(COURT OF APPEAL)*

THE NILE IMPORT & EXPORT CO. LTD. V. MOHAMED NURI OSMAN

AC-REV-102

 Principles

·  Negligence—Negligent statement—When a duty to be careful in statements exists, failure to exercise that duty gives rise to an action for negligence if damages results

A plaintiff cannot recover damages in an action for negligence, for loss caused to him by a negligent misstatement, unless he can prove that the maker of the statement was under special duty to him to be careful; and the maker has failed to exercise such duty.

Judgment

Advocate: Abdel Rabman Yousif for applicant

Salah E. Hassan 1. March 9, 1967: —This is an application against the order of the learned Province Judge. Khartoum, dismissing summarily an application for revision under Civil Justice Ordinance, s. 176 (2). It is against this order and the judgment of the learned District Judge that this application lies.

The bare facts of this case, stated sufficiently to raise the general point of law in controversy are these:

The Nile Import and Export Co. Ltd. acting as agents for G. W. J. Blackman & Co. entered into a contract with respondent Mohamed Nun Osman for the supply to him of Mild Steel Hot Rolled Angles. A document to that effect (Ex. A) was signed by respondents and the applicants on behalf of the sellers on July 27. 1963. This document showed the quality and the specification of the angles but was silent as to country of origin. Then a more formal contract was signed by the sellers and the respondent on August 9. 1963. It contained all the terms of the contract and it indicated that the origin of the goods would be Belgium. Luxemburg or France and that the line of shipment would be later selected by the sellers.

Then the buyer (now respondent) with a view to obtaining an import licence for these goods asked applicant to kindly fill in the necessary form in order to submit it to the Ministry of Cimmerce. They gratuitously did so and they wrote opposite “Country of Origin” the word Belgium. Up to that time it was yet unknown to both parties whether it would be Belgium, Luxemburg or France. The import licence was issued indicating that the country of origin was Belgium.

On December 12, 1963, applicants sent the invoice vide covering letter (Ex. B). The invoice clearly states that the goods were shipped from France and were due to arrive on December 22, 1963, at Port Sudan. These documents were received by respondent in due time. He admits that he did not approach the bank to pay the purchase price except on December 30, 1963. The goods could not be cleared because the country of origin indicated in the import licence was different from the real country of origin. Respondents came to know this on January 21, 1964, from the clearing agents. By that date demurrage was already six days due from January 15, 196.4. Three days later, on January 18, 1964, respondent corrected the import licence. He delivered the amended import licence to the clearing agents on January 25, 1964, and it was cleared on February 11, 1964. Respondent claimed the demurrage for the period January 15, 1964 up to February ii, 1962 amounting to:

£S.1,548,290m/ms

Plus porterage      3,470m/ms.

Total       £S.I, 552.030m/ms

The learned advocate for applicant raised two points namely:

1. The cause of action was based on contract and the District Judge decided the case on a tortious liability basis, which is wrong and contrary to law because if the obligation is created by the parties and solely created by them the plaintiff’s remedy will lie in contract only.

2. The misstatement was not false to the knowledge of applicants and no duty of care existed at the time of the misstatement in question because the likelihood of injury to the plaintiff was not reasonably within their contemplation.

The respondent s advocate tried to refute this argument repeating more or less the same argument of the learned District Judge. -

4 regards the first point raised by the applicants I am afraid I am not inclined to agree and I would say that the same facts in a transaction may Create alternative liabilities in contract and tort suppose that I agree with a dental surgeon to pull out my tooth with a painless process, and he does it negligently causing me sever p and injuring jaw I can bring my action either for breach of contract or for the ordinary tort of negligence as there is a duty primarily fixed by law on the dental surgeon to be careful. The second point needs real consideration. The main point in issue should be whether the entry made by the applicants in the application for the import licence was a negligent misstatement, which was made in breach of an existing duty to be careful.

There is no general duty not to make careless misstatements. There is no duty to be careful in speech, as there is a duty to be honest in speech. The duty is limited to those who can establish a relationship of proximity such as was found to exist in Donoghue v. Stevenson [1932] AC. 562. when Lord Atkin propounded his famous neighbour doctrine. A plaintiff therefore cannot recover for financial loss caused by a careless statement unless he can show that the maker of the statement was under a special duty to him to be careful.

Lord Pearce stated in the case of Hedley Byrne & Co. v. HelIer and Partners Ltd [1963] 2 All E.R.575 at p. 613 as follows:

“The law of negligence has been deliberately limited in its range by the court’s insistence that there can be no actionable negligence in vacuo without the existence of some duty to the plaintiff. For it would be impracticable to grant relief to everybody who suffers damage through the carelessness of another.”

Is the relationship between ‘the parties in this case such that it can be brought within a category giving rise to a special duty?

I shall content myself with the proposition that whenever there is a relationship equivalent to contract there is a duty of care. Such relation ship may be either general or particular. Examples of a general relation ship are those of solicitor and client and of banker and customer. Where there is a general relationship of this sort it is unnecessary to do more than I to prove its existence and the duty follows. Where as in our present case, what is relied on is a particular relationship created ad hoc (I respondents asking applicants gratuitously to fill in for him the impost licence application form), it will be necessary to examine the pall - - facts to see whether there is an express or implied undertaking responsibility—this would be by an application of the general conception of proximity in Donoghue v. Stevenson [1932] A.C. 562. In such circumstances a duty exists as In the words of Lord Reid in Hedley Byrne & v. Keller and Partners Ltd. [1963] 2 All E.R. at p. 578:

“Where it is plain that the party seeking Information or advice v trusting the other to exercise such a degree of care as the circumstances required, where It was reasonable for him to do that, and where the gave the information or advice when he knew or ought to have kn4 that the inquirer was relying on him.’’

Let us check what happened in the case before us. Respondents requested applicant to fill in for them the import licence application. When doing so they inserted in the place of country of origin the word Belgium. The goods turned out later to be shipped from France. Both parties are on equal footing as to their knowledge respecting the place of shipment of .the goods. They both knew that it could either be Belgium, Luxemburg or France and that cannot be ascertained until they were actually shipped From these facts it is plain that respondent was neither seeking advice nor information because there was nothing unknown to him. The preparation of the import licence application form was a friendly request, which was cordially carried out. There is no proximity in such relationship to justify the existence of any duty to be careful otherwise the ordinary courtesies and exchanges of life would become impossible if’ it were, sought to attach legal obligation to every kind of friendly act. Having decided that no duty exists in this special relationship therefore no liability follows whether applicants were careless or reckless in there entering the word Belgium in the application form as the country of origin. So this application succeeds and the decree of the court below is set-aside with an order dismissing respondents’ case with no order as to costs. The judge is to be commended for the ability he displayed in his exposition of the law relating to negligent misstatements irrespective of the fact that he arrived at a wrong conclusion.

Osman El Tayeb J. March 9, 1967: —The loss that respondent claimed by way of damages from applicants was the accrual of demurrage at Port Sudan in respect of goods purchased through the agency of applicants, alleging that such accrual of demurrage was due to breach of contract by applicants and/or to their negligence.

The contract of sale stated the place of origin of the goods to be Belgium, France or Luxemburg. They contacted the sellers to arrange for the shipment of the goods, according to the quantity and specifications agreed upon Meanwhile applicants asked respondent to obtain the required import licence. Respondent asked applicants to fill in the prescribed form of the licence, they did and in it they wrote against place of origin “Belgium.” Respondent signed it and obtained the approval. When the goods arrived at Port Sudan the clearance thereof was refused by the Authorities, because it was found the place of origin of the goods was France, while in the import licence. It was written as Belgium. The clearance could not be effected unless the import licence was amended. It was sent back to respondent. He got in touch with the Ministry of Commerce and had the licence amended, and he returned it to the clearing agent, who could effect the clearance. The accrual of demurrage arose during this period taken for the amendment of the import licence to make the place of origin in it corresponds to that in the shipping documents.

The allegation is that applicants were acting in breach of their contract as to the origin of the goods or that they were negligent in writing the import licence thereby causing respondent to suffer loss.

It is clear that there was no breach of contract; France was mentioned in the contract as one of the places of origin of the goods. I do not think that it could have been in the mind of any person that the writing of the import licence was part of the sale contract or that it constituted a separate contract.

The learned District Judge held in favour of respondent on the grounds that the statement as to the place of origin in the import licence was negligently made by applicant and loss resulted therefrom He relied on the principle enunciated in the English case of Hedley Byrne & Co. Ltd. V. Heller & partners Ltd. [1963] 2 All ER. 575—594. That principle as taken from the judgment of Lord Morris is stated as follows:

“My Lords, I consider that it follows and that it should be regarded as settled that if someone possessed of a special skill undertakes, quite irrespective of contract, to apply that skill, a duty of care will arise. The fact that the service is to be given by means of, or by the instrumentality of, Words can make no difference. Furthermore if, in a sphere in which a person is so placed that others could reasonably rely on his judgment or his skill or his ability to make careful inquiry, a person takes it on himself to give information or advice to, or allows his information or advice to be passed on to, another person who, as he knows or should know, will place reliance on it, then a duty of care will arise.”

I disagree with the learned District Judge, but with some hesitation, as to the position of applicants, and as to whether they should know or should make careful inquiry to know the country of shipment of the goods between those three mentioned in the contract of sale in order to advise respondent correctly. It seems that they were not. The filling in of the import licence was the responsibility of respondent alone, and he knew that in the contract three countries were mentioned, and also knew that an import licence with three countries of origin could not be approved. So respondent and/or applicant had to choose one of those countries, which would have been more likely to be the place of origin than the others. Applicants did so write Belgium by guess relying on the fact that the sellers were a Belgian firm. That was with the knowledge of respondent too. It is to be noted that the import licence had to be obtained before the shipment of the goods.

It appears to me that there was no misstatement in this case, and if it was the loss was not foreseeable, as the amendment of the place of origin could be made without delay, noting that the delay of the days on which demurrage was charged was between respondent and his clearing agent.

I agree that this revision be allowed, and the case be dismissed with costs.