Negligence - Economic Loss And Psychiatric Harm

Question 1

Spartan Steel v Martin and Co

Answer 1

General principle: pure economic loss is not actionable

Held: as a a matter of policy it should be the law that there is no actionable claim for purely economic loss
- to extend the duty to this extent could prove disastrous for Ds

Question 2

Hadley Byrne v Heller and Partners

Answer 2

Exception to PEL not being an actionable claim: the law of ‘negligent misstatement’ - where the D makes a negligent misstatement in the course of a ‘special relationship’ with the C

Held: it may be possible to make a claim in negligence for pure economic loss where there is a special relationship assuming responsibility between two parties, despite them not being in a contract

Question 3

Caparo v Dickman (special relationship)

Answer 3

Outlined the current principles that govern the law of pure economic loss

Held: provided further detail to the requirements of a special relationship

Liability for negligent misstatement can be established where

1. The D giving the advice possesses or purports to possess a special skill or certain expertise
2. The D communicates that either directly or indirectly to the reliant party
3. Knowing that they will reasonably rely on it

Question 4

Chadwick v British Rail (rescuers)

Answer 4

Held: a rescuer can be regarded as a primary victim as aid and rescuers are a foreseeable consequence of the negligent acts of defendants, particularly where the rescuer was directly involved in the rescue efforts by placing himself in the zone of danger

Question 5

Pure economic loss

Answer 5

The general principle:
- a claimant cannot typically claim for pure economic loss

The exception:
- a C can claim for PEL where they rely upon a negligent misstatement by the D w whom they had a special relationship

Question 6

Page v Smith (secondary victims - the threshold test)

Answer 6

Held: court confirmed that where liability is being sought in relation to a secondary V suffering from psychiatric harm, psychiatric harm must be foreseeable, this requires proof that an ordinary person of reasonable fortitude would also have suffered psychiatric harm in the circumstances

Question 7

Alcock v CC of South Yorkshire Police (secondary victims criteria)

Answer 7

Held: courts laid down the tests taht would be used to determine when a secondary V may be compensated for psychiatric damage in negligence cases

1. They must have close ties of love and affection with the primary victim
2. Witness the shocking scene or its immediate aftermath
3. They do so with their own unaided scenes