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Ward v. McMaster [1988] IESC 3 (10th May, 1988)

Supreme Court

Denis Ward and Anne Ward
(Plaintiffs)

v.

Patrick McMaster, Louth County Council and Nicholas Hardy and Company Limited
(Defendants)


No. 174 of 1985
[10th of May 1988]


Status: Reported at [1988] IR 337; [1989] ILRM 400



Finlay C.J.

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



Walsh J.

2. I agree with the judgment of McCarthy J.



Henchy J.

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


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


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


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


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


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


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


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


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


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


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



Griffin J.

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



McCarthy J.

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


1. The Loan Scheme

Section 39 of the Housing Act, 1966, made provision for loans by housing authorities for acquisition or construction of houses and for the making of regulations for that purpose, at the same time repealing a great body of legislation going back to 1878 and set out in the first schedule to the Act. The Minister made the Housing Authorities (Loans for Acquisition or Construction of Houses) Regulations, 1972. He prescribed that the amount of the loan should not, so far as relevant, exceed £3,000 or 95 per cent of the value of the house. The expressed limitation was, subsequently, raised. Regulation 4 (1) provided that the value of a house, germane to this case, should be “the amount which, in the opinion of the housing authority, the house, if sold on the open market, might reasonably be expected to realise together with so much, if any, of the legal and other expenses incidental to the acquisition of the ownership of the house as the housing authority may consider proper”. Regulation 5 provided for a form of appeal from the determination as to value from the housing authority to the Commissioner of Valuation.

16. Regulation 12 provided:-


“Before making a loan a housing authority shall satisfy themselves –

(a) that the borrower occupies or intends to occupy the house as his normal place of residence;
(b) that the value of the ownership of the house is sufficient to provide adequate security for the loan;
(c) that the title to the ownership is one which an ordinary mortgagee would be willing to accept;
(d) that the borrower is not a borrower in respect of any other loan made by them under the Act or is not the proprietor of a house in respect of which an advance, or any part of an advance, made by them under the Small Dwellings Acquisition Acts, 1899 to 1962, remains unpaid;
(e) that the repayment of the loan to the housing authority is secured either by
(i) an instrument vesting the ownership (including any interest already held by the borrower) in the housing authority subject to the right of redemption by the borrower, or
(ii) in a case where the ownership of the borrower consists of a leasehold interest, by an instrument of mortgage by subdemise subject to a nominal reversion, vesting the term of the subdemise in the housing authority subject to the right of redemption by the borrower, or
(iii) where the title to the ownership is registered under the provisions of the Registration of Title Act, 1964 by an instrument charging the ownership with payment to the housing authority of the amount of the loan together with the interest thereon.”

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


“6. No advance shall be made by the Council until the Council is satisfied, as a result of a report by the Council’s valuer, as to the actual value of an existing house . . . and that . . . is so situated as to be readily saleable, in the event of a sale by the Council becoming necessary, due to default by the borrower.”
“16. (a) Every house in respect of which an advance is made must be insured against fire by the borrower for at least the full value of the house.”

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


“2. Applications shall be considered only from persons who are unable to obtain loans from commercial agencies, e.g. Building Societies, Banks and whose circumstances would otherwise necessitate their being re-housed by the Council.”

2. The application

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

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


“I thought that when the Council went out and they passed it, their surveyor was out, if the Council were putting half the money into it, their word was as good as anybody’s, you know, because half their money was in it too.”

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


“It seems to me that the effect of his evidence seems to be that it was his experience in Northern Ireland which lead him to believe somebody would go out – is that right?”, and the first plaintiff agreed.

3. The condition of the house

The learned trial judge in findings now unchallenged held that all items of floor construction were sub-standard; that the foundation was structurally unsound and unsafe; that there were noticeable slopes in floors and ceilings and poor timber-work; all being “hidden” defects, in the sense that they were not discoverable by the sort of examination which a lay person with no professional qualifications would be expected to carry out:- “But I accept the evidence (and this is of particular importance when considering the claim against the defendant Council) that these defects were discoverable by a reasonably careful inspection carried out by a person with ordinary professional qualifications in house construction such as those that an architect or an engineer would have obtained.” [1985] I.R. 29 at pages 35 and 36.

Further defects of a similar kind were then identified. Pascal McLoughlin regarded his functions as requiring him to consider merely the visual appearance of the house and then informed the Council of its market value. This he did on the 12th August, 1980, in the “valuer’s certificate”.

4. The legal relationship

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


“In the light of the facts to which I have referred it seems to me that there was a sufficient relationship of proximity or neighbourhood between the plaintiff and the Council such that in the reasonable contemplation of the Council carelessness on their part in the carrying out of the valuation of the bungalow the plaintiff was going to purchase might be likely to cause him damage. They should have been aware that it was unlikely that the plaintiff (in view of his knowledge that they were going to value the premises and his very limited means) would himself employ a professional person to examine it and so they should have known that if the valuation was carelessly done it might not disclose defects in the premises and as a result the plaintiff might suffer loss and damage. So it seems to me that a prima facie duty of care existed and there is nothing in the dealing between the parties which should restrict or limit that duty in any way. In particular no warning against reliance on the proposed valuation was given.”

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


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


(1) That since each party (the plaintiffs and the County Council) had to look to themselves to safeguard their situation, there was no duty of care cast upon the Council in respect of the first plaintiff. None such arose from their established proximity.
(2) Even if there was such a duty, that there was no risk of damage reasonably foreseeable to the County Council and, consequently, no breach of duty.
(3) That the omission held to be culpable arose from a decision of policy or discretion which was not open to question by the courts in an action such as this. It was, it is said, a policy decision within the discretion of the County Council not to have any inspection other than that which produced a valuer’s certificate: to carry out such inspections in every instance through an engineer or like qualified person would greatly reduce the amount of money available in loans with consequent damage to the true purpose of the relevant part of the Housing Act.

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


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


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


“[T]he position has now been reached that in order to establish that a duty of care arises in a particular situation, it is not necessary to bring the facts of that situation within those of previous situations where a duty of care has been held to exist. Rather the question has to be approached in two stages. First one has to ask whether, as between the alleged wrongdoer and the person who has suffered damage there is a sufficient relationship of proximity or neighbourhood such that, in the reasonable contemplation of the former, carelessness on his part may be likely to cause damage to the latter – in which case a prima facie duty of care arises. Secondly, if the first question is answered affirmatively, it is necessary to consider whether there are any considerations which ought to negative, or to reduce or limit the scope of the duty or the class of person to whom it is owed or the damages to which a breach of it may give rise . . .”

In Curran (1985) N.I.L.R. Bulletin 22 after an exhaustive review of authority, Carswell J. accepted the proposition from Charlesworth and Percy on Negligence that “it will be an essential fact to he proved, in any case, that the defendant has assumed responsibility for giving his opinion, advice or even information” and that the voluntary assumption of responsibility for the accuracy of the statement in question is the basis of the doctrine. Carswell J. later examined the proposition that it follows from the fact that a public body is under a statutory power or duty that it owes a duty of care at common law with particular emphasis on Peabody Fund v. Sir Lindsay Parkinson Ltd. [1985] AC 210, a case cited by the learned trial judge in the instant appeal. As Carswell J. pointed out in Curran, Peabody Fund v. Sir Lindsay Parkinson Ltd. [1985] AC 210, in the jurisdiction where it would be binding, is not a conclusive authority on the ambit of the duty of care although affording a valuable amount of guidance. Carswell J. rested his judgment finally upon the view that the obligation resting upon the Housing Executive was to see to the proper application of public money in improvement grants, the latter limb of the claim in Curran.

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


“. . . though the Executive must be taken to have known when it offered the mortgage that the plaintiffs would rely upon it to the extent of deducing that an appropriate valuation had been given to the Executive, there were no facts upon which one could assume that the Executive was accepting responsibility for the careful preparation of the valuation which preceded the offer.”

Again, at p. 20:-

“I am unable to accept that the Executive by informing the plaintiffs of the amount which it was willing to advance on the security of the house, though it was a mistaken figure negligently arrived at, can be taken impliedly as undertaking to be responsible for any loss suffered as a result of negligence in the appointment of the valuer at the suit of the plaintiff, who without any inducement by or representation on behalf of the Executive voluntarily elected not to be advised in the matter but to accept the figure proposed by the Executive as the amount of the advance to him. In reaching that conclusion, I am conscious of the caveat issued by Lord Reid in Mutual Life and Citizens Assurance Co. Ltd. v. Evatt [1971] AC 793 at p.813 of the report with reference to the terms of the speeches in Hedley Byrne, namely ‘we do not think it would be useful to quote expressions from speeches used without having in mind circumstances such as we have here’. But insofar as the facts of this case are clearly within the area of contemplation in the Hedley Byrne case, I have no doubt that a condition precedent to liability is that the Executive should have indicated to the plaintiffs, or so acted as to mislead them into believing, that the Executive was accepting responsibility for its opinion. That condition is not established by the matters set out in the statement of claim or by any of the other matters which we have permitted the plaintiffs to call in aid.”

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


Yuen Kun Yeu v. A..-G. of Hong Kong [1987] 3 W.L.R. 776 was a decision of the Judicial Committee of the Privy Council in which the judgment of the Committee was delivered by Lord Keith of Kinkel. Having cited the familiar passage from Lord Wilberforce in Anns he pointed to the subsequent judicial resiling from the two-stage test in England and in Australia (by Brennan J. and Gibbs C.J. in Sutherland). Lord Keith disposed of the second stage of the Anns test, the public policy factor, by reference to Rondel v. Worsley [1969] 1 AC 191 dealing with the liability of a barrister for negligence in the conduct of proceedings in court, and Hill v. Chief Constable of West Yorkshire [1987] 2 W.L.R. 1126 the claim by the mother of the last victim of the “Yorkshire Ripper” for damages on the grounds of the negligence of the police in failing to apprehend the murderer before the death of her daughter. Glidewell L.J. as an additional reason for dismissing the action at its preliminary stage, pointed to what might be termed the “floodgates” or “appalling vista” line of argument. Lord Wilberforce, in McLoughlin v. O’Brian [1983] 1 AC 410 had been unimpressed by the floodgates reasoning. Lord Keith concluded at p. 785 that:-

“In view of the direction in which the law has since been developing, their Lordships consider that for the future it should be recognised that the two-stage test in Anns v. Merton London Borough Council [1978] AC 728, 751-752, is not to be regarded as in all circumstances a suitable guide to the existence of a duty of care.”

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


Siney v. Corporation of Dublin [1980] I.R. 400. The claim here was for damages for injury caused to the plaintiff’s furniture and clothing and the nature of the plaintiff’s occupation of the flat provided by Dublin Corporation. So far as relevant to the instant appeal, it is apposite to quote the words of O’Higgins C.J. at pp. 408-4 10:-

“To answer this question, [the application of an exclusionary rule] regard must be had to the Housing Act, 1966, under which this letting was made, and to the position, powers and obligations of the defendants under that Act. The Act of 1966 is a major piece of social legislation which is aimed at dealing with the distressing problem of families that are unable to provide for themselves and being either homeless or living in overcrowded, unhealthy and unfit houses. The Act sought to establish administrative machinery under which such conditions could be eliminated gradually throughout the country, and by means of which new and suitable dwellings could be provided for those in need . . . The Act also empowers the Minister for the Environment to provide grants for persons endeavouring to provide their own houses, either by building, or by repairing or reconstructing existing accommodation: see sections 13-23. The Minister was also empowered to give grants to housing authorities in order to promote and finance schemes for the assistance of people seeking to build or otherwise provide their own housing accommodation: see sections 24-43 . . . In short, the aim of the Act of 1966 was to bring into existence decent housing which, in each functional area, would be introduced by the housing authority and the standards of which would be maintained by that authority.”

31. Later at p. 412 he said:-


“I will merely say that the statutory duties imposed by the Housing Act, 1966, are so imposed for the benefit of the public. Under the Act they are enforceable under s. 111 by the Minister. In these circumstances no right of action is given to a private citizen if the complaint is merely that the duties so imposed, or any one of them has or has not been carried out. The mere fact that a housing authority has failed to discharge a duty imposed upon it does not give to a complaining or aggrieved citizen a right of action for damages.”

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


“In this case it is sufficient to say that many of these recent decisions recognise a possible liability where the exercise of statutory powers in a negligent manner results in injury to persons occupying houses for whose protection or benefit these powers were intended . . . Obviously, that inspection should have been carried out to ensure what had been built or provided accorded with the statutory requirements as to fitness for human habitation. Had the inspection by the defendants been so carried out, it would have disclosed that the ventilation system in this particular flat was defective and inadequate and that the defect was likely to lead to excessive humidity and to the kind of conditions of which the plaintiff and his family subsequently complained. In the circumstances the undetected defect in the ventilation was a serious concealed danger of which the incoming tenant, the plaintiff, could not have been aware and which he could not reasonably have been expected to discover. In these circumstances I can see no basis for suggesting that the principle of Donoghue v. Stevenson should not apply.”

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


“When the defendants, as the housing authority, prepared and adopted a building programme and then exercised their powers under s. 56 , sub-s. 1, to provide these flats for letting, it was a necessary postulate of the statutory scheme of things that the flats would not add to the stock of houses unfit or unsuitable for human habitation. Indeed, it would be positively inconsistent with the powers and the duties of the defendants, as a housing authority under the Act, to provide a flat that was not fit for habitation. The defendants’ powers (set out in ss. 66-69) of getting uninhabitable houses repaired, or closed and demolished if not repairable, are so specific and drastic that it must be deemed a necessary element of the statutory intent that the defendants are to use their powers under the Act in such a way that a dwelling built and let by them is fit for habitation, and that the tenant of the dwelling may act on an unarticulated assurance by them that it is fit for habitation. In other words, the letting agreement in this case should be read as if it contains an express term warranting the flat to be habitable.”

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


“Following on Donoghue v. Stevenson it has been established by a line of decisions (such as Dutton v. Bognor Regis U.D.C., Anns v. Merton London Borough and Batty v. Metropolitan Realisations Ltd.) that where a person, including a builder or a local authority, carelessly provides a dwelling in which there is a concealed defect which the occupier could not have discovered by inspection, the person who provided the dwelling may be liable in negligence for personal injury or economic loss suffered as a result of the defect. The precise conditions or limitations of that liability need not now be considered, for I have no doubt that the principle of liability evolved in those cases is applicable to the circumstances of this case.”

In Shelton v. Creane and Arklow U.D.C. (Unreported, High Court, 17th December, 1987) Lardner J. accepted the principle stated by Costello J. in the instant case.

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


1. The duty of care,
2. Reasonable foreseeability.

1. The duty of care

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


2. Reasonable Foreseeability

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


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


39. The appeal on liability should be dismissed.


© 1988 Irish Supreme Court


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