Policy Decisions and Liability For Pure Economic Loss and Psychiatric Injury

Question 1

Pure Economic Loss

Answer 1

Physically present, earned income.

Question 2

If PEL was actionable then…

Answer 2

There would be no reasonable limit to a defendants liability and courts would be overwhelmed.

Question 3

PEL Case: Hedley Byrne and Co. Ltd v Heller and Partners Ltd

Answer 3

• C was an advertising agency who wanted info on the creditworthiness of a potential client from D’s bank.
• D confirmed worthiness of the other client and gave a disclaimer.
• C entered into the contracts and the other client went into liquidation, losing $17,000.
• C brought a claim against D.

Question 4

PEL Case: Hedley Byrne and Co. Ltd v Heller and Partners Ltd

Held:

Answer 4

D not liable, disclaimer excluded any duty of care.

Question 5

Psychiatric Injury

Answer 5

Seen as less serious than physical harm (not anymore) because of opening the floodgates, fraudulent claims and problems proving diagnosis.

Question 6

What victim is C normally?

Answer 6

C is often the secondary victim.

Question 7

Psychiatric Injury Definition

Answer 7

A long term, diagnosed mental injury which is greater than shock or grief.

Question 8

Psychiatric Injury Case: McLoughlin v O’Brian

Answer 8

C suffered mental illness after a car crash where husband and 3 children injured, one child died. Went to hospital witnessing the injuries and went into shock.

Question 9

McLoughlin v O’Brian Held:

Answer 9

C’s claim for psychiatric injury allowed, it was reasonably foreseeable, close proximity and shock was of sight and hearing of the immediate aftermath.