Web Site Warnings

August 17, 2009

In Patchett and Patchett v Swimming Pool & Allied Trades Association [2009] EWCA Civ 717, a trade body for swimming pool installers escaped liability for information on its site that wrongly suggested a company was a member that had been vetted as being trustworthy. The site’s warning to visitors to make further inquiries was a key factor in the court’s decision.

The facts

When Gary and Karen Patchett wanted a swimming pool for their garden, they found the website of the Swimming Pool & Allied Trades Association (SPATA) via Google’s search engine. The trade body’s website offered a ‘member finder’ to help visitors find the SPATA members nearest to them. The Patchetts used it to contact three companies for quotes.
They hired Crown Pools Limited, which had been identified among the members on the site. They agreed a quote of £55,815 for the installation of the pool and landscaping works. However, Crown became insolvent before the work was completed and alternative contractors had to be found to finish the job. The Patchetts said they lost £44,000 as a consequence.

The couple looked to SPATA to recover their loss. They argued that SPATA had made negligent misrepresentations on its website and, in so doing, had breached a duty to take reasonable care in making representations.

A page on the site headed ‘Who and what is SPATA?’ made a claim that ‘pool installer members are fully vetted before being admitted to membership, with checks on their financial record, their experience in the trade and inspections of their work’. It added: ‘Only SPATA registered pool and spa installers belong to SPATASHIELD, SPATA’s unique Bond and Warranty Scheme offering customers peace of mind that their installation will be completed fully to SPATA Standards – come what may!’

Mr Patchett said that he read this information before hiring Crown but he did not have any direct communication with SPATA.

The SPATA website failed to disclose that there was more than one type of member and that Crown was only an affiliate member. Only full members underwent the checks and vetting that the site referred to and only full members were covered by the SPATASHIELD bond and warranty scheme.

Duties of care: the need for independent inquiry

The judge in the Birmingham County Court rejected the Patchetts’ case and they appealed. The Court of Appeal dismissed the appeal by a majority ruling. Master of the Rolls Lord Anthony Clarke gave the leading judgment.

The legal test to be applied to cases of negligence causing pure financial loss was not in dispute. One element of that test is whether the loss was reasonably foreseeable as a result of what the defendant did or failed to do. ‘There is no issue here about foreseeability,’ wrote Lord Clarke. ‘The issues are whether there was a sufficient proximity between the parties and whether it would be fair, just and reasonable to impose a duty of care upon SPATA.’
Lord Clarke noted that the purpose of the website was to encourage people who wanted a swimming pool to use a member of SPATA. He said it was foreseeable to SPATA that people wanting a swimming pool would rely on the representations made on its site.

This was not a case of a website containing statements ‘to all and sundry for any purpose on which they may choose to rely,’ he said. ‘On the contrary, the representations were directed to a limited class of people, namely those considering having a swimming pool installed.’
The critical representations, he said, were those about the vetting of members’ creditworthiness, work quality and the SPATASHIELD scheme and the representation that Crown was a member of SPATA. Lord Clarke said that this established ‘a sufficient relationship between SPATA and the claimants, as typical examples of those who would be expected to use the website to identify a SPATA member to install a pool, to satisfy both the test of proximity … and the further test that it would be fair just and reasonable to impose a duty upon SPATA that it should take reasonable care to ensure that the representations it was making were true.’ … ‘If the reader of the website read only the paragraphs quoted above [about vetting] and the list of members on the drop down list, he would reasonably think that all members had the benefits of membership described because he would not know that there was more than one type of member’.

But the county court judge said that SPATA did not owe a duty of care because, while SPATA knew that the representations on the website would be likely to be acted upon by people like the claimants, it would not expect them to do so without further enquiry. He had referred to the Hedley Byrne v Heller criteria for establishing a duty of care between advisor and advisee. These include knowing either actually or inferentially that the advice communicated is likely to be acted upon by the advisee without independent inquiry. The county court judge said that that criterion had not been satisfied. Lord Clarke endorsed that view (at [31]) ‘The principal reason it was not satisfied is that, when the website is read as a whole, it urges independent enquiry’.

The page that described the vetting of members also stated that SPATA supplies an information pack on request. It stated ‘The pack includes a Contract Check List which sets out the questions that the customer should ask a would-be tenderer together with those that must be asked of the appointed installer before work starts and prior to releasing the final payment’.
According to Lord Clarke (at [31]-[34]), ‘The purpose of the information pack was to provide relevant information, including a contract check list which set out questions which should be asked of a would-be tenderer and an appointed installer. The judge held that it would be expected that a potential customer would obtain the information pack. I agree. … The judge in effect accepted that SPATA could reasonably expect potential customers to have regard to all the information potentially available from the website and not just part of it. For my part, I do not think that the judge erred in any way in reaching that conclusion. …The precise relationship between SPATA and the claimants is simply that SPATA produced its website for people like the claimants but to my mind they are not in a relationship of adviser and advisee. While they are not entirely strangers because, as a trade association, SPATA directed its website to people like the claimants in the hope that they would enter into contracts with their members, […] I find it difficult to classify their contact in terms of a relationship, whether special or otherwise. For the same reason I do not think that there is sufficient proximity between the parties to give rise to a duty of care.’

He added that there was ‘no real support for an assumption of responsibility’ because ‘the degree of reliance which SPATA intended or should reasonably have anticipated would be placed on the accuracy of the statements in the website was limited by the advice […] that potential customers should obtain an information pack’. ‘As to reliance, while there was some reliance, the significance of it is much reduced by that same advice,’ wrote Lord Clarke. ‘So is the absence of other advisers and the opportunity for a disclaimer. SPATA could of course have included a disclaimer but it did include the advice in [the paragraph describing the information pack].’

Neither the first instance judge nor Lord Clarke accepted that ‘SPATA might reasonably anticipate that those reading the statements made on its website would rely upon those statements without making any checks of their own.’

The judge in the Birmingham County Court stated: ‘Looking at the material objectively and in context, the website is to be seen as a first step in a process. That is how it reads, and viewed objectively that is how SPATA present it. The information pack is not said to be an essential next step, but that is the step which it obviously encourages. It would be particularly surprising to find a customer rely on the information as to the SPATASHIELD scheme without obtaining a copy of the policy, or some more detailed document confirming the terms of the cover’. Lord Clarke said that he agreed (at [39]):
‘I do not think that it can fairly be held that SPATA assumed a legal responsibility to the claimants for the accuracy of the statements in the website without the further enquiry which the website itself urged. It is common ground that, if the claimants had asked for and obtained an information pack, they would have learned the true facts. …In these circumstances there was not a sufficient relationship of proximity between SPATA and the claimants for these purposes and it would not be fair just and reasonable to hold that SPATA owed them a duty to take care’.

Lord Clarke said (at [39]-[40])that to rule that SPATA owed a duty of care to the claimants ‘would be an unwarranted extension’ of existing case law:
‘even though nothing I have said is intended to detract from the conclusion that it is important that information put into the public domain is accurate. When application was being made for permission to appeal it was suggested that special considerations apply to representations on websites. I do not think that the mere fact that the representations were contained on a website supports the conclusion that a duty of care is owed. As ever, all depends on the circumstances. Some websites are interactive and it may be possible, applying the principles outlined above, to conclude in particular circumstances that a duty is owed. However, I agree with the judge that that is not the case here.’

Lord Justice Scott Baker supported Lord Clarke’s opinion, making clear that the drop-down list of members was insufficient to establish liability ‘because the reader’s attention was drawn to the information pack’.

Dissenting judgment: no further inquiry necessary

Lady Justice Smith disagreed with Lord Clarke and Lord Justice Baker. She believed that there was close proximity between the parties (at [55]-[57]):
‘There is nothing in [the paragraph about the information pack] which would suggest to the reader that it was necessary to obtain the information pack in order to make a further check on the credentials of the members listed on the website. There is nothing to suggest that the information pack might in any way limit the reliance which the customer can place upon the statement that a particular installer is a member of SPATA and is therefore a good contractor to engage. Nor is there anything to suggest that the information pack is necessary as a check on the accuracy of the information provided on the site itself. Of course, if the information pack had been requested and read, the customer would have discovered the mistake made on the website and would have found out that Crown was not a member of SPATA. But that fact should, in my view, be put out of mind, when considering whether, on an objective reading, there was an expectation that the customer would not rely on the website without the information pack.
I do not accept that, objectively considered, this website was merely “the first step in the process” … I would hold that, objectively construed, the website invites reliance on the qualities inherent in membership without further inquiry.’

Comment and analysis

The Court of Appeal has endorsed website disclaimers. Mistakes can be excused by warning notices, it ruled. However, the judges based their decision, at least in part, on a misunderstanding of how people use websites.

The case confirms that a website can owe a duty of care to its visitors. That much was predictable, albeit untested (by my recollection) in UK courts. What was less predictable was how easily a site could dodge that duty: simply tell your visitors to seek further information before they rely on what they read and, hey presto, you’re off the hook. The ruling is a gift for the risk-averse. Cue more disclaimers on websites.

SPATA escaped liability because its ‘about us’ page contained a statement that urged potential customers to obtain an information pack before hiring a swimming pool installer. That was, in effect, SPATA’s disclaimer. Lord Anthony Clarke and Lord Justice Scott Baker concluded that SPATA owed no duty of care to the Patchetts, largely because of that disclaimer.

It is a very rare thing that a website mistake like SPATA’s will trigger a lawsuit in the UK. But this case highlights the risk of inaccuracies and the value of disclaimers in a way that we haven’t seen before. It’s the first case to test website disclaimers, even if it does so indirectly.

There are three things that strike me as odd in the judgment.

First, Lord Clarke said that web users examine all pages of a website. A witness for SPATA said, according to the ruling, ‘that it was intended the website would be taken as a whole, ‘not a bit here and a bit there’ and that more information would be obtained from SPATA.’
Lord Clarke endorsed the county court judge’s view that SPATA ‘could reasonably expect potential customers to have regard to all the information potentially available from the website and not just part of it’. I disagree. I think both the judge and Lord Clarke erred. I suspect neither judge has ever had reason to do website traffic analysis, but website visitors rarely examine more than a few pages of a site. Disclaimer pages and ‘about us’ pages are seldom among a site’s top destinations.

Secondly, Lord Clarke implied that ‘interactive’ sites are more likely to owe a duty of care to users. Frustratingly, we’re left to guess what sort of interactivity he’s talking about. Does he mean sites that let users ask questions and receive answers on the site? Does he mean sites that provide information only to registered users? Or sites presenting a contract that must be accepted with a click and possibly payment? Or does he mean something else? We’re simply not told.

The ruling also found that there was no duty of care because there was no proximity. But if the Patchetts had requested an information pack, there would be proximity, it seems. If that information pack made the same error as the site, perhaps there would be a breach of a duty of care, by Lord Clarke’s reasoning. So liability turns on a visitor’s failure to heed the recommendation.

SPATA claimed that its members are backed by insurance and Crown was identified as a member. Given that information, I think it’s incorrect to suggest that most users would investigate further (a point that Lady Justice Smith made in her dissenting judgment). I think there was sufficient proximity between advisor and advisee to establish a duty of care and a breach of that duty. That is my third criticism of the decision.

It may have been fatal to his claim that Mr Patchett admitted reading the disclaimer. Mr Patchett acknowledged that it was remiss of him not to make the inquiries recommended. That admission explains why Lord Clarke never heard arguments about traffic analysis and why he came to the erroneous conclusion that people read every page. Had this reasoning been explored fully, though, surely we would have heard about the basic principles of disclaimers and exemption clauses. In Thornton v Shoe Lane Parking Ltd [1971] 1 All ER 686, Lord Denning punished a car park’s failure to alert drivers to a condition, concealed in its small print, that said cars are parked at the owner’s risk. He famously observed that, to give sufficient notice, the condition ‘would need to be printed in red ink with a red hand pointing to it, or something equally startling’.

The SPATA case does not overrule Thornton v Shoe Lane. So if you agree with me that people don’t read every page on a site, and you agree that the ruling bolsters the effectiveness of generic disclaimers, and you want to avoid liability for mistakes on your website, it follows that you should have a disclaimer and that you should make an effort to bring it to your users’ attention.

Disclaimers are unpleasant creatures, almost by definition. They also have a nasty habit of undermining a user’s confidence in what they’re reading. Alas, we’ll likely see them more often.
I’d recommend that organisations review the likelihood that their visitors will find and read their disclaimers. It is a brave operator that assumes they’ll never make a mistake on their site or that, if they do, they’ll be sued by an honest individual like Mr Patchett who owns up to reading and ignoring the warnings. If generic disclaimers can work, as the court has suggested here, your risk manager surely will want you to maximise their exposure.

So watch out, champions of clean design and user experience: ugly warnings are coming soon to a site near you.

Disclaimers on OUT-LAW.COM

In the early days of the web, law firms, banks, insurers and other risk-averse businesses were afraid of publishing online. On some sites, before you could read anything at all, you had to click your acceptance of a wicked, wordy disclaimer that said, in effect, ‘You’ve only got yourself to blame if you rely on what you read here. It could be nonsense, so always seek independent advice.’

When setting up OUT-LAW.COM in 2000, we knew that if we wrote an article that contained an error of law, and someone relied upon that article and lost money as a consequence, we might get sued.

We examined our potential defences to such a claim. For example, this is general guidance for the public, not advice given in the course of a lawyer-client relationship, so there is unlikely to be a duty of care; and perhaps common sense tells you that you should always consult with a solicitor. Another potential defence was our disclaimer, accessible via a link at the top of every page on our site.

Our disclaimer begins: ‘These pages contain general information only. Nothing in these pages constitutes legal advice. You should consult a suitably qualified lawyer on any specific legal problem or matter.’ It goes on to say that we make no warranties about the content of our own site or of sites to which we link. It’s standard stuff.

Some law sites still put that on every page of their guidance. We don’t. We took the view that such generic disclaimers carry little weight so we put ours at a one-click distance from all other content. We figured it might work. Our lack of confidence in the likely impact of such disclaimers was the main reason that we didn’t clutter every page with the full wording or even a summary.

We thought other factors would be more influential in determining the existence or otherwise of a duty of care. We also knew that if we did get sued for making a mistake, our defences might fail. A court could infer a duty of care, owed by us to our visitors (even if they’re not existing clients of Pinsent Masons). So we concluded that we must work hard to avoid getting the law wrong.

We have a policy that says we will only publish material if we are confident that it is accurate, general in nature and unlikely to provoke complaints. News stories and other legal guidance must not appear on our site without being checked by a qualified solicitor. When content is perceived to be high risk – a good example being stories about defamation proceedings, where litigants tend to get twitchy about all coverage of their cases – we double-check the content at a senior level. We also have an insurance policy, in case the worst happens.

The Court of Appeal has forced us to rethink our approach. If we can mitigate our risk further, we should, even if that interferes with the user experience. Our insurers will rightly expect that of us. Organisations with a greater appetite for risk might reasonably decide to do nothing to their sites.

These are just my views, of course. Don’t take my word for it. After all, this article contains general information only. Nothing here constitutes legal advice and you should always consult a suitably-qualified lawyer.

Struan Robertson is editor of OUT-LAW.COM. The views expressed are the author’s own and do not necessarily represent the views of Pinsent Masons (and here we go again…). You can follow Struan on Twitter: twitter.com/struan99.