Pure Economic Loss Flashcards
Spartan Steel v Martin
No duty of care owed for pure economic loss - only duty of care is owed for consequential economic loss. CEL is where D’s negligence causes some injury to C, which subsequently leads to economic loss. Whereas PEL is just purely economic loss and no other damage/harm to C
Conarken Group v Network Rail
For CEL, it is sufficient to show that D should have appreciated that losses would ensue as a result of their negligence that led to the physical damage/injury
Dutton v Bognor Regis DC
General position for PEL in relation to defective products is that if C receives a product which does not work simply due to D’s negligence, then C has only suffered PEL, which is not recoverable (per SS v Martin)
Murphy v Brentwood DC
For dwellings that have been built negligently, C only suffers PEL if the structure of the building is the only thing that suffers problems. Therefore, defective structural building work is only PEL and not recoverable.
For C to claim for defective building work, there must be some other damage resulting from the defective building - e.g. if the roof collapses and damages C’s other possessions.
Only latent defects that then go on to cause damage can be claimed for - if the defect becomes apparent before any further damage/injury, then it is PEL
Exceptions to PEL General Rule - i.e. Where it IS Recoverable
1) Hedley Byrne v Heller
2) Caparo Industries v Dickman
Hedley Byrne v Heller
PEL may be recoverable where D owes a limited duty of care to C based on assumption of responsibility by D, and reliance by C. Two stages under HB exception:
1) Assumption of responsibility by D
2) Reasonable reliance on this assumption by C
This exception mainly concerns cases where C relies upon D’s professional advice - Lord Upjohn said in OBITER that the relationship must be ‘akin to a contract’
Calvert v William Hill
Duty of care for PEL may arise where there is an express assumption of responsibility
Williams v Natural Life Health Foods
Court looks at the overall course of communication to determine whether there was an assumption of responsibility by D themselves. D was NOT liable in his personal capacity here
Henderson v Merrett Syndicates
Assumption of responsibility can also be implied by the relationship itself. General test for this is whether D has put themselves out as having some kind of advantage over C in terms of specialist knowledge
White v Jones
There does NOT need to be direct contact between C and D for there to be an assumption of responsibility implied by the relationship
Spring v Guardian Assurance
D can be liable as a former employer to C if D still portrays themselves as having specialist knowledge - so there was an assumption of responsibility by D as C’s former employer because D portrayed themselves as still having specialist knowledge about C
Smith v Eric S Bush
HB exception extends to D making negligent misstatements that were intended to go to third parties, but which C then reasonably relies on
Caparo Industries v Dickman
Caparo test also applies to limited duty of care cases for PEL - but note that it is NOT the starting point for PEL, since generally PEL is not recoverable. Apply the test as usual, but proximity requirement has two distinct elements for PEL:
1) Statement must be intended for C
2) C must rely on the statement for the purpose for which it was provided.
Note that the purpose of the statement was key in why the claim failed in Caparo, but succeeded in Smith. In Caparo the statement was to provide info specifically for shareholders and by definition not for third parties. Whereas in Smith, the statement was just about the specific transaction itself, which still very much concerned C, so they could claim.
Customs and Excise Commissioners v Barclays Bank
HL held that there are only two tests for PEL, and these should be applied separately:
1) HB - assumption of responsibility (limited duty)
2) Caparo - three stage test for duty of care
HL said that the HB test should be applied first - IF this fails, then apply the Caparo test afterwards to see if a limited duty of care can be established for PEL
s.1 Defective Premises Act 1972
Workers for dwellings owe a duty to the persons interested that the work is professional and the dwelling is FIT FOR HABITATION.
This is a statutory exception to the rule in Murphy v Brentwood DC - normally defective building work is PEL and therefore not recoverable, but defective building work in itself might be claimed for under s.1.
