opinion on matters of title.
Similarly, there are many circumstances in which the vendor's solicitor in drafting a reply could be described as transmitting information but could not reasonably be regarded as assuming any particular responsibility for that information. Thus, in the present case, the standard requisition 11 asked whether any notice, certificate or order had been served on the vendor under a long series of listed statutes or "under any other Act. . ." The answer was a terse "no". The purchasers' solicitor from his own experience would be well aware that the most that could be inferred from such a reply was that the vendors' solicitor's clients had so instructed her. It would be wholly unreal to suppose that the vendors' solicitor was accepting any responsibility for the accuracy of the information being furnished.
But that is not to say that there are no circumstances in which the vendors' solicitor will not assume at least some degree of responsibility for the information being furnished to the purchaser's solicitors. Specifically, in a case such as the present, where the vendor's solicitor is asked whether there is any litigation pending or whether any adverse claim has been made to the property and is aware of his or her own knowledge of threats of litigation and adverse claims having been made, he or she assumes at least some responsibility for the information given in reply and cannot be exonerated from responsibility solely on the ground that he or she is simply transmitting the vendor's instructions. Whether he or she can be regarded as so relieved from responsibility must depend upon the circumstances of the particular case and whether it was reasonable, in those circumstances, for the vendor's solicitor simply to transmit what he or she was told without further enquiry.
It is also clear that, in such a situation, the vendor's solicitor in assessing the instructions he or she is given, determining whether further enquiries should be made and deciding on the information to which the vendor's solicitors are entitled is acting in a professional capacity and must be assumed to be applying the skill and knowledge to be expected of a solicitor in such circumstances.
I would, accordingly, take the view, differing with respect from the learned trial judge, that the first two requirements indicated in Midland Bank v Cameron, Thom Peterkin & Duncans [1988] S.L.T. 611, before a duty of care can arise as between a solicitor and a third party are met in this case.
As to the third and fourth requirements, that the plaintiffs were relying upon the reply and that the vendors' solicitors must have been aware that they were likely so to rely, the context in which the reply was given is crucial. The contract for sale had expressly provided that the site was being sold with the benefit of a specified planning permission. Not merely were the vendors' solicitors aware of this: they were also aware that there was no physical boundary between the site and Mrs McKimm's land and that she had threatened to institute proceedings if the vendors continued to gain access to the land from the main road, on the ground that they would be trespassing on the triangular area. They were also aware that she had claimed through her solicitors that the map on which the planning permission was based erroneously included the triangular area and that, accordingly, the planning permission was invalid. They were also aware of the first plaintiff's concerns as to the boundary in question, since he had unsuccessfully sought to have the boundary staked out or an ordnance survey map incorporated in the contract. In these circumstances, they must have known that, whether or not their reply accurately reflected the vendors' instructions to them, it would unquestionably be relied on by the plaintiffs. In the event, of course, it was relied on, since the plaintiffs closed the sale wholly unaware of the fact that the vendors had been embroiled in a dispute concerning this very boundary which, as the learned trial judge found, had led to their selling on the property to the plaintiffs and the reply to the requisition, however else it may be viewed, certainly gave not the slightest hint of any trouble as to the boundary to the plaintiffs.
I conclude, accordingly, that the vendors' solicitors owed a duty of care to the plaintiffs when they replied to requisition 13.8. It remains to be considered whether they were in breach of that duty. In the circumstances of this case, I am satisfied that they were. There are many instances in which a solicitor acting in a transaction such as this would be perfectly entitled to convey without comment the information furnished to him by his client, but this was not one of them. It is not a question of the vendors' solicitors having to query the veracity of the instructions being furnished to them by their own client: even if those instructions were perfectly correct, it could have meant that the dispute had been settled on terms that the vendors acknowledged the title of Mrs McKimm to the triangular area. In failing to ascertain the terms on which the dispute had been settled and conveying that information to the plaintiffs, they were in breach of their duty of care to them. On one view, that urged on behalf of the plaintiffs, they had, in any event, not accurately transmitted the vendors' instructions, since those merely indicated that the dispute had been settled: they did not indicate, as the reply to the requisition on one reading did, that no claim to the triangular portion was at the date of the reply being made by Mrs McKimm. At the very least, however, the reply, because of the manner in which it was framed did not convey all the information to which the plaintifffs were entitled and, as I have already said, a partial statement in such circumstances may be equivalent to a mis-statement or misrepresentation. It is right to say that no one in this case has suggested that the vendors' solicitors deliberately intended to mislead the plaintiffs or their solicitor: unfortunately, however, they had, in all the circumstances insufficient regard to the duty which they clearly owed to the plaintiffs. Had they got in touch with Cunningham & Co, it would have transpired that Mrs McKimm had not abandoned her claim to the 54 square metres and that her claim was well founded in law. The plaintiffs would then clearly have been in a position to rescind the contract and recover their deposit because of the vendors' misrepresentations.
I would allow the appeal and vary the order of the learned trial judge by finding the fourth and fifth defendants liable in damages for negligence to the plaintiffs. The action should then be remitted to the High Court for the assessment of damages.
BARRON J:
I agree with the judgment which has just been delivered by Keane J
In my view a solicitor's responsibility, if any, for replies to requisitions should not depend upon the wording used. Answers such as "vendor says no", "no", or "not to vendor's knowledge", all mean the same thing: "it is believed that there is no information of relevance".
The solicitor is not a conduit pipe. Once he is acting professionally he warrants that so far as his own acts are concerned he has taken the care and applied the skill and knowledge expected of a member of his profession. He cannot therefore accept his client's instructions without question when it is reasonable to query them. That is the difference between innocent and negligent mis-statement. It is not enough that the solicitor was acting bona fide. For that reason, the submission made by the defendants' counsel sought to apply the wrong test. Of course, as against his own client, if the solicitor acted on the client's express instructions, this is generally a good defence to a claim by his own client.
The question which is involved here is the normal rule. If reliance is going to be placed upon what you say, then you have a duty of care towards the person who will rely upon that to ensure that he will not be injured as a result of any lack of the required care on your part. The standard of care depends upon the person making the statement. In the case of a professional person the standard is that laid down in the relevant authorities.
In the circumstances of the present case, I regard the words of Cooke J in Allied Finance and Investments Ltd. v Haddow [1983] N.Z.L.R. 22, as particularly appropriate:-
"But surely the result of the established principle is different when on request a solicitor gives a certificate on which the other party must naturally be expected to act."
The question in the instant case is, is this a case of information being supplied by the vendor's solicitor on which the purchaser's solicitor must naturally be expected to act Will the latter rely upon the truth of the answer to the requisition because it has been made but also because it is warranted by the solicitor that acting professionally he believes it to be true. The answer to that question must be, yes.
The learned trial judge has applied the first of the four requirements of Jauncey LJ. in Midland Bank v Cameron, Thom Peterkin and Duncans [1988] S.L.T. 611, as requiring the solicitor to assume responsibility for the answers "and thus the role of principal in relation thereto", as involving the intention of the solicitor. I prefer the view of Keane J that, if in law he can be made liable for giving misleading information, he is assuming responsibility for the answers.
In any event, it is important in relation to the facts of that case that the plaintiffs conceded that, if the solicitors were a mere mouthpiece for their client and known to be such by the plaintiffs, no liability could attach to them in respect of information which they provided on behalf of their client. That is not the case here. Jauncey LJ. himself suggested that the answer to the following question required to be asked: is he however careless if, without checking, he merely passes on information, of whose accuracy he has no reason to doubt Even though he answered the question in the negative, I am sure that, if he had changed the word "no" in that question to "any" not alone to "good" he would have answered it in the affirmative.
In the present case the solicitors ought to have known that the answer in the form in which it was given was not necessarily either the truth or the whole truth. They were under a duty to inquire further. Not having done so and the answer proving to be misleading, they cannot avoid liability to the plaintiffs.
I would allow the appeal.
© 1998 Irish Supreme Court