Patchett v Swimming Pool and Allied Trades Assn Ltd [2009] EWCA Civ 717

Claimants hired a fraudulent swimming pool installer they found on the website of a trade association (SPATA). When they lost money, they sued SPATA for negligent misstatement. The court held SPATA owed no duty of care, as the website provided general information with disclaimers, not a specific representation upon which the claimants could justifiably rely.

Facts

The claimants, Mr and Mrs Patchett, wished to install a swimming pool at their home. They visited the website of the defendant, the Swimming Pool and Allied Trades Association Ltd (SPATA), a trade body for the swimming pool industry. On the website, they found a company called Crown Pools listed as a SPATA member. The website promoted the benefits of using a SPATA member, referencing a Code of Ethics and high standards. Relying on this apparent endorsement, the Patchetts contracted with Crown Pools, paying a significant deposit of £32,586. It transpired that the individual behind Crown Pools, Mr Bayman, was a convicted fraudster who had provided false information to SPATA to gain membership. The company became insolvent, and the Patchetts lost their deposit. They sued SPATA in tort for their economic loss, alleging negligent misstatement.

Issues

The central legal issue was whether SPATA owed a duty of care to the claimants, as members of the public using its website, to prevent them from suffering economic loss. This depended on whether the principles of negligent misstatement, established in Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465, were satisfied. Specifically, the court had to determine:
1. Whether SPATA, by listing Crown Pools on its website, had assumed a responsibility to the claimants for the accuracy of that information or for the reliability of its member.
2. Whether it was reasonable for the claimants to have relied on the information on the website without making further enquiries.
3. Whether the disclaimers and terms of use on the SPATA website were sufficient to negate any potential duty of care.

Judgment

The Court of Appeal allowed SPATA’s appeal, overturning the trial judge’s decision. Lord Justice Ward, giving the leading judgment, held that no duty of care was owed by SPATA to the Patchetts.

The court analysed the information presented on the SPATA website. It was considered to be information provided to the world at large, not a specific statement or advice directed at the claimants. Ward LJ distinguished the case from the classic negligent misstatement scenario:

This is not the classic Hedley Byrne situation where a specific inquiry is made of a defendant and a specific answer is given which is relied upon. This is a case where the information is published to the world at large.

The judgment stressed that merely displaying a member’s logo and details on a website did not amount to an assumption of responsibility for that member’s financial stability or probity. The purpose was to distinguish members from non-members, not to provide a guarantee. Ward LJ stated:

In my judgment the message is clear. It is distinguishing between members and non-members. It is extolling the virtues of members who have to meet certain standards to gain admission and who have to abide by a code of ethics in their trading. All of that is valuable information to the consumer. It does not carry any further message. It is not a warranty that the member will behave. It does not warrant his financial probity.

Crucially, the court found that the website’s terms and conditions contained an effective disclaimer of liability. The terms of use included a clause stating that SPATA was not responsible for any loss arising from reliance on the information contained on the website. This was deemed sufficient to negate any assumption of responsibility that might otherwise have arisen.

In the light of a clear warning that SPATA is not responsible for any loss arising from reliance on the information, I cannot see how it can be said that SPATA have assumed a responsibility for the accuracy of the information provided or have held out that a member can be relied upon to be financially sound. In my judgment the disclaimer is clear and compendious and it is fatal to the claim.

Therefore, the court concluded that the relationship between SPATA and the Patchetts was not sufficiently proximate to give rise to a duty of care. The information was general, and SPATA had expressly disclaimed responsibility for it.

Implications

This case is significant for clarifying the extent of the duty of care owed by trade associations and operators of websites that provide information to the public. It establishes that, in the absence of a specific enquiry or a special relationship, providing a list of members is unlikely to create an assumption of responsibility for the conduct or financial soundness of those members. The judgment highlights the effectiveness of clear and prominent website disclaimers in negating a duty of care for negligent misstatement. It serves as a strong precedent limiting the liability of online information providers, emphasizing that users cannot blindly rely on such information and may need to conduct their own due diligence.

Verdict: The appeal was allowed. The judgment for the claimants was set aside and judgment was entered for the defendant, SPATA.

Source: Patchett v Swimming Pool and Allied Trades Assn Ltd [2009] EWCA Civ 717