Saturday, August 06, 2005

Physical Damages & Economic Loss

Whereas , the existence of a duty of care not to cause economic loss requires special analysis, it may be that the criteria applicable to cases of physical damage and to cases of economic loss are the same,viz., that the damage should be reasonably foreseeable, that the relationship between the parties should be sufficiently proximate and that it should be fair, just and reasonable to impose a duty of care.( Marc Rich vs Bishop Rock Marine (1994) 1 W.L.R. 1071 (C.A.).

Liability for Physical Damages

In the absence of a contractual duty or a special relationship of proximity, a builder owes no duty of care in tort in respect of the quality of his work. (D. & F. Estates vs Church Commissioners (1989) A.C. 177 (H.L.); Murphy vs Brentwood District Council (1991) 1 A.C. 398 at 480 (H.L.). The principle does not extend to bring home liability towards an occupier who knows the full extend of the defect yet continues to occupy the building. A landlord who is responsible for the design and construction of a house let by him is under a duty to take reasonable care that the house is free from defects likely to cause injury to any person whom he ought reasonably to have in contemplation as likely to be affected by the defects. (Rimmer vs Liverpool City Council (1985) Q.B. 1 (C.A.).

“ Knowledge of the existence of a danger does not always enable a person to avoid the danger. In simple case it does. In other cases, especially where building are concerned, it would be absurdly unrealistic to suggest that a person can always take steps to avoid a danger once he knows of its existence, and that if he does not do so he is the author of his own misfortune…Knowledge, or opportunity for inspection, does not by itself always negative a duty of care or break the chain of causation. Whether it does depends on all the circumstances. It will only do so when it is reasonable to expect the plaintiff to remove or avoid the danger and unreasonable foe him to run the risk of being injured by the danger. (Sir Donald Nicolls V.-C. in Target vs Torfaen Borough Council (1992) 3 All E.R. 27 at 37 (C.A.).

Personal Injury

A contractor will be liable if a plaintiff suffers personal injury because of the contractor’s negligence. Where contractors carrying out reconstruction works obstructed the normal approach to a house so that it was impassable, they were held liable when a visitor was injured while using a dangerous alternative route suggested by the contractors’ workmen.(A.C. Billings Ltd. Vs Riden (1958) A.C. 240 (H.L.); George Hawkins vs Chrysler (U.K.) (1986) 38 B.L.R. 36 (C.A.).

Physical Damage to Property

“In most claims in respect pf physical damage to property the question of the existence of a duty of care does not give rise to any problem because it is self-evident that such a duty exist and the contrary view is unarguable. (Lord Brandon in Mobil Oil Hong Kong United Dockyards (1991) 1 Lloyd’s Rep. 309 at 328 (P.C.).

Negligent instructions

An architect or engineer who issues instructions which he knows or ought to know are likely to cause injury to person or property may be liable in negligence if injury results.(Clay vs A.J. Crump & Sons (1964) 1 Q.B. 533 (C.A.)

Economic Loss

Economic loss is monetary loss and pure economic loss is monetary loss unrelated to physical injury to person or “other” property.

‘ the affliction of physical injury to person or property of another universally requires to be justified. The causing of economic loss does not. If it is to be categorized as wrongful it is necessary to find some factor beyond the mere occurrence of the loss and the fact that its occurrence could be foreseen. (Lord Oliver in Murphy vs Brentwood District Council (1991) 1 A.C. 398 at 487 (H.L.).

Pure economic loss may be recoverable against a party who owes the loser a relevant contractual duty. “ But it is not recoverable in tort in the absence of a special relationship of proximity imposing on the tortfeasor a duty of care to safeguard the plaintiff from economic loss.”(Lord Bridge in Murphy vsBrentwood District Council (1991) 1 A.C. 398 at 475 (H.L.)

The loss sustained by a building owner from an ordinary building defect is the cost of rectifying the defect.

Consequential Economic Loss

Economic loss which is consequential upon actionable physical damage to person or property is sometimes recoverable. Consequential economic loss is habitually awarded in personal injury case ,e.g. for future loss of earnings. It has also been awarded in commercial cases , but there is no clear principle to determine when such losses are recoverable and when it is not.

Liability for negligence of sub-contractors

A main contractor is not generally liable, other than in contract, for the negligence of his sub-contractors. But, “ if in the course of supervision the main contractor in fact comes to know that the sub-contractor’s work is being done in a defective and foreseeably dangerous way and if he condones that negligence on the part of the sub-contractor, he will no doubt make himself potentially liable for the consequences as a joint tortfeasor.(Lambert vs Lewis (1982) A.C. 225 at 278 (H.L.).

Professional negligence

Breach of a professional person’s obligations to his client is habitually referred to as professional negligence. It has now been held that persons who perform services of a professional or quasi-professional nature possessing a special expertise may assume responsibility giving rise to a tortious liability irrespective of whether there is a contractual relationship between the parties, so that the plaintiff may choose between concurrent remedies in contract or tort. (Henderson vs Merrett Syndicates Ltd. (1994) 3 W.L.R. 761 (H.L.).

This understanding of the law has been applied by Official Referees to architects and engineers. (Wessex Regional Health Authority vs H.L.M. Design (1994) 10 Const.L.J. 165 at 186).

Everyone who enters into a contract assumes responsibilities and the essence of the law under discussion is that concurrent duties in tort are also co-existence with those in contract.

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