Economic Losses Associated With Land And Buildings

Question 1

Murphy v Brentwood District Council

Answer 1

Murphy had to sell his house at a significant loss, as Brentwood District Council had failed to inspect the house’s foundations. Murphy sought to recover the cost from Brentwood District Council. Could Murphy recover for his economic loss?

Held - No recovery, pure economic loss
Reasoning

No liability in the absence of physical injury

Question 2

Junior Books v Veitchi Ltd

Answer 2

The defendants were specialists in flooring and were sub-contractors to lay a floor in a factory which was to be used by the plaintiffs. The plaintiffs claimed that due to the negligence of the defendants, the floor was faulty and as they were specialists on the matter, they were liable for the damage caused by the cracking in the floor. As a result of this, the plaintiff brought an action claiming for the costs related to relaying the floor, for loss of profits and the cost to the factory for getting the floor replaced. There was no claim for injury to persons caused by the floor. The defendants appealed the claim of the plaintiffs.

Held - The court dismissed the appeal of the defendants. The court held that the parties were sufficiently close and therefore there was a scope of duty between them. It was found that this was not limited to a duty to avoid causing foreseeable harm to persons or property but also created a duty to avoid pure economic loss, as a result of the work that had been defected. On this basis, the plaintiff could recover the cost of repairing the floor.