Negligent misstatement – liability disclaimer upheld in landmark decision

Walsh v Jones Lang LaSalle Limited (JLL) [01.06.17]

Date published

16/06/2017

Services

Countries

The Irish Supreme Court upholds the efficacy of a liability disclaimer made by a sales agent in a commercial property sales brochure in defeating a claim of negligent misstatement.

The Supreme Court found that the defendant firm of valuers (JLL) was entitled to rely on a liability disclaimer to exclude liability in an action for negligent misstatement brought by the purchaser of commercial property (Walsh) in circumstances where the square footage of the property concerned was mistakenly said to be 8% greater than it actually was.

Professionals and their insurers will welcome this landmark decision.

Key facts of the case

JLL had been engaged by the vendors of a commercial property to act as their sales agent. As part of that process JLL produced a sales brochure which set out the square footage of the property and also contained a disclaimer in the following terms:

“Whilst every care has been taken in the preparation of these particulars, and they are believed to be correct, they are not warranted and intending purchasers / lessees should satisfy themselves as to the correctness of the information given.”

Walsh was the purchaser of the property and when he came to lease the premises, he discovered that the square footage set out in the JLL brochure was incorrect and, in fact, the square footage was 8% less than stated.

High Court decision

In 2006, the High Court found in Walsh’s favour and awarded him €350,000 in damages. The High Court held that JLL owed a duty of care to the purchaser and the disclaimer did not operate to protect them. To be entitled to rely on the disclaimer, JLL would have had to draw Walsh’s attention to the fact that the measurements published were wholly unreliable.

The Supreme Court

The Supreme Court rejected the High Court’s analysis. They restated the jurisprudence on negligent misstatement with reference to earlier, English case law, and in particular the classic House of Lords decision in Hedley Byrne v Heller & Partners Limited [1964] and in doing so held that the High Court was wrong to apply the three step test in the leading Irish case on negligent misstatement, Glencar Exploration Limited v Mayo County Council [2002], to find the existence of a duty of care.

The three step test in Glencar states that a duty of care should be found to exist where: (i) there is a special relationship of proximity between plaintiff and defendant (ii) loss is foreseeable and (iii) it is just and reasonable to impose a duty of care.
The Supreme Court said that this was the incorrect approach to cases involving disclaimers of liability. Rather, the existence of a disclaimer of liability, if properly worded, will mean that there is no assumption of responsibility by the maker of the statement to third parties and therefore no duty of care should be found to exist.

JLL admitted that their brochure was incorrect and they had erred but because there was no duty of care, the question as to whether they were negligent did not arise.

Comment

Estate agents and valuers, in particular, will be pleased with this decision as will their insurers. The decision confirms that a suitably worded disclaimer can effectively exclude liability to prospective purchasers. Estate Agents, of course, are not the only professionals that use liability disclaimers in their literature to exclude liability to third parties with whom they are not in a contractual relationship and all those other professionals will also benefit from this decision.

This case will be the benchmark for negligent misstatement cases relating to the efficacy of liability disclaimers.