Its a complete notes for pure economic loss, structured in way easily understandable and to use as guidance for essays writing or problem question. Its included recent case and update. All you need to know about in pure economic loss is in one complete note. Further, this area of pure economic loss...
General rule: there is no DOC to avoid causing PEL. If you Cts held (unanimous) that first two heads of damage Defective Property - Eco Loss caused by acquiring
want to protect your wealth then make a ctt. was perfectly recoverable but the 3rd was not. No duty Defective Property involves no damage to persons or
for relational eco loss. property other than to the defective property itself. If
Consequential Eco Loss someone loses money because they acquired defective
Eco loss that is consequent upon physical damage Policy reason for denying PEL that judge gave was: property, their normal remedy is through the law of ctt.
presents few problems. You can recover from this form • Encouraging ‘self-help’ attitudes - it was said that Won’t be able to bring a claim through neg.
of eco loss. Flows from personal injury or property interruption in essential facilities could be caused by (Irrecoverable in neg)
damage. E.g. D’s neg causes C to be injured so that they a variety of hazards, and they said those effected like Old law: wrong classification as property damage for
have to take time off work and lose money. This eco loss our Cs should either take precaution (ie. installed a defective foundation
is consequential upon C’s personal injury and is backup generator in case the power is cut off) or Anns v Merton LBC [1978] (failure to inspect
recoverable. work hard afterwards to make up the loss or they foundation)
could take out an insurance beforehand (business LBC was responsible for inspecting and approving
Pure Eco Loss interruption insurance) building plans. Their neg resulted in the block of flats, at
PEL is financial damage suffered as a result the negligent • Problems of proof/ fraud- the Cs are claiming for which the C was a tenant, being built with inadequate
act of the other party which is not accompanied by any loss of profit, but what if one of the melts were not foundation. In suing the local council, the C argued that
physical damage to a person or his property. This going to be in use anyway, and they melted it just to the structural defect was a threat to health and safety.
involves a reduction in holdings of non-tangible wealth. recover greater losses. The decision in Anns further eroded the rule against
Money is low-down in the list of protected interests so • floodgates - this would create a flood gate of Cs that liability for PEL. In Anns, where the claim was for loss
there are restrictive rules on recovery. used the electric facilities. incurred due to a defective property, the House had
• Deserving and undeserving cases- property damage classified the loss sustained as property damage and
Relational eco loss - Relational eco loss is financial loss and personal damage are deserving, whilst eco loss consequential eco loss. This classification of loss was
that results from damage to another person’s property. is undeserving. wrong. Loss arising out of a defective property is PEL. A
It is irrecoverable. Only a person with a possessory or • Attempt to ‘plug the lacuna’ per Goff LJ – re the so- defective property loss its value.
proprietary right to the property may sue. called ‘principle of transferred loss’: (not accepted in
Spartan Steel v Martin [1973] (CA) (electricity cable England 5:0 rejected) The high-point of recovery: allow claim for defective
severed; melts in furnace destroyed) property which PEL if – proximity between parties,
D (Martin) were an excavating company and they hit an What if the Cs had owned the power cable? - It would relying on their skill and judgement and damage was
electricity cable negligently leading to C’s have been consequential harm, damage to their own direct and foreseeable consequence
company having no power for approximately 4 hrs. The property! Junior Books v Veitchi [1983] (defective floor)
electricity broad owns the essential facility. Spartan Other reasons: C engaged a general contractor to build a factory. C
steel company had huge furnaces containing molten • Free market economy - the aim of most businesses nominated the D, a specialist flooring company, as sub-
metal which had solidified inside which had to be wasted is to get people to lose money, to get higher profit. contractors to lay the flooring at the factory. The floor
and thrown away. Spartan steel company claim for: Overall when someone losses money, it means proved defective but as there was a ctt only between the
1. Lost value of the molten metal that had to be someone else in the market is gaining money. C and main contractors, there was no contractual r/ship
wasted Whereas personal injury and property damage between the C and the sub-contractors. Accordingly, the
2. Lost profits that would’ve been made on this causes loss but doesn’t cause a benefit to someone D were obliged to bring an action in delict, arguing that
potential metal else. sub-contractors owed them a non-contractual DOC. Cts
3. Lost that could’ve been made during the 4 hour • Christian Witting’s personality thesis - people spend allowed a claim in tort for PEL caused defective flooring
power outage. (that is PEL it’s not consequential on money buying things and that represents there against a subcontractor. The decision was justified on
any property damage). personality. So property is more important because grounds that the proximity between the parties was
it reflects personality rather than money. extremely close falling only just short of a direct
, contractual r/ship “akin to contractual r/ship”. The C COA overturned this application of Junior Books, on the Exp: Defect went on to cause other property damage,
had nominated the D relying on their skill and ground that Junior Books depended on its own unique Complete Structure Doctrine
judgement. The D were aware of this reliance and the and particular facts and has very limited application Alternative: Ctt or S1 DPA 1972
damage was a direct and foreseeable consequence of (applies only where the degree of proximity is so great) D & F Estates Ltd. v Church Commissioners for England
their neg. This expansion of liability was widely criticised and could not be used to allow the present claim for it [1989] (peeling plaster)
and post Junior Books the Cts, having now long realised was PEL. The court held that C could only recover D, The Church Commissioners owned a block of flats
that the expansion of liability had gone to far, began to foreseeable physical/property damage (ie. lobster) he built by a firm of contractors. The plastering work was
reign in liability for PEL in tort. had suffered and any consequential eco loss he had sub contracted. Fifteen years after the property was
suffered as a direct result of that physical/property built it was found that the plastering work was defective.
Cts in cases where facts were similar to that of Junior damage. C, leased the property from the D. As result of peeling
Books but refused to follow the ruling in Junior Books plaster, C had to re-plaster the wall, clean carpets of
thus Junior Books distinguish in following cases: Simaan General Contracting v Pilkington Glass (curtain plaster flakes and suffered rent loss. C tried to claim
Muirhead v Industrial Tank Specialities (lobster) glass walling be a particular shade of green) losses against subcontractor who carried out the plaster
C engaged ITS (1st D) to design, supply and install a fish The C were the main contractors on a building project in work negligently under tort, as there was no direct
tank in which C would store the lobsters. The tank Abu Dhabi. It was a term of the ctt with the building contractual r/ship between them. COA - A contractor
needed an electric pump to circulate the seawater for owner that the curtain glass walling be a particular may have contractual or statutory duty to supervise, but
the purpose of oxygenation. ITS (2nd D) subcontracted to shade of green, as green is the colour of peace in Islam. not necessarily in tort. A main contractor will not have
supplied the pumps to ITT. Each pump consists of an The C engaged a firm to obtain and erect the glass. This responsibility in tort for failure to supervise the acts of a
impeller driven by an electric motor which manufacture firm ordered the glass from the D. The glass was of the sub-contractor where it would be unreasonable to
by the LSEM (3rd D). Unfortunately, the motors supplied wrong colour and this caused extra expense to the C in expect him to provide supervision. HOL - The claim failed
were designed for use in France where they use a lower his performance of his ctt with the building owner. The in that the C’s losses were purely eco as the peeling
range of voltages than those used in England. firm glass erectors went into liquidation, which plaster was defect and not damage in itself. Further,
Consequently, the pumps failed and despite the constant prevented a ctt action against them. The C sued the D in the peeling plaster was not a latent (hidden) defect [so
attempts by the C and a local electrician to keep them neg. The action failed, as the C were unable to show that C can repair].
going, the pumps failed. This resulted in the death of the the D had assumed any responsibility to them. The
whole stock of lobsters from lack of oxygen, the lobsters absence of a ctt between C and D was fatal. Ld. Bridge said A builder of permanent structure can only
suffocated or got boiled alive. C first sue the 1st D and be liable for a dangerous defect if it is hidden defect
successfully establish liability but the company was Greater Nottingham Co-operative Society v which cause personal injury/damage to other
insolvent, so the C claim then proceed against 2nd D and Cementation Piling and Foundations (pile driving to property. (ie. drawing analogy to Donoghue v Stevenson
3rd D for: extend premise) – bottle can’t examine which latent – dangerous – went
1. The cost of the pumps C entered a ctt to have their premises extended. D were on to injury) If the defect is discovered before it caused
2. The cost of cooking and refrigerating the salvaged nominated sub-contractors for the pile driving. There damage, any loss suffered repairing the defect is purely
lobsters. was a ctt between the C and the D in respect of materials eco. The exception to the rule where damage would be
3. The cost of the electrician who attended the pumps. and design. D carried out the work negligently with the recoverable if it could be shown that the defect went on
4. The cost of attending to the pumps themselves. result that the C suffered eco loss. The ctt did not cover to cause other property damage (such damage to other
5. Loss of interest on capital deployed. the way in which the loss came about and the neg action furniture or part of property). This is also known as the
6. Loss of profit on intended sales. failed as the ctt was conclusive as to the party’s rights. complex structure doctrine. An alternative way to claim
7. The value of lost lobsters. if case not satisfied the requirement or not within the
8. Damages for the inconvenience and anxiety suffered GR: Only can be liable for dangerous defect if it is latent exception – by ctt or S1 DPA 1972.
by C. defect which cause Personal Injury/Damage to Property
(Consequences Eco Loss)
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