Court: Court of Appeal
Judgment Date: 3 February 1893
Where Reported: [1893] 1 Q.B. 491; [1893] 2 WLUK 6
Legal Issues in Le Lievre v Gould
Le Lievre v Gould dealt with the issue of a surveyor’s duty of care to third parties in the absence of contractual relations or fraud.
Le Lievre v Gould questioned whether a surveyor, issuing certificates on the progress of a building project, owed a duty of care to mortgagees who relied on these certificates to release funds, despite there being no direct contractual relationship or fraudulent intent on the part of the surveyor.
Material Facts in Le Lievre v Gould
In the case, mortgagees advanced money to a builder based on certificates issued by the surveyor, Gould, stating the progress of the building.
These certificates were later found to be inaccurate due to Gould’s negligence, but there was no fraudulent intent.
Le Lievre and Dennes, the mortgagees, relied on these certificates to advance funds. Gould was not appointed by the mortgagees, and there was no contractual relation between him and them.
The central issue was whether Gould owed a duty of care to the mortgagees in the absence of any direct contract or fraud, and if his negligent misrepresentation could lead to liability.
Judgment in Le Lievre v Gould
The court held that Gould, the surveyor, owed no duty of care to the mortgagees in the absence of a contract or fraud.
It was determined that the inaccurate certificates issued by Gould, although negligent, did not constitute a breach of duty towards the plaintiffs.
The court found that there was no contractual relationship between Gould and the mortgagees, and since there was no fraud involved, Gould’s negligence did not give rise to a legal liability to the mortgagees.
The Reason for the Decision in Le Lievre v Gould
The decision was primarily based on the absence of a direct contractual relationship between the surveyor and the mortgagees.
The court emphasised that in the absence of a contract, a duty of care does not automatically arise. The principle of negligence requires the existence of a duty owed by the defendant to the plaintiff.
Since Gould was appointed by the builder and not by the mortgagees, he did not owe a direct duty of care to them.
Additionally, the court considered the element of fraud. In negligence cases, particularly those involving misrepresentation, the presence of fraudulent intent is often a key factor in establishing liability.
In this case, it was acknowledged that although Gould’s certificates were inaccurate, there was no evidence of fraudulent intent or reckless disregard for the truth.
The court also underscored the policy implications of imposing a duty of care in such circumstances. It recognised that extending liability to such third-party situations without clear contractual relationships could lead to an unreasonable expansion of professional liability.
Such an expansion could have significant implications for professional practices, potentially leading to an overly cautious approach that could impede the efficiency of commercial transactions.
The distinction between contractual obligations and general duties in tort was another important aspect of the decision.
The court maintained a clear demarcation between these two areas of law, asserting that the obligations in tort should not be extended to replicate those arising from contract unless there is a compelling reason to do so.
Conclusion
Le Lievre v Gould is a significant case in delineating the scope of a professional’s duty of care towards third parties in the absence of a direct contractual relationship or fraud.
The ruling in Le Lievre v Gould reaffirms the principle that negligence alone, without a duty of care established by contract or fraudulent intent, is insufficient for establishing liability in misrepresentation cases.
This case serves as a precedent in limiting the extension of professional liability, emphasising the necessity of a direct contractual relationship or fraudulent intent for such liability to arise.
