Wednesday, November 08, 2006


Tuesday 7 November 2006

We continued with our consideration of a pure economic loss. In Murphy v Brentwood DC (1991) a seven judge House of Lords overruled their own previous decision in Anns v Merton BC. Briefly, it was held that a local authority is not liable in negligence to a building owner or occupier for the cost of remedying a dangerous defect, which resulted from the negligence of the authority in not ensuring that the building was erected in accordance with building regulations.

In 1970 the claimant purchased from a construction company one of a pair of semi-detached houses newly constructed on an in-filled site on a concrete raft foundation to prevent damage from settlement. The plans and calculations for the raft foundation were submitted to the local council for building regulation approval prior to the construction of the houses. The council referred the plans and calculations to consulting engineers for checking and on their recommendation approved the design under the building regulations and byelaws. In 1981 the claimant noticed serious cracks in his house and discovered that the raft foundation was defective and that differential settlement beneath it had caused it to distort. The claimant was unable to carry out the necessary repairs to the foundation, which would have cost £45,000, and in 1986 the claimant sold the house subject to the defects for £35,000 less than its market value in sound condition. He brought an action against the council claiming that it was liable for the consulting engineers’ negligence in recommending approval of the plans and alleging that he and his family had suffered an imminent risk to health and safety because gas and soil pipes had broken and there was a risk of further breaks. The judge, who found as a fact that the claimant had been exposed to an imminent risk to health and safety, held the council liable for the consulting engineers’ negligence and awarded the claimant damages of £38,777, being the loss on the sale of the house and expenses. The council appealed to the Court of Appeal, which held, following existing House of Lords authority, that the council owed a duty of care to the claimant to see that the house was properly built so that injury to the safety or health of those who lived in it was avoided and that it was in breach of that duty when it approved plans for a defective raft foundation. The court accordingly dismissed the appeal. The council appealed to the House of Lords.

It was held that when carrying out its statutory functions of exercising control over building operations a local authority was not liable in negligence to a building owner or occupier for the cost of remedying a dangerous defect in the building which resulted from the negligent failure of the authority to ensure that the building was designed or erected in conformity with the applicable standards prescribed by the building regulations or byelaws but which became apparent before the defect caused physical injury, because the damage suffered by the building owner or occupier in such circumstances was not material or physical damage but the purely economic loss of the expenditure incurred either in remedying the structural defect to avert the danger or of abandoning the property as unfit for habitation, and, since a dangerous defect once known became merely a defect in quality, to permit the building owner or occupier to recover his economic loss would logically lead to an unacceptably wide category of claims in respect of buildings or chattels which were defective in quality, and would in effect introduce product liability and transmissible warranties of quality into the law of tort by means of judicial legislation. The council accordingly had owed no duty of care to the claimant when it approved the plans for a defective raft foundation for the claimant’s house. The appeal would therefore be allowed. Anns v Merton London Borough Council [1977] overruled.

Two years earlier their Lordships reached the same decision in D & F Estates v Church Commissioners [1989]. The claimants complained that the plaster had fallen from the walls of their new flats. It had not been mixed in accordance with instructions. The House of Lords held that this was a pure economic loss, so only recoverable under the Hedley Byrne principles.

The problem in both cases is that the court are saying that the claim is for the difference in value between a perfect and imperfect building, i.e. a pure economic loss, even though in both cases physical damage had been caused to the properties.

There is an oddity here that has been created in the context of buildings which are defective but have not caused damage to person or other property. A valuer who prepares a negligent valuation survey can be sued by the purchaser who “relied” on the report: Smith v Bush [1989] but the original tortfeasor whose negligence created the inherent defect in the building cannot be sued because the owner’s loss is pure economic loss (see  above cases)!

Most negligence actions are concerned with positive conduct which causes damage to the claimant, but what is the position where the defendant fails to act and thereby causes damage to the claimant? – an omission.

In Donoghue v Stevenson (1932) Lord Atkin referred in the neighbour test to, “acts or omissions...” What he meant by omission, however, was an omission in a course of positive conduct, for example where a person is driving a car and omits to apply the brakes. The conventional view was that there was no liability in negligence for a simple failure to act for another person’s benefit unless there was a positive duty to do so.

Consider: If X has fallen into a river and is drowning.  X calls for help. Y is walking along the bank and hears X. There is a lifebelt provided on the bank, but Y just walks by. There is no liability on Y as he owes no duty of care to X, unless there is a special relationship which gives rise to a duty to act.

What of Y had begun a rescue attempt and then withdrew, making X’s position even worse? By embarking on a positive act, does Y undertake a duty?

It would surely be strange to say that the person who does nothing has no liability, whilst a Good Samaritan could be sued!

The question of liability for omissions came before the House of Lords in Smith v Littlewoods Organisation Ltd (1987). Lord Goff said that there was no duty to prevent persons deliberately inflicting damage on another person. There were, however, four exceptions to this principle:

  1. where there was a special relationship between the parties, such as a contractual relationship;

  2. where there was a special relationship between the defendant and the third party. This could arise where boys escape from a detention centre and cause damage, e.g. Home Office v Dorset Yacht Co. [1970]);

  3. where the defendant negligently causes or permits a source of danger to be created, which is then interfered with by third parties, e.g. Haynes v Harwood (1935); children threw stones at an unattended horse, a policeman was injured when attempting to stop the horse as it bolted.

  4. where the defendant knew or had means of knowledge that a third party was creating a danger on his property and failed to take reasonable steps to abate it. Examples of this arise in the tort of nuisance, e.g. Goldman v Hargrave (1966). A bolt of lightning hit a rd gum tree. The owner cut it down, but left it to burn itself out. It spread to his neighbours land, and burnt his house down.

Related to this is liability for the acts of third parties. When will A be liable to B for the negligent act of C?  Any question of A’s liability will normally concern his omission to exercise control over C.

Lamb v Camden London Borough Council (1981), the defendants negligently damaged a water main which caused flooding to the claimants premises. The occupier moved out and squatters took over the house causing damage. The court was concerned with the defendant’s liability for the damage caused by the squatters. The issue was treated as one of remoteness of damage and it was concluded that the damage was too remote a consequence of the breach of duty.

Perl (Exporters) Ltd v Camden London Borough Council (1984), the defendant council owned adjoining premises. Number 142 was let to the claimant, and #144 was divided into flats. There was no lock on #144, and thieves entered #142 by knocking a hole through the adjoining wall. The Court of Appeal held that the defendants were not liable, mere foreseeability was not sufficient to establish a duty. Policy factors are at work here; the claimant would be insured against this type of loss.

The issue came to the House of Lords in Smith v Littlewoods Organisation Ltd (above). The defendants purchased a building and left it empty. A fire started in it which seriously damaged the claimant’s property. The fire had been started by vandals (who had started fires on other occasions) but this fact was not known to the defendants. The court held that there was a duty on persons to ensure that their property was not a source of danger to neighbouring properties. But this duty would only extend to preventing damage being caused by vandals where such damage was reasonably foreseeable. As the defendants had not known of the previous fires no duty was owed.

That’s it for the establishment of a duty of care, so now we turn to the breach.

Once the claimant has established that the defendant owed him a duty of care, he must show that the defendant was in breach of that duty – did the defendant’s conduct fall below the required standard? If it did, then the conduct will amount to negligence and the defendant will be in breach of duty.

The standard of care expected of a particular defendant is set by the law, but the question whether the defendant fell below the standard is one of fact, to be determined by reference to all the relevant circumstances. Policy considerations may affect the outcome.

An objective standard of care is taken and the defendant’s conduct is weighed against that to be expected from the “reasonable man”. The most frequently cited definition of breach of duty was given by Alderson B in Blyth v Birmingham Waterworks Co. (1856):

“Negligence is the omission to do something which a reasonable man, guided upon those considerations which ordinarily regulate the conduct of human affairs, would do, or doing something which a prudent and reasonable man would not do.”

You just need to refer to the reasonable man test.

No account is taken of individual disabilities or peculiarities, as the test is objective. A learner driver will be judged by the same standard as a reasonably prudent, qualified driver: Nettleship v Weston (1971).

There is a subjective element to the ‘reasonable man’ test because the standard is that of the reasonable man in the particular circumstances in which the defendant found himself at the time of the accident. In Glasgow Corporation v Muir (1943), an urn of hot tea was being carried down a narrow passage when, for an unexplained reason, one of the handles was released and children were scalded. The manageress of the cafe was alleged to have been negligent in allowing the urn to be carried by a party of visitors past a queue of children buying ice creams. The House of Lords held there was no negligence as, on the facts of the particular case, it could not have been foreseen that such an accident would occur. Lord MacMillan described the ‘reasonable man’ as being free from over-apprehension (every path is best by lions) and from over-confidence. He fits in between.

The defendant will only be liable if the reasonable man would have foreseen damage in the circumstances prevailing at the time of the alleged breach of duty. In Roe v Minister of Health (1954), the claimant was paralysed after receiving an injection in hospital with a syringe into which phenol had leaked. At that time it was not known that phenol could get into the syringe through cracks invisible to the naked eye. The defendants were therefore not negligent, as they could not have foreseen the accident. The circumstances in which the accident had occurred were only discovered some time after the event. The court must avoid judging the defendant with “the benefit of hindsight”.

Minors have no immunity, but are rarely sued as they have no cash/insurance. If he is sued he is judged against that of a reasonable child of the same age. In Mullin v Richards (1998) the Court of Appeal unanimously confirmed the appropriate measure of foreseeability of harm to be that of an ordinarily prudent child of the same age, and in the same circumstances, as the defendant. Here both claimant and defendant were 15 year old schoolgirls engaged in a mock fight with plastic rulers, during which one ruler broke and a piece of plastic entered the claimants eye, causing her to lose sight in that eye. On the facts of this case the Court of Appeal could not find evidence of lack of reasonable care on the part of the defendant and concluded that the accident was no more than a commonplace game in which there was no justification for attributing foresight of significant personal injury.

Many factors may operate in isolation or conjunction but there is also a policy element behind many of the courts’ decisions, e.g. in deciding whether to make a finding of fault in a medical negligence case, the court may take into account, when setting the standard of care, the effect on a Health Authority’s (HA) finances or the morale of the members of that professional group whose practices are being questioned. Factors will include:

We’ll look at each in turn.

Nearly every human action involves some risk of harm to others, but it will not necessarily result in liability. The greater the risk of damage, the more care that must be taken.

In Bolton v Stone (1951), the claimant was struck by a cricket ball while she stood outside her house. The ball had been hit 100 yards and cleared a 17 foot fence some 78 yards from the batsman. This had occurred only six times in 30 years. The defendants were held not liable as the risk was so small that the reasonable man would have been justified in disregarding it.

Compare with Hilder v Associated Portland Cement Ltd (1961), the defendants allowed children to play football on waste ground next to a road. Balls frequently went onto the road and one caused a motorist to crash, killing him. The likelihood of a passer-by being hit by a ball was considerable and the defendant occupier of the waste ground was held liable.

The greater the injury risked, the greater the precautions required. In Paris v Stepney Borough Council (1951), a one-eyed welder, employed by the defendants, lost his sight because he was not provided with safety goggles. The defendants were negligent because they were aware of his disability and should have taken greater care.

In Withers v Perry Chain Co. Ltd (1961) the claimant was prone to dermatitis and was given the most grease-free job available. She still contracted dermatitis, but the defendant employers were not liable – they had done all that was reasonable, bar refusing to employ her.

The court may balance the risk against the importance of the objective to be achieved by the defendant, often known as social utility.

Watt v Hertfordshire County Council (1954), a fireman was injured by the sudden movement of a heavy jack in a vehicle which was not adapted to carry it. The jack was needed at the scene of an accident to save the life of a trapped person. The defendants were not negligent as the objective of taking the jack to the accident as quickly as possible to save a life justified the risk.

However, the utility of the defendant’s activities does not justify all risks. A balance must be achieved with other factors and those driving emergency vehicles are not excused automatically from all the normal rules of the road.

Other values may be less easy to assess. Road accident deaths are many, and could certainly be reduced by imposing a speed limit of 5 mph, but the consequences of this would be unacceptable in an industrialised society. What about the social utility of playing cricket - Bolton v Stone?

Once a risk has been identified as being reasonably foreseeable, the difficult question arises of whether the defendant should have taken precautions against the risk. If the cost of eliminating the risk is out of all proportion to the extent of the risk the defendant will not be obliged to take preventative measures - Bolton v Stone again!

In Latimer v AEC Ltd (1953), the floor of the defendant’s factory became flooded after heavy rain. They took all possible steps to minimise the danger, short of closing the factory. The claimant slipped and was injured, but the defendants were held not liable. The court weighed the degree or extent of the risk against the cost of eliminating it.

Conformity with standard and accepted practice may be sufficient to fulfil the standard of reasonable care.

The Court of Appeal has clarified the standard of care to be expected of an auctioneer. In Luxmoore-May v Messenger May and Baverstock (1990) the defendants, it was alleged, had negligently failed to identify two pictures belonging to the claimants as those of a celebrated painter. At a subsequent auction of the paintings they were sold for £840, and a few months later they were sold again for £88,000. The claimants claimed the difference between the two prices. The Court of Appeal considered the standard of care and skill to be expected of provincial auctioneers to be similar to that of a general medical practitioner. “Since the valuation of a picture of which the artist was unknown was not an exact science and pre-eminently involved an exercise of opinion and judgment which by its very nature might be fallible… the court would be slow to hold that a valuer was guilty of professional negligence merely because he failed to spot (an antique of unrecognised worth) if he had done his job honestly and with due diligence.” On these facts, the defendants were not negligent, since divergent views about the painter could have been held by experts of similar standing.

Failing to follow usual practice is usually good evidence of negligence, but in Brown v Rolls Royce (1960) the claimant contracted dermatitis at work. Washing facilities, but not barrier cream, was supplied by the defendants. The cream was supplied in other firms (usual practice) but there was argument over its effectiveness. The claimant was unable to show that she would have not suffered dermatitis had the cream been supplied, hence the defendants were not liable.

The final issue is one of special skill, so important that we leave this until next week.

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