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82 Cards in this Set

  • Front
  • Back

Pure Economic loss arises where...

There is no physical or property damage to the plaintiff


Test is to...

Identify the loss

If the person who suffers a financial loss does not suffer personal or property damage the loss is not a consequence financial loss but a...

Pure Economic Loss

Exclusionary rule originated in

Cattle v Stockton Waterworks


Facts of Cattle v Stockton Waterworks

-Plaintiff contracted to build tunnel under roadway


-Defendant negligently flooded land in placing water mains near road


-Cost of contract increased and became less financially beneficial to the plaintiff


-Recovery refused as would be catastrophic for future cases

Outcome of Cattle v Stockton Water works

Recovery refused as would be catastrophic for future cases.

Facts of Simpson v Thompson

Defendant ship owner owned two ships which collided


1 ship was lost and claimed against insurance policy


Insurance company exercised subligation and sued sued defendant for loss incurred on paying out penalty


Recovery refused


Lord Penzance's findings

rejected concept that when damage is caused to property, not only property owner but any person who has a contract with the owner can have a cause of action


Requirement is that the plaintiff have sufficient proprietary interest in the damaged property


Combination of Cattle and Simpson led to exclusionary rule

Exceptions to exclusionary rule

Time Charterers/Charter by demise


Joint ventures


Master servant


Recovery under tortious heads


Time Charterers

Involves agreement between ship owner and charterer to provide services of ship , master and crew but no interest in the vessel

Charterers by Demise

Gives a lease which gives possession of the vessel

The Winkfield


The Oakhampton

Charterer of vessel who was bailie of goods can recover for loss of goods

Bennets case

Plaintiff owned a tug boat and salvage ship


Salvaged vessel was hit and sank


Plaintiff failed to recover lost profit on salvaged vessel as he had insufficient proprietary interest in the vessel

Exception to rule B. Joint ventures

One joint venturer can recover for damage caused to property owned by the joint venturers.

Maine v Leask

Fishing boat included owners of the boat owners of the nets and crew who shared all profits



All parties recovered despite no interest in the boats of nets

Burgess v Florence Nightingale Hospital

Husband and wife dancing partners.


Wife died on operating table due to anesthesists negligence


Wimpey Construction v Martin Black and Co

Defendant supplied ropes to HO ltd


HO Ltd and GH Ltd in joint venture to build tanker terminal


Equipment failed causing loss


Negligent advice given in the use of equipment


Loss arose from delay in construction timetable


HO Ltd recovered but plaintiff did not as no possessory or proprietary interest

CNR v NPS

CNR owned land across which it trains travelled


Also owned tracks on the bridge


Bridge owned by PWC


CNR 85% users of the bridge


Paid toll for each crossing


Exclusive agreement with PWC to maintain bridge


Defendant barge owner crashed into bridge


Closed for repairs

Facts of CNR cntd

Plaintiff had to reroute cargo at increased expense


Captain mistakenly believed bridge belonged to CNR


Defendant had hit bridge before


Outcome of CNR

SC divided 3/3/1


McLaughlin allowed recovery


La Forest dissenting (powerful opinion)


Stevenson allowing recovery but for other reasons


McLaughlin's judgement:

Canadian law allows recovery for PEL (Rivtow marine)


Incremental approach to allowing recovery (Kamploops)


RF and Proximity govern recovery in negligence


Sufficient proximity relating to physical, geographical and personal knowledge of the defendant


Quasi joint venture in operation


Insurance argument affects fault principle

La Forest, categories of economic loss are:

A. Statutory Bodies (Anns)


B. Misrepresentations
C. Negligent performance of services (


D. Negligent supply of goods/services


E. Relational economic loss

Loss falls into category E. no recovery

Loss incurred by virtue the plaintiff has a contract with the owner of the property


No joint venture as no loss/profit sharing clause


No legal relationship created


No joint undertaking of a commercial enterprise


A mere contractual right to use bridge


Plaintiff should insure against risk


Better position to assess risk and its occurance

Judgement of Stevenson J:

Exclusionary rule inoperative in Canada


Recovery allowed in other areas not involving physical damage(misstatements)


Known plaintiff test provided for in Caltex Oil


Applicable here as defendant knew plaintiff and was aware of specific consequences of his negligence


Proximity of parties and specific knowledge sufficient to impose liability

Bow valley Husky v St John Shipping

HOOL and BVI contract with defednant to construct rig


Established plaintiff and transferred ownership of oil rig and exploration to plaintiff


Plaintiff leased back rig to HOOL and BVI


Plaintiff entitled to daily payments while rig not in use


Fire on rig and out of service for several months


Bow valley cntd

Plaintiff sought cost of repairs and loss of revenue while rig inoperable


HOOL and BVI sought to recover day rate amount paid to plaintiff


SC attitude to PEL

1.Less worthy a claim than personal or property damage


2. Indeterminate liability


3. Burden should rest with plaintiff who is best placed to anticipate loss


4. Contract should determine loss

CREL is recoverable where morally and economically justified e.g. CNR joint venture scenario


3 categories of recovery:

-CREL in special circumstances where conditions are met


-In circumstances defined by the categories making the law generally predictable


-Categories are not closed

La forest limited recovery to:

-Personal property damage


-General Average case


-Joint venture, of which present case was not one


-Would permit a new category if justified by policy and required by justice

Example of how to approach issue:

Hercules Management vs Ernst and Young

Facts of hercules management

Failed to include information in accounts and plaintiff invested in company to their detriment


Anns, stage 1

Special relationship and reasonable defence


-prima facie duty arose to shareholders


-Reasonably foreseeable that the shareholders would rely upon the accounts


-Relationship between the parties and the nature of the statements made reliance upon statements reasonable.

Anns, Stage 2.

Policy considerations:


Indeterminate liability and issue. The only person the defendant can reasonably foresee to rely on the statement can sue and only for the uses the auditor would foresee

Findings of Hercules management:

-Prima facie duty arose to warn of the product supplied which corresponds with the duty to disclose in Hercules


-Whether duty to plaintiff was extendible to HOOL and BVI


- As defendant was aware of them prima facie duty arose

Policy:

1. Indeterminite liability as other could incur loss


2. no sound reason for recovery


3. Identifying plaintiff test rejected (6/1 in CNR)


4. Limiting liability to users of the rig rejected for the same reasons as 3 (identified plaintiff test)

Deterrence argument

-Plaintiff better places to minimize risk and attempt to do so


-No inequality of bargaining power


-Exercised that power by providing for down time with day rates

C. Actio Per Quod Servitium Amisit (Master/servant)

Master/employer is considered to have proprietary interest in employee whereby a third party could be liable for loss of employees service

D. recovery under other tortious heads

...

Boyd v Gr N. R'way

Plaintiff delayed at level crossing for 20 mins and lost fee.


No other person delayed at crossing incurred special loss thus identifying plaintiff as person incurring special loss


Problems with general exclusion of liability with development of neighbour principle:

...

Hedley Byrne:

Negligent misrepresentation causing economic loss



Words more volatile than acts so treated differently

Facts of Weller v Foot and Mouth Disease Research Institute

Escape of virus resulting in closure of cattle mart.



Many and varied businesses affected (dairy producers, butchers etc)



Findings of Weller:

Duty imposed by misrepresentations is narrow but if duty owed resulting from negligent acts, duty would be wider



Reluctance to develop liability for economic loss

Findings of Konstantinidis v World Tanker Corp

Distinction between charterers of demise and time charters unaffected by Hedley Byrne

Facts and findings of Weir Breeze

-Cargo in freight contract


-Vendor owned property


-Purchaser assumed risk while in transit as title to goods did not pass


-No recovery for loss of goods unless plaintiff is the owner of the goods at the time of the negligent act

result of Public Utilities Supply v Whitall (UK)

No recovery

Spartan Steel and Alloys Ltd v Martin & co.

-Defendant damaged power cable connected to plaintiff's factory in the course of road works


-Aware of cable owned by public utility company and of plaintiff's factory


-Loss of power interrupted melting process


-Damage for loss of melt, loss of profit on that melt and loss of profit on 4 later melts in interruption period

Outcome of Spartan Steel

Recovery for loss of melt and loss of profit on melt as this amounted to damage to plaintiffs property.



no recovery for 4 later melts as this amounted to pure economic loss

Irish Paper Sacks v Sisk (Ireland)

refused recovery for severing of power cable.

Star Village Tavern v Nield

Bridge connecting two parts of the town destroyed resulting in loss to pub, was recovered.

Retreat from exclusionary rule in what case?

Dominion Tape of Canada v LR

Facts of dominion tape:

-RTA damaged utility pole servicing plaintiff's business


-Idle workers paid during inactivity.


Outcome of Dominion Tape:

No recovery for loss of profits



Wages allowed as "positive outlay" (CNR v NPS)


McDonald & Sons. dissenting judgement referred to Spartan Steel>

Lord Edmund Davies could see no reason to distinguish between loss of melt, loss of profits on melt and loss of 4 later melts.

Caltex Oil v Dredge Williamsted

Plaintiff used second plaintiff's (AOR) underwater pipeline to pump oil from its terminal to 2nd plaintiffs terminal for refining and pumped back to plaintiff

caltex oil cntd

AOR owned pipeline; sued for additional cost of transport by sea:


1. Not a public utility, privately owned


2. Outlay of expenditure not profits claimed


3. Defendant aware of pipeline and plaintiff's use of it


4. Plaintiff was a specific and identifiable individual whose loss was FR which established the necessary proximity for a duty to arise

Recovery allowed where there is special knowledge

Yumerovski v Dani

Facts of Yumerovski:

-Caltex used as authority


-Defendant was a travel agent and close family friend who drove plaintiff to the airport


-Fatal RTA resulted in 8 flights being lost


-Recovery because of special knowledge

facts of Candlewood Navigation Corp Ltd.

-Ship Iberaki let to 2nd plaintiff on a bare boat charter and liable for repair costs


-1st plaintiff owned the boat and 2nd plaintiff re-let boat to 1st plaintiff time sub charter


-2nd plaintiff had possession


-Defendant collided with vessel


-2nd plaintiff recovered cost of repair


-1st plaintiff sought cost for alternative ship hire and loss of profits

outcome of candlewood navigation corp

Claim rejected as could not recover as owners

Facts of Esso Petroleum

-Oil tanker collided with jetty causing oil pollution


-Tanker toed by Esso's tug was cast off after fire on tug


-Defendants were designers of the tug


-170k for lost oil


-527k to local sheep farmers


-3.7M to clean offshore (paid to BP)

Outcome of Esso Petroleum

damage to ship, loss and use of oil foreseeable



Sheep farmers and BP payments not linked to damage to the ship but from damage to third parties and not recoverable.

Irish case law

...

Outcome of McShane v Johnson Haulage (irish)

Preliminary application to strike out PEL claim rejected



No bar to recovery for PEL

Ward v McMaster



(Irish)

endorsement of Anns

Beatty v Rent Tribunal

'95 defendant raised rent to 300p/m


'00 raised to 500p/m, but lower than that suggested by the tenant's valuer.


Plaintiff sought JR and order quashed


Given leave to seek damages of 5817.00

Beatty at the supreme court

decided matter on "immunity" of tribunal akin to a court administering judicial function



No view expressed on issue of PEL

Perre v Apand

-Plaintiff a potato grower in S. Australia


-No. of ancillary businesses connected to potato growing


- Defendants imported uncertified seeds for trials on lands neighbouring the plaintiff


-WA regulations prohibited import of any potato coming in contact with bacterial wilt within 20k radius for 5 year period


-potato crop not infected by had to be sold at lower price in SA amrket.


-Pure economic loss

Findings of Perre v Apand



Gleeson CJ:

-Caltex, Hedley Byrne allow recover in special circumstances


-Caparo stage 3 test not a solution


-No indeterminate liability


-Plaintiff vulnerable to defendant's activity


-Physically close to plaintiff

Gauldron J

-Control by defendant on plaintiff's rights


-Special factor giving rise to special relationship


-Limited class affected


-Aware of vulnerability of plaintiff who could not protect himself.

McHugh J

Caltex correct despite Candlewood


Defendant aware of class no matter how large


Duty to Sparnons extendible to plaintiff


Proximity insufficient on its own


Caparo defective


-Proximity not a unifying criterion


-case by case application of test affects existing categories of liability


-"Fair, just and reasonable" undefined, vague and uncertain.

Solution:

Caltex not limited to the "identifiable plaintiff" test


knowledge or means of knowledge will suffice to identify class and who can recover


Let contract law determine issue where possible


Vulnerability of plaintiff akin to reliance in mistatements


Actual knowledge important in determining duty question

Duty:

1. Was loss RF?


2. Is liability indeterminate?


3. Is the burden on the defendant unreasonable?


4. Is the plaintiff vulnerable to the defendant's 5 conduct?


5.lass lC Did defendant know conduct would cause harm?

class limited to:

owners and growers in 20k radius



processors and plants excluded

Customs and excise v Barclay's Bank

-Plaintiff sought and obtained Mareva injunction against BSL and DL companieswho owed vat to plaintiff


-Defendant directed to freeze accounts of both companies


-Instructions were sent to wrong place


-Companies were insolvent.


-Plaintiff sought to recoup from defendant

Action unanimously dismissed



Lord Bingham

3 tests identifiable:


A. Assumption of responsibility


B. 3 stage test


C. Incremental approach


1. A sufficient but necessarily (something) condition of liability


2. Test is to be applied objectively


3. Threefold test not an answer to whether a duty of care is owed in novel circumstances and components are mere labels.


contd

4. Incremental test is of little value and is only usefully when used in combination with a test or principle which identifies the legally significant features of a situation. The closer the facts of the case to those of a case in which a duty of care has been held to exist, the readier the court will be to find an assumption of responsibility, or proximity or that policy considerations are satisfied

contd

5. Outcomes to date in successful cases are sensible and just



6. Must concentrated on the detailed circumstances of the particular case and particular relationship of the parties.

Lord Hoffman

Cannot derive a common law duty from a court order in the way that a common law duty cannot be derived from a breach of statute

Lord Rodger

Notification of the order obliged the bank to respect the order and as such does not generate a duty of care to the revenue.

Lord walker



Questioned caparo's 3 stage test and its usefulness



Responsibility was not volunarily undertaken by bank

Lord Mance

No voluntary assumption of responsibility by the bank