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

Mr and Mrs Patchett chose a swimming pool contractor from SPATA’s website, relying on statements that members were vetted and covered by a bond and warranty scheme. The contractor was only an affiliate member and became insolvent. The Court of Appeal held SPATA owed no duty of care for these website statements.

Facts

The claimants, Mr and Mrs Patchett, sought a contractor to build a swimming pool at their home in 2006. The defendant, the Swimming Pool and Allied Trades Association Ltd (SPATA), is an incorporated trade association for the swimming-pool industry, whose members include most major UK pool installers.

Mr Patchett found SPATA’s website via Google. The home page, headed “WHO AND WHAT IS SPATA?”, contained a series of statements about SPATA and its members. It explained that installing a pool was a specialised task, that SPATA was the trade association for the industry, that it set standards, and that installer members were fully vetted before admission, with checks on financial record, experience and inspections of work, and were required to comply with SPATA construction standards and code of ethics, with periodic reinspections.

Paragraph 6 of the website also promoted “SPATASHIELD”, described as SPATA’s bond and warranty scheme, offering customers security that installations would be completed to SPATA standards “come what may!”. The site provided a member search facility. It also stated in paragraph 8:

“SPATA supplies an information pack and members lists which give details of suitably qualified and approved installers in the customer’s area. The pack includes a Contract Check List which sets out the questions that the customer should ask a would-be tenderer together with those which must be asked of the appointed installer before work starts and prior to releasing the final payment”

From the website, Mr Patchett obtained contact details of three member companies, including Crown Pools Ltd (Crown). He obtained quotations and ultimately accepted Crown’s revised quote to install the pool and carry out landscaping works. Crown began work but, by autumn 2006, was in serious financial difficulty, stopped work and became technically insolvent. The claimants had the works completed by others, alleging substandard work and claiming a total loss of about £44,000.

The claimants’ case was that the SPATA website represented that Crown was a vetted member with high standards, that checks had been made on its creditworthiness and quality of work, and that, as a member, it fell within SPATASHIELD. In fact, Crown was only an affiliate member: only full members underwent the vetting described, could use the SPATA logo, and were covered by the SPATASHIELD bond and warranty (itself subject to limits and conditions). Crown had not been subject to the vetting process and its customers had no SPATASHIELD protection.

In a witness statement, Mr Patchett said he understood the website to mean SPATA undertook to vet, monitor and inspect its members to ensure they were, and remained, sound, competent and creditworthy contractors, and that the website provided details of contractors who had been subject to this scrutiny. He stated that, due to SPATA’s status and the statements on the website, particularly about SPATASHIELD, he only approached contractors listed as SPATA members and did not approach any non-members.

There was no direct communication between the claimants and SPATA. The claimants did not request the information pack referred to in paragraph 8. Mr Patchett mentioned SPATA membership to Crown’s director, Mr Finley, but made no enquiry about SPATASHIELD, and none of Crown’s documentation referred to SPATA or SPATASHIELD.

Issues

The central issue was whether SPATA owed the claimants a duty of care in tort in respect of allegedly negligent misstatements on its website which caused pure economic loss. This raised sub-issues:

• whether, applying the principles of Hedley Byrne, Caparo and Barclays Bank, SPATA had assumed responsibility towards website users like the claimants;
• whether there was sufficient proximity between SPATA and the claimants, and whether it was fair, just and reasonable to impose a duty of care, having regard to the website’s content and context;
• in particular, whether SPATA could reasonably expect potential customers to rely on the website statements “without independent inquiry”, or whether paragraph 8 meant that further enquiry via the information pack was to be expected before reliance;
• if a duty existed and was breached, how contributory negligence and damages should be assessed.

Judgment

Majority (Lord Clarke MR and Scott Baker LJ)

The Master of the Rolls accepted the judge’s statement of the applicable legal principles, including the threefold test (foreseeability, proximity, and whether it is fair, just and reasonable), the assumption of responsibility approach, and Lord Oliver’s analysis in Caparo of the Hedley Byrne duty, emphasising the requirement that advice be likely to be acted upon “without independent inquiry”.

Foreseeability of loss was not in issue. The key questions were proximity and fairness. Lord Clarke accepted that the website was designed to encourage people intending to install swimming pools to use SPATA members and that SPATA foresaw that such people would act on the information. The statements, particularly paragraph 6 and the listing of Crown as a member, had real persuasive force and were, in important respects, misleading because they did not disclose that there were different categories of membership and that the vetting and SPATASHIELD cover applied only to full members.

However, the judge had found an important difference between what the website actually said and what Mr Patchett understood it to mean. Lord Clarke agreed that the duty question had to be determined on the basis of the statements objectively understood, not on the claimant’s subjective reading. SPATA did not warrant that its members would remain creditworthy or that any particular installation would be competently performed; it said only that checks had been made before admission and that work had previously met SPATA standards, with periodic reinspections.

Crucially, Lord Clarke held that, when read as a whole, the website did not invite reliance without further enquiry. Paragraph 8 was central. It showed that SPATA supplied an information pack and members’ lists giving details of suitably qualified and approved installers, and that the pack contained a contract checklist of questions to be asked of would-be tenderers and the appointed installer. He endorsed the trial judge’s view that potential customers would be expected to obtain the information pack and that SPATA could reasonably expect users to take the website as a whole “not a bit here and a bit there” and seek further information.

Lord Clarke considered Sir Brian Neill’s list of factors for negligent misstatement and concluded that the relationship between SPATA and the claimants was not that of adviser and advisee but closer to that between a trade association and members of the public. While SPATA was not a complete stranger to users of the website, the degree of proximity was insufficient to give rise to a duty. The degree of intended and reasonably foreseeable reliance was limited by paragraph 8, which urged further enquiry via the information pack.

He agreed with the judge that the third criterion identified by Lord Oliver – that it be known that the advice will be relied upon “without independent inquiry” – was not satisfied. The website was “a first step in a process”, and it would be “particularly surprising” for a customer to rely on information about SPATASHIELD without obtaining policy terms or further detailed documentation. As he put it:

“Looking at the material objectively and in context, the website is to be seen as a first step in a process. That is how it reads, and viewed objectively that is how SPATA present it. The information pack is not said to be an essential next step, but that is the step which it obviously encourages. It would be particularly surprising to find a customer rely on the information as to the SPATASHIELD scheme without obtaining a copy of the policy, or some more detailed document confirming the terms of the cover.”

On this analysis, SPATA had not assumed legal responsibility to the claimants for the accuracy of the website statements without the further enquiry the site itself urged. There was therefore insufficient proximity and it would not be fair, just and reasonable to impose a duty of care.

On contributory negligence, the judge had said that, if a duty existed, he would have found the claim barred by 100% contributory negligence, mainly because the claimants failed to investigate SPATASHIELD and would have discovered that Crown was not covered. Lord Clarke thought that went too far, but still considered the claimants substantially at fault for failing to obtain the information pack or enquire further about the bond and warranty scheme, particularly given their business experience. Had a duty existed, he would have reduced damages by 75% for contributory negligence.

On causation and quantum, the judge had held that, if there were liability, the recoverable loss would be limited to the 20% SPATASHIELD cover (about £11,630). Lord Clarke doubted that measure, considering that in tort the loss should be assessed on the basis that the misrepresentation had not been made at all, in which case the claimants would not have contracted with Crown, and loss would be assessed on the pleaded calculation and then reduced for contributory negligence. However, these points were obiter because he concluded no duty existed and the appeal should be dismissed.

Lord Clarke also rejected any notion that websites are subject to different principles:

“I do not think that the mere fact that the representations were contained on a website supports the conclusion that a duty of care is owed. As ever, all depends on the circumstances. Some websites are interactive and it may be possible, applying the principles outlined above, to conclude in particular circumstances that a duty is owed. However, I agree with the judge that that is not the case here.”

Scott Baker LJ agreed with the Master of the Rolls that the appeal should be dismissed. He emphasised that the same legal principles apply to website misrepresentations as to statements in any other public medium:

“I too would like to emphasise that no different legal principles apply to misrepresentations on a website than to those anywhere else in the public domain.”

He accepted that some statements on the SPATA website, read in isolation, were untrue or liable to mislead, particularly the implication that Crown, as a listed member, had been vetted and was covered by SPATASHIELD. However, he regarded it as “crucial” to read the statements as a whole, including the reference to the information pack. He agreed with the judge that a potential customer would be expected to obtain the pack and, had Mr Patchett done so, he would immediately have discovered that Crown was not a full member and not covered by SPATASHIELD. The omission to distinguish full and affiliate members on the website’s drop-down list was insufficient to establish liability because readers were directed to the information pack, which contained the relevant distinctions.

Dissent (Lady Justice Smith)

Lady Justice Smith reached the opposite conclusion on duty. She accepted the Master of the Rolls’ summary of the law but differed in its application.

She considered that SPATA’s website was aimed specifically at people intending to install a pool and looking for a contractor, and that its commercial purpose was to persuade those people to use SPATA members. Accordingly, the representations were not made “to all and sundry” but to a defined class whom SPATA wished to attract. She regarded this as establishing “a considerable degree of proximity”; the real issue was whether, having regard to that proximity, it was fair, just and reasonable to impose a duty.

In her view, the website’s “essential message” to a reasonably careful prospective customer was that SPATA was a responsible body which could be relied upon to identify competent and financially sound installers. The site presented SPATA as trustworthy and in a regulatory role, setting standards and vetting installers. It was entirely foreseeable that potential customers would rely on SPATA’s expertise and trustworthiness.

She understood that, but for paragraph 8, the majority would have accepted that it was fair, just and reasonable to impose a duty. She therefore focused on whether paragraph 8 should be read as indicating that no reliance should be placed on the website without first obtaining the information pack. She disagreed with that reading. Referring to paragraph 8, she said:

“With great respect, I cannot agree that this paragraph does more than offer the further information which may be gathered from the pack.”

She noted that the first sentence simply offered an information pack and members’ lists, but a customer could obtain a list of members directly from the website without requesting the pack. The second sentence referred to advice on what questions to ask contractors, but there was nothing to suggest that the pack was needed to check the credentials of listed members or to limit the reliance that could be placed on a statement that an installer was a SPATA member. Nor was there anything to indicate that the pack was necessary as a check on the accuracy of information provided on the website itself.

Although, in fact, the information pack would have revealed that Crown was not a full member, Lady Justice Smith considered that this hindsight should not colour the objective assessment of what the website invited readers to do. She rejected the characterisation of the website as merely “the first step in the process”: in her view, the customer was given an option to request the pack and might reasonably decide not to do so. Objectively, she concluded, the website invited reliance on the qualities inherent in SPATA membership without further enquiry, and SPATA therefore owed a duty to take reasonable care that its website information was accurate. Breach and reliance were accepted; subject to contributory negligence, she would have found SPATA liable.

On contributory negligence, she agreed that the claimants were negligent in failing to enquire about SPATASHIELD and in not noticing that Crown’s quotation did not display the SPATA logo, but considered these matters went to contributory negligence, not to the existence of any duty. She agreed with the Master of the Rolls that, if liability were established, a 75% reduction would be appropriate and agreed with his observations on damages. However, these points were academic given the majority’s conclusion.

Implications

This decision confirms that negligent misstatement principles apply equally to information published on websites. Trade associations and similar bodies do not automatically incur a duty of care to those who act on public-facing material. Whether a duty arises depends on proximity, assumption of responsibility and whether reliance without further enquiry is anticipated.

The case illustrates that, where a website explicitly or implicitly encourages users to seek further information (for example, via an information pack or other material), courts may regard the site as only a preliminary step in a decision-making process. That can limit proximity and preclude a finding that the publisher should expect its statements to be relied upon “without independent inquiry”.

The judgment also underscores that, although misleading or incomplete web content is undesirable, not every inaccuracy will give rise to tortious liability for pure economic loss. Potential claimants’ own failures to seek readily available further information may be treated either as negating duty or, if a duty exists, as giving rise to substantial contributory negligence.

Verdict: Appeal dismissed; SPATA was held not to owe the claimants a duty of care in respect of statements on its website.

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