Consulting engineers prepared a site investigation report for the vendors of a site in South Wales. The report stated that it was for the vendor’s use and should not be passed on to others without the consultant’s express consent, but that it could be assigned to the eventual site purchaser. The consultant’s contract with the vendor also contained a third party rights exclusion and caps on liability. The vendor disclosed the report to the purchaser but its benefit was never assigned and there was therefore no contract between the consultant and the purchaser. But did the consultant owe the purchaser a duty of care in tort?
The court noted some relevant key principles from case law; that it is always necessary to consider the circumstances and context, commercial, contractual and factual, including the contractual structure, in which the parties’ inter-relationship arises. Not every careless misstatement is actionable or gives rise to a duty of care. Foreseeability of loss is not enough (by itself). It is necessary to establish that the duty relates to the kind of loss suffered and to determine the scope of any duty of care, again considering the context and circumstances. Disclaimers are simply one factor, but possibly an important one, in determining whether a duty of care arises. Telling everyone concerned that you are not accepting a responsibility is usually inconsistent with voluntarily undertaking it. In finding that no duty of care was owed in tort, the court said that the no use, no passing on and assignment statements in the report, when read in the context of the contract containing the third party rights exclusion and the liability limitation, made it reasonably clear, on an objective assessment, to the purchaser that, if it wanted to place legal reliance on the report, it would have to obtain an assignment or other legal document from the consultant to do so.