Wokingham Borough Council v Muhammad Sohaib Arshad

The Court of Appeal (EWHC, King’s Bench Division) allowed the Council's appeal against HHJ Melissa Clarke's decision in the County Court. Applying the Caparo three-stage test and authorities on negligent misstatement, the judge below was correct to hold that a local authority officer giving pre-application licensing advice may, in some circumstances, assume responsibility and give rise to a Hedley Byrne duty to avoid causing economic loss to an identified recipient.

However, the judge erred in law in relation to psychiatric injury: she did not adequately test whether psychiatric harm (as distinct from upset or distress) was a reasonably foreseeable kind of loss at the duty stage. Applying the authorities on psychiatric injury (including Page, Frost, Hatton and Yapp), the appellate court held that pure psychiatric injury was not so reasonably foreseeable from the Council's discretionary pre-application advice to impose a duty to avoid psychiatric harm. The judge's award for psychiatric injury and associated parasitic sums was therefore set aside.

The appellate court rejected the Council's causation argument: the chain from negligent advice to purchase to suspension and consequent disruption was not broken. The court also considered but refused to allow a renewed challenge on the quantum of PSLA and refused permission for other grounds. The interim payment made to the claimant must be repaid. Although the Council is the successful party and entitled to costs, CPR QOCS principles apply and, exercising the court's discretion under CPR 44.16, the judge (Bourne J) declined to permit enforcement of its costs order against the claimant in the circumstances.

Background and parties: The claimant, Mr Arshad, a long‑standing hackney carriage driver, purchased a second‑hand Ford Galaxy after pre‑purchase advice from a Council technical officer that it would be appropriate for licensing. The vehicle proved non‑compliant with the Council's accessibility policy; his hackney carriage vehicle licence was suspended and later revoked. Mr Arshad brought multiple claims in the County Court including discrimination, negligence and breach of statutory duty; he succeeded only on negligence in respect of psychiatric injury. The County Court awarded damages for psychiatric injury and costs. The Council appealed.

Procedural posture: Appeal granted by Martin Spencer J on limited grounds (duty, foreseeability of psychiatric harm and causation). Hearing before Bourne J in the High Court (King's Bench Division) on 20 July 2022.

Nature of the claim and relief sought: Tortious claim for negligence (negligent pre‑application advice/negligent misstatement), claims for discrimination and breach of statutory licensing duties, and damages for psychiatric injury, financial loss, and aggravated/exemplary damages. The principal relief in issue on appeal was the County Court's award for psychiatric injury and associated costs order.

Issues framed by the court:

• Whether the Council owed a duty of care to the claimant when giving pre‑application licensing advice (Caparo test and Hedley Byrne negligent misstatement principles).
• Whether psychiatric injury (as opposed to upset or distress) was a reasonably foreseeable kind of harm resulting from the negligent advice.
• Whether causation linked the negligent advice to the psychiatric injury.
• Whether the County Court erred in quantum and costs (including the application of QOCS).

Court’s reasoning and conclusions:

• Duty: The appellate judge agreed that advice given by a local authority officer to an identified individual can give rise to a Hedley Byrne negligent misstatement duty where responsibility is assumed and reliance is foreseeable. The pre‑application advice here was given to a known individual to enable compliance with an opaque licensing policy and therefore could attract a duty to avoid economic loss.
• Foreseeability of psychiatric injury: The court held the judge below failed to apply the foreseeability enquiry properly at the duty stage and to confront authorities which place caution on recovery for pure psychiatric harm (Page, Frost, Hatton, Yapp). Applying those authorities, the court concluded that psychiatric illness was not so reasonably foreseeable from discretionary pre‑application licensing advice to impose a duty to avoid pure psychiatric harm; grounds 1 and 2 of the appeal therefore succeeded.
• Causation: The court found no error in the County Court's factual causation analysis; the chain from negligent advice to purchase to suspension and consequent disruption was coherent and causative, so ground 3 failed.
• Quantum and costs: The appellate court granted permission to argue quantum but dismissed the challenge to the award on the facts. On costs, the court recognised the defendant should be entitled to costs but, because QOCS applied to mixed proceedings and enforcement is discretionary under CPR 44.16, the judge exercised her discretion and declined to permit enforcement of the costs order against the claimant in the particular circumstances.

Wider context: The judgment emphasises the careful, incremental approach required when extending duties in negligence to cover psychiatric harm arising from negligent advice by public authorities; it also illustrates the interaction of Hedley Byrne negligent misstatement principles with the restrictions and policy controls that apply to claims for pure psychiatric injury and the practical effect of QOCS in mixed claims.

Appeal allowed. The court held that although the Council could in principle assume responsibility when giving pre‑application licensing advice (Hedley Byrne) and a duty to avoid economic loss might arise, the County Court judge erred in imposing a duty to avoid psychiatric harm because psychiatric injury was not a reasonably foreseeable kind of loss from the discretionary advice in question. Causation was upheld but the psychiatric injury award and related sums were set aside; the interim payment must be repaid. The Council is the successful party and entitled to costs, but enforcement of costs against the claimant was refused in the exercise of the court’s discretion under the QOCS regime.

This is an appeal to the High Court (King's Bench Division) from HHJ Melissa Clarke's judgment given in Oxford County Court on 15 October 2021 in favour of the claimant. Permission to appeal on specified grounds was given by Martin Spencer J on 28 March 2022. The High Court (Bourne J) heard the appeal and allowed it on 29 September 2022.