Weston v John Gribben

This judgment arises out of consideration of the Second Defendant’s application issued on 6^th October 2005 for summary judgment against the Claimant pursuant to Part 24 in relation both to his alleged course of action against it in negligence and in misfeasance in a public office. Alternatively the Second Defendant seeks the same relief pursuant to CPR 3.4 (2) (a).

The basis for both applications is that the matters complained about by the Claimant (which I shall set out below) has no sufficient causal connection with the losses sustained by him and/or fall outside the scope of any duty of care owed to him by the Second Defendant. The basis for that claim is said to be the principle of law identified by Lord Hoffman in South Australia Asset Management Corporation v York Montague [1997] AC 191at 210-216.

The Claimant (“Mr Weston”) at all material times was the director of a Spanish registered company known as Grass Inversiones S.L. (“Grass”). It was the legal owner of 28 residential units in Dominion Beach Malaga (“Dominion Beach”).

He was in addition the chairman of a company known as Allied European Holdings Limited registered in the Cayman Islands and it was the legal owner of a property in Barcelona (“the Barcelona Property”).

Further the Claimant at all material times was the owner of a berth at Puerto Banus number 157 Marbella (“the Berth”).

The First Defendant against whom Mr Weston obtained judgment in default on 4^th April 2005 is a Notary authorised (inter alia) to notarise documents within the jurisdiction of Scotland.

The Second Defendant is the Foreign and Commonwealth Office (“FCO”).

I set out the facts which are assumed to be the position for the purposes of the FCO’s application. I should make it clear that the facts are assumed; they are not all accepted.

Equally for the purposes of FCO’s application it accepts but reserves its position if the matter proceeds to trial:-

As will appear in this judgment the FCO’s attack is based solely on its contention that there is no causal link between the alleged acts of complaint against it to the loss sustained by Mr Weston.

By virtue of his directorship, chairmanship and personal ownership it is contended by Mr Weston that he had control of the 3 Spanish properties namely Dominion Beach, the Barcelona Property and the Berth.

It is alleged that on the evening of 19^th October 1998 the First Defendant purported to notarise in the public bar at the Grosvenor Hotel London and stamp 4 documents each with a typed name of Mr Weston and a signature purporting to his at the end of the document signed and dated them and added the declaration “duly signed and notarised before me John Gribben, notary public at London on 19^th day of October 1998”.

It is alleged that the First Defendant well knew that reliance would be placed by third parties on his execution of the document as conclusive proof and or confirmation of the authenticity of the identity of the person who signed the document and that the signatory had assented to the contents of the document by signing the same. It is further alleged that he owed Mr Weston a duty of care to ensure that any document purportedly signed by him was indeed signed by him and he assents to the contents of such documents.

Mr Weston contends that he did not meet the First Defendant as alleged and did not sign any documents and at no time was he in London on 19^th October 1998.

Various allegations of negligence are set out in paragraph 21 of the Particulars of Claim against the First Defendant which are not material for my consideration.

It’s functions derive from the Hague Convention abolishing the requirement of legalisation for foreign documents (dated 5^th October 1961). Both the United Kingdom and Spain are signatories. The former practice was for public documents executed in State A for use in State B to be subject to the cumbersome procedure of “legalisation” by diplomatic or consular authorities of State A. Officials would be required to carry out specific checks of the Public Notary.

The post 1961 practice is that such checks are carried out by the Contracting State on a centralised basis: as far as England, Scotland and Wales is concerned by the FCO in London. English and Welsh notaries are registered at the Faculty Office of the Archbishop of Canterbury; Scottish Notaries at the Law Society of Scotland. The FCO’s functions cover both legal jurisdictions.The Hague Convention has the following provisions that are relevant to the issue before me:-

“2.

Each Contracting State shall exempt from legislation documents to which the present Convention applies and which have to be produced in its territory. For the purposes of the present Convention, legislation means only the formality by which the diplomatic or consular agents of the country in which the document has to be produced certify the authenticity of the signature, the capacity in which the person signing the document has acted and, where appropriate, the identity of the seal or stamp which it bears.

3.

The only formality that may be required in order to certify the authenticity of the signature, the capacity in which the person signing the document has acted and, where appropriate, the identity of the seal or stamp which it bears, is the addition of the certificate described in Article 4, issued by the competent authority of the State from which the document emanates…

4.

The certificate referred to in the first paragraph of Article 3 shall be placed on the document itself or on an “allonge”; it shall be in the form of the model annexed to the present Convention…”

The certificates referred to in article 3 are called apostilles which apparently is the French word for notation. The schedule to the convention sets out the form of the apostilles. All of the apostilles follow that form and set out a number of certificates. The first certificate (being number 2 in the apostille) is that the document has been signed by the notary. The second (item 3) is that it was signed “acting in the capacity of Notary Public” and the third (item 4) “bears the seal/stamp of said Notary Public”.

All of the apostilles bear the stamp of the FCO and all are dated 6^th November 1998 and have been signed by a Ms A Campbell for the Secretary of State.

There is one oddity in that 2 apostilles have apparently been given the same number (G58366) but nothing turns on that.

The First Defendant’s signature on the notarised documents is genuine.

It is important to appreciate the significance in my view of an apostille. It is attached to the notarised document in accordance with the convention and is intended to provide a straight forward way of dispensing with the formal methods of “legalisation” for foreign public documents. It therefore reduced the burdens on the FCO and provided a method whereby the FCO would certify the authenticity of the documents and the notary status as set out in the convention. I was told by Mr Jay QC who appears for the FCO that Ms Campbell for example would make determinations on approximately between 50 and 100 such documents a day.

For the purposes of the present application FCO accepts in addition to the concession of duties referred to above that the First Defendant had no power to carry out his notarial duties in England and Wales (see section 1 of the Public Notaries Act 1801). He was registered in Scotland and not in England. For the purposes of the present application FCO also accepts that certificate 3 is accordingly incorrect in that the First Defendant could not carry out his notarial functions in England and Wales which he purported to do as appears from his signing and that was clear from the documents.

The procedure for providing the apostille is set out in paragraph 17 and 18 of FCO’s defence and depended on whether the documents were presented by post or in person. It is accepted by FCO for the purpose of the present application that the procedures were not carried out correctly. This seems to me possibly to be an inevitable concession. The First Defendant if he was registered at all with a specimen signature would have been registered on the index kept for the Law Society of Scotland. If his signature has been authenticated or by checking it can only have been done against such an index. If the signature was not checked because it was known to Ms Campbell there appears to have been a failure to note that the First Defendant a Scottish Notary was purporting to notarise a document in England. Assuming that he cannot do that then the FCO has provided an incorrect certificate because he is not carrying out his functions as a notary because he cannot do those in England. I accept of course that the FCO reserves the right to argue at trial that he can actually discharge his functions in England. It may also be the case that it is unusual for documents presented for legislation under the convention to identify where the notary is discharging his functions.

Mr Weston alleges that two people armed with these false documents apparently duly notarised with the apostilles attached to them fraudulently obtained the three properties.

He has recovered the Barcelona property but that cost him £37,000 in legal fees. He lost the Dominion Beach properties which are said to be worth £12,000,000 and incurred expenses of £109,000 in an attempt to recover the Dominion Beach and the Berth. He has also lost the value of the Berth which he contends is £510,000. His claim is therefore nearly £13,000,000.

Mr Weston provided a witness statement in opposition to the present application. It seems to me three paragraphs are relevant to the present application and I set them out in full:-

Paragraph 15 “At the conclusion of the case in the Barcelona High Court, it was decided that Goldstone and Villette were the prime movers in the fraud. However, unfortunately it was not possible to recover the Dominion Beach Property. I understand that this was because the documents produced to enable the Dominion Beach Property to be transferred away from Grass were on their face genuine and authenticated by the British government’s apostilles”.

Paragraph 20 “My enquiries discovered that the Barcelona Property was transferred into the name of a Spanish company called Golden Promest SL. Within the Barcelona High Court proceedings, I was able to show that Golden Promest SL was beneficially owned by Mr Alvarez’s father. Fortunately, I was able to recover the Barcelona Property. As explained in the Particulars of Claim, the damages claimed in relation to the Barcelona Property comprise the substantial legal expenses involved in effecting its eventual successful recovery”.

Paragraph 22 “Enquiries that I made in Spain revealed that the Berth was purchased by a German lawyer based in Malaga. My Spanish lawyers inform me that the gentleman in question is believed to have purchased in good faith. I am advised that there is no realistic chance of recovering the Berth”.

FCO do not accept that the decision of the Barcelona High Court is correct in law and contend that it is not binding on it. For the purpose of the present application however I am bound to assume that the reason why Mr Weston failed to recover the properties was because of the presence of the apostilles which enabled somebody dealing with a person putting forward those documents to believe that they were genuinely executed documents.

As I set out above the reason given is based on the judgment of Lord Hoffman in Saamco at pages 214-217.

That part of his judgment is as follows:-

[210] “The Court of Appeal (Banque Bruxelles Lambert SA v Eagle Star Insurance Co Ltd and other appeals [1995] 2 All ER 769, [1995] QB 375) decided that in a case in which the lender would not otherwise have lent (which they called a ‘no-transaction’ case), he is entitled to recover the difference between the sum which he lent, together with a reasonable rate of interest, and the net sum which he actually got back. The valuer bears the whole risk of a transaction which, but for his negligence, would not have happened. He is therefore liable for all the loss attributable to a fall in the market. They distinguished what they called a ‘successful transaction’ case, in which the evidence shows that if the lender had been correctly advised, he would still have lent a lesser sum on the same security. In such a case, the lender can recover only the difference between what he has actually lost and what he would have lost if he had lent the lesser amount. Since the fall in the property market is a common element in both the actual and the hypothetical calculations, it does not increase the valuer’s liability.
   The valuers appeal. They say that a valuer provides an estimate of the value of the property at the date of the valuation. He does not undertake the role of a prophet. It is unfair that merely because for one reason or other the lender would not otherwise have lent, the valuer should be saddled with the whole risk of the transaction, including a subsequent fall in the value of the property.
   Much of the discussion, both in the judgment of the Court of Appeal and in argument at the Bar, has assumed that the case is about the correct measure of damages for the loss which the lender has suffered. The Court of Appeal ([1995] 2 All ER 769 at 838, [1995] QB 375 at 401–402) began its judgment with the citation of three well-known cases, Robinson v Harman (1848) 1 Exch 850 at 855, [1843–60] All ER Rep 383 at 385, Livingstone v Rawyards Coal Co (1880) 5 App Cas 25 at 39 and British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Rlys Co of London Ltd [1912] AC 673 at 688–689, [1911–13] All ER Rep 63 at 69, stating the principle that where an injury is to be compensated by damages, the damages should be as nearly as possible the sum which would put the plaintiff in the position [211] in which he would have been if he had not been injured. It described this principle as ‘the necessary point of departure’ (see [1995] 2 All ER 769 at 839, [1995] QB 375 at 403).
   I think that this was the wrong place to begin. Before one can consider the principle on which one should calculate the damages to which a plaintiff is entitled as compensation for loss, it is necessary to decide for what kind of loss he is entitled to compensation. A correct description of the loss for which the valuer is liable must precede any consideration of the measure of damages. For this purpose it is better to begin at the beginning and consider the lender’s cause of action.
   The lender sues on a contract under which the valuer, in return for a fee, undertakes to provide him with certain information. Precisely what information he has to provide depends, of course, upon the terms of the individual contract. There is some dispute on this point in respect of two of the appeals, to which I shall have to return. But there is one common element which everyone accepts. In each case the valuer was required to provide an estimate of the price which the property might reasonably be expected to fetch if sold in the open market at the date of the valuation.
   There is again agreement on the purpose for which the information was provided. It was to form part of the material on which the lender was to decide whether, and if so how much, he would lend. The valuation tells the lender how much, at current values, he is likely to recover if he has to resort to his security. This enables him to decide what margin, if any, an advance of a given amount will allow for: a fall in the market; reasonably foreseeable variance from the figure put forward by the valuer (a valuation is an estimate of the most probable figure which the property will fetch, not a prediction that it will fetch precisely that figure); accidental damage to the property and any other of the contingencies which may happen. The valuer will know that if he overestimates the value of the property, the lender’s margin for all these purposes will be correspondingly less.
   On the other hand, the valuer will not ordinarily be privy to the other considerations which the lender may take into account, such as how much money he has available, how much the borrower needs to borrow, the strength of his covenant, the attraction of the rate of interest, or the other personal or commercial considerations which may induce the lender to lend.
   Because the valuer will appreciate that his valuation, though not the only consideration which would influence the lender, is likely to be a very important one, the law implies into the contract a term that the valuer will exercise reasonable care and skill. The relationship between the parties also gives rise to a concurrent duty in tort (see Henderson v Merrett Syndicates Ltd, Hallam-Eames v Merrett Syndicates Ltd, Hughes v Merrett Syndicates Ltd, Arbuthnott v Feltrim Underwriting Agencies Ltd, Deeny v Gooda Walker Ltd (in liq) [1994] 3 All ER 506, [1995] 2 AC 145). But the scope of the duty in tort is the same as in contract.
   A duty of care such as the valuer owes does not, however, exist in the abstract. A plaintiff who sues for breach of a duty imposed by the law (whether in contract or tort or under statute) must do more than prove that the defendant has failed to comply. He must show that the duty was owed to him and that it was a duty in respect of the kind of loss which he has suffered. Both of these requirements are illustrated by Caparo Industries plc v Dickman [1990] 1 All ER 568, [1990] 2 AC 605. The auditors’ failure to use reasonable care in auditing the company’s statutory accounts was a breach of their duty [212] of care. But they were not liable to an outside take-over bidder because the duty was not owed to him. Nor were they liable to shareholders who had bought more shares in reliance on the accounts because, although they were owed a duty of care, it was in their capacity as members of the company and not in the capacity (which they shared with everyone else) of potential buyers of its shares. Accordingly, the duty which they were owed was not in respect of loss which they might suffer by buying its shares. As Lord Bridge of Harwich said ([1990] 1 All ER 568 at 581, [1990] 2 AC 605 at 627):

   ‘It is never sufficient to ask simply whether A owes B a duty of care. It is always necessary to determine the scope of the duty by reference to the kind of damage from which A must take care to save B harmless.’

In the present case, there is no dispute that the duty was owed to the lenders. The real question in this case is the kind of loss in respect of which the duty was owed.
   How is the scope of the duty determined? In the case of a statutory duty, the question is answered by deducing the purpose of the duty from the language and context of the statute (see Gorris v Scott (1874) LR 9 Exch 125). In the case of tort, it will similarly depend upon the purpose of the rule imposing the duty. Most of the judgments in Caparo are occupied in examining the Companies Act 1985 to ascertain the purpose of the auditor’s duty to take care that the statutory accounts comply with the Act. In the case of an implied contractual duty, the nature and extent of the liability is defined by the term which the law implies. As in the case of any implied term, the process is one of construction of the agreement as a whole in its commercial setting. The contractual duty to provide a valuation and the known purpose of that valuation compel the conclusion that the contract includes a duty of care. The scope of the duty, in the sense of the consequences for which the valuer is responsible, is that which the law regards as best giving effect to the express obligations assumed by the valuer: neither cutting them down so that the lender obtains less than he was reasonably entitled to expect, nor extending them so as to impose on the valuer a liability greater than he could reasonably have thought he was undertaking.
   What therefore should be the extent of the valuer’s liability? The Court of Appeal said that he should be liable for the loss which would not have occurred if he had given the correct advice. The lender having, in reliance on the valuation, embarked upon a transaction which he would not otherwise have undertaken, the valuer should bear all the risks of that transaction, subject only to the limitation that the damage should have been within the reasonable contemplation of the parties.
   There is no reason in principle why the law should not penalise wrongful conduct by shifting on to the wrongdoer the whole risk of consequences which would not have happened but for the wrongful act. Hart and Honoré Causation in the Law (2nd edn, 1985) p 120 say that it would, for example, be perfectly intelligible to have a rule by which an unlicensed driver was responsible for all the consequences of his having driven, even if they were unconnected with his not having a licence. One might adopt such a rule in the interests of deterring unlicensed driving.

[213] But that is not the normal rule. One may compare, for example, Western Steamship Co Ltd v NV Konninklijke Rotterdamsche Lloyd, The Empire Jamaica [1955] 3 All ER 60 at 61, [1955] P 259 at 264 per Evershed MR, in which a collision was caused by a ‘blunder in seamanship of … a somewhat serious and startling character’ by an uncertificated second mate. Although the owners knew that the mate was not certificated and it was certainly the case that the collision would not have happened if he had not been employed, it was held in limitation proceedings that the damage took place without the employers’ ‘actual fault or privity’ because the mate was in fact experienced and (subject to this one aberration) competent (see [1955] 3 All ER 60 at 69, [1955] P 259 at 271). The collision was not, therefore, attributable to his not having a certificate. The owners were not treated as responsible for all the consequences of having employed an uncertificated mate, but only for the consequences of his having been uncertificated.
   Rules which make the wrongdoer liable for all the consequences of his wrongful conduct are exceptional and need to be justified by some special policy. Normally the law limits liability to those consequences which are attributable to that which made the act wrongful. In the case of liability in negligence for providing inaccurate information, this would mean liability for the consequences of the information being inaccurate.
   I can illustrate the difference between the ordinary principle and that adopted by the Court of Appeal by an example. A mountaineer about to undertake a difficult climb is concerned about the fitness of his knee. He goes to a doctor who negligently makes a superficial examination and pronounces the knee fit. The climber goes on the expedition, which he would not have undertaken if the doctor had told him the true state of his knee. He suffers an injury which is an entirely foreseeable consequence of mountaineering, but has nothing to do with his knee.

   On the Court of Appeal’s principle, the doctor is responsible for the injury suffered by the mountaineer because it is damage which would not have occurred if he had been given correct information about his knee. He would not have gone on the expedition and would have suffered no injury. On what I have suggested is the more usual principle, the doctor is not liable. The injury has not been caused by the doctor’s bad advice, because it would have occurred even if the advice had been correct.
   The Court of Appeal summarily rejected the application of the latter principle to the present case, saying ([1995] 2 All ER 769 at 840, [1995] QB 375 at 404):

‘The complaint made and upheld against the valuers in these cases is … not that they were wrong. A professional opinion may be wrong without being negligent. The complaint in each case is that the valuer expressed an opinion that the land was worth more than any careful and competent valuer would have advised.’

I find this reasoning unsatisfactory. It seems to be saying that the valuer’s liability should be restricted to the consequences of the valuation being wrong if he had warranted that it was correct, but not if he had only promised to use reasonable care to see that it was correct. There are, of course, differences between the measure of damages for breach of warranty and for injury caused by negligence, to which I shall return. In the case of liability for providing inaccurate information, however, it would seem

[214] paradoxical that the liability of a person who warranted the accuracy of the information should be less than that of a person who gave no such warranty but failed to take reasonable care.
   Your Lordships might, I would suggest, think that there was something wrong with a principle which, in the example which I have given, produced the result that the doctor was liable. What is the reason for this feeling? I think that the Court of Appeal’s principle offends common sense because it makes the doctor responsible for consequences which, though in general terms foreseeable, do not appear to have a sufficient causal connection with the subject matter of the duty. The doctor was asked for information on only one of the considerations which might affect the safety of the mountaineer on the expedition. There seems no reason of policy which requires that the negligence of the doctor should require the transfer to him of all the foreseeable risks of the expedition.
   I think that one can to some extent generalise the principle upon which this response depends. It is that a person under a duty to take reasonable care to provide information on which someone else will decide upon a course of action is, if negligent, not generally regarded as responsible for all the consequences of that course of action. He is responsible only for the consequences of the information being wrong. A duty of care which imposes upon the informant responsibility for losses which would have occurred even if the information which he gave had been correct is not in my view fair and reasonable as between the parties. It is therefore inappropriate either as an implied term of a contract or as a tortious duty arising from the relationship between them.
   The principle thus stated distinguishes between a duty to provide information for the purpose of enabling someone else to decide upon a course of action and a duty to advise someone as to what course of action he should take. If the duty is to advise whether or not a course of action should be taken, the adviser must take reasonable care to consider all the potential consequences of that course of action. If he is negligent, he will therefore be responsible for all the foreseeable loss which is a consequence of that course of action having been taken. If his duty is only to supply information, he must take reasonable care to ensure that the information is correct and if he is negligent, will be responsible for all the foreseeable consequences of the information being wrong.
   I think that this principle is implicit in the decision of this House in Banque Financière de la Cité SA v Westgate Insurance Co Ltd sub nom Banque Keyser Ullmann SA v Skandial (UK) Insurance Co Ltd [1990] 2 All ER 947, [1991] 2 AC 249. Some banks had lent a large sum of money on the security of, first, property which the borrower had represented to be valuable, and, secondly, insurance policies against any shortfall on the realisation of the property. When the borrower turned out to be a swindler and the property worthless, the insurers relied upon a fraud exception in the policies to repudiate liability. The banks discovered that the agent of their broker who had placed the insurance had, by an altogether separate fraud, issued cover notes in respect of non-existent policies for part of the risk. This had come to the knowledge of one of the insurers before a substantial part of the advances had been made. The banks claimed that the insurers were under a duty of good faith to disclose this information and that, if [215] they had done so, the banks would have so distrusted the brokers that they would have made no advance and therefore suffered no loss.
   Lord Templeman (with whom all the other members of the House agreed) dealt with the matter in terms of causation. He said that assuming a duty to disclose the information existed, the breach of that duty did not cause the loss. The failure to inform the lenders of the broker’s fraud induced them to think that valid policies were in place. But even if this had been true, the loss would still have happened. The insurers would still have been entitled to repudiate the policies under the fraud exception.
   Lord Templeman could only have dealt with the case in this way if he thought it went without saying that the insurers’ duty to provide information made them liable, not for all loss which would not have been suffered if the information had been given, but only for loss caused by the lender having lent on a false basis, namely, in the belief that insurance policies had been effected. If that had not been the principle which the House was applying, the discussion of whether the non-existence of the policies had caused the loss would have been irrelevant. I respectfully think that the underlying principle was right and that it is decisive of this case. The Court of Appeal distinguished Banque Financière de la Cité on the ground that the insurers could not have foreseen the borrower’s fraud. No doubt this is true: it shows that the rule that damages are limited to what was within the reasonable contemplation of the parties, can sometimes make arguments over the scope of the duty academic. But I do not think it was the way the House actually decided the case. Lord Templeman’s speech puts the matter firmly on the ground of causation and the analysis makes sense only on the footing that he was concerned with the consequences to the lenders of having lent without knowing the true facts, rather than with what would have been the consequences of disclosure.
   The principle that a person providing information upon which another will rely in choosing a course of action is responsible only for the consequences of the information being wrong is not without exceptions. This is not the occasion upon which to attempt a list, but fraud is commonly thought to be one. In Doyle v Olby (Ironmongers) Ltd [1969] 2 All ER 119 at 122, [1969] 2 QB 158 at 167 Lord Denning MR said:

“The defendant is bound to make reparation for all the actual damage directly flowing from the fraudulent inducement. The person who has been defrauded is entitled to say: “I would not have entered into this bargain at all but for your representation …”

Such an exception, by which the whole risk of loss which would not have been suffered if the plaintiff had not been fraudulently induced to enter into the transaction is transferred to the defendant, would be justifiable both as a deterrent against fraud and on the ground that damages for fraud are frequently a restitutionary remedy.
   The question of liability for fraud does not arise in this case, and I therefore confine myself to two observations. The first is that although I have said that fraud is commonly thought to be an exception, Hobhouse LJ seems to have expressed a contrary view in the recent case of Downs v Chappell [1996] 3 All ER 344 at 362, when he said that the damages recoverable for fraudulent misrepresentation should not be greater than [216] the loss which would have been suffered ‘had the represented, or supposed, state of affairs actually existed’. In other words, the defendant should not be liable for loss which would have been a consequence of the transaction even if the representation had been true. This, as I have said, is what I conceive to be in accordance with the normal principle of liability for wrongful acts. But liability for fraud, or under s 2(1) of the Misrepresentation Act 1967, for a negligent misrepresentation inducing a contract with the representor, has usually been thought to extend to all loss suffered in consequence of having entered into the transaction. We have received written representations on Downs v Chappell, which was decided after the conclusion of the oral argument, but since the issue in that case is not before the House, I prefer not to express any concluded view.
   My second observation is that, even if the maker of the fraudulent misrepresentation is liable for all the consequences of the plaintiff having entered into the transaction, the identification of those consequences may involve difficult questions of causation. The defendant is clearly not liable for losses which the plaintiff would have suffered even if he had not entered into the transaction or for losses attributable to causes which negative the causal effect of the misrepresentation.
   The measure of damages in an action for breach of a duty to take care to provide accurate information must also be distinguished from the measure of damages for breach of a warranty that the information is accurate. In the case of breach of a duty of care, the measure of damages is the loss attributable to the inaccuracy of the information which the plaintiff has suffered by reason of having entered into the transaction on the assumption that the information was correct. One therefore compares the loss he has actually suffered, with what his position would have been if he had not entered into the transaction and asks what element of this loss is attributable to the inaccuracy of the information. In the case of a warranty, one compares the plaintiff’s position as a result of entering into the transaction with what it would have been if the information had been accurate. Both measures are concerned with the consequences of the inaccuracy of the information, but the tort measure is the extent to which the plaintiff is worse off because the information was wrong, whereas the warranty measure is the extent to which he would have been better off if the information had been right.”

All of the appeals were on the basis of 2 common features namely that if the lender had known the true value of the property he would not have lent and second that a fall in the property market after the date of valuation greatly increased the loss which the lender suffered.

The main platform for FCO’s submission is the well known paragraph of Lord Hoffman’s judgment at page 213 d-e above where he gives his mountaineering example.

In my view the mountaineering example has been much overplayed. It is but a factual example designed to show how the Doctor cannot be liable for an injury which is an entirely foreseeable consequence of mountaineering but which has nothing to do with the knee. The analogy cannot be pressed too far. Thus for example in “McGregor on Damages” (paragraph 6-122) the mountaineering example is further investigated:-

“Also reasonably straightforward is Lord Hoffman’s illustration in SAAMCO now cited, it seems, upon every conceivable occasion, of the man who would not have gone mountaineering had he been properly advised by his doctor of a weak knee. It is not going to be part of the duty of the doctor to protect the man from accidents unrelated to the condition of his knee. If, on the other hand, the accident, or any other accident, is attributed to the knee and happens in the course of an activity in which the man would not have engaged but for the doctors’s advice, this would fall within the scope of the duty. But cases can be difficult to resolve as to the scope of the duty, as is shown by the opposing views often taken of a case by the House of Lords, the Court of Appeal and the court of first instance. Contrasts abound. ”

In my view no generalised rule can be drawn from Lord Hoffman’s judgment in SAAMCO. What he is saying is on the facts of each case the question to be decided is whether the loss “is the kind of loss in respect of which the duty isowed” [ibid] at page 212 (c).

It is important to appreciate that the argument in SAAMCO was whether or not the surveyors were liable for all losses which were occasioned to the lenders as a result of embarking upon a transaction which they would not otherwise have undertaken.

As he says (page 214 (b)) the decision of the Court of Appeal made the doctor responsible for consequences which though in general terms were foreseeable do not appear to have sufficient cause or connection with the subject matter of the duty. “The doctor was asked for information on only one of the considerations which might affect the safety of the mountaineer on the expedition. There seems to be no reason of policy which requires that the negligent doctor should require the transfer to him of all the foreseeable acts of that expedition”.

Further on that page Lord Hoffman said this:-

“If his duty is only to supply information he must take reasonable care to ensure that the information is correct and if he is negligent he will be responsible for all the foreseeable consequences of the information being wrong”.

Mr Jay QC submits that there is a difference between the authentication of the signature for example and the certificate number 3 that the notary is carrying out his duties as a notary. I do not see that. It is certainly true that the authentication of the signature will require a more detailed task but the convention does not distinguish between authenticating the signature and certifying the notary is carrying out his functions.

The reason why Mr Jay QC seeks to draw a difference is because first he attaches significance to the fact that the First Defendant’s signature on all 4 apostilles was genuine and second at all material times he was a registered notary in Scotland.

He therefore submits (paragraph 18 of his skeleton argument) that it is purely fortuitous that documents were notarised in England as they could have been notarised in Scotland. If they had been notarised in Scotland the same fraud would have been carried out.

Alternatively Mr Jay QC in paragraph 19 of his skeleton argument puts forward another possibility. If the First Defendant took all reasonable steps to satisfy himself that the identity of the person claiming to be Mr Weston he would have no course of action against the First Defendant. He than asks rhetorically whether or not a valid cause of action could be maintained against the FCO on the grounds that the documents should not have been notarised in London?

It seems to me that both analogies are false.

One should further look at the facts. It is quite wrong to categorise the notarising in London as being fortuitous because it is that which draws attention (or ought to draw to attention) of the FCO that the First Defendant is acting outside his role as a notary because on the assumed facts and law before me he cannot discharge his functions in London. The purpose of the FCO’s actions are to provide a certificate that all of the requirements set out in the convention are satisfied. What is the purpose of such certificate? The first purpose was the international one to provide for a more easily regulated system as between the signatory countries as to the recognition of foreign documents. That was beneficial to the relevant signatory states because it reduced strains that were put on their staff. Second in my view it established a policy that the documents so authenticated could be relied upon in respect of which certificates were given. Certificates are given as to signing and capacity. That is the limit of the Barcelona Court decision.

There was a debate between Mr Jay QC and myself as to whether that meant that they were warranting them but that does not arise on the pleadings and cannot arise in favour of Mr Weston as he never relied upon these documents. It might have been otherwise of course if Mr Weston had been successful in his litigation in Spain and the people who acquired the property innocently in reliance upon the notarised documents sued the FCO.

I do not see that the SAAMCO case has any application to the present facts. The Claimant did not ask the FCO to do anything nor to provide any advice and he did nothing in reliance on anything they did or did not do. One has to ask the question, as Lord Hoffman does, what are people intended to do as a result of the FCO’s certificate? The answer to that is that they utilise the apostille fixed to the documents to demonstrate their authenticity by reference to (1) the notarisation of the Notary and (2) the certificate as to the status of the Notary by the FCO. If the FCO in carrying out its functions in the convention negligently provides a certificate it seems to me that they are arguably liable for the consequences which occur when the apostille is put to the use that it was intended for. That is far removed from the concept of an injury to a mountaineer not connected to his weak knee. Nor does the fact that the person who has possession of the documents and apostille intends to commit a fraud have any relevance. The fraud is only completed when he uses the documents to complete an apparently genuine transaction and transfer the title to innocent third parties. Those people intend to rely upon the apostille.

It seems to me therefore that it is arguable that the provision of the apostille in a negligent way has caused the loss occasioned.

The negligence of the First Defendant is irrelevant. I do not accept that if the signature could not with taking reasonable steps be shown to be a forgery (thereby exonerating D1) that exonerates FCO from any consequences of breaches of its non negligent certificate as to the discharge of the duties by the notary. The duties are separate and independent (although of course there may be claims for contributions between them).

Equally the fact that the document could have been executed in Scotland is irrelevant. It was not executed in Scotland. Had it been executed in Scotland there would have been no breach of duty because the certificate given would have correctly identified the capacity of the First Defendant.

A further point of significance in my view is the reasoning of the Barcelona Court. For the purposes of the present application it appears to be the case that Mr Weston failed to recover the properties because the Barcelona Court held that the ultimate purchasers were “on their face genuine and authenticated by the British Government’s apostilles” that in my view is fatal to the FCO’s application under Part 24/CPR 3. It appears that the case was lost because of the apparent authenticity of the apostilles. That shows that the failings in the apostilles which were intended to be used with the documents has a direct causal link with Mr Weston’s loss or at least arguably does so.

The present application is of course under CPR 24 or CPR 3.

I was referred to a number of cases the main one which was the well known observations of Lord Hutton in Three Rivers v Bank of England [2003] 2 AC1 at pages 266-267.

I do not accept that the present claim based on the arguments put forward by the FCO of the Claimant is one which has no real prospect of succeeding. In my judgment Mr Weston’s claim on this one issue is more than fanciful.

Equally I do not accept that the pleadings disclose no cause of action nor are an abuse for the same reason.

Equally I echo the observations in the Court of Appeal in Equitable Life Assurance Society v Ernst and Young [2003] EWCA CIV 1114 at paragraph 38-41. I am not satisfied that it is possible to come to a conclusion that the losses sustained by Mr Weston were not legally caused by the alleged negligence acts of the FCO. This is especially so when the actual reasoning of the Barcelona Court clearly has significance. Therefore I cannot say that Mr Weston’s claim is fanciful or is an abuse.

Accordingly I dismiss the FCO’s application. I will hear further observations as to how the action should proceed. In this context mention is made of further preliminary issues but I suspect that that is unlikely to be of any great value as in my view the matter should proceed expeditiously to trial. However I remain open to such suggestions as the parties wish to make when I deliver this judgment.

For the avoidance of doubt I reiterate for Mr Weston’s benefit that there are large matters of his claim which are still in issue and the concessions by the FCO at this stage are only for the purpose of the present application.