Principles of Tort Law

INTRODUCTION

Liability for negligently-inflicted financial losses is both complex and challenging. This is due, in part, to the reluctance of English appellate courts to settle upon any one test by which to establish whether D owed C a duty of care to avoid the pure economic loss which C suffered.

It is also due, in part, to the sophisticated and ‘broad network of economic links that exist in any developed society’ (as the Court of Appeal put it in Conarken Group Ltd v Network Rail Infrastructure Ltd (Rev 1)). The Scottish Inner House spoke for English law too, when it stated that, ‘[negligently-inflicted pure economic loss] is a difficult area of the law … which continues to develop … as a process of incrementalism’ (per Hines v King Sturge LLP).

Recovery for pure economic loss also tends to be an area of negligence which is governed to a large extent by policy – which calls to mind that ‘unruly horse’ of public policy that Burroughs J spoke of in Richardson v Mellish, that ‘once you get astride it, you never know where it will carry you’. Part of the challenge, in this chapter, is to provide some defined tracks upon which that horse may predictably pass! It should also be mentioned, at the outset, that English law has not adopted a sympathetic approach to pure economic loss claims. Just as with pure psychiatric injury claims (see Chapter 5), casting any duty of care on D's part to avoid such injury can be very challenging.

This chapter explores four principal categories of pure economic loss claims:

Before turning to each in turn, it is important to reiterate a couple of preliminary points.