Negligence and pure economic loss

Question 1

3 elements needed

Answer 1

1. A legal duty owed by the defendant to the claimant to take care
2. A breach of duty by the defendant; and
3. Damage to the claimant, caused by the breach, which is not too remote

Question 2

Established duty of care

Answer 2

A relationship that automatically gives rise to a duty of care or one that has been identified in precedent.

Most common are:
* one road user to another: this would include driver to other drivers; driver to passenger; driver to pedestrian; cyclist to driver; cyclist to pedestrian
* doctor to patient
* employer to employee
* manufacturer to consumer
* tutor to tutee, teacher to pupil

Question 3

Novel duty situations - Caparo 3 stage test

Answer 3

3 limbs must be established:

1. It was reasonably foreseeable that the defendants failure to take care could cause damage to the claimant
2. There was a relationship of proximity between the claimant and the defendant
   (relationship between the parties)
3. It is fair, just and reasonable that the law should recognise a duty on the defendant

Question 4

Liability for omissions to act - general rule

Answer 4

The general rule is that a duty of care is not owed for omissions, i.e. failing to act to prevent harm to the claimant.

Question 5

Liability for omissions to act - exceptions

Answer 5

• The duty not to make the situation worse e.g. rescuers
• When there is a duty to act positively
  If a person has some sort of power or control over the other person or object e.g. lifeguard, schools, parents

Question 6

Breach of duty

Answer 6

Breach occurs where D falls below the particular standard of care.

2 key questions:
1. How D ought to have behaved in the circumstances - the standard of care. This is a legal question.
2. How did D behave - did they fall below the standard of care? This is a factual question

Question 7

Breach of duty - standard of care

Answer 7

Defendant must meet the standard of ‘the reasonable person’.

Test is an objective one; the courts do not take into account the personal attributes of each defendant.

Question 8

Breach of duty - standard of care - special standard

Answer 8

• the skilled defendants
  e.g. doctors. Judged according to the degree of skill or competence to be expected from a person who has that special skill.
• the under- skilled defendant
  e.g. learner driver, even on their first drive, is expected to reach the standard of the reasonably competent driver.
  Junior doctor.
  Odd jobs around house - the courts are prepared to demand a certain level of skill from a defendant householder, ie that of the reasonably competent amateur carpenter, etc.
  So if an amateur tackles, unaided, a job which far exceeds their capability/normally done by a professional, likely judged negligent.
• children
  Show as much care as someone else their age.
  Very young children are rarely found liable.
  Need adult to represent them.

Question 9

Breach of duty - factors in determining whether defendant has achieved the required standard of care

Answer 9

1. Magnitude of the risk
   * How likely was it that the defendant’s actions could cause an injury?
   * If an injury was caused, how serious was it likely to be?
2. Cost and practicability of precautions
3. D’s purpose
4. Common practice
5. The current state of knowledge

Question 10

Proving breach of duty

Answer 10

Claimant must prove their case ‘on a balance of probabilities’.

The most usual way for a claimant to prove a breach of duty is by using:
* Witnesses of fact are people who saw what happened in the accident in question.
* Expert witnesses.

Question 11

Proving breach of duty - Res ipsa loquitur

Answer 11

= ‘the thing speaks for itself’.

3 conditions:
1. The thing causing the damage must be under the control of the defendant or someone for whom the defendant is responsible.
2. The accident must be such as would not normally happen without negligence.
3. The cause of the accident is unknown to the claimant – so that the claimant has no direct evidence

When it applies a inference of negligence against the defendant.

Question 12

Causation

Answer 12

1) Causation in fact
2) Intervening acts?
3) Was the damage too remote

Question 13

Causation - causation in fact - test

Answer 13

‘but for’ test - But for the defendant’s breach of duty, would the harm to the claimant have occurred? if no causation is satisfied

Question 14

Causation - causation in fact - proof

Answer 14

The claimant must prove it on balance of probabilities.

In multiple causes case, have to show that it MATERIALLY CONTRIBUTED to the damage.

Test is MATERIAL INCREASE IN RISK in cases of scientific uncertainty e.g. mesothelioma.

Question 15

Causation - causation in fact - divisible and indivisible injury

Answer 15

Divisible injury - if the court can apportion damages accordingly then a claimant will need to sue all defendants to recover damages in full.

Indivisible injury - the court cannot divide the injury up then the claimant is entitled to recover damages in full from either defendants.

Question 16

Causation - legal causation - intervening acts

Answer 16

• Instinctive intervention of a third party does not break chain
• Negligent intervention of a third party
  Chain unlikely to be broken by a negligent action of a third party which the defendant ought to have foreseen as a likely consequence of his negligence.
• Intervening conduct of a third party is reckless or intentional that the D would not have foreseen as a likely consequence of his negligence will break chain
• Actions of the claimant
  To break chain act has to be entirely unreasonable in all the circumstances.

Question 17

Causation - legal causation - remoteness - basic rule

Answer 17

The Wagon Mound rule for remoteness of damage is, ‘If a reasonable person would not have foreseen the damage it cannot be recovered’.

2 provisos to this rule, which are referred to as:
* the ‘similar in type’ rule; and
* the ‘egg- shell skull’ rule.

Question 18

Causation - legal causation - remoteness - similar in type rule

Answer 18

If the claimant suffers an injury of a type which was foreseeable, it does not matter that the precise way in which the claimant was injured was not foreseeable.

Question 19

Causation - legal causation - remoteness - egg shell rule

Answer 19

‘You take your victim as you find him’.

If the claimant suffers a particular disability/condition, they can recover in full
from the defendant for their losses, even though the defendant could not have foreseen the full extent of the claimant’s loss.

Question 20

Pure economic loss - limited duty situations

Answer 20

There may not be a sufficiently proximate relationship between the defendant and claimant and therefore there is not a close enough relationship for a duty of care to arise and the claimant cannot recover loss

Question 21

Pure economic loss- definition

Answer 21

A financial loss stemming directly from the harm caused by the negligent act or omission.

Arises where there hasn’t been any injury or damage to person or property.

Question 22

Pure economic loss - general test

Answer 22

Loss is not recoverable.

Question 23

Pure economic loss - examples

Answer 23

• Defective item of property
• Economic loss caused by negligent actions where there is no physical damage

Question 24

Pure economic loss - Economic loss caused by damage to the property of a third party

Answer 24

• If a defendant negligently damages the claimant’s property and causes the claimant loss, there is a sufficiently close relationship between the claimant and the defendant. This is not a situation of pure economic loss.
• If the defendant negligently damages property belonging to a third party and causes the claimant loss, there is not a sufficiently close relationship between the claimant and the defendant. The defendant does not owe the claimant a duty of care. This is a situation of pure economic loss.

Question 25

Pure economic loss - Economic loss caused where there is no personal injury to the claimant or physical damage to the claimant’s property

Answer 25

Economic loss caused where there is no physical damage can be either:
* caused by negligent actions; or
* caused by negligent statements.

Question 26

Pure economic loss - negligent statement

Answer 26

Where no physical damage but caused by a negligent statement rather than action = generally PEL.

Exception: special relationship = D has assumed a responsibility towards the claimant.

Question 27

Pure economic loss - negligent statement - exception

Answer 27

• Did the defendant assume a responsibility towards the claimant?
• Did the defendant know the purpose for which the advice was required?
• Did the defendant know that the advice would be communicated to the claimant (either specifically or as a member of an ascertainable class)?
• Did the defendant know that the claimant was likely to act on the advice without independent inquiry?
• Was the advice acted on by the claimant to its detriment?
• Was it reasonable for the claimant to rely on the defendant for advice?

Question 28

Pure economic loss - defence - exclusion of liability

Answer 28

2 requirements:
1. Reasonable steps must have been taken to bring the exclusion notice to the claimant’s attention before the tort was committed.
2. The wording of the notice must cover the loss suffered by the claimant.

In addition, it must not be excluded by CRA 2015 or UCTA 1977 (must be reasonable)
Reasonable?
* Were the parties of equal bargaining power?
* In the case of advice, would it have been reasonably practicable to obtain the advice from an alternative source taking into account considerations of cost and time?
* How difficult is the task being undertaken for which liability is being excluded?
* What are the practical consequences, taking into account the sums of money at stake and the ability of the parties to bear the loss involved, particularly in the light of insurance?

This exclusion is in addition to any other defence that may be available to D (e.g. contributory negligence).