Tort 5: Negligence Special Problems (All)

Alcock v Chief Constable of South Yorkshire criticism

too much floodgates influence excessively harsh on the Cs not fully corresponding with medical knowledge regarding psychiatric illness brought about by nervous shock. reform has been widely advocated and a legislative proposal to mitigate some of the effects of Alcock was drafted by the Parliamentary Law Commission in 1998, the decision in Alcock represents the state of the law in the area of liability for psychiatric harm as it currently stands.

negligent mis-statements Chaudhry v Prabhakar [1988]

unusual, although not impossible, for the duty to arise between friends in a relatively social context. CA held that the duty of care will arise on the D who are the friend of C that give a N advice to the C to selection of a second car. The D will liable on it, although D not as a professional in the mechanic area. (Richard Card

relationship between the claim and the purpose of advice Morgan Crucible Co plc v Hill Samuel

where the target company of a take-over bid knows that the bidder is relying on financial information provided by itself, a duty of care arises.

Pure economic loss by contrast arises:

where there is no physical injury to any person or to any property where there is physical injury to a person other than the C or to the property of some person other than the C.

Spring v Guardian Assurance Ltd [1995]

writer of a reference about a former employee seeking a job was held to owe a duty of care to the employee and not merely to the prospective employer who relied on it. Notice that the D was obliged (through the rules of the regulatory system for financial institutions) to provide a reference.

negligent mis-statements liab

Liability is sometimes said to result from an assumption of responsibility on the part of the D

assumption of responsibility Lord Goff in Henderson v Merrett Syndicate Ltd

Lord Goff, in looking for the principle which underlay the decision in Hedley Byrne: Lord Devlin had said: "I do not understand any of your Lordships to hold that it is a responsibility imposed by law upon certain types of persons or in certain sorts of situations. It is a responsibility that is voluntarily accepted or undertaken, either generally where a general relationship, such as that of solicitor and client or banker and customer, is created, or specifically in relation to a particular transaction." Lord Goff added in Henderson : "From these statements, and from their application in Hedley Byrne, we can derive some understanding of the breadth of the principle underlying the case. We can see that it rests upon a relationship between the parties, which may be general or specific to the particular transaction, and which may or may not be contractual in nature. All of their Lordships spoke in terms of one party having assumed or undertaken a responsibility towards the other."

Economic loss cases (iii): damage to another's property

Weller v Foot and Mouth Disease Research Institute [1966] no for PEL Spartan Steel

EX C is given as a present a computer manufactured by D. There is a fault in the hard disk. As a result files containing the draft of his doctoral thesis are corrupted and C loses six months of his research work.

When a fault in a computer corrupts a document, is that physical damage or economic loss? Does it matter?

Rescuers

White: rescuers cannot claim as a Primary Victim disallowed claims of police rescuers, they were professionals, they were paid and had generous pensions. police should not be able to claim if personal relatives and friends fail. unclear if it extends to private rescuers

EX D's employee, digging a hole in the road, damages a water main. The water supply has to be cut off for two days and C's factory has to close for that period. There is no production and C is late in meeting an urgent order.

Whose water main is it? Is the economic loss pure or consequential? See Spartan Steel.

Caparo Industries v Dickman [1990]

a firm of accountants who had carried out a statutory audit of a company were held to owe a duty to the shareholders as owners of the company but not to the Cs who launched a take-over bid for the company on the strength of the accounts.

Liability for pure economic loss and for negligent mis-statements

a number of leading cases involve mis-statements that caused financial or economic loss to the C. It is therefore convenient to discuss them together although you will discover that there are cases about economic loss that do not involve careless advice or information.

Hedley Byrne

a. DOC for advice/info b. extends to purely economic losses. Assumption of resp No requirement of deceit

pure economic loss

not directly linked to physical damage: forms purely $: Hedley Byrne v Heller Ross v Caunters [1980]; loss of inheritance for Bs 2. Loss of profit : Spartan 3. Cost of repairing inherently defective property or reduction in value on discovering property is inherently defective e.g. a house. Murphy v Brentwood [1991] rejects Anns v London Borough of Merton [1978]

policy reasons that restrict the right of recovery for economic loss.

$ less worthy of protection than physical burden on particular Ds will be unbearably high. (Imagine that the D carelessly pollutes a holiday beach. Holidaymakers stay away) Easy to apply rule against pel Cs can often make good their economic loss in other ways than by claiming compensation: for example, if a factory has to shut down because of loss of power, it may be possible to make up for lost production by having extra shifts later. It may make more economic sense for potential Cs to insure than Ds Allowing economic loss to be recovered in T muddles the boundary between contract and T, but less now because of 3P act.

negligent mis-statements when does DOC arise HL did not decide in Hedley Byrne v Heller that a person had a duty to take care in making statements whenever damage or loss was foreseeable.

'If, in a sphere in which a person is so placed that that others could reasonably rely on his judgment or his skill or on his ability to make careful enquiry...a person takes it on himself to give information or advice to or allows his information or advice to be passed on to another person who, as he knows or should know, will place reliance on it, then a duty of care will arise.

relationship between the claim and the purpose of advice Law Society v KPMG Peat Marwick. imposition on a reporting accountant of a duty of care owed to the Law Society, for whose purposes the accountant's report was required, was fair, just and reasonable. The report was intended to assist the Law Society in deciding whether and when to exercise its powers of intervention in order to protect the Compensation Fund. The reporting accountant should be held responsible for loss to the Compensation Fund caused by that N.

(1) not self-evident that a duty was owed, as the Law Society had a number of distinct functions, both in public and private law (2) Vice-Chancellor correctly identified the approach as being to examine the question of the DOC against Caparo Previous cases which dealt with situations where a duty of care to protect against economic loss existed were all concerned with a potential commercial transaction. However, no difference in principle arose because here it was regulatory action which the Law Society would have taken (5) If it was fair, just and reasonable that the accountants should be liable for the loss to the Compensation Fund then such consequences had to be accepted. There was no reason of policy why accountants should not be liable. A distinction could be made with the position of the Solicitors' Indemnity Fund, which was an insurer of solicitors and would not expect to be owed a duty by the auditors. The Compensation Fund was a fund of last resort. (6) The Vice-Chancellor's decision did not prevent it being argued that the scale of the loss was beyond anything the auditors could have foreseen having regard to the accounts to which the report related and that therefore the loss or the whole of the loss was not recoverable

range of factors that may be relevant to the denial of a duty of care. For example, a duty of care may not exist where:

1. The claimant is the author of his own misfortune (Philcox v Civil Aviation Authority 2. A duty of care would lead to unduly defensive practices by Ds seeking to avoid claims for negligence with detrimental effects on their performance of some public duty (Hill v CC of West Yorkshire [1988] 2 All ER 238, and X (minors) v Bedfordshire CC [1995] 3. Awards of damages against a public authority exercising a public function would have an impact upon the resources available to the authority to perform its duties, both in terms of the damages and costs, and in terms of the resources required to investigate and defend spurious claims (X (minors) v Bedfordshire CC [1995] 3 A duty of care would cut across a complex statutory framework established by Parliament for regulating particular circumstances, such as the regulation of financial markets (Yuen Kun-yeu v AG of Hong Kong [1987] 2 All ER 705) or the protection of C at risk (X (minors) v Bedfordshire 4. There is an alternative remedy available to an aggrieved C, such as a statutory right of appeal from the decision of a government officer or department, or judicial review, or another source of compensation, such as the criminal Injuries Compensation Scheme, or another cause of action, such as a claim for breach of contract, even where the action would be against a different D. 5. Where a DOC would tend to undermine the requirements of other causes of action, particularly in the case of complex commercial contracts where the parties have had the opportunity to negotiate a detailed structure of contractual negotiations

contrast different results: Smith v Eric S. Bush (a firm) [1990] 1 AC 831 and Caparo Industries v Dickman [1990]

1. number of Cs 2. social situation Caparo Industries v Dickman [1990]: large number of shareholders DOC owed, no DOC to Co. . in Smith Doc owed to homeowner. policy is favoring the weak.

Stevenson v Nationwide Building Soc [1984] (EXPERT) in field=> more responsibility required. harder to claim reliance. total disclaimer of liability for professional negligence of a surveyor undertaking a M valuation survey contained in a notice to the potential Mor is effective. The special features of this case should, however, be carefully noted.

3 features of case: (a) the fact that the court was considering a disclaimer that was used as a metter of standard practice; ( b) the fact that the effects of the disclaimer were fully and clearly explained and a course of action made available to circumvent these effects; and (c) not a member of the general public unused (EXPERT) to the implications of opting for a mere mortgage valuation report rather than the more comprehensive (and more expensive) intermediate type of survey and valuation or full structural survey, but, on the contrary, was an estate agent and insurance broker well acquainted with property transactions and their risks.

meaning of consequential economic loss cf PEL

A C suffers personal injuries: damages are recoverable for the economic consequences of the personal injuries, such as lost wages or salary if the C is unable to work because of the injuries. The C's property is damaged. The C can recover for the economic consequences, which might be: the reduction in the value of the property or the cost of repairing it and might include the loss of profit from the use of the property.

problem with allowing the assumption of responsibility to be too wide Steyn

A moment's reflection will show that, if the argument were to be accepted in the present case, it would expose directors, officers and employees of companies carrying on business as providers of services to a plethora of new T claims. The fallacy in the argument is clear. In the present case liability of the company is dependent on a special relationship with the respondents giving raise to an assumption of responsibility. Mr. Mistlin was a stranger to that particular relationship. He cannot therefore be liable as a joint Tfeasor with the company. If he is to be held liable to the respondents, it could only be on the basis of a special relationship between himself and the respondents. There was none. I would therefore reject this alternative argument.

Hunter v. British Coal Corporation [1998]

A workman, who did not see an accident, but suffered shock after thinking that he had caused the death, was not able to recover damages. His injury was too remote from the accident.

MLC v Evatt [1971] factors for determining special relationship in Hedley Byrne

Assumption of responsibility by statement maker Circumstances such that it is reasonable for recipient to accept and rely on statement. Speaker knew or ought to have known that the recipient intended to rely on the information Reasonable for recipient to seek or accept and rely on speaker's advice. This decision was subsequently appealed to Privy Council where a more restrictive approach was taken namely, that the speaker must carry on business of giving advice or let it be known of their claims to special skills in the field. held the plaintiff can't claim their economic cost loss cause by the negligent misstatement to the defendant. Because the defendant was Insurance Company although they give an advice but the financial advice they had given was not an expert in their professional. (Barbara Ann Hocking, pg73) After this case happened, it restricted the "special relationship" principle that establish in the case Hedley Byrne. In this case Privy Council added another condition that needed to constitute the special relationship.

Boardman v Sanderson [1964] succeeds hearing the accident

C's infant son had had an epileptic fit as a result of admitted N of D T, which caused irreparable brain damage and death when child's life support system was turned off, and as a result of which C suffered a pathological grief reaction, it was held that period of 36 hours from moment epileptic fit started to decision to turn of life support machine, could be seen in law as a horrifying event, appreciation of which brought C within class of secondary Vs and as such was entitled to recover damages for PI

The advice may be relied on by one person but the loss suffered by someone else: Ministry of Housing v Sharp [1970] An employee of the authority failed to exercise reasonable skill and care in searching for entries in the local land charges register. The search certificate prepared by the clerk Nly failed to record a charge

Denning MR held the local authority was liable to the Ministry for the employee's incompetence. At 268 he rejected that a duty of care only arose when there was a voluntary assumption of responsibility, rather "from the fact that the person making it knows, or ought to know, that others, being his neighbours in this regard, would act on the faith of the statement being accurate."

Simaan General. Contracting Co v Pilkington Glass [1988] policy considerations for compensation of PEL limits Junior Books plaintiffs, the main contractors under a contract for a new building in Abu Dhabi, sub-contracted the supply and erecton of curtain walling. The Ds contracted to supply green glass units for incorporation in the curtain walling. They were not in contractual relationship with the plaintiffs. The units were alleged by the building owner to be defective in their colouring. The plaintiffs eventually rejected them and instructed the sub-contractors to replace them with approved panels. The plaintiffs claimed against the Ds damages for negligence in respect of the loss they had suffered as a result of the supply of the defective units. The question whether the Ds, as specified suppliers of the units, owed to the plaintiffs, as the main contractors, a duty to take reasonable care to avoid defects in the units which had caused them loss was tried as a preliminary issue. Judge Newey answered it in favour of the plaintiffs. The Ds appealed.

CA Junior books can only be used if it was not being used to circumvent valid chains of contractual obligations. C did not want to sue main contractor because did a lot of work together so tried to sue D in tort. loss is PEL and CA said this is not a subject of duty. cf Junior there was no valid contractual relationship because main contractor had gone bankrupt.

Gorham v British Telecommunications plc [2000] Assumption of responsibility

CA follow White v Jones Duty of care owed by financial adviser to client's dependants when advising on retirement options.

principle was also applied in cases where there was no such danger, because only one person could suffer economic loss unlike Spartan Steel

Candlewood Navigation v Mitsui OK Lines [1986] AC 1 and Leigh

EX C is given as a present a computer manufactured by D. There is a fault in the hard disk and C has to spend £500 putting it right.

Consider the cases on defective property.

Esso v Mardon [1976] ] Mr Mardon entered a tenancy E, experts estimated sales which were prepared prior to planning application. planning permission changed prominence which would have an adverse affect on sales rate. Esso made no amendments to estimate. rent under tenancy was also based on erroneous estimate. Consequently it became impossible for Mr Mardon to run petrol station profitably. Sold less.

Court of Appeal held that there was no action for misrepresentation as the statement was an estimate of future sales rather than a statement of fact. However, the claimant was entitled to damages based on either negligent misstatement at common law or breach of warranty of a collateral contract.

Fairline Shipping Corp v Adamson [1975]

Cs sued the D, a director of a warehousing company, for the N storage of perishable goods. The contract was between the C and the company. But Kerr J (later Kerr LJ) held that the director was personally liable. That conclusion was possible because the director wrote to the customer, and rendered an invoice, creating the clear impression that he was personally answerable for the services. If he had chosen to write on company notepaper, and rendered an invoice on behalf of the company, the necessary factual foundation for finding an assumption of risk would have been absent.

Economic loss cases (ii): performance of a service Hedley Byrne case was for long thought of as being concerned with advice or information on which the C relied. Later it was interpreted more widely and an 'extended Hedley Byrne principle' was recognised

D can be liable where there has been a voluntary assumption of responsibility (Henderson , but then Ministry of Housing) by the D towards the C either generally or for the purposes of a specific transaction. On this view liability for N mis-statements is merely an example of a wider principle and reliance is not a necessary ingredient of liability. Henderson v Merrett Syndicates Ltd [1995]

recovery of pure economic loss: policy considerations

D was not liable for purely economic loss. The principle is illustrated by Simpson

Economic loss cases (iv): Defective buildings and chattels s concerned Cs who had acquired a house or a flat that had begun to show signs (or would show signs) of physical deterioration, so that the Cs had to spend money putting it right or had to sell it for less than it should have been worth.

Dutton v Bognor Regis Building Co [1972] 1 QB 373; Anns v Merton London Borough Council [1978] AC 728; Junior Books v Veitchi [1982] AC 520 and Murphy v Brentwood District Council [1991]

Anns v London Borough of Merton [1978] rejected by Murphy v Brentwood [1991] as it lacked precision and created a duty of care of general application. plaintiffs were leasees of flats in Wimbledon. The borough of Merton approved a set of plans to build a block of flats. Eight years after building was complete and the flats were rented the foundation started to deteriorate. The tenants brought an action against the city for the cost of the repairs. The plaintiffs sued the local authority on the grounds that their predecessor's inspectors had either not inspected the foundations or, if they had, had done so negligently. The HL held that the local authority owed the plaintiff a duty of care. It was in this case the lord Wilberforce established a two stage test:

First one has to ask, as between the alleged wrong doer and the person who has suffered damage there is a sufficient relationship of proximity or neighbourhood such that, in the reasonable contemplation of the former, carelessness on his part maybe likely to cause damage to the latter- in which case a prima facie duty of care rises. Secondly, if the first question is answered affirmatively, it is necessary to consider whether there are any considerations which ought to negative, or to reduce or limit the scope of the duty or the class of person to whom it is owed or the damages to which a breach of it may give rise

D

HL said that Junior Books was so far dependent on the 'unique' relationship between the C and the D that it cannot be regarded as laying down any general principle in the law of T. Junior Books has been distinguished by the CA on a number of occasions: Muirhead v Industrial Tank Specialities [1985] 3 All ER 705 Simaan General Contracting v Pilkington Glass (No 2) Anns, he said 'that in so far as the case is authority for the proposition that a builder is liable in tort . . . for damage occurring through his negligence to the very thing . . . constructed, such liability is limited directly to cases where the defect threatens the health or safety of occupants or of third parties . . . possibly other property'. The damages then recoverable are limited to the cost of averting that danger. 'The case cannot properly be adapted to support the recovery of damages fr pure economic loss going beyond that. Such loss is not in principle recoverable in tort unless the case can be brought within the principle of reliance established in Hedley Byrne.'

Negligent misstatements generally pure economic loss not recoverable BUT

Hedley Byrne v Heller need special relationship and reliance special relationship: -requires special skill or knowledge (not ordinary people) D is better position to understand than C

Pure economic loss and negligent misstatements don't always go together

Hedley Byrne v Heller [1964] HL in Hedley Byrne held that there could be a duty for careless words problem with the case was that allowing duty of care for careless words, opens floodgates. prior to this, C had to show dishonesty. pure economic case, courts are cautious in this situations since it opens the doors to fraud. here disclaimer was found to be sufficient enough to discharge any duty created by Heller's actions. distinguished Derry v Peek. that case based on tort of deceit=> not binding in N.

Hedley Byrne v Heller [1964] facts: The case was considered by the HL, as leading case in stating liability for pure economic loss arising from a T. It introduced the basic idea of an " . assumption of responsibility" . . Issue Whether and under what conditions a person can recover damages for loss suffered by reason of his having relied on an innocent but negligent misrepresentation.

Hedley was responsible for any amount which was not paid by Easipower since they have to pay for advertising orders. Later on Hedley became curious about a financial position of Easipower to afford another advertising which Hedley may give them on credit. The bank of Easipower [the defendant] gave a report of Easipowers financial position that they have enough resources for ordinary business proceedings, but stated that the report was given "without responsibility." Based on the report which was given by the respondents, Hedley added r orders on behalf of Easipower which later on were not covered by sufficient resources. It meant a loss of £17,000 for Hedley Byrne. Hedley sued the respondents for damages under the tort of negligence.

Henderson v Merrett Syndicates Ltd [1995] groups of investors suing the people who invested their money, after the funds were negligently invested and the plaintiffs suffered a big loss. Issue: The investors had a K with their agents. Was a duty of care excluded by the K? (Did the presence of a K prevent them from suing in tort?) The question was whether the agents could be liable to the indirect investors (the names behind in the syndicate which had formed another syndicate). The problem was that there was a contractual relationship between the head syndicate managers and its direct members, but not necessarily a contractual relationship between the head syndicate managers and the members of the sub-syndicate. This led to the question of whether a duty could arise in T, raising the matter of " . assumption of responsibility" . .

Holding: No: "A tortious duty of care may arise not only in cases where services are rendered gratuitously, but also where they are rendered under K" Reasoning: Lord Goff of Chieveley: Starts with reference to Hedley Byrne. Says that Hedley established that one could recover for negligence in words or deeds, and for pure economic loss. So there is authority for the type of claim that's being made here. Furthermore, he quotes Lord Morris in Hedley: "it should now be regarded as settled that if someone possessed of a special skill undertakes, quite irrespective of K, to apply that skill for the assistance of another person who relies on that skill, a duty of care will arise." He quotes Devlin who said that you can recover in tort for actions undertaken gratuitously that were done negligently. Reasoning by analogy: he says that the Hedley principle quoted above has been applied to a number of different categories of service-performing people, including insurance brokers and lawyers. So it can be extended to Lloyd's agents. They hold themselves out as possessing special expertise and the investors relied on that expertise. So the remaining issue is the problem of tort or K -- can you recover in tort where there is a K? Two options: insist he sue in K alone, or allow the PL to choose between K and tort? Examination of jurisprudence: he says that at first courts held that liability for solicitor negligence had to be pursued in K. Ditto for architects, but in Bagot v. Stevens Scanlan and Co., Devlin noted that a different conclusion could be reached where the DF had a public calling (e.g. an innkeeper, common carrier, master of a servant). Examination of effects: Goff doesn't like the idea that consequences of the negligence of professionals can take a while to come to light, and that they might come to light more than six years (prescription) after the date of the breach of K. If they couldn't sue in tort, the PLs would be left without a way to make a claim. There are other practical problems related to remoteness of damage and serving proceedings out of jurisdiction, and we can't rewrite the law to mitigate the effects of differing sets of rules -- it's "crying for the moon." Esso v. Madron implied that concurrent liability in K and tort was possible -- the DFs were liable in K and negligence. But there was little discussion of why. Midland Bank v. Hett is more helpful -- an examination of jurisprudence there found no unanimity in the view that solicitor liability is purely contractual. In Midland, the court quoted the famous Candler and Crane passage that appears in Hedley, and then noted that Denning was "trying to find a general principle of liability arising from relationships created by the assumption of a particular work or responsibility, quite regardless of how the relationship arose." The Midland court said that it is wholly immaterial that the DFs' duty arose because they accepted a retainer that entitled them to a fee. A review of foreign (Commonwealth) authorities shows this is the rule in Canada (Central Trust Co and Rafuse), Ireland, and Australia. Why? The tort law is "the general law." Parties can K out of it if they wish, but that doesn't change the fact that it is the "general" (default?) law. It is not distasteful that PFs be able to take advantage of the remedy most advantageous to them. Lord Browne-Wilkinson: Agrees in large part, looks at the problem through lens of fiduciary duty. Says there are K responsibilities, and then fiduciary ones, which must be respected regardless of the presence of a K (unless the K explicitly eliminates them)

scope of the extended principle of Hedley Byrne was explained by Lord Steyn approach to be adopted wrt reliance

If reliance is not proved, it is not established that the assumption of personal responsibility had causative effect. The test is not simply reliance in fact. The test is whether the C could reasonably rely on an assumption of personal responsibility by the individual who performed the services on behalf of the company.

Bourhill v Young subject of how extensive an individual's duty is to ensure others are not harmed by their activities. The case established important boundaries on the scope of recovery for bystanders, or those uninvolved with physical harm. Where a woman suffered psychiatric harm after walking onto the scene of a motorcycle accident, she was deemed not to be a foreseeable victim, having not been in immediate danger of physical harm.

In order to succeed in her claim, Mrs Bourhill had to establish a duty of care had been owed to her by Mr Young. To find such a duty, the claimant must be foreseeable, or proximate to the scene of the accident.[3] The House of Lords denied that Mrs Bourhill had been foreseeable to Mr Young, at the time of the accident. Lord Russell stated: " Can it be said that John Young could reasonably have anticipated that a person, situated as was the appellant, would be affected by his proceeding towards Colinton at the speed at which he was travelling? I think not. His road was clear of pedestrians.

Henderson v Merrett Syndicate Ltd [1994] in the present case, hurricanes in America had led to unprecedented losses for insurers. After the hurricanes, Lloyd's called upon the investors to cover their share of these losses. Litigation followed in which the names sued the people running the underwriting agents for negligent management of the investment fund. Mr Henderson was one of the names and Merrett Syndicates Ltd was one of the underwriting agents.

It was accepted that the underwriting agents had a duty Merrett Syndicates was liable to both types of shareholders, as there was enough foreseeability to extend pure economic loss liability to "un-proximate" third parties. The major significance here was, however, the allowance of claims in both contract and tort, which blurred the divide between the two. Some of the first party Names claimed in tort to overcome the three-year limit in which an action must be taken in contract. to .exercise due care and skill. TEST is objective

W v Essex [1997] does not fit well into Wilberforce criteria, nor 1ary 2ary Vs. here DOC was found, but hard to reconcile, special case. D, the council placed a known sex offender with foster parents C. C's children were abused. C made it clear that they were anxious not to put their children at risk by having a known sex abuser in their home, the social worker and D knew that and also knew that the boy placed had already committed an act or acts of sex abuse. The risk was obvious and the abuse happened.

It was plainly arguable that there was a duty of care owed to the parents and a breach of that duty by the defendants.

duty may arise in a Caparo type situation if the relationship between the claim and the purpose for which the auditors' report was prepared is close enough.

James McNaughton Paper Group Ltd v Hicks Anderson

Greatorex v Greatorex and Others [2000] D, while drunk, drove an uninsured car on the wrong side of the road. He was involved in a collision and was trapped in his car. His father (a leading fire officer) went to the scene in the course of his employment and was subsequently diagnosed suffering from severe post-traumatic stress disorder. He bought a claim against his son for damages. The court rejected the claim.

Justice Cazalet came to the conclusion that the policy requirements affecting duty of care clearly outweighed the arguments in favour of there being such a duty. He found that there was no duty of care owed by a primary victim of self-inflicted injuries towards a secondary party who suffered psychiatric illness as a result of those injuries. A primary victim does not owe a duty of care to a third party in circumstances where his self-inflicted injuries caused the third party psychiatric injury

DOC cases with statements D makes statement to X X reliance causes loss to C

Ministry of Housing v Sharp [1970] duty because D breached satutory duty Ross v Caunters [1980] DOC breached concerning fid duty, witnessing a will. instructions to Testator but loss to C Spring v Guardian Assurance plc [1994] ex employer owed DOC concerning to employee for reference letter. relied upon by future employer. policy consideration around importance of these letters and defamation claims Henderson v Merrett Syndicate Ltd [1994] providing prof services. White v Jones [1995] solicitor assumed responsibility to prepare will in time before death. caused damage to Bs since will was not prepared in time.

scope of the extended principle of Hedley Byrne was explained by Lord Steyn in: Williams v Natural Life Health Foods [1998] facts

Mr Williams and his partner approached Natural Life Health Foods Ltd with a proposal. They wanted to get a franchise for a health food shop in Rugby (i.e. they wanted to use the Natural Life brand to run a new store and pay Natural Life Ltd a fixed fee). Mr Williams was given a brochure with financial projections. They entered the scheme. They failed, and lost money. NLHF goes into liquidation, williams tries to sue manager personally.

Duty of care in complex and problematic situations:

Pure economic loss Negligent misstatements Psychiatric injury Omissions Inspectors and regulators Rescuers Impact of Human Rights legislation

EX D advises C to invest his money in Slushfund plc. The company collapses and C loses his money. In order to meet his immediate financial needs, he has to borrow at a high rate of interest.

Re member to ask who D is (e.g. a stockbroker or a friend), the social setting in which the advice is given and to consider separately the two different economic losses sustained.

Hedley Byrne v Heller [1964] conclusion

Requirements to recover pure economic loss Special relationship and reasonable reliance Special skill or knowledge Formal considered advice it should now be regarded as settled that if someone possessed of a special skill undertakes, quite irrespective of contract, to apply that skill for the assistance of another person who relies on such skill, a duty of care will arise. The fact that the service is to be given by means of, or by the instrumentality of, words can make no difference. Furthermore if, in a sphere in which a person is so placed that others could reasonably rely on his judgment or his skill or on his ability to make careful inquiry, a person takes it on himself to give information or advice to, or allows his information or advice to be passed on to, another person who, as he knows or should know, will place reliance on it, then a duty of care will arise. NOTE: on the facts of the case disclaimer was found to be sufficient enough to discharge any duty created by Heller's actions. "without responsibility" For a time after the decision in the Hedley Byrne case it was thought that damages for economic loss might be recoverable as readily as for physical damage, but this did not happen.

Spartan Steel

Spartan Steel could only recover the damages to their furnaces, the metal they had to discard and the profit lost on the discarded metal. They could not recover the profits lost due to the factory not being operational for 15 hours. Their main reasoning for this was that while the damage to the metal was "physical damage" and the lost profits on the metal was "directly consequential" upon it, the profits lost due to the blackout constituted "pure economic loss".

Spartan Steel

Statutory utility providers are never liable for damages caused by their negligence. A blackout is a common hazard and a risk which everyone can be expected to tolerate from time to time. If claims for pure economic loss in such cases were allowed, it might lead to countless claims, some of which may be spurious (the "floodgates" argument). It would be unfair to place the entire weight of many comparatively small losses upon the shoulders of one person in such cases. The law does not leave the claimant without remedy by allowing him to recover the economic losses that are directly consequential upon physical damage. other reasons Hard to calculate Hard to verify Open the floodgates Fraudulent exaggerated claims policy reasons: encourage correct actions role of insurance role of personal protection/responsibility

assumption of responsibility

TODO from textbook

Lennon v Metropolitan Police Commissioner [2004] VIMP:impact managers HR Even where there is an employment relationship or other contractual or similar relationship between the parties, a D may be found to have voluntarily assumed responsibility to advise the C on specific matters btained advice regarding the transfer from the Metropolitan Police's personnel executive officer (the "Personnel Officer"), and specifically enquired about his housing allowance entitlement (the "Allowance"). The Personnel Officer made the transfer arrangements, and Lennon's employment with the Metropolitan police ceased on 11 January 1999. Before commencing employment in Northern Ireland, Lennon took three weeks leave, which he understood to be unpaid leave. In fact, this served as a break in the continuity of his employment and he lost entitlement to the Allowance.

The Court of Appeal held that the Personnel Officer was not a 'professional advisor' within the narrow definition usually required for a Claimant to recover purely economic loss, resulting from a negligent act or omission. However, the Court of Appeal said this was a managerial position, and gave access to specific knowledge of the implications to service benefits of transfers. Furthermore, the Personnel Officer had held herself out as the person responsible for the transfer arrangements, and had not notified Lennon that this was outside her usual area of responsibility. Therefore, despite the fact that no current contract of employment existed between Lennon and the Commissioner, a similar relationship existed and a duty of care did arise. Consequently, the Commissioner, and those acting under him, were under a duty of care to give advice to Lennon which protected him from economic loss.

Alcock v Chief Constable of South Yorkshire 4 rules for 2ndV to claim

The claimant who is a "secondary victim" must perceive a "shocking event" with his own unaided senses, as an eye-witness to the event, or hearing the event in person, or viewing its "immediate aftermath". This requires close physical proximity to the event, and would usually exclude events witnessed by television or informed of by a third party, as was the case with some of the plaintiffs in Alcock. The shock must be a "sudden" and not a "gradual" assault on the claimant's nervous system. So a claimant who develops a depression from living with a relative debilitated by the accident will not be able to recover damages. If the nervous shock is caused by witnessing the death or injury of another person the claimant must show a "sufficiently proximate" relationship to that person, usually described as a "close tie of love and affection". Such ties are presumed to exist only between parents and children, as well as spouses and fiancés. In other relations, including siblings, ties of love and affection must be proved. It must be reasonably foreseeable that a person of normal fortitude in the claimant's position would suffer psychiatric damage. The closer the tie between the claimant and the victim, the more likely it is that he would succeed in this element. However, once it is shown that some psychiatric damage was foreseeable, it does not matter that the claimant was particularly susceptible to psychiatric illness - the defendant must "take his victim as he finds him" and pay for all the consequences of nervous shock (see "Eggshell skull" rule).

Walters v North Glamorgan NHS Trust [2002]

The claimant's 10-month-old son was in hospital suffering from liver failure which was the result of the defendant's admitted negligence in failing to diagnose his condition. The claimant was with her son when he had an epileptic seizure which the defendant's doctors told her was very unlikely to have caused any serious damage. The child's condition deteriorated and he was taken by ambulance to another hospital for a liver transplant, followed by the claimant in her car. On arrival she was told that her son had in fact suffered severe brain damage, which she was told on the following day was so severe that he would have no quality of life. She agreed to his life support system being turned off and he died. It was agreed that the claimant had suffered shock and a recognised psychiatric illness, namely pathological grief reaction, as a result of what she had witnessed and experienced over a period of some 36 hours between her son's seizure and his death. Could this be categorised as injury by shock - that is 'sudden appreciation by sight or sound of a horrifying event, which violently agitates the mind'? Yes, held the Court of Appeal. A realistic view should be taken of what constitutes the necessary 'event'. In this case there was a seamless tale with an obvious beginning and an equally obvious end. It was played out over a period of 36 hours, which for the claimant was undoubtedly one drawn-out experience. Accordingly, the 36-hour period constituted one entire event, albeit made up of discreet events. It was a short step for the Court to find that such a step was 'horrifying'

Murphy v Brentwood [1991] D Brentwood District Council failed to inspect the foundations of a building adequately, with the result that the building became dangerously unstable. The C, being unable to raise the money for repairs, had to sell that house at a considerable loss, which he sought to recover from the district council. The plaintiff's actions failed and it was held that the Ds did not owe duty of care to the Ps.

The decision in Murphy exposed the reality that until physical injury is caused to something other than the building or to a person, the loss is economic only and in such circumstances the test formulated in Anns was not a sufficient basis for the imposition of a duty of care to avoid causing economic loss. Since it is rare for buildings to be so badly built or, more accurately, for such defects to remain undiscovered until the building begins to collapse, it looked as if the days of multi-party litigation were over. pure economic loss not recoverable for building defects

Murphy v Brentwood [1991]

The defendant local authority failed to inspect the foundations of a building adequately, with the result that building became dangerously unstable. The claimant, being unable to raise any money for repairs, had to sell the house at a considerable loss, which he sought to recover from Brentwood District Council. This action failed as the loss was identified as a Pure Economic loss.

Economic loss cases (iv): Defective buildings and chattels: conclusions

The loss in these cases is to be classified as economic loss, even though there has been a physical effect on the building. b. There is a clear distinction between property which is defective and thereby causes damage to people or other property (damages recoverable) and property which merely is itself defective and is therefore worth less than it should be (damages not recoverable). c. Exceptionally such claims may be successful. In Junior Books the Ds were nominated as specialist sub-contractors to lay a floor in a factory being built for the Cs. The floor was unsuitable for its purpose and had to be replaced by the Cs. The Ds were held liable in T (they had no contract with the Cs) for the cost of replacement.

James McNaughton v Hicks Anderson [1991] factors for determining if a statement made can be considered N and lead to liability

The statement must be made for a specific purpose, other wise there would be no special realtionship. (1) the purpose for which the statement was made. (2) the purpose for which the statement was communicated . (3) the relationship between the advisor, the advisee and any relevant third party. (4) the size of any class to which the advisee belongs. (5) the state of knowledge of the advisor. (6) reliance by the advisee.'

relationship between the claim and the purpose of advice James McNaughton Paper Group Ltd v Hicks Anderson

adopted a more restricted approach, focusing in the adviser's actual and constructive knowledge of the purpose for which the statement was made. Thus, the duty was to be limited to transactions or types of transactions where the adviser knew or ought to have known that the advisee would rely on the statement in connection with that transaction without obtaining independent advice. It also had to be shown that the advisee did in fact reasonably rely on the statement without using his own judgment or obtaining independent advice.

Weller v. Foot and Mouth Disease Research Institute [1966] similar to Spartan Steel

another case where no compensation for pure economic loss. unable to sell cattle due to foot and mouth disease due to N from Ds.

White v Jones [1995] Assumption of responsibility

assumption of responsibility by a solicitor towards his clients was extended to the intended B of the client's will who, as the result of the failure by the solicitor to execute the will before the client's death, was deprived of the intended legacy. The case is striking because the C did not suffer a loss, but merely failed to get a financial benefit that the deceased testator had intended her to have.

Smith v Bush [1990]: "without responsibility" from Hedley is subject to UCTA

business cannot avoid liability unless reasonable. NOTE in Hedley byrne advice was free so maybe reasonable but if pay for advice, probably unreasonable

Caparo v Dickman [1990] restricts Hedley

cannot be a DOC to a statement made at large, would be too onerous. need Specific advice for specific purpose and C uses advice for purpose

Derry v Peek (1889)

could be no liability where the D had not lied or been reckless, but had merely spoken carelessly.

McFarlane v. EE Caledonian Limited [1994]

could only claim if 1. if they escaped by a whisker 2. because of sudden and terrifying nature, reasonably believer they were in danger 3.went into danger as a rescuer

Chaudhry v Prabhakar [1988]

court of appeal held that the duty of care will arise on the defendant who are the friend of plaintiff that give negligent advice to the plaintiff to selection of a second car. The defendant will liable on it, although defendant not as a professional in the mechanic area. Here however D made himself out as more knowledgeable than C. buying a 2nd hand car. here it was to a friend, but clear that it could have financial consequences.

Pure economic loss physical damage

courts are happy to find DOC physical damage=broken leg, computer

Academic criticism of the principle of assumption of risk

criticised principle of assumption of responsibility as often resting on a fiction used to justify a conclusion that a DOC exists: For this criticism two cases which were decided on special facts are cited: Smith v Eric S Bush [1990] White v Jones [1995] general criticism is overstated. Coherence must sometimes yield to practical justice. In any event, restricted conception of con in English law, resulting from combined effect of principles of consideration and privity of con, was backcloth against which Hedley Byrne was decided and principle developed in Henderson.

Attia v British Gas Plc [1988] British Gas plc were to install central heating in the Mrs Attia's home. Whilst installing the system, an employee of British Gas negligently started a fire, which largely destroyed the home and contents within. At first instance, Attia's claim that British Gas had caused her mental shock and distress was denied, with the trial judge holding that damages could only be recovered for psychiatric harm where physical harm to an individual is found.

establishing that nervous shock from witnessing destruction of personal property may be actionable. Prior to this case, NO when no personal injury or witnessing of such an event. CA ruled that D L for subsequent shock and depression of Mrs Attia, following near total destruction of her home and POSs. could recover damages for psychiatric harm, consequent on damage to her home. Bingham LJ noted that decision was breaking new ground, but nevertheless held it was a modest extensio. Insistence that psychiatric damage must be reasonably foreseeable, coupled with clear recognition that a C must prove psychiatric damage as I have defined it, and not merely grief, sorrow or emotional distress, will in my view enable good sense of judge to ensure, Debatable if this can hold after decision in Alcock, PI fails for loss of bro, here house succeeds!!

Junior Books Ltd v Veitchi Co Ltd [1983] D, specialist-flooring contractors negligently laid a floor in C's factory. D as specialist flooring contractors knew what products were required and were alone responsible for the composition and construction of the floor. C suffered loss and damages, such as the cost of removal of machinery and loss of profits while the floor was being re-laid. VIMP for 3 requirements however scope has been limited

exceptions for PEL flooring laid badly. cost of replacing flooring was PEL, normally unrecoverable HL says can be recovered if: 1. proximity (cf Spartan Steel where there was no proximity, parties were randomly thrown together) 2. PEL reasonably forseeable 3. no policy reasons to preclude recovery.

psychiatric injury: general rule

harm suffered by a perception of events will not be treated as a DOC. only arises when the loss is a medically recognized condition.

Spartan Steel

held that in this type of case the distinction between pure and consequential economic loss had not been affected by the Hedley Byrne case. If the Ds carelessly cut off power to a factory by damaging the power supply (i.e. by damaging property belonging to the power company and not to the C) then it was important to see how it came about that the factory had to close for a period. If the closure and economic loss resulted from foreseeable physical damage to the machinery or other property of the C (e.g. because the factory could not reopen until the machines had been cleaned out), then damages were recoverable for the lost production. If the closure and economic loss resulted simply from the lack of power, then it was 'pure' economic loss and damages were not recoverable. danger of indeterminate liability because a large number of factories might be affected.

Anns v Merton London Borough Council [1978] Anns (in so far as it concerned economic loss) and most similar cases were overruled by the HL in Murphy. The Junior Books case was not overruled, although its correctness has been doubted by the HL.

held to be liability on the part of builders who had constructed buildings inadequately, and of building inspectors employed by local councils who had approved the construction, in respect of losses sustained by ultimate Ps who were not in any contractual relations with the Ds.

scope of the extended principle of Hedley Byrne was explained by Lord Steyn in: Williams v Natural Life Health Foods [1998] held that for there to be an effective assumption of responsibility, there must be some direct or indirect conveyance that a director had done so, and that a claimant had relied on the information. Otherwise only a company itself, as a separate legal person, would be liable for negligent information.

held unanimously that Mr Williams claim would fail. They emphasised that there had been no separated assumption of responsibility directly to Mr Williams, and no requisite reliance. Lord Steyn's judgment was as follows. " . . What matters is not that L of shareholders of a company => sep entity. Whether principal is a company or a natural person, someone acting on his behalf may incur personal L in T as well as imposing vicarious or attributed L upon his principal. under principal of Hedley Byrne, which requires existence of a special relationship between C and Tfeaser, it is not sufficient that there should have been a special relationship with principal. There must have been an assumption of responsibility such as to create a special relationship with director or Ee himself

Smith v Eric S. Bush loss to homeowner, advice to bank

house purchaser, who wished to obtain M finance from a bank, sued a surveyor who had been commissioned by the lending institution to provide a report to the bank about the property. The surveyor was held to owe a duty to the purchaser and not just to the bank, even though buyer had been advised about the desirability of obtaining her own survey but had not done so. exclusion words did amount to an exclusion clause and did not satisfy the test of reasonable (s.11 of the 1977 Act, unfair contracts Act).

factors which might have led the HL to come to different decisions in Caparo v Dickman and Smith v Eric S Bush.

i. the social importance of the situations ii. the sort of people likely to be involved: house Ps or takeover bidders iii. the number of potential Cs if there is negligence.

RELIANCE

if C would have done same thing no reliance JEB Fasteners Ltd v Marks Bloom

negligent mis-statements To whom is there liability?

loss may be suffered by someone other than those to whom the advice or information was addressed. Two decisions of the HL can be contrasted: Smith v Eric S. Bush (a firm) [1990] 1 AC 831 and Caparo Industries v Dickman [1990]

Galli-Atkinson v Seghal [2003] Claimant's 16 year old daughter killed in a crash. Claimant arrived after daughter removed from the scene. Hysterical, taken to mortuary, saw the body, which was badly disfigured.

n the present case, the immediate aftermath, in my view extended from the moment of the accident until the moment that the Appellant left the mortuary. The Judge artificially separated out the mortuary visit from what was an uninterrupted series of events, quite unlike the visit to the mortuary in Alcock.If the whole of that sequence of events played a part in producing the illness then the Appellant is entitled to succeed in her claim." Causation by direct perception cf Alcock established that not sufficiently proximate if through TV screen. This contradiction has been criticized as arbitrary.

3rd Wilberforce criteria from Alcock Manner of perception

need to see accident not sufficient to be told of bad news, or witness in mortuary must witness accident not consequences in Altcock, television is not sufficient. Generally in television cannot generally tell the result. Not a sufficient manner of perception.

Economic loss cases 4 categories

negligent mis-statements performance of a service damage to another's property Defective buildings and chattels

Alcock v Chief Constable of South Yorkshire Police [1992] A further action following the Hillsborough tragedy brought by those that helped at the scene. cf White

obiter:that may be DOC in a particularly horrific accident, but this was rejected in McFarlane Rescuers should continue to qualify on policy grounds even though they were not in a close relationship with the victim. Friends and relatives raised the spectre of the "floodgates" argument, and the fear of opening up unlimited liability. 3 "control mechanisms" which limit those who can recover damages for psychiatric injury brought upon by the death or injury to loved ones. These are, close ties of love and affection, presence at the event or its aftermath and causation of the shock by direct perception of the event. Also need to have "nervous shock" i.e. the sudden appreciation by sight or sound of a horrifying event. (Lord Ackner.) One of the Alcock claimants failed as he did not produce evidence of his ties of love and affection to the two brothers that he had witnessed dying. Lord Oliver openly used the word "policy" in explaining his decision. established that not sufficiently proximate if through TV screen.

Dooley v Cammell Laird

plaintiff was entitled to recover in those circumstances. Cammell Laird were in breach of the regulations. one of which was made as a protection against the risk of bodily injury which included injury to the nerves, the nerves being a part of the body. Donovan J said: "I suppose I may reasonably infer that his fellow workmen down the hold were his friends," Mr Dooley was the unwitting agent of the defendant's negligence. He was the crane driver who, without any fault, was party to an accident which could have killed his fellow workers. It was his activity in operating the crane which caused the actual and potential damage. It was that activity which brought him into the category of persons for whom the defendants owed a duty of care, not really any question of relationships of friendships.

scope of the extended principle of Hedley Byrne was explained by Lord Steyn approach to be adopted wrt to assumption of risk

point was elucidated in Henderson by Lord Goff of Chieveley. He observed, at [1994] 2 AC 145, 181B-C: "... especially in a context concerned with a liability which may arise under a contract or in a situation 'equivalent to contract,' it must be expected that an objective test will be applied when asking the question whether, in a particular case, responsibility should be held to have been assumed by the defendant to the plaintiff" The touchstone of liability is not the state of mind of the defendant. An objective test means that the primary focus must be on things said or done by the defendant or on his behalf in dealings with the plaintiff. Obviously, the impact of what a defendant says or does must be judged in the light of the relevant contextual scene. Subject to this qualification the primary focus must be on exchanges (in which term I include statements and conduct) which cross the line between the defendant and the plaintiff. Sometimes such an issue arises in a simple bilateral relationship. In the present case a triangular position is under consideration: the prospective franchisees, the franchisor company, and the director. In such a case where the personal liability of the director is in question the internal arrangements between a director and his company cannot be the foundation of a director's personal liability in tort. The enquiry must be whether the director, or anybody on his behalf, conveyed directly or indirectly to the prospective franchisees that the director assumed personal responsibility towards the prospective franchisees example of such a case being established is Fairline Shipping Corp v Adamson [1975]

McLoughlin v. O'Brian [1983] not at scene of accident, case was unique at time because C suffered injuries away from scene of accident and hours after accident occurred. a friend came to C's (C's) house to tell her of a serious accident involving her H and three children, two hours after it had occurred. He drove her to hospital where she saw her daughter dead and her H and two other children seriously injured, all still covered in oil and mud. suffered nervous shock.

policy restrictions for 2ndary V Dearness, hereness and nearness Vs were still in same bloody state (Lord Wilberforce delivering the leading speech) gave judgment in favour of the plaintiff and laid out a test to determine whether somebody not directly involved in the accident could recover for nervous shock. test required firstly a close relationship between the plaintiff and the victims of the accident, a criterion met in this case due to the close family ties. requires close ties must show strength of relationship, ok for husband wives or parents, but extra evidence required for other claims. The test further required that the plaintiff was in close proximity to the accident in time and place. Although McLoughlin was not at the scene of the accident, it was held that witnessing the immediate aftermath, as she had done, was sufficient: '[insisting] on direct and immediate sight or hearing would be impractical and unjust'. A final requirement was that there was 'proximity by sight or hearing' to the accident or, as in this instance, to its immediate aftermath.

Page v Smith [1996] primary v secondary victims

primary: was in the area and in danger of being harmed physically. D must take V as he finds him. must not show that V is as ordinary man. courts have kept this category limited 2ndary V are onlookers must show that nervous shock was reasonably forseeable to a P of customary flem. policy restrictions in McLoughlin

Weller v Foot and Mouth Disease Research Institute [1966] decision against recovery of economic loss soon after Hedley Byrne v Heller

principle of the CL that a duty of care which arises from a risk of direct injury to person or property is owed only to those whose persons or property may foreseeably be injured by a failure to take care is not affected by the decision in Hedley Byrne ; in order to have a right of action for N a C must show that he was within the D's duty to take care, and he may then recover by way of damages for the direct and consequential loss reasonably foreseeable, but, though proof of direct loss is not an essential part of the claim, he must establish that he was within the scope of the D's duty of care Held: (i) an ability to foresee indirect or economic loss to another person as the result of a D's conduct did not automatically impose on the D a duty to take care to avoid that loss; in the present case the Ds were not liable in N, because their duty to take care to avoid the escape of the virus was due to the foreseeable fact that the virus might infect cattle in the neighbourhood and thus was owed to owners of cattle, but, as the Cs were not owners of cattle, no such duty was owed to them by the Ds.

Muirhead v Industrial Tank Specialities [1985] manufactured motors for pumps which were incorporated in a tank for the storage of lobsters which was installed at the plaintiff's fish farm. The motors, being unsuited to UK voltages, cut out and the plaintiff's entire lobster stock died from lack of oxygen. The plaintiff claimed, inter alia, damages from the third D in negligence for the loss of the lobsters and the economic loss, including loss of profit, resulting therefrom. The trial judge held that the third D was liable to the plaintiff in respect of the pure economic loss. The third D appealed.

refines Junior books by adding that some reliance is also required said that damages in negligence for pure economic loss could be recovered only if there were such a very close proximity of relationship between the parties and reliance by the plaintiff on the D that the D was to be taken voluntarily to have assumed direct responsibility to the plaintiff. The ultimate P of goods supplied unde a chain of ordinary sale contracts could recover such damages only from his immediate V, since such proximity and reliance would not arise between him and the manufacturer, and accordingly the plaintiff could not recover his economic loss from the third D.

White v Chief Constable of South Yorkshire Police [1999] D the Chief Constable and employer of 4 officers, C who had all suffered post traumatic stress disorder as a result of their involvement in the aftermath of the Hillsborough Football Stadium disaster. D admitted that the disaster had been caused by police negligence.

rejects primary V claims from employees against employers against rescuers not in danger court felt there would be public outcry to allow police to succeed in this case D owed officers under him a duty analogous to that of an employer to care for the safety of employees and to take reasonable steps to protect them from physical harm, but there was no extension of that duty to protect from psychiatric injury where there was no breach of the duty to protect from physical injury. It was not possible to classify C as primary victims, since none of them were at any time exposed to personal danger nor reasonably believed themselves to be so. Recognition of C's claims would significantly widen the established categories of cases for which damages could be recovered for pure psychiatric harm and to allow the claims would not fit easily with the decision in Alcock v Chief Constable of South Yorkshire [1992] to deny compensation to bereaved relatives of victims of the disaster who had not witnessed events at first hand or acted as rescuers.

Candler v Crane, Christmas [1951]

relied on the case of Derry v Peek to refuse a remedy to the plaintiff, holding that loss resulting from negligent misstatement was not actionable in the absence of any contractual or fiduciary relationship between the parties. PEL cannot be recovered Denning LJ delivered an important dissenting judgment, arguing for a duty of care for N statements. This was later upheld in Hedley Byrne v Heller

Proximity in time and space cases from 2nd criteria in McLoughlin (Dearness, Nearness, hereness)

some inconsistency Boardman v Sanderson [1964] Walters v North Glamorgan NHS Trust [2002] Galli-Atkinson v Seghal [2003]

Derry v Peek [1889] a company prospectus the defendant stated the company had the right to use steam powered trams as oppose to horse powered trams. However, at the time the right to use steam powered trams was subject of approval of the Board of Trade, which was later refused. The claimant purchased shares in the company in reliance of the statement made and brought a claim based on the alleged fraudulent representation of the defendant.

statement was not fraudulent but made in the honest belief that approval was forthcoming. Lord Herschell defined fraudulent misrepresentation as a statement which is made either: i) knowing it to be false, ii) without belief in its truth, or iii) recklessly, careless as to whether it be true or false.

negligent mis-statements When is there liability? lack of care required

tends to focus on the existence of the duty, but D is liable only if there is a lack of care. Much advice on economic matters turns out to be wrong without being careless. The D has the opportunity to explain the limits of his knowledge and the amount of research he has undertaken and is to be judged according to what he Pd to do. It also has to be shown that the N advice or information was a cause of the C's loss.

Liability for psychiatric injury : old label nervous shock Dulieu v White

that the statement of claim disclosed a good cause of action against B. Mere fright not followed by consequent physical damage will not support an action, but if it is followed by consequent physical damage, then, if the fright was the natural result of the Ds' negligence, an action lies, and the physical damage is not too remote to support it. Per Phillimore, J.: Where there is a legal duty on the D not to frighten the plaintiff by his negligence, then fright with consequent physical damage will support an action. .

Yianni v Edwin Evans

young and experienced buyer relied on advice. judge found the surveyor liable, even though the building society, and not the P, had employed him. The surveyor knew, however, that the advance would be granted only if his report were favourable and that it was unlikely the P would obtain his own survey. The surveyor was therefore held to have a duty to both Yianni and to the building society. Since this decision, lenders have made valuation surveys available to prospective Ps, thus widening the liability of surveyors.