Economic Loss Flashcards
Glencar
- Recognised the following categories of pure economic loss
i. Cost of remedying defects in housing let by local authority - Siney v Dublin Corporation
ii. Cost of remedying defects for which local authority were held responsible - Ward
Negligent misstatement
Instances where pure economic loss can be argued
1) Negligent Misstatements
2) Relational Economic Loss
Bates v Minister for Agriculture
- When imposing liability for a negligent misstatement
□ Nature of reliance
□ Status of advisor
□ Circumstances of advice
□ Extent advisor should contemplate reliance - Regard must also be had for
□ The nature of information sought
□ Party from whom it is sought, and
The relationship between them
Hedley Byrne v Heller
- P ad agency asked bank if customer was on sound financial footing
- Written without responsibility
- Was there an argument for economic loss for misstatement given where there is no contract?
- Court held where the plaintiff relies to his financial detriment on negligent advice/information given to him in circumstances where the defendant knew or should have known that the plaintiff would have acted in reliance on such advice/information
- To establish a duty, four requirements must be fulfilled
1) A special (fiduciary) relationship of trust and confidence must exist
2) The party preparing the advice must have voluntarily assumed the risk, and
Such reliance was reasonable in the circumstances
Crandler v Crane, Christmas & Co
- Before Hedley Byrne v Heller, duty recognised only where contract existed and a fiduciary relationship
- Changed since
Capiro v Dickman
- Accountant produced wrong financial information to company
- Based on financial accounts, shareholder made bid for company
□ Paid over the odds - Sued accountants in negligence
§ Court noted that in order for a duty to be owed, there must be evidence that they knew who would rely on advice - they worked for the company, not for the bidder
Held no assumption of responsibility
Law Society v KPMG
Must be established that the reliance by the plaintiff on the advice/information was foreseeable
Steel v NRAM
Such reliance is more easily established in circumstances where the reliance was reasonable
Wall v Hegarty
In considering the reasonableness of the reliance the courts will have regard for the relative expertise of the defendant
Leionavarn v Burgess
- Surrounding circumstances in which the advice/information was communicated will also be relevant
- More formality - greater likelihood that reliance reasonable
Calvert v William Hill
The existence of some sort of assumption of responsibility appears to be essential
Morgan Crucible v Hill Samuel Bank
Auditors found liable when asked to prepare an audit for investment purposes
Banca Nazionale v Playboy
Bank not liable for credit reference given to shell company unknowingly for benefit of claimant
SAAMCO
- Lenders sought damages following negligent valuations provided on properties by defendant
- Economy collapsed and mortgages are defaulted
- Bank argued that they would never have given money if they knew the true value of properties
- Defendant accepted liability up to the amount of the houses, not the amount that the bank leant which was far higher
- Court held that they were not responsible for the property crash and subsequent financial loss
Khan v Meadows
- Pregnant woman negligently told that she did not have haemophilia gene which would mean that her child would likely not have autism
- Turned out that she did
◊ Child born with autism - Sued doctor as she would have aborted
- Doctor responsible for the negligent conclusion that she did not have haemophilia gene, not for the birth of the autistic child
Walsh v Jones LaSalle Ltd
- P was experienced property developer
® Visited a premises for sale - Brochure gave inaccurate information regarding square footing
- However, included disclaimer said that they could not rely on brochure
- Court held that the brochure’s disclaimer was effective
Perre v Apand Ply Ltd
- Farmer’s crops destroyed due to negligence
- Meant that neighbour’s crops also had to be destroyed
McShane Wholesale Fruit
- Defendant’s negligence left the plaintiff’s shop without power
- Claim succeeded as there was no chance of the floodgates being opened to multiple claims
- Only affected the defendant’s shop
Factors that must be proven for argument of economic loss
1) The harm to the plaintiff was foreseeable, and
2) there was special proximity , which
3) caused a reasonable reliance
4) where the defendant had assumed responsibility of the plaintiff
