• There are a number of situations where because of, for instance, the nature of the loss or the
identity of the defender, the court may refuse to recognise the existence of duty between
defender (duty of care owed by) and pursuer (to whom a duty of care may be owed).
• Alternatively, a duty might be recognised but only if additional requirements over and above
reasonable foreseeability are met.
• Such problems arise where the loss suffered is purely economic (referred to as “pure
economic loss”) or purely psychiatric (“mental or psychiatric harm”) rather than physical.
• It may be difficult to establish the existence of duty if the defender is a public authority.
Pure economic loss
Intro:
Pure economic loss is regarded as pecuniary (i.e. monetary) loss which arises from a negligent act
without resultant personal injury to the pursuer or damage to his/her property. Not been harmed and
nothing has been damaged, but you have lost money.
A claim in delict is generally not available in these cases.
The justification for restricting claims for pure economic loss lies in that it would open the flood gates
to potentially massive claims for minor breaches of duty.
(a) Situations in which recovery is generally not permitted
(i) Damage to Property Not Belonging to the Pursuer
All involve power cuts:
• Spartan Steel v Martin [1973] QB 27; [1972] 3 WLR 502; [1972] 3 All ER 557
Spartan Steel were a steel company and the cable which provided the electiricty for their
factory was cut negligently and they lost power for 15 hours. This caused 3 different losses to
the company:
1. There was already metal in their electric furnaces and when the power was cut the metal
turned solid and could not be recovered so they lost the metal.
2. The furnaces were damaged when the metal cooled.
3. For 15 hours the company was unable to function, the facotry was closed and not making
money.
The company sued on all 3 grounds for the compensatin for the metal lost, the damage caused
and for 15 hours when they would have been working and made money. The court said they
were entitled to claim for loss of metal, damage to the furnaces but not for the 15 hours of
, work lost as the loss was purely a matter of time so purely economic. Not able to quantify the
loss, it was uncertian.
• Dynamco v Holland 1971 SC 257; 1972 SLT 38
Cable was cut but the furnaces of Dynamco were not being used at the time so no material
damage, no machine damage, no product was lost, just lost time which was pure economic
loss. Only loss was pure economic loss as cable belonged not to the pursuer but to the
electricity board. Only material damage loss in this case was the property of the electricity
board, so not loss to Dynamco.
• SCM v WJ Whittal [1971] 1 QB 337
It was a steel manufacturing factory where the power was cut when metal was in furnaces
and were able to claim the damages to loss of metal.
• Coleridge v Miller Construction 1997 SLT 485
Coleridge was a glass factory and Miller Construction had cut the power cable to their factory.
They were manufacturing glass and all glass is in the furnaces were lost and as the glass cooled,
it damaged the furnaces and so had to be replaced. In this case there is material loss as
physical harm to the furnaces and glass.
• East Lothian Angling Association v Haddington Town Council 1980 SLT 213
Haddington Town Council started pumping sewage and the East Angling Association said it
was effecting the sale of angling permits. They claimed that a duty of care existed here needed
money in the sale of permits.. they had lost money, lost cash but because there is no
proprietary loss, then not recoverable..
(ii) Personal Injury to Another
• Reavis v Clan Line Steamers 1925 SC 725; 1925 SLT 538
A ferry sailing from Glasgow to Londonderry in Northern Ireland. A jazz orchestra was onboard
and they had been formed and owned by Mrs Reavis. Halfway, the ship collided with another
ship and sank. Several key members were drowned with many others injured and Reavis sued
the ship company and said that she had suffered financial loss from the death of the members.
She said that the orchestra members who had died were no longer working for her and that
caused a financial loss.
The court cleared it out as you cannot sue for personal injury that the person has not suffered.
If Mrs Reavis had been injured she could have sued, but she cannot sue because her
employees are injured. She had only suffered economic loss, therefore there was no right or
basis to sue. Effectively no damage suffered by Reavis, only pure economic loss.
• Islington LBC v UCL Hospital [2005] EWCA Civ 596
Had a stroke induced to some extent by poor advice given to her by the hospital. Since she
had suffered a stroke, she had to be put into permanent institutional care run by the Islington
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