Tort - Negligence (Economic Loss)

Question 1

What is Consequential Economic Loss?

Answer 1

Economic loss resulting from a form of physical injury or damage to the claimant or their property.

Question 2

What tests are claims for consequential economic loss subject to?

Answer 2

The usual tests for causation and remoteness

Question 3

What is pure economic loss?

Answer 3

Financial loss suffered other than as a result of injury or damage

(Network Rail Infrastructure Ltd v Conarken Group Ltd (2011) )

Question 4

What are the four types of pure economic loss?

Answer 4

Relational
Defective Products
Negligent Misstatements
‘Extended’ Hedley-Byrne liability

Question 5

What is relational economic loss?

Answer 5

Economic loss caused by a defendant damaging the property of a third party

Question 6

What is relational economic loss? (And case)

Answer 6

Economic losses caused by a defendant damaging the property of a third party

(Not generally recoverable for policy reasons)

Cattle v The Stockton Waterworks Company (1874-5) LR 10 QB 453

Question 7

What are the three exceptions to the relational economic loss rule? (And authority)

Answer 7

1. If there is a trust in place between the plaintiff and the third party
   Shell UK Ltd v Total UK Ltd (2010)
2. If the losses arise out of contracts with third parties
   Network Rail Infrastructure Ltd v Conarken Group Ltd (2011)
3. If there is a joint venture between claimant and third party
   Morrison Steamship Co Ltd v Greystoke Castle (1947)

Question 8

What is the rule on defective products (2 parts)? (And authority)

Answer 8

Generally, if a product is defective, the claim is in contract, not tort.

If the defect is latent, and then causes harm/injury, claim can be in negligence. If the defect is discovered prior to any harm done, there is no claim.
(Murphy v Brentwood District Council (1991))

Question 9

What is the rule for negligent misstatements? (And authority)

Answer 9

Potential to claim pure economic loss from negligent misstatement, if:

1. There is a voluntary acceptance of responsibility, or
2. If there is a special relationship between the parties, or
3. If the relationship between the parties amounts to a contract

Hedley Byrne & Co Ltd v Heller & Partners Ltd (1964)

Question 10

In which three areas has liability for pure economic loss been extended under Hedley Byrne? (Inc cases)

Answer 10

1. Unfavourable employment reference (Spring v Guardian Assurance Plc (1995))
2. Lloyd’s insurance market investors’ losses (Henderson v Merrett Syndicates Ltd (1995))
3. Losses resulting from failure to draw up a new will
   (White v Jones (1995))

Question 11

What were two main points held in Customs and Excise Commissioners v Barclays Bank Plc (2006-7)?

Answer 11

1. A voluntary assumption of responsibility may be sufficient on its own, without a policy argument (the nature of the relationship makes it just, fair and equitable)
2. If there is no voluntary assumption of responsibility, the 3-stage test in Caparo may still apply.