Ward v McMaster and Others

• Jurisdiction: Ireland
• Judge: Henchy J.,McCarthy J
• Judgment Date: 10 May 1988
• Neutral Citation: [1988] IESC 3
• Court: Supreme Court
• Docket Number: [S.C. No. 174 of 1985]
• Date: 10 May 1988

[1988] IESC 3

THE SUPREME COURT

Finlay C.J.

Walsh J.

Henchy J.

Griffin J.

McCarthy J.

No. 497P/1983

(174-305/85)

WARD v. MCMASTER

DENIS WARD AND ANNE WARD

v.

PATRICK McMASTER, LOUTH COUNTY COUNCIL AND NICHOLAS HARDY& COMPANY LTD.

1 Judgment of Henchy J. [Finlay agr. Griffin conc.] delivered the 10th day of May 1988

2 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-named 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 Councilwere 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.

3 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.

4 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 boughtthe 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.

5 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-named 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 beupheld.

6 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 be 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.

7 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 Iunderstand 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.

8 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 sufficientlyclear and distinctive to enable the point at issue to be decided on well-established principles.

9 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 £12,000 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. DublinCorporation 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 aspecial position.

10 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 havethe 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.

11 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 dutyto 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.

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

13 Judgment of McCarthy Jdelivered on the 10th day of May, 1988 [Finlay agr. Walsh conc]

14 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 thebreach 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 dwelling house 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 wasdecreed with a right of contribution of 90 per cent from the vendor/builder (a right...