Liability for Economic Loss and Psychiatric Injury

Question 1

Pure Economic Loss Liability

Answer 1

No DoC owed to avoid another to suffer loss which is purely economic (not related to personal injury/damaged property).

Question 2

Case: Spartan Steel v Alloys Ltd v Martin: PEL

Answer 2

D dug a trench and negligently cut off electricity supply to their steelworks. The value and profits of one of the melts ruined was allowed but not on 4 others.

POL: Recovery of damages for PEL not permitted as ‘a matter of policy so as to limit the liability of the defendant.’

Question 3

Liability can be imposed if…

Answer 3

economic loss is caused by negligent misstatement rather than negligent act.

Question 4

Hedley Byrne v Heller Case: Special Relationship: Says D owes a DoC to a claimant in the making of a statement if there is a special relationship, this means that:

Answer 4

D who made statement possesses some skill relating to it.

Knows C will highly likely rely on statement.

C relies on it incurring financial loss and reasonable for them to rely on it.

Question 5

Define Economic Loss

Answer 5

Financial loss / damage suffered to someone seen only as a balance.

Question 6

Chaudhry v Prabhakar: Economic Loss

Answer 6

D helped C buy a car, not realising it was unroadworthy.

C relied on advice and suffered economic loss.

POL: D had no knowledge of c’s existence, let alone reliance.

Question 7

Define Psychiatric Injury

Answer 7

A long term psychiatric injury greater than shock or grief.

Grief / sorrow / fear / panic / terror do not amount.

Question 8

Behrens and Ors v Bertram Mills - Psychiatric Injury

Answer 8

Dog antagonised elephant during circus performance, causing a stampede injuring and shocking performers.

POL: Delvin J wanted to award him a substantial sum, but he couldn’t unless shock resulted in physical/mental harm.

Question 9

Hinz v Berry: Not amounting to Psychiatric Injury

Answer 9

Woman suffered depression after seeing husband die and children injured in accident.

Lord Denning said no damages are awarded for grief or sorrow caused by someone’s death.

Question 10

Primary Victim (objective test)

Answer 10

Someone in zone of physical danger.

Question 11

Secondary Victim

Answer 11

Not in zone but witnesses the horrific event.

Question 12

What does C need to establish?

Answer 12

C only needs to establish physical harm was foreseeable. There is no requirement for psychiatric injury to be foreseeable if personal injury is.

Question 13

Case: Paige v Smith - Personal Injury

Answer 13

Car accident, caused by D, triggered C’s ME, a chronic illness causing her to stop working.

POL: If personal injury was foreseeable, it doesn’t matter if the injury was psychiatric or physical.

Question 14

Secondary victims must establish 4 Alcock Rules:

Answer 14

1. Close tie of love and affection.
2. Witness event with own unaided senses
3. Proximity to event or immediate aftermath.
4. Receive psychiatric injury as a result.

Question 15

Alcock v CCOSY: Secondary Victim

Answer 15

Friends/family claimed shock they suffered as a consequence of the Hillsborough football disaster.

POL: Case sets test for secondary victims.

Question 16

Rescuers

Answer 16

Come to aid of primary victims, cannot be primary/secondary themselves.

Question 17

White v CCOSY: Rescuers

Answer 17

Police on duty during Hillsborough disaster claimed as rescuers; promoted to primary victims, not secondary.

POL: Decision based on policy, it wouldn’t be just to allow police officers to recover compensation where relatives denied it.