Wokingham Borough Council v Muhammad Sohaib Arshad

A public authority may owe a duty of care when it gives discretionary advice, outside a formal statutory certification process, to an identified person who is expected to rely on it. The duty may extend to foreseeable economic loss. Psychiatric injury requires separate consideration: the court must ask whether psychiatric illness, rather than ordinary distress, was reasonably foreseeable in the circumstances. For a person of apparently ordinary fortitude, a serious work-related setback will not ordinarily establish a real risk of psychiatric breakdown without more. Causation is not defeated merely because negligent advice causes loss through its immediate consequences. In mixed personal-injury and non-personal-injury proceedings, QOCS protection is discretionary. The appeal was allowed because psychiatric injury was not reasonably foreseeable.

Wokingham Borough Council appealed against a County Court judgment awarding Mr Arshad £42,500 for psychiatric injury caused by negligent advice that a Ford Galaxy would be suitable for licensing as a hackney carriage. The County Court rejected his discrimination, statutory-duty, financial-loss and aggravated or exemplary damages claims.

The appeal concerned duty of care, foreseeability of psychiatric injury, causation, damages and costs. The Council also renewed applications concerning damages and costs, while Mr Arshad renewed an application for permission to cross-appeal on discrimination, statutory-duty, human-rights, misfeasance and damages issues.

1. Duty of care. The court applied the three-stage approach in Caparo Industries plc v Dickman and held that foreseeability must be considered by reference to the particular kind of damage claimed. In a novel relationship, the court should proceed incrementally and by analogy with recognised categories, having regard to legal coherence.
2. The Council’s advice was given outside the statutory certification process, to an identified prospective licence applicant, in circumstances where reliance was known. Reeman v Department for Transport was materially different because it concerned statutory certification owed for a public safety purpose and a third-party purchaser. The reasoning in Welton v North Cornwall District Council supported recognising a duty concerning advice given in the context of, but outside, a statutory regulatory process.
3. The Council owed a duty in relation to reasonably foreseeable economic loss. However, the issue was whether that duty extended to pure psychiatric harm. Applying the caution evident in Frost v Chief Constable of South Yorkshire, Hatton v Sutherland and Yapp v Foreign and Commonwealth Office, the relevant question was whether the circumstances should have been recognised as involving a real risk of psychiatric breakdown. No particular vulnerability was known, and the situation was no more serious than the career setback considered in Yapp. Psychiatric injury was therefore not reasonably foreseeable.
4. The causation ground failed. Negligent advice may cause loss through an immediately resulting transaction or consequence. Here, the advice led promptly to purchase of the non-compliant vehicle, suspension of the licence and disruption of the business. Other contributing factors did not break the chain.
5. The challenge to the damages assessment was arguable, but the County Court was entitled to place the psychiatric injury in the moderately severe bracket and was not plainly wrong. Permission to appeal on costs was refused. The renewed cross-appeal application was refused.
6. The Council’s appeal was allowed. The claim was dismissed, the damages award was set aside and the interim payment of £10,000 was repayable. The Council obtained an order for its reasonable costs, but enforcement was barred under the court’s discretion under CPR 44.16.

1. High Court (King’s Bench Division): appeal from the judgment of HHJ Melissa Clarke in Oxford County Court dated 15 October 2021. The appeal was allowed and the County Court judgment was set aside.