Although public policy considerations mean that regulators are rarely found liable for performance of their statutory functions, certain circumstances may make liability more likely. In particular, where responsibility has been assumed outside of core regulatory functions.

The principles

  • Public bodies do not generally assume direct liability for the consequences of acts undertaken (or decisions taken) in the performance of their public service duties. (This is, obviously, subject to certain statutory duties and vicarious liability in certain circumstances).
  • The first question is whether the particular area of responsibility is “justiciable” or not as a matter of policy, followed closely by whether a duty of care should be imposed in the particular circumstances.
  • “Special circumstances”, such as a specific assumption of responsibility, a special relationship or the defendant public body having negligently caused or permitted a source of danger to be created may tip the balance, however.

In the courts

  • In Schubert Murphy v The Law Society (albeit only in the context of a strike out application) the Court of Appeal considered a claim for negligence arising from reliance by a law firm on what turned out to be false information on the Law Society’s “Find A Solicitor” database. Considering the three part test in Caparo v Dickman, the court held that the loss was reasonably foreseeable, and that a factual enquiry would be needed to establish whether there was a relationship of proximity and whether it would be fair, just and reasonable to impose a duty. The court rejected arguments that in no conceivable circumstances could there be a duty. Beatson LJ acknowledged that a regulator such as the Law Society does not generally owe a duty of care in relation to the way it carries out its regulatory functions. The “Find A solicitor” function, however, provides “an additional but voluntary service” so it is arguable, subject to a fuller consideration of the facts, that there may be a duty.
  • Also of potential interest is the decision in UPL Europe Ltd & Ors v Agchemaccess Ltd, in which the court said that the ambit of conspiracy ought not to be extended so as to cover breaches of regulatory legislative provisions whose enforcement was the responsibility of a government authority.

What this means

  • Although actions against regulators for failure to perform their statutory duties have only succeeded in limited circumstances, it is still worth being aware that regulators, and other public bodies, may find themselves in the firing line. Where a regulator has sufficient control over an activity and the claimant belongs to a protected class, and /or where the public body is providing some ancillary service (thereby assuming responsibility outside of their core regulatory function, as with the Financial Assistance Scheme (FAS) function provided by the Law Society) there is more potential risk for the regulator.

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