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Old Gate Estates Ltd v Toplis & Harding & Russell [1939] 3 All ER 209

The liability in negligence of agents to third parties

Facts

A block of flats was to be purchased by the promoters of the claimant’s company. During the promotion of the company and before the company was formed, the claimant (promoter) employed a member of the defendant’s firm to value the flats. The valuation was too high because sums relating to the rates payable were incorrectly provided to the valuer by the promoter. The company sought damages in respect of damages for negligent valuation.

Issue

Whether a duty of care in negligence was owed to the company by the valuer despite there being no contract between these parties, the contract existing between the promoters and the valuer.

Held

There was no duty of care owed to the company in these circumstances. There was no claim in contract because the valuation had taken place before the company was formed. There was also no duty of care owed to the company as a third party. The position in Donoghue v Stevenson [1932] AC 562 was limited to circumstances where the negligence at issue created a risk to life, limb or health. It does not apply in the circumstances of this case.


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