Ward v. McMaster

Factual and Procedural Background

The Plaintiff agreed to purchase a house on the outskirts of The City for £24,000. Because he could not obtain commercial finance, he applied to the Defendant Council (a housing authority under the Housing Act 1966) for a £12,000 loan. Before advancing funds, the Defendant Council was obliged by statute and its own published loan scheme to obtain a valuation confirming that the property was worth the purchase price and provided adequate security.

The Defendant Council engaged a local auctioneer (the Third Defendant) who completed a standard “valuer’s certificate,” opining that the house was worth approximately £25,000 and was a reasonable security for a 30-year loan. Relying on that certificate, the Defendant Council advanced the loan and the Plaintiff completed the purchase. After taking possession, the Plaintiff and his wife discovered extensive latent structural defects; the property proved uninhabitable and remains vacant.

In the High Court, Judge Costello held the vendor/builder (First Defendant) and the Defendant Council liable in negligence but exonerated the auctioneer. The Defendant Council appealed to the Supreme Court solely on the finding of its own liability and on quantum. The present opinion dismisses that appeal.

Legal Issues Presented

1. Whether the Defendant Council owed a private law duty of care to the Plaintiff, beyond its public statutory duties, when arranging the valuation of the house.
2. If such a duty existed, whether the Defendant Council breached it by engaging an auctioneer who lacked the expertise to detect structural defects.
3. Whether policy or discretionary considerations, or the absence of foreseeable risk, should negate or limit any duty owed.

Arguments of the Parties

Appellant – Defendant Council

• Both borrower and lender were responsible for protecting their own interests; therefore no duty of care arose from mere proximity.
• Even if a duty existed, no reasonably foreseeable risk of loss to the Plaintiff was established.
• The decision to rely solely on an auctioneer’s valuation was a discretionary policy choice aimed at maximising loan funds; the courts should not review that discretion.

Respondent – Plaintiff

• The statutory loan scheme and financial circumstances of borrowers created a relationship of proximity whereby the Defendant Council should have foreseen that applicants would rely on its valuation and would not commission separate structural surveys.
• By engaging an inadequately qualified valuer, the Defendant Council fell below the standard of reasonable care owed to borrowers.
• Policy arguments could not override the need to compensate an individual who suffered foreseeable loss caused by the Council’s negligence.

Table of Precedents Cited

Court's Reasoning and Analysis

1. Existence of a Duty of Care. The Court held that the statutory loan scheme created a close and foreseeable relationship between the Defendant Council and borrowers. Given the Council’s statutory objective of eliminating unfit housing and the borrowers’ limited means, it was foreseeable that borrowers would rely on the Council’s valuation and would not commission independent structural surveys.

2. Breach. The Defendant Council admitted that the auctioneer lacked expertise to evaluate structural soundness. By selecting an inadequately qualified valuer or by failing to arrange an additional structural inspection, the Council failed to exercise reasonable care.

3. Policy Defences. The Court rejected the argument that resource-allocation or discretion should immunise the Council. No exclusion clause was communicated to borrowers, and the cost-saving rationale did not outweigh the foreseeable risk of serious loss.

4. Foreseeability of Damage. A housing authority should anticipate that approval of a loan signals that the house is acceptable security; thus borrowers like the Plaintiff would consider the authority’s approval a “badge of quality.” The resultant loss was plainly foreseeable.

5. Conclusion. Considering proximity, foreseeability, and the absence of overriding policy factors, the Court affirmed that the Defendant Council owed and breached a duty of care, causing the Plaintiff’s economic loss.

Holding and Implications

Appeal DISMISSED. The finding of negligence against the Defendant Council stands, and the damages awarded to the Plaintiff are unaffected.

Implications: The decision confirms that Irish housing authorities may owe a private law duty of care to loan applicants when administering statutory housing-loan schemes. Where borrowers reasonably rely on a Council’s valuation, the Council must ensure that competent professionals assess both market value and structural soundness, or expressly disclaim responsibility. The ruling imposes no new statutory obligation but clarifies the circumstances in which common-law negligence will attach to public bodies.