TORT LAW REVISION: NEGLIGENCE - PEL
(I) Duty of Care for Pure Economic Loss (Careless Acts)
Careless Acts that Cause Economic Loss
(e.g.: severing electricity cable, damaging goods, approving poor foundations for property, supplying defective items)
Spartan Steel v Martin (1973):
• Damaged metal (claimable); loss of profit from damaged metal (claimable); loss of possible profit that could have been made (not
claimable – speculative, not actual)
• Difference between consequential and pure economic losses (‘PEL’): (i) consequential losses = losses that flow from physical injury to Cl. or
damage to Cl.’s property; (ii) PEL = economic loss that stands alone (no physical injury or property damage to Cl., or property only
defective, NOT damaged, or loss is NOT actual but speculated)
• G/R: (i) Consequential losses are recoverable – D owes DOC for consequential losses on PEL; (ii) PEL are not recoverable – D does NOT
owe DOC for PEL (reasons: against public policy, unfair to D, unlimited liability & availability of insurance)
A. Profit that could have B. Damaged Property C. Property/ Goods not damaged, but defective:
been made: X DOC – no belonging to another/ injury X DOC – no damage, loss not consequential
real loss, speculative to another: X DOC – not
consequential loss to Cl.
I. Against Council II. Against builder/contractor
Spartan Steel: Weller v FMDRI (1966): (No DOC on Council) (No DOC, no contract)
§ No DOC owed for • FMDRI caused cattle to be
speculated loss of infected with F&M disease Murphy v Brentwood DC (1991): Muirhead v Industrial Tankship (1986):
profit. through negligent disposal • Cracks on the wall due to poor Defective pumps (incompatible with electricity supply in
§ Such loss is purely of lab waste – infected foundations laid by England) – claim for dead lobsters & loss of profit
economic cattle could not be developers, designed by civil claimable (consequential loss); claim for cost of
§ Loss of profit is a risk in bought/sold – cattle engineers replacing pumps denied – purely economic
manufacturing/ auctioneer claimed loss • Claim against BDC for
vicissitude of life • Cattle auctioneer’s loss = negligently approving plan and D & F Estates v Church Comm. (1989):
§ Better covered by purely economic – the design • Cl. claimed damages against contractors (D), for
insurance infected cattle were not • Cl. unable to pay for repairs – peeling plaster falling off walls of leased property –
§ Alternatively, Cl. can his property – only owners sold property for less (because plaster work carried out negligently contractors
make up what was lost of cattle could claim as buyer knew about cracks) • Damages only recoverable under contract but Cl.
by increasing price or consequential loss • BDC did not owe DOC to Cl. – lacked ‘privity’
production and sales (Spartan Steel applied) loss purely economic – poor • A builder of a structure which is dangerously
§ Loss should not be foundation causing cracks not defective can only be liable if the defect remains
borne by D alone but Leigh & Sillavan v Aliakmon material physical damage – hidden until it causes personal injury or property
by society as a whole – (1985): cracks = defects – loss not damage to other property. The dangerous defect
lightens D’s burden • Goods destroyed at sea consequential itself attracts no liability
due to shipment • If a builder erects a structure • If the defect is discovered before it causes damage,
Conarken v Network Rail company’s neglect that contains a latent & any losses claimed for repair = purely economic
Infrastructure (2011): • Cl. (purchaser) of goods dangerous defect, he is only • Complex structure doctrine may apply where the
Cl. could recover cost of claimed losses liable for that defect if it building is a complex structure, & 1 element of the
repairing railway • No DOC owed to Cl. – causes damage or injury – if building is considered distinct from another element.
infrastructure damaged under commercial law the defect is discovered Then damage to 1 part caused by a hidden defect in
by D, & other losses such ownership in good remain before any damage/injury is another part = “damage to other property” =
as additional fuel, with seller – Cl. has no title caused, & the Cl. wants to claimable
passenger buses & taxis to goods, losses purely sell/repair the property & Note: buildings built & equipped by same contractor ¹
& staff overtime due to economic (Spartan Steel suffers a loss doing so, such complex structure. CSD has now been considered
damage. Ct also allowed applied) loss is purely economic & not artificial (Murphy)
claim for amounts which recoverable under tort • OTF, claim failed – defect not hidden & did not cause
the Cl. owed other train Islington LBC v UCL NHST • It may be claimed under other damage to another property & CS doctrine
operating companies (2005): contract against the builder, didn’t apply
under existing contracts. • Cl. provided welfare care not Council. Alternatively,
Ct. held: foreseeable for X – incurred medical claim may be pursued against Bellefield Services v Turner (2000):
losses consequential to expenses on her behalf builder/ developer under: S1 Builder constructed deficient firewall – fire spread –
property damage & when D’s negligence Defective Premises Act 1972 damaged property. No DOC owed, loss held to be
income loss = caused her to need further (liability on builders, subcon, purely economic
recoverable by profit medical care & treatment professional advisors,
making bodies. Loss of • Claimed against D for surveryors & architects – duty NOTE HOWEVER:
future business is expenses incurred – to ensure ‘fit for habitation’ Junior Books v Veitchi (1983):
claimable depending on • D did not owe DOC to Cl. – – 6 yr limitation period from Sub-con laid flooring contrary to specification – Cl. had
circumstances & fairness expenses incurred by Cl. date of completion to relay flooring – claimed cost of relaying flooring
for X are purely economic against sub-con. Although no damage and cost was
• Injury was to X and not Cl., ANNS OVERRULED! purely economic claim allowed – high degree of
thus X consequential to Cl. proximity and assumption of responsibility
(I) Duty of Care for Pure Economic Loss (Careless Acts)
Careless Acts that Cause Economic Loss
(e.g.: severing electricity cable, damaging goods, approving poor foundations for property, supplying defective items)
Spartan Steel v Martin (1973):
• Damaged metal (claimable); loss of profit from damaged metal (claimable); loss of possible profit that could have been made (not
claimable – speculative, not actual)
• Difference between consequential and pure economic losses (‘PEL’): (i) consequential losses = losses that flow from physical injury to Cl. or
damage to Cl.’s property; (ii) PEL = economic loss that stands alone (no physical injury or property damage to Cl., or property only
defective, NOT damaged, or loss is NOT actual but speculated)
• G/R: (i) Consequential losses are recoverable – D owes DOC for consequential losses on PEL; (ii) PEL are not recoverable – D does NOT
owe DOC for PEL (reasons: against public policy, unfair to D, unlimited liability & availability of insurance)
A. Profit that could have B. Damaged Property C. Property/ Goods not damaged, but defective:
been made: X DOC – no belonging to another/ injury X DOC – no damage, loss not consequential
real loss, speculative to another: X DOC – not
consequential loss to Cl.
I. Against Council II. Against builder/contractor
Spartan Steel: Weller v FMDRI (1966): (No DOC on Council) (No DOC, no contract)
§ No DOC owed for • FMDRI caused cattle to be
speculated loss of infected with F&M disease Murphy v Brentwood DC (1991): Muirhead v Industrial Tankship (1986):
profit. through negligent disposal • Cracks on the wall due to poor Defective pumps (incompatible with electricity supply in
§ Such loss is purely of lab waste – infected foundations laid by England) – claim for dead lobsters & loss of profit
economic cattle could not be developers, designed by civil claimable (consequential loss); claim for cost of
§ Loss of profit is a risk in bought/sold – cattle engineers replacing pumps denied – purely economic
manufacturing/ auctioneer claimed loss • Claim against BDC for
vicissitude of life • Cattle auctioneer’s loss = negligently approving plan and D & F Estates v Church Comm. (1989):
§ Better covered by purely economic – the design • Cl. claimed damages against contractors (D), for
insurance infected cattle were not • Cl. unable to pay for repairs – peeling plaster falling off walls of leased property –
§ Alternatively, Cl. can his property – only owners sold property for less (because plaster work carried out negligently contractors
make up what was lost of cattle could claim as buyer knew about cracks) • Damages only recoverable under contract but Cl.
by increasing price or consequential loss • BDC did not owe DOC to Cl. – lacked ‘privity’
production and sales (Spartan Steel applied) loss purely economic – poor • A builder of a structure which is dangerously
§ Loss should not be foundation causing cracks not defective can only be liable if the defect remains
borne by D alone but Leigh & Sillavan v Aliakmon material physical damage – hidden until it causes personal injury or property
by society as a whole – (1985): cracks = defects – loss not damage to other property. The dangerous defect
lightens D’s burden • Goods destroyed at sea consequential itself attracts no liability
due to shipment • If a builder erects a structure • If the defect is discovered before it causes damage,
Conarken v Network Rail company’s neglect that contains a latent & any losses claimed for repair = purely economic
Infrastructure (2011): • Cl. (purchaser) of goods dangerous defect, he is only • Complex structure doctrine may apply where the
Cl. could recover cost of claimed losses liable for that defect if it building is a complex structure, & 1 element of the
repairing railway • No DOC owed to Cl. – causes damage or injury – if building is considered distinct from another element.
infrastructure damaged under commercial law the defect is discovered Then damage to 1 part caused by a hidden defect in
by D, & other losses such ownership in good remain before any damage/injury is another part = “damage to other property” =
as additional fuel, with seller – Cl. has no title caused, & the Cl. wants to claimable
passenger buses & taxis to goods, losses purely sell/repair the property & Note: buildings built & equipped by same contractor ¹
& staff overtime due to economic (Spartan Steel suffers a loss doing so, such complex structure. CSD has now been considered
damage. Ct also allowed applied) loss is purely economic & not artificial (Murphy)
claim for amounts which recoverable under tort • OTF, claim failed – defect not hidden & did not cause
the Cl. owed other train Islington LBC v UCL NHST • It may be claimed under other damage to another property & CS doctrine
operating companies (2005): contract against the builder, didn’t apply
under existing contracts. • Cl. provided welfare care not Council. Alternatively,
Ct. held: foreseeable for X – incurred medical claim may be pursued against Bellefield Services v Turner (2000):
losses consequential to expenses on her behalf builder/ developer under: S1 Builder constructed deficient firewall – fire spread –
property damage & when D’s negligence Defective Premises Act 1972 damaged property. No DOC owed, loss held to be
income loss = caused her to need further (liability on builders, subcon, purely economic
recoverable by profit medical care & treatment professional advisors,
making bodies. Loss of • Claimed against D for surveryors & architects – duty NOTE HOWEVER:
future business is expenses incurred – to ensure ‘fit for habitation’ Junior Books v Veitchi (1983):
claimable depending on • D did not owe DOC to Cl. – – 6 yr limitation period from Sub-con laid flooring contrary to specification – Cl. had
circumstances & fairness expenses incurred by Cl. date of completion to relay flooring – claimed cost of relaying flooring
for X are purely economic against sub-con. Although no damage and cost was
• Injury was to X and not Cl., ANNS OVERRULED! purely economic claim allowed – high degree of
thus X consequential to Cl. proximity and assumption of responsibility
