Pure economic loss

Pure economic loss

1. Not recoverable when result of damage to 3rd party property - Spartan Steel v Martin & Co 1973 (lost profits from cut elec. cable)

2. Not recoverable when no physical damage - Weller & Co v Foot & Mouth Disease Research Inst 1966 (closed cattle market because D allowed F&M to escape

3. Purchased house, discovered major flaws

   • Old law: Can recover against council - Anns v Merton 1978
   • Good law - No recovery for PEL Murphy v Brentwood DC 1991
   • Special case - Proximity of relationship meaning tortfeasor has duty to safeguard C from PEL - Junior Brooks v Veitchi 1983

4. Negligent statement

   • Hedley Byrne & Co v Heller 1964 - D (bank) testifies to C of creditworthiness of third party, goes into liquidation, loss to C
     • HL found DoC exists (but C failed due to D's exclusion). Special relationship between giver and receiver of advice
       • D assumes responsibility due to special skill, knows of C's reliance
         • C reasonably relies on advice
     • Can apply outside business context: Chaudhry v Prabhakar 1989 (Friend's advice about second-hand car, when friend holds himself out to have knowledge)
     • DoC owed by health inspector to B&B who have unnecessary works done on his insistence - Welton v North Cornwall DC 1997
   • Caparo v Dickman 1990 - Four part test for special relationship
     • 1. Adviser knows purpose of advice
     • 2. Adviser knew advice would reach the advisee (specifically or as class of persons)
     • 3. Advisor knew advisee was likely to act on advice without further inquiry
     • 4. Advice actually acted on to advisee's detriment
     • Extension - Advice provided to third party at C's detriment (employment reference) - Spring v Guardian Assurance Plc 1995
     • Extension - duty from will-drafter to beneficiary not to delay in task - White v Jones 1995