Seddon v Driver And Vehicle Licensing Agency

The Court of Appeal dismissed the appellant's challenge to the High Court's finding that the Driver and Vehicle Licensing Agency (DVLA) did not owe a tortious duty of care to a prospective purchaser of a registered vehicle to notify the seller that the DVLA had doubts about the vehicle's age or identity. The court applied the established tests for recovery of pure economic loss: assumption of responsibility, the threefold Caparo test (foreseeability, proximity and whether it is fair, just and reasonable to impose a duty) and the incremental approach. The court accepted that the loss was foreseeable but held there was no assumption of responsibility by the DVLA, the requisite proximity was lacking (notably because the V5C and related conduct were provided and undertaken for statutory purposes rather than to inform private purchase decisions and because the class of potential purchasers was not identifiable), and it was not fair, just or reasonable to impose such a duty. Reeman v Department of Transport was treated as a closely analogous authority supporting the conclusion that no duty arose.

Background and parties: The appellant, Mr Seddon, purchased a continuation AC Cobra in October 2014 for £250,000 relying in part on the vehicle's V5C which recorded a 1964 date of manufacture and historic tax class. The respondent was the Driver and Vehicle Licensing Agency (DVLA). The DVLA had evidence in August 2014 (from an advert) suggesting the vehicle might be a 2002 recreation and initiated an internal note to investigate on any change of keeper, but did not notify prospective purchasers or Mr Seddon at the time.

Procedural posture: This is an appeal to the Court of Appeal from a preliminary-issues decision of the Queen's Bench Division (Justine Thornton QC) ([2018] EWHC 312 (QB)), which held no duty of care was owed. The Court of Appeal heard argument and delivered its approved judgment on 28 January 2019.

Nature of the claim and relief sought: The claim was for pure economic loss in tort (negligence) arising from the DVLA's failure to inform the seller or prospective purchasers that it had doubts about the vehicle's age/identity and had decided to investigate. Damages claimed were the diminution in value following allocation of a "Q" plate, assessed by the appellant as a loss of £150,000 following mitigation.

Issues framed by the court:

• Whether the DVLA had assumed responsibility to prospective purchasers such as Mr Seddon;
• Whether the threefold Caparo test was satisfied (foreseeability, proximity and whether it was fair, just and reasonable to impose a duty);
• Whether the incremental approach to novel duties supported imposing a duty of care.

Court's reasoning (concise): The court accepted foreseeability of loss but rejected assumption of responsibility because the DVLA was performing statutory functions, was not acting voluntarily or to assist the claimant specifically, and had no direct relationship with the appellant. On proximity the court emphasised that the V5C and regulatory processes were created for statutory purposes (tax collection and vehicle registration) and not to assist private commercial purchase decisions; therefore the appellant relied on the V5C for a purpose different from that for which it was issued. The court also held the class of prospective purchasers was not an identifiable, existing class at the material time, undermining proximity. On fairness it concluded that imposing such a duty would expose the DVLA (and by analogy other registries) to wide, unpredictable liabilities, would be disproportionate to the statutory scheme, and that purchasers have alternative protective measures (contractual warranties, inspections, statutory appeal routes). Reeman v Department of Transport was treated as highly relevant and analogous authority supporting the conclusion that no duty should be imposed.

Wider comment: The court noted the undesirable consequences for public bodies and taxpayers if a duty of this nature were recognised, and that correction and appeal mechanisms exist within the statutory scheme.

The Court of Appeal dismissed the appeal. It held that, although the financial loss was foreseeable, the DVLA had not assumed responsibility to prospective purchasers, the necessary proximity was lacking (the V5C and investigation were for statutory purposes and the class of purchasers was not identifiable), and it would not be fair, just or reasonable to impose a duty of care. The court treated Reeman v Department of Transport as a persuasive and closely analogous authority supporting dismissal.

Appeal to the Court of Appeal (Civil Division) from the Queen's Bench Division (Justine Thornton QC) [2018] EWHC 312 (QB); judgment of the Court of Appeal reported as [2019] EWCA Civ 14 which dismissed the appeal.