Negligence - duty of care

Question 1

Donoghue v Stevenson [1932] AC 562 (HL) 580 (Lord Atkin):

duty of care in negligence

(Lord Atkin): ‘[I]n English law there must be, and is, some general conception of relations giving rise to a duty of care, of which the particular cases found in the books are but instances …’

Answer 1

= the HoL identified general principle of liability for negligence

=> Presumption of a duty of care for positive acts causing physical injury or property damage.

Held:

• The House of Lords, by a bare majority, found in Mrs Donoghue’s favour and sent the case back for trial. The majority (Lord Atkin, Lord Thankerton, and Lord Macmillan) held that a manufacturer of goods owes a duty to the consumer of the product to take reasonable care that it does not contain defects likely to cause damage to the person or property
• The House of Lords rejected the idea that the defendant’s liability is entirely governed by his or her contractual arrangements (sometimes called the ‘privity fallacy’) and recognized a new duty of care in negligence: that between a manufacturer and the ultimate consumer of goods. As well as recognizing that ‘[t]he categories of negligence are never closed’ (per Lord Macmillan), the case is significant for the protection it provides to consumers of goods.

Facts: Mrs Donoghue visited a café in Paisley with a friend. Her friend ordered a bottle of ginger beer for her. The drink was in an opaque glass bottle and was manufactured by the defendant, Stevenson. At the bottom of the bottle were the remains of a decomposed snail. Mrs Donoghue suffered shock and gastroenteritis because of this.

As it was her friend who had bought the drink, Mrs Donoghue could not bring a contractual claim against the retailer. Instead, she sued the manufacturer in tort. A preliminary point of law was referred to the House of Lords on whether these facts could give rise to a claim.

Question 2

Khan v Meadows [2021] UKSC 21, [2022] AC 852

the five elements of negligence

Answer 2

= sharp disagreement of the justices on this issue [whether the order of the elements is fixed]

Question 3

Mulcahy v Ministry of Defence [1996] QB 732 (CA)

duty of care - public policy

see also Smith v Ministry of Defence [2013] UKSC 41, [2014] AC 52:

Answer 3

• ## the court held that at common law, one soldier does not owe to another a duty of care when engaging the enemy in the course of hostilities.shows that: In some cases the courts will refuse to recognise a duty of care for reasons of public policy, even though the situation is one where otherwise there would be a duty of care applying ordinary negligence principles.

Question 4

Anns v Merton LBC [1978] AC 728 (HL):

duty of care

the ‘two tier test’ (ie, foreseeability of harm + no policy reasons why no duty = duty)

(overruled in Murphy v Brentwood DC [1991] 1 AC 398 (HL))

⇒ whereas Anns invited courts to disregard previously established limits on the number and breadth of duty situations, the Caparo approach gave a crucial role to consideration of precisely how far the authorities have already gone.

Answer 4

D was liable for negligence
The cracks were regarded as physical damage to property and hence actionable.

The lessees of a block of flats (Cs) found that faulty foundations had resulted in cracks in their flats
Cs sued Merton LBC (D) for damages for the negligent exercise of its statutory powers by approving foundations that were not deep enough and failing to inspect them properly

Question 5

Caparo Industries v Dickman [1990] 2 AC 605 (HL)

duty of care

HoL criticism of Anns v Merton - case reactionary to Anns v Merton

why is the case so important:

• Caparoclarifies what constitutes reasonable reliance under the principle inHedley Byrne v Heller and Partners[1964] AC 465. In this way, it restricted liability for negligent misstatements to those where the parties are in a bilateral relationship more closely akin to contract rather that where statements are published to a large audience.
• Changed the methods the courts use in determining whether a duty of care is owed in novel circumstances: the courts now focus upon the previously decided categories of cases (an approach recently confirmed inRobinson v Chief Constable of West Yorkshire[2018] UKSC 4). If a duty of care has been imposed in similar circumstances in the past then duty of care is more likely to be imposed on the defendant. By parity of reasoning, if a line of cases has previously held that a defendant does not owe a duty of care then the courts will follow those cases in analogous circumstances. In novel cases the courts will resort to the three-stage framework identified by Lord Bridge to determine whether a duty of care should be imposed on a defendant.
• Change in emphasis for determining duty of care. Under the previousAnns v Merton LBC[1978] AC 728 test it was easy for claimants to establish aprima facieduty of care and the burden then shifted to the defendant to demonstrate why a duty should not be imposed. Now, if a claimant cannot establish that their claim fits with an analogous case, they have the burden of demonstrating that all limbs of the tripartiteCaparoframework are satisfied.

Answer 5

(unanimous decision) A duty of care was NOT owed. For a duty of care to be owed in cases of negligent misstatement the claimant’s reliance upon the defendant’s statement or advice must be reasonable. The purpose of the statutory requirement for an audit of public companies under the Companies Act 1985 was to enable shareholders to exercise their class rights in annual general meetings. It was not intended to assist shareholders in the making of decisions as to future investment in the company. As the purpose of the statements was not to help investors, it could not be reasonably be relied upon by them.

Lord Bridge’s Caparo framework:

However, underlying all cases where a duty of care is owed is that:

(1) the damage was foreseeable;

(2) there is a sufficient relationship of proximity between the claimant and defendant; and

(3) it is fair, just, and reasonable to impose a duty of care (per Lord Bridge).

The claimant company, Caparo Industries, had begun purchasing shares in another company called Fidelity plc a few days before its annual accounts had been published to shareholders. In reliance on the accounts, Caparo bought more shares in Fidelity and accomplished a takeover. However, Fidelity’s profits were not as high as had been projected and so its share price fell significantly. As a result, the claimants lost money and brought an action against Fidelity’s auditors, Dickman, alleging that they were negligent in carrying out the audit and making their report. The making of such reports was required under the Companies Act 1985. Successful claims in the court of appeal, auditors appeal to the HoL.

Question 6

Murphy v Brentwood DC [1991] 1 AC 398 (HL)

overrules Anns v merton

Question 7

Robinson v CC West Yorkshire [2018] UKSC 4, [2018] AC 736 [27]

incrementalism

⇒ Mrs Robinson’s complaint was not that the police failed to prevent a third party from causing her injury. This was a case involving a positive act by the police (at [73]) and it was ‘not only reasonably foreseeable, but actually foreseen by the officers, that Williams was likely to resist arrest by attempting to escape’ (at [74]) and that pedestrians could be injured. As such, a duty of care was owed. Furthermore, the recorder was correct to hold that the officers had breached that duty.

Lord Mance and Lord Hughes agreed with the result but believed that policy reasoning was relevant in determining whether the police owe a duty of care to members of the public.

Answer 7

Lord Reed): ‘[T]he characteristic approach of the common law in such situations is to develop incrementally and by analogy with established authority.’
Held: Robinson’s claim successful.

• Caparowas not authority for a universal test to determine duty questions in all cases. Instead, it favoured an approach of developing the law incrementally based on previous categories of duty situations (at [21]) + Lord Reed confined the use of policy reasoning (the third limb of theCaparotest) to novel cases where no established authority covered the facts of the case and instead emphasized the importance of precedent
• Public authorities are subject to the same liabilities in tort as private individuals and bodies (at [32]). The common law ‘does not normally impose liability for omissions, or more particularly for a failure to prevent harm caused by the conduct of third parties’ (at [50]). As such, public authorities such as the police are ‘not, therefore, generally under a duty of care to provide a benefit to individuals through the performance of their public duties’ (at [50]). However, given that private individuals usually owe a duty of care where their positive act has caused foreseeable physical injury, this does not prevent the police from owing a duty of care where damage is caused by their positive acts (at [70])

Facts: our police officers attempted to arrest a man who had been seen dealing drugs in Huddersfield town centre. The drug dealer resisted arrest and, as a result, the group toppled into a passerby, Mrs Robinson, and injured her. She brought a claim in negligence against the defendant chief constable. Duty of care in Robinson: avoid of causing personal injury as a result of actions.

At first instance it was held that although the police had breached their duty of care, they were immune from liability in negligence. On appeal, it was held that the police were not immune from liability but that they did not owe the claimant a duty of care and had not acted carelessly in carrying out the arrest. The Court of Appeal held that to determine whether a duty of care is owed in negligenceallcases are decided by what is known as the three-stageCaparotest. The Court of Appeal applied this test and rejected Mrs Robinson’s claim. It held that the policy reasons inHill v Chief Constable of West Yorkshire[1989] AC 53 (a case brought against the police by the family of a victim of the Yorkshire Ripper) meant that the police do not owe a duty of care to members of the public. This is known as ‘theHillprinciple’ and is based on the idea that imposing a duty of care would result in the police engaging in defensive practices.

Question 8

N v Poole BC [2019] UKSC 25, [2020] AC 780 [30]

Caparo Factors - public authority

The decision in N v Poole BC now forms – along with the decisions in Michael and Robinson – a troika of UKSC decisions that clearly endorse what in McBride & Bagshaw we call the uniform approach to determining whether a public authority owed a claimant a duty of care. It is now clear beyond question that the law of negligence treats public bodies and private individuals the same: if an equivalently-situated private individual would not owe the
claimant a duty of care of some description, a public body will not owe that claimant that kind of duty of care.

Lord Reed’s analysis in N v Poole contains a helpful typology of the situations in which an assumption of responsibility by a public authority might be found. [82], he distinguishes:

• situations where an assumption of responsibility can be inferred from the nature of the function the public authority was performing, and those where it can otherwise be inferred from the manner in which the public authority has behaved towards the claimant or victim ex. the provision of a service on which the claimant or victim reasonably foreseeably relies
• situations of acceptance of a responsibility for a person’s safety (e.g. where a council takes a vulnerable child into protective care).

This analysis suggests a two-stage inquiry:

1. first, a court should address whether an assumption of responsibility can be inferred from the function thepublic authority was performing;
2. secondly, if it cannot do that, it should consider whether an assumption of responsibility can be otherwise inferred from the words or conduct of the public authority on the specific facts.

Answer 8

Held: The Supreme Court held in favour of the local authority. Nothing in the local authority’s behaviour indicated that they had assumed responsibility for the claimants’ affairs.

Principle: The general rule is that a local authority does not owe people a duty for failing to protect them from harm. They will only owe a duty if a private individual would owe a duty for failing to act ⇒ they are under no special regimen(e.g. where they created the danger or there was an assumption of responsibility). They do not owe a duty merely because they are exercising their statutory powers or because they owe a statutory duty which could have avoided the harm.

• Merely taking on a task for C is not sufficient for an assumption of responsibility. There has to be an undertaking that reasonable care will be taken, either expressly or impliedly. Such an undertaking will be implied usually from the foreseeability of reliance on the exercise of such care. However, foreseeable reliance is not the only foundation for implying an undertaking that reasonable care will be taken. Exercising power and directing the life of another person (in the absence of that person’s reliance) is also a core instance of when you are likely to be found to have assumed a responsibility for their welfare. = You can inply an assumption of R if you undertake the running of sn’s life.
• XHA highlights that reliance is not necessary especially in cases involving children.

(Lord Reed) (emphasis added): ‘Clarification of the general approach to establishing a duty of care in novel situations was provided by [Caparo] but the decision was widely misunderstood as establishing a general tripartite test ….’
= Note: Caparo does not lay down a ‘test’ for establishing a duty of care

The first claimant was a severely mentally and physically disabled child. The second claimant was his brother. The children were placed into local authority housing with their mother. During this time, they were physically and emotionally harassed by their neighbours.

This was reported to the local authority, who carried out various assessments, enquiries, strategy meetings and child protection conferences. After two years of abuse, the second claimant expressed suicidal thoughts and was referred to mental health services. This did not improve matters, and after a further two years the second claimant was put under a ‘child in need’ plan. A year later, this was escalated to a child protection plan. Three months later, the family were rehoused.

The claimant sued the local authority for failing to protect them from their neighbours’ abuse. They argued that the local authority had assumed responsibility for their wellbeing when they began accommodating the pair and investigating the difficulties they encountered.

Question 9

Dryden & Ors v Johnson Matthey PLC [2018] UKSC 18

Question 10

Darnley v Croydon Health Services NHS Trust [2018] UKSC 50

incrementalism

Principles

• There is no need to consider the test inCaparo v Dickman[1990] UKHL 2 to hold that there is a duty of care where the facts of the case are sufficiently analogous to existing, non-novel cases. Where the precise facts are unusual but the overall issue essentially falls within an existing category of duty of care, a duty exists.
• A medical receptionist owes patients a duty to take reasonable steps not to provide misleading information as to the availability of medical care. The standard of care is that of an averagely competent and well-informed A&E receptionist.
• A claimant’s decision-making process cannot be assessed in isolation from the breach. Where a claimant’s decision is influenced by the breach, it is less likely to break the chain of causation

Answer 10

Held: the defendant was held liable

1. Duty: It is not appropriate to distinguish between medical and non-medical staff as the duty is owed by all staff members.> The present case falls squarely within an established category of duty of care: it has long been established that such a duty is owed by those who provide and run a casualty department to persons presenting themselves complaining of illness or injury and before they are treated or received into care in the hospital’s wards. The duty is to take reasonable care not to cause physical injury to the patient.
2. Negligent breach of duty: A receptionist in an A&E department is expected to take reasonable care not to provide misleading advice as to the availability of medical assistance. The standard required is that of an averagely competent and well-informed person performing the function of a receptionist at a department providing emergency medical care [25]. Moreover, responding to requests for information as to the usual system of operation of the A&E department is well within the area of responsibility of receptionists.
3. Causation: The appellant’s decision to leave was reasonably foreseeable and was made, at least in part, on the basis
   of the misleading information. The trial judge made further findings of fact that,
   1) had the appellant been told he would be seen within 30 minutes he would have waited, been seen by a doctor and admitted, and(2) had the appellant suffered the collapse at 21:30 whilst at the Mayday Hospital, he would have undergone surgery earlier and he would have made a nearly full recovery. Thus, the appellant’s departure did not break the chain of causation.

Facts: The claimant had gone to the NHS Trust’s accident and emergency department (A&E) after sustaining a head injury where he was misinformed by the receptionist about the waiting time. He then decided to return home without treatment and his condition deteriorated. He was returned to hospital by ambulance but the delay led to his permanent brain damage which would not have resulted had he remained at hospital. He claimed damages from the trust for breaching its duty of care. Both the trial judge and the Court of Appeal dismissed his appeal, holding that there was no duty to advise about waiting times, and that the appellant had broken the chain of causation by leaving A&E.

Question 11

Smith v Littlewoods Organisation Ltd

failure to confer a benefit - the omission rule

This case also highlights the exception to the omission rule:
1. Relationship between the parties which creates an assumption of responsibility on behalf of D for the safety of C. Stansbie v Troman comes under this exception
2. Relationship of control between D and a third party who causes the damage. Home Office v Dorset Yacht Co Ltd comes under this exception
3. D creates or permits a source of danger to be created, which is interfered with by 3rd parties
* It must be reasonably foreseeable that a third party will intervene
* An occupier is liable only if it is foreseeable that third parties might trespass and cause danger
Haynes v Harwood comes under this exception
4. D fails to remove a source of danger of which he is aware (but may not have created or permitted it). The standard of care is that described in Goldman v Hargave.

Answer 11

D did not owe a duty of care to prevent the trespassers from starting the fire.

Ds owned a disused cinema in which young people attempted to start fires, one of which spread and damaged adjoining properties
Owners of those properties sued in negligence for Ds’ omission to secure the premises adequately

Question 12

Hill v CC South Yorkshire [1989] AC 53 (HL)

failure to confer a benefit-omission rule - ‘public authority’ liability

Reasoning:
The two-stage Anns test was applied and the facts did not pass either:

First stage: lack of proximity
* In contrast to Home v Dorset Yacht, the killer was never in the custody of the police
* The victim was one of a vast number of the female general public and there was no special distinctive risk to the killer’s activities

Second stage: on public policy grounds, “the police were immune from an action of this kind”: p

Answer 12

D were not liable in negligence as no duty of care had arisen on the facts. No duty of care is owed to the general public by the police in the course of their investigation of crime

Lord Keith:
“the police were immune from an action of this kind.”
*The general sense of public duty which motivates police forces is unlikely to be appreciably reinforced by the imposition of such liability so far as concerns their function in the investigation and suppression of crime. *
the imposition of liability may lead to the exercise of a function being carried on in a detrimentally defensive frame of mind.

The Yorkshire ripper killed Jacqueline Hill, a student before he was captured
C, a relative of Jacqueline sued the police (D), alleging that there were extensive failings in the investigation and failure to apprehend the ripper who they interviewed 9 times

Question 13

Barrett v Enfield LBC [2001] 2 AC 550

failure to confer a benefit - prevent alternative aid/ AoR for wellbeing

Answer 13

Held (House of Lords)
Appeal allowed, the case should be heard
Public policy considerations did not exclude a duty of care

C was in the case of a local authority (D) between 10 months and 18 years of age and was moved nine times between different foster placements
C alleged that he had developed psychiatric illness as a result due to the negligence of D
The claim was struck out in the County Court
The Court of Appeal dismissed C’s appeal, citing policy considerations of fairness, justice and reasonableness and that the fact that it was a policy decision

Question 14

Stovin v Wise [1996] AC 923 (HL) 930

failure to confer a benefit - omission rule

Answer 14

No, they did not owe a duty of care. Under theHighways Act 1980 s.79a highway authority had discretionary powers to require the removal of such obstructions. However, a statutory power did not give rise to a common law duty of care and N had not acted unreasonably in failing to proceed under that power. Even if the work ought to have been carried out, it could not be found that a public law duty gave rise to an obligation to compensate those suffering loss due to its non- performance. The creation of a duty of care in the circumstances posed an unacceptable risk to local authority budgetary decision making in an area where road users themselves were subject to compulsory insurance requirements.

Facts: N was aware of a visibility issue due to a bank of land at a road junction where three accidents had occurred over the past 12 years. The matter was discussed with the landowners, and N agreed to undertake the necessary work to remove the obstruction. However, by the time S was seriously injured in a collision with a car driven by W, no steps had been taken to address the issue. Subsequently, W joined N as a second defendant in S’s damages claim.

Issue: Do highway authorities owe a duty of care towards motorists to remove obstructions?

Question 15

Michael v CC South Wales Police [2015] UKSC 2, [2015] AC 1732

failure to confer a benefit -

Lord Kerr and Lady Hale’s dissent: there was sufficient proximity between the police and the claimants so a duty of care could be established. The majority rejected Lady Hale’s view that proximity can exist “if the police know or ought to know of an imminent threat of death or personal injury to a particular individual which they have the means to prevent”. Three reasons were given: (i) the definition wrongly implies that a duty should be owed to “the intended victim of a drive-by shooting but not to an injured bystander”, (ii) the requirement that the threat be imminent is arbitrary, and (iii) the limitation of the duty to personal injury is arbitrary

⇒ their dissent resuscitated Lord Bingham’s dissenting opinion in Smith v CC of Sussex Police.

Wider considerations:

• The majority ruled that police officers do not have immunity from negligence claims simply due to their status; instead, the usual rules on liability for omissions apply to them as they do to other defendants. However, this approach will generally exclude claims where the police fail to prevent harm by a third-party criminal, meaning the practical impact for victims of police negligence may be limited.
• **When will the police owe a duty of care in negligence? The Supreme Court inRobinson v Chief Constable of West Yorkshire Police[2018] UKSC 4recently held that the police owed a duty of care to a passerby who they injured while trying to arrest a criminal. It was held that the normal rules of negligence that an individual owes a duty of care where their positive act causes foreseeable physical injury apply to the police as to anyone else. TheHillprinciple only applied to omissions.

Answer 15

Held: by a majority (Lady Hale and Lord Kerr dissenting) that the negligence claim should fail but unanimously held that the human rights claim should go to trial.

Lord Keith held that reasons of policy meant that the police were ‘immune’ from actions in negligence for failing to prevent a third party causing harm. He said (at [63]) that the sense of public duty that motivates the police is unlikely to be reinforced by the imposition of negligence liability = ‘defensive practices’ argument and it has been relied upon in several subsequent decisions involving the police.

Lord Toulson, giving the leading judgment inMichael, maintained that Lord Keith’s use of the phrase ‘immunity’ inHill‘was, with hindsight, not only unnecessary but unfortunate’ (at [44]) as it gave rise to misunderstandings. Lord Toulson did not rely upon such policy reasoning when rejecting the claim. Relied on ordinary common law principles relating to liability for omissions, maintaining that English law does not generally impose liability on a defendant for injury or damage to the person or property of a claimant caused by the conduct of a third party. The exceptions to this arise where a defendant is in a position of control over the third party or when a defendant has assumed a positive responsibility to safeguard the claimant. It was held that neither of these exceptions applied to the current case and, as such, the police did not owe a duty of care. Furthermore, Lord Toulson was not persuaded by the claimant’s arguments that an exception should be made to this principle: it was ‘speculative’ whether a change in the ‘civil law would lead to a reduction of domestic violence or an improvement in its investigation’

Facts: Joanna Michael was murdered by her ex-boyfriend Cyron Williams. He had turned up at her house in the middle of the night and hit her after finding her with another man. Although she lived in the area of the South Wales Police, her 999 call was picked up by a Gwent Police operator. She informed the call handler that Williams had taken her car to drive the other man home and had said that when he came back he was going to kill her. The call handler informed Ms Michael that she would pass the call on to the police in Cardiff. Gwent Police graded the call as requiring an immediate response and Ms Michael’s home was no more than six minutes’ drive from the nearest police station. The call handler gave an abbreviated version of what Ms Michael had said to South Wales Police. However, no mention was made of the threat to kill. As a result, South Wales Police categorized the call as requiring a response within 60 minutes. Ms Michael dialed 999 again approximately 15 minutes after the first call. This was also received by Gwent Police. The operator heard Ms Michael scream and the line went dead. South Wales Police arrived at her home within eight minutes of the second call to find she had been brutally stabbed to death.

⇒ claim against the Chief Constables of Gwent and the South Wales Police for damages for negligence and under the Human Rights Act 1998 for failing to protect Ms Michael’s right to life under Article 2 of the European Convention on Human Rights.

Question 16

HXA v Surrey CC [2023] UKSC 52, [2024] 1 WLR 335 [90]

failure to confer a benfit-AoR for wellbeing/ preventing alternative aid

The duties imposed on local authorities under legislation like the Children Act 1989 do not create corresponding tortious duties which entitle a claimant to damages for their breach. However, it is not impossible that a local authority will owe a corresponding duty in these cases. Lord Burrows and Stephens gave two examples of cases where there might be an assumption of responsibility:
* Where the local authority has gained parental responsibility for the child; and
* During the period in which a local authority has taken a child from their parents (e.g. during a period of respite or foster care). In these circumstances, the parents are assumed to have delegated their parental responsibility to the local authority.

Lord Burrows and Stephens also stressed that ‘assumption of responsibility’ is not quite the same concept across the tort of negligence. In cases of economic loss, it requires the claimant to rely on the defendants services. Conversely, the Lords argued that this is not the case for local authority cases involving vulnerable individuals. They noted that it would be inappropriate to require reliance in cases likely to involve young children or those with learning disabilities, who cannot ‘rely’ on anything in any real sense.

Answer 16

⇒ The Court upheld N v Poole Borough Council as a key precedent. The Supreme Court held in favour of the local authority. There was no assumption of responsibility, and so no arguable duty of care.

• The local authority’s decision to investigate in HXA was not an assumption of responsibility. The decision was merely an initial step to prepare for some other action.
• Even if the authority had investigated, this would not involve providing a service to the child. It was a decision purely for the local authority’s benefit, to allow them to know whether they should use any of their other powers.

(Lord Burrows and Lord Stephens): ‘The precise ingredients of an assumption of responsibility appear to vary according to the general context in which it is being used.’

In HXA, the Local A has knowledge abt the abuse

Facts
The claimants were children who had suffered sexual and physical abuse at the hands of a parent or a parent’s partner.

In the first case, HXA, the local authority’s social workers were aware of a potential issue. They decided that they would investigate, but never actually did so.
In the second case, YXA, the local authority did intervene. However, they failed to act on recommendations that the child be taken into care. Instead, they reached an agreement with the parents that he would only spend some days a week in foster care. Only after further abuse was the child place in care full-time.
The children sued their local authorities in negligence, arguing that the authorities had a duty of care to protect them from this abuse. They argued that the local authority was both directly liable, and vicariously liable for the social workers’ failures. The local authorities sought to have the cases struck out on the basis that neither they nor their social workers owed the children a duty of care. They argued that, following the Supreme Court decision in N v Poole Borough Council [2019] UKSC 25, the claimants failed to establish an arguable case that the local authorities were providing a service or benefit for which they assumed responsibility for the children’s care.

Question 17

Mitchell v Glasgow CC [2009] UKHL 11

failure to confer a benefit - local authority

Answer 17

the claim failed bc there was no assumption of responsibility by the housing authority .

housing authority failed to protect resident from being killed by antisocial neighbor = the family of the deceased claimed negligence.

Question 18

Home Office v Dorset Yacht Co Ltd [1970] AC 1004 (HL)

failure to confer a benefit - special level of control

Reasoning:
Lord Diplock

Dismissed the appeal; any duty a Borstal officer to use reasonable care to prevent a Borstal boy from escaping was owed only to persons whom he could reasonable foresee had property in the vicinity of the detention place of the boys

Lord Reid

Saw not reasonable ground in the public policy immunity umbrella over governmental departments and dismissed the appeal. When a new point emerged ‘one should ask not whether it is covered by authority but whether recognized principles apply to it’ (at 1026–7). AlthoughDonoghueshould not be treated as if it were ‘statutory definition’ he thought ‘the time has come when we can and should say that it ought to apply unless there is some justification or valid explanation for its exclusion’ (at 1027). His approach—asking whether the damage was reasonably foreseeable before looking at reasons that might negate the duty—was a precursor to the, now overruled,Annstest of determining whether a duty of care is owed.

Viscount Dillhorn (dissenting)

> ‘Where I differ is in thinking that it is not part of the judicial function “to alter all this.” The facts of a particular case may be a wholly inadequate basis for a far-reaching change of the law. We have not to decide what the law should be and then alter the existing law. That is the function of Parliament. As in my opinion no such duty under the common Law now exists my answer to the question raised in this preliminary issue is in the negative and I would allow the appeal.’

Answer 18

Held: The OH had a duty of care and no policy reasons would justify an immunity in such a case. The majority (Viscount Dilhorne dissenting) held that the Borstal officers owed the claimants a duty to take reasonable care to prevent the Borstal trainees under their care from causing damage to the claimant’s property.

Although the general rule is that a defendant will not owe a duty of care to prevent a third party from causing damage to a claimant, this case fell, according to Lord Pearson, ‘under the exception and not the rule’ (at 1055). The reason for this was that there was a special relationship between the defendants and the Borstal trainees as the latter were under the control of the Borstal officers (at 1039 per Lord Morris).

The Home Office maintained that because they were acting in accordance with a statutory duty they should not owe the claimants a duty of care. This argument was rejected, with Lord Pearce stating, ‘The existence of the statutory duties does not exclude liability at common law for negligence in the performance of the statutory duties’ (at 1055).

• In finding a duty of care, Lords Diplock and Morris focused on the proximity of the relationship between the borstal officers and the victims due to the particular risk caused by the borstal trainees in their care while Lord Pearson focused on the relationship of control of the borstal officers over the borstal trainees
• This case is an exception to the general rule that there is no duty of care for omissions ⇒ landmark for the expansionary doctrine of negligence in the 70s and 80s.

A party of young offenders, known as Borstal trainees, were working on an island in Poole Harbour as part of their rehabilitation. They were under the supervision of Borstal officers employed by the Home Office. In breach of their instructions, these officers went to bed and left the trainees to their own devices. During the night, seven of them escaped on a boat. They all had criminal records and five of them had a record of escaping from previous Borstal institutions. In the course of their escape the Borstal trainees collided with a yacht owned by the Dorset Yacht Company. They then vandalized the yacht, damaging it further. A claim was brought in negligence by the Dorset Yacht Company for the damage to their property and the House of Lords had to determine the preliminary issue of whether the Home Office owed a duty of care in these circumstances.

Question 19

Goldman v Hargrave [1967] 1 AC 645 (PC)

failure to confer a benefit - status exception - occupiers of land

This is a very interesting case to contrast with Capital & Counties v Hampshire CC. Although the latter case decides that the fire service owes no duty of care to the owner or occupier of burning property simply by virtue of its attendance at the fire scene, Goldman makes it clear that the owner/occupier owes a duty to neighbours who are threatened by the fire.
⇒ the owner/occupier’s liability seems to arise by virtue of the responsibility he assumes as an incident of his ownership or occupation of the land, which should be regarded as a privilege, of benefit to the owner/occupier but carrying with it certain obligations, including that of ensuring that the land does not become an unreasonable source of danger to neighbours

Answer 19

The Privy Council held in favour of the claimants, holding the defendant liable in nuisance. Allowing the fire to burn out instead of using water raised an unreasonable and foreseeable risk that the fire might revive.

Principle: Where a naturally occurring hazard arises on the defendant’s land, principles of negligence are relevant to nuisance. Liability depends on whether the defendant ought to have known of the hazard and whether, based on this knowledge, a reasonable person would have taken effective steps to remove it.

When determining what is reasonable, it is relevant that the hazard exists through no fault of the occupier. The occupier’s resources and individual circumstances are also relevant. The law cannot require occupiers to spend excessive amounts of money or to achieve the nearly-impossible.

A freak lightning strike set a tree in the centre of the defendant’s land on fire. The defendant was advised that the fire could not be put out while the tree was standing. As such, he cleared all flammable material from around the tree and sprayed the area with water. A few hours later, the tree was cut down. Afterwards, the defendant simply allowed the fire to burn out instead of using water to put it out. A few days later, the weather changed and the fire started up again. This time, the fire spread over the defendant’s land and onto the claimants’ neighbouring land. By the time the defendant noticed, it was too late.

The claimants sued the defendant in private nuisance and under the rule in Rylands v Fletcher for the damage to their property. The defendant argued that he could not be liable for either: the fire was started by natural occurrences and he had not adopted or continued it.

Question 20

Armes v Nottinghamshire CC [2017] UKSC 6

Failure to confer a benefit - status exception

NB: different

Answer 20

D is vicariously liable for the acts of foster parents
However, D did not owe a non-delegable duty to C.

C was placed by the local authority (D) with foster carers as a child. She suffered physical and sexual abuse
C sued D sued on the basis of vicarious liability or breach of non-delegable duty of care
The Court of Appeal rejected the claim on the basis that
There was insufficient control by local authorities over the daily care of foster children and
The imposition of vicarious liability would not enable deterrence of abuse by local authorities given their lack of control

Question 21

Kent v Griffiths [2001] QB 36 (CA)

failure to confer a benefit - preventing alternative protection

Kent v Griffith decided in a different legal context ⇒ Pre-Robinson

Answer 21

Held: The ambulance service owed the claimant a duty of care after accepting the 999 call for assistance. Theybreachedthis duty by failing to arrive promptly without good reason.

reasoning: the court distinguished ambulances services from police of firefighters who do not owe a duty of care. Ambulance services were said to be more akin to doctors caring for patients. Their sole concern is the interests of the individual patient and there are not normally any conflicting priorities between the patient’s interests and the public at large. The key point here is that an assumption of responsibility arose from the assurance and not merely the picking up of the call.

⇒ However, the Court of Appeal noted that a different conclusion might be reached if what was being criticised was the service’s allocation of resources. For example, if the 999 operator had been unable to provide an ambulance because there were not enough ambulances, this would fall outside of the scope of the duty of care established by this case.

The Court also concluded that ambulance services are not ‘volunteers’ (who are usually only under a duty to avoid making matters worse)

Facts: The claimant was a pregnant woman who suffered a severe asthma attack. Her doctor attended her and called 999, requesting an ambulance and informing the operator of the claimant’s condition. The operator told the doctor that an ambulance would arrive in around eight minutes. The ambulance took thirty-four minutes to arrive, and the paramedics falsified their arrival time to hide this. The paramedics never gave a reason for the delay.

By the time the claimant arrived at the hospital, she had suffered respiratory arrest. This resulted in brain damage and a miscarriage. These injuries would have been avoided if the ambulance had arrived promptly. The claimant’s doctor testified that if he had known the ambulance would have taken that long to arrive, he would have had the claimant’s husband drive her to the hospital. The claimant sued the ambulance service in the tort of negligence.

Question 22

Tindall v CC Thames Valley Police

Answer 22

appeal to the SC pending

Question 23

Gorringe v Calderdale MBC [2004] UKHL 15

failure to confer a benefit - local authority

Recent application of the Gorringe principle in:

Michael v CC South Wales Police [2015] UKSC 2, [2015] AC 1732

N v Poole BC [2019] UKSC 25, [2020] AC 780

HXA v Surrey CC [2023] UKSC 52, [2024] 1 WLR 335

Answer 23

D was not liable in negligence
D was not under a common law duty of care to protect C from her own negligence

Principe: In the absence of circumstances which would generally give rise to an obligation to take positive action at common law, a public body will not be liable for failing to confer a benefit in negligence (so, a highway authority could not be liable in negligence for failing to paint a ‘SLOW’ sign on the surface of a road to warn motorists of a hidden danger, even though the authority was under a statutory duty to promote road safety)

C was driving too fast for safety on country road and got into an accident
C sued for damages against the D highway authority that it ought to have painted the word slow on the road surface
C claimed that a duty of care arises from D’s statutory duty to maintain the highway under s41 Highways Act 1980

Question 24

Haynes v Harwood

omission rule - controver over the risk or creating the risk

Answer 24

C’s claim succeeded
A defendant is liable in negligence for the injuries the claimant sustains when rescuing others from the danger the defendant created
The claimant’s act of rescue does not break the chain of causation and does not give rise to a defence of voluntary assumption of risk

This Case is Authority For…
If a defendant ought to have foreseen that an animal might escape and that a person might be injured trying to prevent them from doing harm, the defendant owes a duty of care.
Where a third party’s acts are the natural and probable consequence of the defendant’s negligence, those acts will not be a novus actus interveniens. Essentially, if the third party’s acts fall within the scope of harm or mischief which the duty is designed to prevent, causation will not be broken

D negligently left his horses with vans attached unsecured on the street
A stone thrown by children startled the horses and caused them to bolt down the street but C policeman prevented them from injuring large number of children and people on the street
C sustained injuries and sued for negligence

Question 25

Sumner v Colborne [2018] EWCA Civ 1006

omission rule - control over the risk or creating the risk - local A

Answer 25

On appeal, the Court again rejected the contention that Yetkin was a direct precedent or analogous, determining that that case was concerned with the creation and maintenance of a crossing facility on the highway, whereas Sumner related to things done, or not done, on land adjacent to the highway.

Further, having considered Robinson v Chief Constable of West Yorkshire (2018) and Caparo v Dickman, the Court found that it would not be fair, just and reasonable to find that a duty of care existed on these specific facts because imposing such a duty would place too great a burden on individual landowners across the country.

The Claimant, Mr Sumner, was cycling on the A494 when he was involved in a collision with a vehicle being driven by a Mr Colborne, who emerged from a minor road onto the A494.

The Welsh Ministers (“WM”) were the Highway Authority for the A494 and Denbighshire County Council (“DCC”) was the Highway Authority for the minor road.

Several years prior to the accident, WM had fenced off a parcel of land that bordered the A494 and the minor road at the junction. Although WM had audited the land and devised a system of maintenance to cut back the vegetation, it failed to actually implement the system, and the vegetation grew to a height and density that impaired Mr Colborne’s range of vision.

Mr Colborne denied liability for the collision and commenced Part 20 claims against DCC and WM, seeking an indemnity or contribution on the premise that:

Yekin v Mahmood [2010] EWCA Civ 776 was a direct precedent or analogous in that DCC and/or WM had created a danger to users of the highway by changing the layout of the land at the junction, by permitting the vegetation to grown to such a height and density that it obstructed his visibility;

Question 26

Capital and Counties Plc v Hampshire County Council

omissions - status exception - occupiers of land

Answer 26

The Court of Appeal held that:

A duty of care was owed to the first claimant. The fire service had created or exacerbated the danger by turning off the sprinklers.
A duty of care was not owed to the second claimant.
A duty of care was not owed to the third claimant. The Fire Services Act 1947 did not allow for an action for breach of statutory duty.
This Case is Authority For…
The fire service:

is not under a duty to answer a call for assistance;
is not under a duty to fight fires reasonably if they do attend the scene;
are under a duty not to create new dangers or exacerbate existing ones if they do answer a call.

The claimants alleged that the fire department acted negligently or breached of statutory duty when attending fires at their property.

In the first case, the fire service turned off a sprinkler system, causing a fire to spread out of control.
In the second case, the fire had already been extinguished by a third-party. However, it broke out again after the fire service had declared the area was safe.
In the third case, the fire brigade was unable to stop the fire as they ran out of water. Fire brigade are under a statutory duty to have enough water to put out fires (Fire Services Act 1947).

Question 27

Yetkin v LB of Newham

omissions-local authority

Answer 27

Held

The decision of the House of Lords in Gorringe v Calderdale Metropolitan Borough Council [2004] was considered. In Gorringe, it was held that the local authority did not owe a duty of care to the Claimant to warn her to slow down as she approached the crest of a road where her accident occurred. However, Gorringe was not concerned with cases where the local authority has done something positive which had or may have given rise to a common law duty of care. Lady Justice Smith stated that it is “well established law that a person who does an act which affects the safety of the highway will generally owe a duty of care to road users and if there is a breach of that duty liability will follow”. It was entirely foreseeable that some pedestrians would not rely on the traffic light system and it was therefore necessary to give pedestrians a good view of the carriageway. Primary liability was established subject to 75% contributory negligence

Mrs Yetkin was knocked over by a car driven by Mr Mahmood while crossing the High Street, Stratford which is part of the A11 trunk road. At this point it is a dual carriageway with six lanes and a pedestrian crossing controlled by traffic lights. The crossing is in two parts, with an area bounded by railings on the central reservation. At the time of the accident the London Borough of Newham (LBN) had planted the central reservation with shrubs which had grown thick and tall, so that a pedestrian wishing to cross the southbound carriageway had a restricted view of the road to the left. Mrs Yetkin reached the central reservation and decided to set off across the southbound carriageway without waiting for the traffic lights to change in her favour. At first instance her claim against Mr Mahmood and LBN was dismissed. She appealed against the decision in respect of LBN..

Question 28

Martin Hines And Others V. King Sturge Llp

pure economic loss

Answer 28

Action dismissed..
(1) X had failed to state a relevant case in the absence of averments as to any express reliance by X on K to attend to fire protection, or circumstances from which it could properly be inferred that they had so relied on K, and had made it known to K that they were doing so.
(2) There were no pleadings to the effect that K had undertaken to X that they would supply or maintain any fire precautions, rather the pleadings seemed to suggest that K were in a contractual relationship with J, with whom the responsibility for fire precautions rested, and would therefore carry out only such services as J requested of them.
(3) X’s averment that the property was under control of K as managing agents was not based upon any factual averments, and there was nothing from which it could be inferred that K had any awareness of a responsibility for the testing and maintenance of the fire alarm system.
(4) X had failed to make out a duty of proximity where, as managing agents, K were working for J, for the purpose of preserving the building for their benefit, rather than for X. Further, the proximity and fair, just and reasonable components of the tripartite test in Caparo could not be met, Caparo considere

A sole trader and a company (collectively X) sought damages from managing agents (K) employed by the owner of a building (J) from which X ran businesses, for the cost of physical damage to the building and its contents, and loss caused by interruption of business, following a fire.
X averred that K had control of the building in their capacity as managing agents, and that the maintenance of the fire alarm system and monitoring system therein, which was not in operation at the time of the fire, was K’s responsibility, of which they were fully aware.
X submitted that (1) there was proximity between K and X by the fact that X were in the building, which K were there to look after and keep safe for those working there; (2) their averments were sufficient to allow the case to go to inquiry; (3) the tripartite test in Caparo Industries Plc v Dickman [1990] 2 A.C. 605, [1990] 2 WLUK 128, had been met by virtue of K’s assumption of responsibility for maintenance and monitoring pursuant to their contract with J, which created a special relationship between X and K under which K owed X a duty of care.

Question 29

Conarken Group v Network Rail Infrastructure (2011)

consequential economic loss

The extent of consequential economic loss was linked to the Wagon Mound test of reasonable foreseeability

Answer 29

Here, the defendants who damaged railway property were held to also be liable to Network Rail for the contractual payments they owed to train operating companies while the track was unusable.

Question 30

Caparo v Dickman

pure economic loss - duty of care - Caparo Factors

More generally, the judgment of Lord Bridge noted that there was a tension between two different approaches to determining when a duty of care exists. The traditional ‘categories of duty’ approach that existed prior to[Donoghue v Stevensoncould be contrasted with the ‘modern approach of seeking a single general principle which may be applied in all circumstances to determine the existence of a duty of care’.

Recent cases, however, had demonstrated ‘the inability of any single general principle to provide a practical test which can be applied to every situation to determine whether a duty of care is owed and, if so, what is its scope’. The law has ‘now moved in the direction of attaching greater significance to the more traditional categorisation of distinct and recognisable situations as guides to the existence, the scope and the limits of the varied duties of care which the law imposes’. The courts will develop the law incrementally and by analogy with previously decided cases (per Lord Bridge).

Wider comments
- Changed the methods the courts use in determining whether a duty of care is owed in novel circumstances: the courts now focus upon the previously decided categories of cases (an approach recently confirmed inRobinson v Chief Constable of West Yorkshire[2018] UKSC 4). If a duty of care has been imposed in similar circumstances in the past then duty of care is more likely to be imposed on the defendant. By parity of reasoning, if a line of cases has previously held that a defendant does not owe a duty of care then the courts will follow those cases in analogous circumstances. In novel cases the courts will resort to the three-stage framework identified by Lord Bridge to determine whether a duty of care should be imposed on a defendant.
- Change in emphasis for determining duty of care. Under the previousAnns v Merton LBC[1978] AC 728 test it was easy for claimants to establish aprima facieduty of care and the burden then shifted to the defendant to demonstrate why a duty should not be imposed. Now, if a claimant cannot establish that their claim fits with an analogous case, they have the burden of demonstrating that all limbs of the tripartiteCaparoframework are satisfied.

Answer 30

Held: (unanimous decision) A duty of care was NOT owed. For a duty of care to be owed in cases of negligent misstatement the claimant’s reliance upon the defendant’s statement or advice must be reasonable. The purpose of the statutory requirement for an audit of public companies under the Companies Act 1985 was to enable shareholders to exercise their class rights in annual general meetings. It was not intended to assist shareholders in the making of decisions as to future investment in the company. As the purpose of the statements was not to help investors, it could not be reasonably be relied upon by them.
Lord Bridge’s Caparo framework:

However, underlying all cases where a duty of care is owed is that:

(1) the damage was foreseeable;

(2) there is a sufficient relationship of proximity between the claimant and defendant; and

(3) it is fair, just, and reasonable to impose a duty of care (per Lord Bridge).

Lord Oliver believed that the necessary relationship (of proximity) between the maker of a statement or giver of advice (‘the adviser’) and the recipient who acts in reliance upon it (‘the advisee’) may typically be held to exist where:

1. The advice is required for a purpose which is made known to the adviser at the time when the advice is given;
2. The adviser knows that his advice will be communicated to the advisee, either specifically or as a member of an ascertainable class, in order that it should be used by the advisee for that purpose;
3. It is known that the advice so communicated is likely to be acted upon by the advisee for that purpose without independent inquiry, and
4. It is so acted upon by the advisee to his detriment.

Facts: The claimant company, Caparo Industries, had begun purchasing shares in another company called Fidelity plc a few days before its annual accounts had been published to shareholders. In reliance on the accounts, Caparo bought more shares in Fidelity and accomplished a takeover. However, Fidelity’s profits were not as high as had been projected and so its share price fell significantly. As a result, the claimants lost money and brought an action against Fidelity’s auditors, Dickman, alleging that they were negligent in carrying out the audit and making their report. The making of such reports was required under the Companies Act 1985. Successful claims in the court of appeal, auditors appeal to the HoL.

Question 31

Spartan Steel & Alloys Ltd v Martin & Co (Contractors) Ltd [1973] QB 27

Pure economic loss

‘At bottom I think the question of recovering economic loss is one of policy. Whenever the courts draw a line to mark out the bounds of duty, they do it as matter of policy so as to limit the responsibility of the defendant. Whenever the courts set bounds to the damages recoverable - saying that they are, or are not, too remote - they do it as matter of policy so as to limit the liability of the defendant.’ Lord Denning MR

‘Negligent interference with such services is one of the facts of life and can cause a lot of damage, both physical and financial. Water conduits have been with us for centuries; gas mains for nearly a century and a half; electricity supply cables for about three-quarters of a century; but there is not a single case in the English law reports which is an authority for the proposition that mere financial loss resulting from negligent interruption of such services is recoverable.’ Lawton LJ

Dissent

‘For my part, I cannot see why the £400 loss of profit here sustained should be recoverable and not the £1,767. It is common ground that both types of loss were equally foreseeable and equally direct consequences of the defendants’ admitted negligence, and the only distinction drawn is that the former figure represents the profit lost as a result of the physical damage done to the material in the furnace at the time when power was cut off. But what has that purely fortuitous fact to do with legal principle?’ Edmund Davies LJ

= criticizes the artificial and arbitrary line bieng drawn.

Answer 31

Held (Lord Denning leading judgment, Edmund Davies LJ dissenting) : they could recover the £400 as the loss was foreseeable + the £ 368 but not the loss of profit from the four melts. Consequential economic loss (financial loss consequent upon physical damage) is recoverable. The third loss, though, was irrecoverable. This was because it constituted ‘relational economic loss’. That is, pure economic loss that results from damage toanother individual’sproperty—in this case, the electricity cable belonging to a third party ⇒ it is financial loss that is not consequent upon physical injury or property damage.
Three types of loss:

1.£368: Metal already in the furnace at time = valid claim csq of the physical damage

2.£400: Profit on the melts in progress when the power was cut = valid claim //

3.£1,767: Profit on four further melts which were not possible during the power cut = not valid claim = PEL

Facts: The defendants were digging up a road and negligently damaged an electricity cable, which was the direct supply of electricity from a power station to the claimants’ factory, where they carried out a business melting metal. The power supply failed and so the claimants had to pour molten metal out of their furnace to prevent the metal solidifying and damaging the furnace. As the claimants could not keep the metal at the correct temperature and complete the steel ‘melt’, the metal depreciated in value by £368 (the first loss) and they lost a profit of £400 from the sale of the metal from that melt (the second loss). They could also have completed four further melts during the time the power was cut and their loss of profit from those melts was £1,767 (the third loss). In an action for negligence against the defendants, the plaintiffs claimed all three sums as damages—a total of £2,535.

Question 32

Hedley Byrne v Heller

Pure economic loss - negligent misstatement

Lord Pearce

‘A reasonable man, knowing that he was being trusted or that his skill and judgment were being relied on, would, I think, have three courses open to him. He could keep silent or decline to give the information or advice sought: or he could give an answer with a clear qualification that he accepted no responsibility for it or that it was given without that reflection or inquiry which a careful answer would require: or he could simply answer without any such qualification…’

‘… If he chooses to adopt the last course he must, I think, be held to have accepted some responsibility for his answer being given carefully, or to have accepted a relationship with the inquirer which requires him to exercise such care as the circumstances require.’

=creates the legal fiction – in. Giving advice they have assumed responsibility to HB that they would give this advice carefully which would create duty if Care for PEL

Lord Reid

‘My Lords, it seems to me that if A assumes a responsibility to B to tender him deliberate advice, there could be a liability if the advice is negligently given. I say “could be” because the ordinary courtesies and exchanges of life would become impossible if it were sought to attach legal obligation to every kindly and friendly act. But the principle of the matter would not appear to be in doubt.’

Lord Morris

‘I am bound to say, my Lords, that I think this to be nonsense. It is not the sort of nonsense that can arise even in the best system of law out of the need to draw nice distinctions between borderline cases. It arises, if it is the law, simply out of a refusal to make sense. The line is not drawn on any intelligible principle. It just happens to be the line which those who have been driven from the extreme assertion that negligent statements in the absence of contractual or fiduciary duty give no cause of action have in the course of their retreat so far reached.’

=> there is something in the nature of the relationship that should give rise to the duty of care

Lord Delvin

‘It is a responsibility that is voluntarily accepted or undertaken, either generally where a general relationship, such as that of solicitor and client or banker and customer, is created, or specifically in relation to a particular transaction… Responsibility can attach only to the single act, that is, the giving of the reference, and only if the doing of that act implied a voluntary undertaking to assume responsibility.’

Answer 32

Holding: The appellants lost their case in the House of Lords. As Heller had issued their advice with a disclaimer that it was ‘without responsibility’, they were not liable in negligence. However, the House of Lords considered, albeitobiter, when a duty of care to avoid causing pure economic loss would arise in negligence. Their Lordships held that for a duty of care to avoid causing financial loss to exist there must be:

1.A special relationship between the claimant and defendant.

Lord Morris stated, ‘the ordinary courtesies and exchanges of life would become impossible if it were sought to attach legal obligation to every kindly and friendly act’. As such, their Lordships emphasized that there must be a special relationship between the claimant and defendant. This will normally arise from ‘a business or professional transaction’ (per Lord Pearce) or those that are ‘akin to contract’ (per Lord Devlin).

2.A voluntary undertaking of responsibility by the defendant.

Lord Devlin said that he did not see the responsibility of the defendant as one ‘imposed by law upon certain types of persons or in certain sorts of situations’. Instead, it is ‘a responsibility that isvoluntarilyaccepted or undertaken, either generally where a general relationship, such as that of solicitor and client or banker and customer, is created, or specifically in relation to a particular transaction’.

3.A statement made by the defendant.

Much of the judgment inHedley Byrnewas concerned with the difference between negligent words and negligent acts. Although the House of Lords inHedley Byrneheld that statements can attract liability in negligence, they stressed that the two should not be treated the same. Lord Reid said that while careful people ‘often express definite opinions on social or informal occasions even when they see that others are likely to be influenced by them’, it is unusual to casually ‘put into circulation negligently made articles which are dangerous’. Furthermore, imposing liability for financial loss caused by careless words is more likely to lead to a flood of liability. Per Lord Pearce: ‘If the mere hearing or reading of words were held to create proximity, there might be no limit to the persons to whom the speaker or writer could be liable.’

4.Reasonable reliance upon the statement or advice by the claimant.

The claimant must have in fact relied upon the statement and the reliance must be reasonable.

On the facts of the case, the reliance upon Heller’s advice was not reasonable because of the disclaimer. Lord Devlin stated: ‘A man cannot be said voluntarily to be undertaking a responsibility if at the very moment when he is said to be accepting it he declares that in fact he is not.’

Facts: The appellants, Hedley Byrne, were advertising agents who had placed orders for a company, Easipower Ltd. Under the terms of the advertising order, Hedley Byrne were personally liable for the cost of it. They asked their bankers to inquire into Easipower’s financial stability and their bankers made inquiries of the respondents, Heller, who were Easipower’s bankers. Heller gave favourable references but stipulated that these were ‘without responsibility’. Relying on these references, the appellants placed the orders. It turned out that Easipower was not creditworthy and so the claimants lost £17,000. They brought a claim in negligence against Heller alleging that the references were carelessly prepared.

Question 33

Banca Natzionale del Lavoro SPA v Playboy Club

pure economic loss - negligent misstatement - three parties situation

Answer 33

Held:

Appeal dismissed. Could not be an assumption of R since you don’t know who the information is requested from.

Applicable principles -The principle established inHedley Byrne & Co Ltd v Heller & Partners, which allowed the recovery of a purely economic loss for a negligent misstatement where the existence of a special relationship between claimant and defendant made it appropriate => the foundation remained the defendant’s voluntary assumption of responsibility to an identifiable person or group of persons, rather than to the world at large or to a wholly indeterminate group. The defendant’s knowledge of the transaction in respect of which the statement was made was potentially relevant for three purposes:
(a) to identify some specific person or group of persons to whom he could be said to assume responsibility;
(b) to demonstrate that the claimant’s reliance on the statement would be financially significant; and
(c) to limit the degree of responsibility which the defendant was taken to assume if no financial limit was expressly mentioned

Facts: A club which operated a casino appealed against a decision that a bank was not liable in negligence in respect of a favourable credit reference supplied to the club’s agent in regards to a customer who subsequently defaulted.

The club used an agent to request credit references in order to preserve customer confidentiality. The bank had confirmed to the agent that the customer in question had an account with them and was trustworthy for up to £1.6 million in any one week. On the strength of the reference the club exchanged the customer’s cheques for gaming chips. The cheques were returned unpaid and the club lost around £800,000. It was common ground that the bank had no reasonable basis for its reference. The Court of Appeal held that the bank did not owe a duty of care to the club in relation to the reference, and that the only duty was owed to the agent, to whom the reference was addressed.

Question 34

Chaudry v Prabhakar

pure economic loss - negligent misstatement - personal context

A social setting or relationship does not normally fulfil the requirements for a special relationship. Chaudhury v Prabhaker (1989), where the defendant was asked by his friend to advise him about the purchase of a used car, should be treated as a rather narrow exception to this rule.

Answer 34

Held: AoR accepted. D liable in negligence.

a friend had given advice on buying a car (saying that he was knowedgeable) when it turned out that the car the claimant bought was not roadworthy. No fee was paid for the advice. The defendant was not even a mechanic. However, D knew that the car’s bonnet had been replaced and he did not ask the seller whether the car had been involved in an accident.

Question 35

Lejonvarn v Burgess

pure economic loss - negligent misstatement - personal context

Reasoning:

(1) The fact that the judge had found there to be no contract did not mean that the parties’ relationship could not be akin to a contractual one. Offer and acceptance, and an intention to create legal relations were relevant considerations, but they were not determinative. The judge had found that the scope of the services for which responsibility was being assumed was reasonably clear

(2) There was no reason in principle why a duty of care could not be owed to avoid economic loss in connection with the supervision of another’s work where the supervision was part of a professional service for which responsibility had been assumed and where the supervision was negligently performed. The architect had had a duty to exercise reasonable skill and care in directing, inspecting and supervising the contractor’s work, including its timing and progress (paras94-99).

(3) The architect had not merely said that she would produce designs, but had actually done so. She had not been under any positive obligation to produce the design work, but any such work done had to be done with reasonable skill and care (paras104-106).

(4) The architect knew that costs and a reasonably accurate budget were crucial to the respondents. She had offered to provide, and did provide, a service which included receiving applications for payment from the contractor and advising the respondents about their payment. She had owed a duty of care in so doing (paras117-118).

(5) The combination of what the architect said she would do, and did do, against the background found by the judge, justified his finding of a duty of care in relation to the provision of the services. There was no reason to interfere with the judge’s findings that the services had been provided.

Answer 35

The contract claim failed but the judge at first instance and the Court of Appeal held that a duty of care for professional services had been owed in negligence, on the basis of assumption of responsibility. However when the issue was later tried on the facts, the court found that her duty of care had not been breached by the defendant.

An architect, Mrs Lejonvarn, gratuitously provided substantial advice and preparatory work on a landscaping project for some friends, the Burgesses. The project ran into serious difficulties and foundered, whereupon the Burgesses sued their (former) friend in both contract and tort.

Question 36

Spring v Guardian Assurance

pure economic loss - negligent misstatement - three parties situation

Answer 36

The House of Lords found a duty of care based on an assumption of responsibility by the defendant and the close relationship between the parties (Figure 4.4).

Principle: A duty of care can be owed not only to the direct recipient of the misstatement but also to a person reasonably relying upon it

The plaintiff was the subject of a negligently composed reference which damaged his job prospects. The facts did not fit neatly into the Hedley Byrne format, because Spring, the plaintiff, was the subject rather than the recipient of the reference. Further, it was inaccurate to say that he had relied on the statement, in terms of changing his behaviour because of it.

Question 37

Henderson v Merrett Syndicates Ltd

pure economic loss - negligent services

They extended the HB principles.**

‘From these statements, and from their application in Hedley Byrne, we can derive some understanding of the breadth of the principle underlying the case. We can see that it rests upon a relationship between the parties, which may be general or specific to the particular transaction, and which may or may not be contractual in nature. All of their Lordships spoke in terms of one party having assumed or undertaken a responsibility towards the other.’

Lord Goff

Answer 37

HELD: The House of Lords held that there was a duty of care not to cause pure economic loss to both groups of plaintiffs for the following reasons:

1.The existence of contractual relationships between the parties did not exclude the possibility of a duty of care in negligence.

2.The Hedley Byrne special relationship did not apply only to the giving of information and advice, but also to the provision of services.

3.The foundation of the duty of care in Hedley Byrne was, according to Lord Goff, the assumption of responsibility to the plaintiff by the defendant. Once this was established, it was unnecessary to apply the Caparo test of whether it was fair, just, and reasonable to impose a duty.

This case concerned a complex group of actions against managing agents who were alleged to have been negligent in handling the investments of the plaintiff ‘Names’ in the Lloyd’s insurance market. p. 41↵In many cases the parties were linked by contract but some contractual actions were time-barred. However, there were also instances in which there was no privity of contract between the parties because they were separated by a third party. In the absence of possible contractual remedies, the injured parties brought negligence actions for the pure economic loss which they had suffered.

Question 38

White v Jones [1995] 2 AC 207

pure economic loss - neglignegt services

White is a significant case on the law of pure economic loss and the principle in Hedley Byrne. The justification for this limited exception to the rule that pure economic loss is irrecoverable is that it prevents some of the unfairness that arises from contract doctrine where the parties’ relationship is ‘akin to contract’. By permitting recovery in a situation far removed from a normal bilateral contractual relationship, the House of Lords have generously interpreted this rule. According to Whittaker in (1997) 17 LS 169, if White is correct then it means that there only two real elements for liability: (1) agreement of the defendant to perform a service; and (2) the defendant having special skill and knowledge. This potentially greatly expands liability.

Lord Mustill was critical of this. He observed that:

the intended beneficiaries did not engage the solicitor, undertake to pay his fees or tell him what to do. Having promised them nothing he has broken no promise. They nevertheless fasten upon the circumstance that the solicitor broke his promise to someone else (the testator) so as to make him the source of a second fund, enabling both sets of parties to benefit; so that those taking under the old will can receive and retain money from the testator’s estate which the testator did not want them to have, and the successful plaintiffs can receive amounts equal to those which the testator did want them to have, but from a quite different source. This is undoubtedly a possible result, but I would wish to guard against assuming too readily that it so reflects the moral imperatives of the situation that the law of delict should be strained to bring it about (at 278).

Answer 38

D was liable for negligence.

This was a claim for negligently inflicted pure economic loss and so the claimants would have to demonstrate that their case fell within the principle inHedley Byrne v Heller[1964] AC 465. This principle requires that the defendant has voluntarily assumed responsibility for a statement or service that the claimant has reasonably relied upon. There must also be a special relationship between the claimant and defendant arising from the defendant’s skill or profession. The problem in this case was that the daughters had not had any contact with the defendants and so it is hard to see how the latter had assumed responsibility for a serviceto the beneficiaries under the will(as opposed to his client, the testator) or how the daughters had reasonably relied upon that service. Nonetheless, a 3:2 majority the House of Lords allowed the daughters’ claim and held that the case fell within theHedley Byrneexception.

In the majority, Lord Goff believed that there was a ‘lacuna in the law’ (at 260) that ‘practical justice’ (at 265) required be filled because ‘if such a duty is not recognised, the only persons who might have a valid claim (i.e., the testator and his estate) have suffered no loss, and the only person who has suffered a loss (i.e., the disappointed beneficiary) has no claim’ (at 259). He maintained that the right of citizens to leave their assets to whom they please was an important one (at 260).

Also in the majority, Lord Browne-Wilkinson observed that the case could be reconciled with theHedley Byrneline of authorities if one took ‘assumption of responsibility’ to be assumption of thetaskrather than assumption oflegal liability(at 273).

By way of contrast, Lord Mustill gave a powerful dissenting judgment (with which Lord Keith agreed). Unlike the majority, he could not ‘discern a principled reasoning which could lead to the recognition of such an extensive new area of potential liability’ (at 291). He believed that the elements of ‘mutuality’, ‘special relationship’, ‘reliance’, and ‘undertaking of responsibility’ which are necessary forHedley Byrneliability were absent in this case.

Facts: The claimants, Carole White and Pauline Heath, were the beneficiaries under a will made by their father, Arthur Barrett. He had cut them out of his estate but, after reconciling with them, instructed the defendant solicitors to prepare a new will so that money could be left to them. These instructions were not acted upon before the testator died and so the old will, which left the claimants with nothing, was still valid. The daughters brought a claim in negligence against the defendant solicitor for the loss of £18,000 that they would have received under the will.

Question 39

Williams v Natural Life Health Foods

express AoR - pure economic loss

Answer 39

Held: The House of Lords held that Mr Williams could not succeed in holding Mr Mistlin personally liable. The court found no direct or indirect assumption of responsibility by Mistlin towards Williams, and no reasonable reliance on the information provided. The principle of assumption of responsibility requires a specific relationship and personal responsibility, which were absent in this case.

Facts: Mr Williams and his partner sought to open a health food shop through a franchise with Natural Life Health Foods Ltd, relying on financial projections provided in a brochure. When the venture failed, Williams sued the company for negligence. After the company went into liquidation, Williams sought to hold the managing director, Mr Mistlin, personally liable, claiming Mistlin had assumed responsibility for the advice in the brochure.

Question 40

Calvert v William Hill

express AoR - pure economic loss

‘the judge found on the narrower basis that the defendants did assume responsibility to implement the assurances given by John on the telephone, and that a duty of care arose, of which on the facts the defendants were plainly in breach. Taken in isolation as a compartmental analysis alone, we are inclined to think that, on the special facts of the case, the judge was right to hold that the defendants assumed a tortious duty to implement John’s assurances. It does not follow that this was a duty whose scope embraces the loss claimed in these proceedings.’

Sir Anthony May P

Answer 40

Held: there was an express AoR

Even if they had enacted the exclusion policy, he still would have gambled => no cuasation on the facts

C is a greyhound trainer, but he is a terrible gambler (pathological gambler). Lost £2.1 m. Calls WH not to let him gamble anymore because of his addiction (social exclusion procedure). He keeps gambling, the access is still not blocked.

Question 41

Phelps v Hillingdon

implied AoR - pure economic loss

Answer 41

Ds owed a duty of care to Cs and were negligent in performing their duty
Their duty of care was not excluded on public policy grounds

This ruling concerns the combined appeal of three cases which concerned claimants who were dyslexic and a fourth where the claimant was suffering from muscular dystrophy
Cs claimed that educational psychologists employed by local authorities (Ds) negligently failed to identify their special needs when they were children through psychological assessment and consequently failed to provide appropriate education services for their needs
Damages amounting to loss of earnings and cost of tuition were claimed

Question 42

Robinson v Jones

implied AoR - pure economic loss

‘When one moves beyond the realm of professional retainers, it by no means follows that every contracting party assumes responsibilities (in the Hedley Byrne sense) to the other parties co-extensive with the contractual obligations. Such an analysis would be nonsensical. Contractual and tortious duties have different origins and different functions…’

Jackson LJ
= the type of work that builders conduct is the sort of conduct that should give rise to AoR.

= if the builder had gone beyond the building – design etc…

Class-based difference? builders’ work is not deemed to be technical enough to give rise to an AoR

As a matter of policy: the situation where AoR can arise does not extend to building works.

‘… Contractual obligations spring from the consent of the parties and the common law principle that contracts should be enforced. Tortious duties are imposed by law, as a matter of policy, in specific situations.‘

Jackson LJ

Answer 42

The loss was not recoverable as assumption of responsibility C and D were not in a professional relationship
In any case any duty of care was excluded by terms of the contract.

Facts: buy a house and the contract said that the house should be constructed in a workmanlike way. 12 years later, British gas deems that the boiler is not up to standard. ( could not rely on the contract anymore ⇒ tort). They sought to sue the builderof the house they owned for negligence in the process of construction that led to costs spent on repairs

Question 43

Smith v Eric Bush

reasonable reliance - pure economic loss

Comment

Smith v Bushis a landmark case on the law of negligently inflicted economic loss as it demonstrates that disclaimers will not necessarily prevent a duty of care being imposed if they do not comply with UCTA 1977. It is also important for its interpretation of the ‘assumption of responsibility’ element of the principle inHedley Byrne. Lord Griffiths did not think ‘that voluntary assumption of responsibility is a helpful or realistic test for liability’ (at 862). It can ‘only have any real meaning if it is understood as referring to the circumstances in which the law willdeemthe maker of the statement to have assumed responsibility to the person who acts upon the advice’ (at 862). If a duty of care can be imposed where the relationship is not voluntary though, it can be hard to say when a duty of care will be owed under this principle. After all, how can the defendants inSmithbe said to havevoluntarilyassumed responsibility when they have gone to great lengths to avoid such responsibility?

Answer 43

The claimant was successful in the House of Lords. Lord Templeman maintained that the relationship between the surveyor and purchaser was ‘akin to contract’ and that the surveyor knows that the consideration he receives is derived from the purchaser (at 846). As such, the principle in Hedley Byrne Ltd v Heller & Partners Ltd [1964] AC 465 applied. Therefore a surveyor instructed to carry out a valuation of a house owed a duty of care to the purchaser if the surveyor was aware that the purchaser would probably buy the house in reliance on the valuation without an independent survey.

Usually, no duty of care to avoid causing pure economic loss would be owed where there is a disclaimer of liability. Even though the surveyor in Smith had added an exclusion clause to his report, this was held to be a notice within the meaning of the Unfair Contract Terms Act 1977 (UCTA 1977)

The claimant, Mrs Smith, wished to purchase a house and so applied to a building society for a mortgage. After receiving a fee from the claimant, the building society instructed the defendant surveyors to value the house. Their report said that the house did not need any essential repairs but it also contained a disclaimer that the surveyor would not be liable to the purchaser. Mrs Smith was advised to obtain independent professional advice but she did not do this. In reliance on the building society valuation, she purchased the house.

Eighteen months later, the chimney collapsed and caused substantial damage to the house. On inspection, the defendant had noticed that chimney breasts had been removed but did not check whether the chimneys were adequately supported. The claimant’s contract with the building society meant that she could not bring any claim against them and, in any event, they had not acted negligently. She did not have a contract with the surveyors so brought a claim against them in the tort of negligence for the economic loss she had suffered.

Question 44

Scullion v Scottish Bank

reasonable reliance - pure economic loss

Answer 44

Held: no reasonable reliance. Professional ppl => should do their own assessment of the market – the commercial nature of the relationship meant that there was no reasonable reliance

Facts: property investor purchasing a flat to rent out. In the surveyor, vague mention of the rental market. The rental income was not as much as he anticipated > tries to make a claim on the basis of the tortious duty.

Question 45

NRAM Ltd (formerly NRAM plc) v Steel and another [2018] UKSC 13

reasonable reliance - pure economic loss

Steelis a landmark case on the law of pure economic loss and in its reaffirmation that the assumption of responsibility principle derived fromHedley Byrneis the touchstone of liability in negligent pure economic loss cases. In this respect, the case is consistent with recent Supreme Court decisions such asRobinson v Chief Constable of West Yorkshire Police[2018] 2 WLR 595, that have deprecated the use of a threefoldCaparotest and the role of policy for determining the duty of care. InSteel, Lord Wilson emphasized that the ‘[m]ore important’ aspect ofCaparo Industries plc v Dickman[1990] 2 AC 605 for present purposes was its reassertion of ‘the need for a representee to establish that it was reasonable for him to have relied on the representation and that the representor should reasonably have foreseen that he would do so’ (at [23]).

Accordingly, the case is important in holding that reasonable reliance was ‘central to the concept of an assumption of responsibility’ (at [35]). Some previous authorities had been less stringent and had interpreted this element of theHedley Byrneprinciple in a way that is hard to justify (see e.g.Smith v Eric S Bush[1990] 1 AC 831).

Answer 45

D did not owe a duty of care to C.

‘although it may require cautious incremental development in order to fit cases to which it does not readily apply’, the concept of assumption of responsibility derived from it ‘remains the foundation of the liability’ (at [24]).

Lord Wilson maintained that the legal consequences of Ms Steel’s misrepresentation were ‘clearly governed by whether, in making it, she assumed responsibility for it towards Northern Rock’ and there was no need for incremental development of the concept (at [25]). Nevertheless the case had ‘an unusual dimension: for the claim is brought by one party to an arm’s length transaction against the solicitor who was acting for the other party. A solicitor owes a duty of care to the party for whom he is acting but generally owes no duty to the opposite party’ (at [25]).

Although Headway and NRAM were not engaged in hostile litigation, it was impossible ‘to subscribe to the suggestion that they were not at arm’s length in relation to the removal of security over Unit 1’ (at [35]). The Lord Ordinary was correct to say that it was not reasonable for NRAM to rely upon the defendant’s representation without further inquiry (at [38]). No authority to the contrary had been cited and, according to Lord Wilson: ‘We should accept that a commercial lender about to implement an agreement with its borrower referable to its security does not act reasonably if it proceeds upon no more than a description of its terms put forward by or on behalf of the borrower’ (at [38]). Immediate access to the correct terms ‘lay—literally—at their finger-tips’ (at [38]). In circumstances where there has been ‘careless misrepresentation about a fact wholly within the knowledge of the representee’ it is not reasonable for the claimant to rely on the defendant’s statement without checking its accuracy and it is, by contrast, ‘reasonable for the representor not to foresee that he would do so’ (at [38]).

Facts: The first defendant, Ms Steel, was a partner in the second defendant law firm. She acted for a company called Headway. Headway was the owner of a business park comprising four units. To purchase the business park, Headway had received a loan from the claimants, Northern Rock Asset Management (NRAM), and in return granted NRAM a standard security over the properties.

In 2006 Headway entered into an agreement to sell Unit 1 for £560,000. NRAM agreed to release the security on Unit 1 in exchange for £495,000, which would leave the balance of the loan (£1,222,000) well-secured by Units 2 and 4 (Unit 3 had already been sold).

The day before the sale, Ms Steel emailed NRAM and incorrectly attached deeds of discharge for all of the units for signing and returning as, according to her misrepresentation ‘the whole loan is being paid off for the estate’.

Ms Steel could not explain why she sent this email but it constituted ‘gross carelessness’ as it had never been suggested that the whole loan was to be repaid and Headway’s instructions were not to that effect. NRAM made no attempt to check the accuracy of Ms Steel’s statements against their own files and the deeds of discharge were executed in exchange for £495,000.

NRAM only discovered that the security on its loan had been discharged in 2010 when Headway went into liquidation. By this time Units 2 and 4 had also been sold. It therefore lost money from the loan. The ultimate loss to NRAM, net of recovery elsewhere, was almost £370,000 and so it brought a claim in negligence against Ms Steel and her firm.

Question 46

Customs & Excise Commissioners v Barclays Bank

pure economic loss

The following case illustrates the way in which the courts often apply the Henderson test and the Caparo three-stage test (for general duty of care) either alternatively or so that they supplement one another.

Answer 46

HELD: The case failed owing to the absence of an assumption of responsibility, combined with of a lack of proximity between the parties and the fact that it would not be fair, just, or reasonable to impose a duty of care.

FACTS: Here, the ‘assumption of responsibility’ criterion did not provide a clear statement of duty in a situation with no precedents. The defendant negligently failed to implement freezing orders placed upon his clients by the claimant. Neither the Hedley Byrne special relationship nor assumption of responsibility fitted the facts: the defendant had merely been a passive recipient of a legally binding instruction.

Question 47

D&F Estates Ltd v Church Commrs [1989]

defective premises - pure economic loss

Introduced the complex structure theory.
In a complex structure, elements of the structure can be considered distinct and one part can cause damage to another.
The complex structure structure theory may retain some relevance today, as held in Murphy v Brentwood DC [1991] 1 AC 398, where a defective part of the property can be considered separate from the rest of the structure if:
it is an ancillary (e.g. electrical wiring, heating boilers) rather than a structural component (e.g. foundation, walls); and/or
it was installed by a separate contractor or subcontractor from the rest of the building which was damaged.

Answer 47

The cost of repairs was not recoverable as it amounted to pure economic loss

Cs were lessees and occupiers of a flat
They found that the plaster was loose and brought an action against D builders for the cost of repairs

Question 48

Murphy v Brentwood DC

defective premises - pure economic loss

Lord Keith

Anns v Mertonwas incorrectly decided

• Although the damage inAnnsv Mertonwas characterised as physical damage by Lord Wilberforce, it was purely economic loss: p.466
• The building itself could not be said to have been subjected to ‘material, physical damage’ by reason merely of the inadequacy of its foundations since the building never existed otherwise than with its foundations in that state: p. 467
• Liability for pure economic loss does not extend beyond the situation of loss sustained through reliance on negligent misstatements as in Hedley Byrne v Heller: p. 468
• If the avoidance of loss fell within the duty of care of local authorities and builders, it would logically extend to defective chattels, opening up an exceedingly wide field of claims, involving the introduction of something in the nature of atransmissible warranty of quality: p469
• Although inD & F Estatesthe court sought to ascertain the basis of principle thatAnns v Mertonproceeded on, it must now be recognised that it did not proceed on any basis of principle at all, but constituted a remarkable example of judicial legislation: p 471
• To depart from it will create greatercertaintyin this field of law: p 471 – 472

Complex structures theory (fromD & F Estates)

• Lord Bridge’s idea that one part a building can be distinct to another is unrealistic where the whole building is erected by one contractor
• However, if electric wiring negligently installed by a sub-contractor caused a fire and burnt down the building the electrical sub-contractor can be held liable: p.470

Lord Bridge

Pure economic loss from defective property is generally non-recoverable

• If there is a latent defect that causes personal injury or damage to other property, then the builder is liable
• However, if the defect is discovered before the damage occurs, the loss is purely economic
• However, there is one qualification: “if a building standsso close to the boundary of the building owner’s landthat after discovery of the dangerous defect it remains a potential source of injury topersons or property on neighbouring landor on the highway, the building owner ought, in principle, to be entitled to recover in tort from the negligent builder thecost of obviating the danger, whether by repair or by demolition, so far as that cost is necessarily incurred in order to protect himself from potential liability to third parties.”

Imminent danger to health and safety

• The cause of action stated inAnns**v Mertonrequired there to have been a present or imminent danger to health and safety such that the damages recoverable includes the amount to remedy the danger
• This leads to logical inconsistencies: p. 480
  
  • Where a defect is not yet dangerous, the building owner will have to wait till it is for the cost of repair to be recoverable
  • Where the building has collapsed and is no longer a source of danger, the loss is no longer recoverable

Liability for economic loss

• Such liability is already imposed by Defective Premises Act 1972, there should not be a similar common law duty not subject to the time limitation exclusions in the act

Answer 48

Held: Held, that the loss suffered was economic loss and the council were not liable in tort for negligent application of the building regulations where resulting defects had not caused physical injury.

Facts: In 1970, M bought one of a pair of houses built on a concrete raft foundation on an in-fill site. The raft was defective and differential settlement occurred. M was unable to repair the defect, and sold the house, sustaining a loss of GBP 35,000. He sued the council for negligent approval of the plans, claiming that there had been an imminent risk to health and safety from fractured gas and oil pipes.

Question 49

Catlin Estates Ltd. v Cater Jonas

pure economic loss - defecive premises Act - dwelling

Answer 49

= a hunting lodge was enough to satisfy the requirement of a dwelling

Question 50

Rendlesham Estates v Barr

pure economic loss - defecive premises Act - fit for habitation

Answer 50

■All people who might reasonably be expected to occupy (babies, asthmatics)

Question 51

Bole v Huntsbuild Ltd

pure economic loss - defecive premises Act - fit for habitation

Answer 51

Fitness?

■Security of the home

■Live safely without inconvenience

■Vacate for remedial works

Question 52

In James McNaughton Paper Group Ltd v Hicks Anderson & Co (1991)

pure economic loss - Caparo

Answer 52

an auditor’s duty of care was held not to exist when the plaintiff relied on a company’s draft accounts in his takeover bid, as they had not been prepared for that purpose, or even for him. Here, six helpful pointers to the existence of a Hedley Byrne duty were set out:
1.The purpose for which the statement was made. In both Caparo and James McNaughton, this was the strongest factor against the finding of a duty.

2.The purpose for which it was communicated.

3.The state of knowledge of the maker of the statement. Did the maker know the purpose of the statement, to whom it would be communicated, and what sort of reliance there might be upon it?