Old Gate Estates Ltd v Toplis & Harding & Russell [1939] 3 All ER 209
The liability in negligence of agents to third parties
Facts
A block of flats was to be purchased by the promoters of the claimant’s company. During the promotion of the company and before the company was formed, the claimant (promoter) employed a member of the defendant’s firm to value the flats. The valuation was too high because sums relating to the rates payable were incorrectly provided to the valuer by the promoter. The company sought damages in respect of damages for negligent valuation.
Issues
Whether a duty of care in negligence was owed to the company by the valuer despite there being no contract between these parties, the contract existing between the promoters and the valuer.
Decision/Outcome
There was no duty of care owed to the company in these circumstances. There was no claim in contract because the valuation had taken place before the company was formed. There was also no duty of care owed to the company as a third party. The position in Donoghue v Stevenson [1932] AC 562 was limited to circumstances where the negligence at issue created a risk to life, limb or health. It does not apply in the circumstances of this case.
Updated 20 March 2026
This case summary accurately describes the decision in Old Gate Estates Ltd v Toplis & Harding & Russell [1939] 3 All ER 209. However, readers should be aware that the legal position described has been substantially superseded by later developments in negligence law.
The article correctly states that at the time of the decision, the court treated Donoghue v Stevenson [1932] AC 562 as confined to physical harm. That restrictive approach to the duty of care in cases of pure economic loss has since evolved considerably. The landmark decision in Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 established that a duty of care can arise in respect of negligent misstatements causing pure economic loss where there is a special relationship involving an assumption of responsibility. Subsequent cases, including Caparo Industries plc v Dickman [1990] 2 AC 605, further refined the test for establishing a duty of care to third parties in cases involving negligent valuations and advice.
The result is that the proposition in this case — that no duty of care can be owed to a third party for a negligent valuation causing economic loss — no longer represents the general law. Whether a duty would arise on similar facts today would depend on the application of the modern Caparo tripartite test and the principles from Hedley Byrne. This case retains historical interest as an illustration of the pre-Hedley Byrne approach, but should not be treated as an accurate statement of current law on third-party liability for negligent valuations.
