Negligence- economic loss and psychiatric injury Flashcards
Theory of tort law- economic loss
While a duty is owed to claimants not to damage property, there is no duty to compensate for loss of profit.
There are two main reasons for this:
1. Financial or economic loss would traditionally be compensated for law of contract
2. Allowing the claims could lead to the ‘floodgates’ being opened to similar claims
- More difficult to show
Economic loss caused by negligence
If a claimant successfully proves a negligent act or omission by another they will be able to claim for
- any physical damage
- any damage to property
The claimant cannot claim for pure economic loss
Loss caused by negligent acts- Spartan Steel v Martin and Co Ltd (1973)
The defendants were responsible for digging up a road outside the plaintiff’s smelting factory. As a result of their negligence when carrying out this task, they inadvertently severed a power supply under the road resulting in a loss of power to the plaintiff’s factory. The plaintiffs suffered a number of forms of damage as a result of this, including loss of profits as a consequence of the factory being non-operational for the period while it was without power, and physical damage to the metal which was in the process of being smelted at the time the power was lost.
Issues
The question was whether the plaintiff could recover damages for the loss of profits or whether this was irrecoverable in negligence as it was a ‘pure economic loss’.
loss of profit was decided to be a contract law issue not a tort one.
Weller v Foot and Mouth Disease Research Institute
The Foot and Mouth virus was negligently allowed to escape from the defendants premises. It infected cattle, rendering them unsaleable and causing many to be destroyed. Restrictions were placed on the movement of all animals for some time to prevent the spread of disease. The claimant was an auctioneer and brought an action claiming the loss pf profit he would have made had he been able to continue his normal sales. His claim failed as the court decided that pure economic loss is not recoverable under tort law.
Loss of income from this negligence was considered pure economic loss and not covered , would create limitless liability and rejected it for policy reasons
Public policy on pure economic loss:
Show that the court is making distinctions to restrict cases.
This may create unfair anomalies in the law
Failure to consider the loss of profit in Spartan steel can be seen as allowing the defendants to ‘get away’ with causing harm that was predictable.
It can also be morally unfair to not compensate a claimant who has suffered loss through no fault of their own.
Compensate for loss not to compensate for any potential profit
Loss caused by negligent misstatements:
- Two-part liability: this is when A gives a statement or advice to B and B makes a loss because of it.
- If there is a contract between A or B then B can claim compensation for breach of contract.
- If B has not paid for advice, then they cannot claim for breach of contract.
- Can B claim under negligence if they show that A has breached their duty of care? - Three Party Liability- this is where A makes a statement to B, and B communicates it to C, C then suffers loss in relying on the statement
Need to show a relationship between A and C to show negligence
Hedley Byrne v Heller and Partner (1964)
A negligent misstatement may give rise to an action for damages for economic loss. When a party seeking information or advice from another – possessing a special skill – and trusts him to exercise due care, and that party knew or ought to have known that the first party was relying on his skill and judgment, then a duty of care will be implied.
Facts in Hedley Byrne
Hedley Byrne were advertising agents placing contracts on behalf of a client on credit terms. Hedley Byrne would be personally liable should the client default. To protect themselves, Hedley Byrne asked their bankers to obtain a credit reference from Heller & Partners (‘H&P’), the client’s bankers. The reference (given both orally and then in writing) was given gratis and was favourable, but also contained an exclusion clause to the effect that the information was given ‘without responsibility on the part of this Bank or its officials’. Hedley Byrne relied upon this reference and subsequently suffered financial loss when the client went into liquidation.
Decision in Hedley Byrne
The court found that H&P’s disclaimer was sufficient to protect them from liability and Hedley Byrne’s claim failed. However, the House of Lords ruled that damage for pure economic loss could arise in situations where the following four conditions were met:
(a) a relationship of trust & confidence arises/exists between the parties;
(b) the party preparing the advice/information has voluntarily assumed the risk;
(c) there has been reliance on the advice/info by the other party, and
(d) reliance was reasonable in the circumstances.
A claim can be made if it can be shown that
1. the statement was made negligently and
2. there is a special relationship between the parties
What is a special relationship?
This was never defined in Hedley Byrne but was later considered in Caparo
Requires all the following:
- The possession of a special skill or expertise on the part of the person giving the advice. This can be a recognized qualification or the person has some special knowledge or a skill in the field.
- A reliance on the advice by the claimant e.g the advice is acted upon, but there has to be a sufficient
- The advice is communicated directly to the claimant and not through a third party i.e. a newspaper or radio
- The person giving the advice knows that it is being used by the claimant
- There is no disclaimer to act as a defence
Chaudhry v Prabakar - special relationship
The plaintiff was seeking to purchase a car and asked the defendant, her friend, to assist her on the basis that he claimed to be knowledgeable on the subject. She purchased a car on the recommendation of the defendant. The car had visible damage, however the defendant did not enquire about the cause of this to the seller, and simply informed the plaintiff that he was sure it had not been in any accidents. It later transpired that the car was badly unroadworthy due to damage caused in a serious previous accident. The plaintiff alleged that the defendant owed a duty of care in the provision of the advice which he had offered and had negligently breached this duty.
Issues
The issue was whether the defendant owed a duty of care to his friend for the provision of advice on a non-contractual and informal basis.
Decision/Outcome
The Court of Appeal held that a duty of care did exist as the defendant was aware that the plaintiff had relied on his advice, and had done so on the basis that he had held himself out as being knowledgeable about cars.
Special relationship can exist in social relationships
Theory of law on psychiatric injury:
The victim has to show if they are a primary victim or secondary, and the other key elements of negligence
A lot for the claimant to prove
prevents the floodgates opening for these types of claims
White v Chief Constable
Alcock v Chief constable
Hillsborough Football stadium
if there were no restrictions, the number of cases would have been huge (players, support staff, stewards, tv spectators etc)
Cost would have fallen on the state
Real victim not getting a pay out? Morally indefensible
What is psychiatric injury?
A severe long term mental injury which is more than shock or grief, nervous shock
What is a primary victim and what is a secondary victim?
Primary- someone who is directly injured in the event
may suffer physical or psychiatric
required to prove the D was negligent
Can claim for both physical and psychiatric
Secondary- someone who is harmed when they witness an event, likely to be mental
not involved in the accident
suffered mental injury as a result
need to prove negligence
Alcock criteria
Reasonable person
Public policy within psychiatric injury
decided by the judges, judicial precedent
most claims will be for pure economic loss due to inability to work
developed public policy to restrict claims
especially for secondary victims
have to prove negligence
What do secondary victims need to prove to be successful?
There was an accident or sudden event where someone was negligent which caused the injury
Some form of mental injury
The claimant passes Alcock criteria
Reasonable man test
What is a mental injury?
an injury that is more than mere shock or grief, must be medical evidence, long term.
examples:
- PTSD
- reactive depression
- Acute anxiety
Must come from a sudden event
Dulieu v White
LP: a claim can be made if the victims fear for their own safety
The claimant was pregnant and behind the bar in her husband’s public house. A horse and cart crashed into the pub. The claimant was not physically injured but feared for her safety and suffered shock. She gave birth prematurely nine days later and the child suffered developmental problems.
Held:
An action could lie in negligence for nervous shock arising from a reasonable fear for one’s own immediate safety
Hambrook v Stokes
A mother was walking with her children along a pavement when a runaway lorry passed her, she heard a crash and that the lorry was involved in an accident involving children, she suffered severe shock as she feared for the safety of her children. Her claim was allowed an as a result a claim could be made by those suffering shock due to fearing for the safety of a family member.
Extended the principle of Dulieu v White to fear for a family member
Bourhill v Young
The claimant was a pregnant fishwife. She got off a tram and as she reached to get her basket off the tram, the defendant drove his motorcycle past the tram at excessive speed and collided with a car 50 feet away from where the claimant was standing. The defendant was killed by the impact. The claimant heard the collusion but did not see it. A short time later, the claimant walked past where the incident occurred. The body had been removed but there was a lot of blood on the road. The claimant went into shock and her baby was still born. She brought a negligence claim against the defendant’s estate.
Held:
No duty of care was owed by the defendant to the claimant. There was not sufficient proximity between the claimant and defendant when the incident occurred
To claim, must be injury caused to a family member
McLoughlin v O’Brien
The claimant’s husband and three of her children were involved in a serious road traffic accident in which their car was struck by a lorry due to the negligence of the defendant lorry driver. Unfortunately one of the children was killed on impact. An ambulance took the injured parties to hospital. Another of the claimant’s sons was a passenger in a car behind the family. The driver took him home and told his mother of the incident and immediately drove her to the hospital. She saw her family suffering before they had been treated and cleaned up. As a result she suffered severe shock, organic depression and a personality change. She brought an action against the defendant for the psychiatric injury she suffered. The Court of Appeal held that no duty of care was owed. She appealed to the House of Lords.
Held:
The appeal was allowed and the claimant was entitled to recover for the psychiatric injury received. The House of Lords extended the class of persons who would be considered proximate to the event to those who come within the immediate aftermath of the event.
Legal principle:
Set out two principles which extended the rules for claiming nervous shock further
1. A claim could be made by someone who had close ties of love and affection with the victim of the accident
2. The shock could be suffered at the scene of the accident or within its immediate aftermath. No time was set, but McLoughlin arrived 2h after the accident
Page v Smith
The claimant had suffered from ME over a period of time and was in recovery when he was involved in a minor car accident due to the defendant’s negligence. The claimant was not physically injured in the collision but the incident triggered his ME and had become chronic and permanent so that he was unable to return to his job as a teacher. He was successful at his trial and awarded £162,000 in damages.
Held:
Provided some kind of personal injury was foreseeable it did not matter whether the injury was physical or psychiatric. There was thus no need to establish that psychiatric injury was foreseeable. Also the fact that an ordinary person would not have suffered the injury incurred by the claimant was irrelevant as the defendant must take his victim as he finds him under the thin skull rule.
Did not matter whether the injury was physical or psychiatric
Alcock v Chief Constable of South Yorkshire
This case arose from the disaster that occurred at Hillsborough football stadium in Sheffield in the FA cup semi-final match between Liverpool and Nottingham Forest in 1989. South Yorkshire Police had been responsible for crowd control at the football match and had been negligent in directing an excessively large number of spectators to one end of the stadium which resulted in the fatal crush in which 95 people were killed and over 400 were physically injured. The scenes were broadcast live on television and were also repeated on news broadcasts. Sixteen claims were brought against the defendant for nervous shock resulting in psychiatric injury. At trial ten of the claims were successful. The defendant appealed against the findings in nine and the unsuccessful claimants appealed. The Court of Appeal found for the defendants in all of the claims. Ten appeals were made to the House of Lords. These included claims made by brothers, sisters, parents, a grand-parent and a fiancé. Two of the claimants had been at the ground but in a different area. Some had seen the events unfold on the television, some had heard about the events in other ways. Some had identified bodies at the makeshift mortuary.
Held:
The appeals were dismissed.
Lord Oliver set out the distinction between primary and secondary victims. A primary victim one involved mediately or immediately as a participant and a secondary victim one who is no more than a passive and unwilling witness of injury to others. The claimants were all classed as secondary victims since they were not in the physical zone of danger.
SET OUT THE ALCOCK CRITERIA
The Alcock criteria:
The claimant must have close ties in love and affection for the victim
- The relationship is a close type of relationship i.e. family
- The relationship is close in fact i.e. friends, flatmates
The claimant suffered mental injuries at the scene of the accident or immediate aftermath - McLoughlin
- some saw bodies 8h later, not allowed
The claimant suffered shock through his own unaided senses, they saw or heard the accident or aftermath
- this excludes people who have seen it on the tv
Other claimants - rescuers ?
covers anyone who helps a victim of the accident
likely to succeed so people are not put off
Chadwick v British Rail
White v Chief Constable
Hale v London underground
Chadwick v British Rail - rescuer key case
This case arose from a horrific train crash in Lewisham in which 90 people were killed and many more were seriously injured. Mr Chadwick lived 200 yards from the scene of the crash and attended the scene to provide some assistance. He worked many hours through the night crawling beneath the wreckage bringing aid and comfort to the trapped victims. As a result of what he had witnesses he suffered acute anxiety neurosis and received treatment as an inpatient for 6 months. considered a primary victim
Held:
His estate was entitled to recover. The defendant owed Mr Chadwick a duty of care since it was reasonably foreseeable that somebody might try to rescue the passengers and suffer injury in the process.
rescuers can claim if they are the primary victim
