Henry’s economic loss has arisen from a negligent misstatement, which is recoverable, such as in Smith v Eric S. Bush, whereby C sought a loan on a mortgage to enable her to buy a house. D surveyed the house on behalf of the mortgage company, failing to notice a fundamental structural defect. As Bush must have known was likely, Smith gained access to the survey and relied on it instead of having one done independently. After C moved in, it became apparent that the surveyor had been negligent. Also it does not state that Gordon had used a disclaimer. And the information had been put in the public eye; D had set himself out as a professional.
D has breached his duty of care owed to C as far as he has fallen bellow the standard of care which the duty of care has dictated to be owed. He would have been expected as the ‘reasonable man’, (as in Blyth v Birmingham Watership) to have to as C was a prospective customer to give reliable advice. This standard deemed appropriate to D; a professional is judged according to the standards of a competent body of professional opinion (Bolam v Friern Hospital) But it could be argued that as anyone could be considered a ‘prospective customer’, the floodgates argument could be used (pace Cardozo CJ in Ultramares v Touche). However as a business man, with experience and expertise in the field, he could have foreseen that by providing inadequate information could, in particular the use of boiler, which can if fitted incorrectly can emit poisonous carbon monoxide gas, would lead to situation of harm arising, or at least some loss to that customer, like with Henry. (foreseeability in Roe v Minister of Health). Also as C was lacking specialist skills as in Wells v Cooper, extra consideration should have been taken into account.
D is liable for damage as far as ‘but for’ his actions C would not have suffered loss. (Barnett v Chelsea Hospital). But for D advising C to buy that particular boiler, C wouldn’t have done so; D is a contributing cause to C’s loss. Although C chose to take and accept that information, although in the context of D being a professional in that field. It could however be viewed that as C did not use the information wholly as it was intended; to buy a boiler from D, that it wasn’t in context. He brought the advised boiler from a different supplier, who if he’d asked could have advised him differently. Although it was reasonably foreseeable that C may take that advice and then go to buy the boiler from a different supplier. The precise consequences of his negligent act did not however have to be foreseen for the damage to be held (Hughes v Lord Advocate).
But the re-sale at a loss was C’s choice, although as he would not have brought it otherwise and therefore had to have sell it, D did influence this, but the re-sale difference is a too far remote consequence of D’s advice; it was not within his reasonable contemplation.
In conclusion henry would be able to claim damages for negligent misstatement, as the purpose for the information issued by D was clear; for C’s circumstances he should buy the ‘Cal Combi Boiler’ as it would work better for him. But he would not be able to claim for the re-sale, no duty of care was owed for the new transaction of the boiler; too remote.
b)
James (C) has some rights against Henry (D); in this case as far as, firstly C’s claim for his broken arm is economic loss, but his loss of earnings are purely economic losses.
Both require a duty of care to exist, which will if the Caparo test applies: whereby was the damage was reasonably foreseeable, there is a relationship of proximity and it is fair, just and reasonable to impose such a duty.
Firstly D’s broken arm; the damage was reasonably foreseeable; that if a boiler fitted by an unprofessional then were not to be to the same standards as a professionals job i.e. didn’t have a poorly made joint, C would be startled into some sort of reaction, which considering he is up a ladder would lead to injury. There is a relationship of sufficient proximity as far as there was a contract between C and D. and it is fair, just and reasonable as far as there is no likelihood that the floodgates would open,(as in Swinney v Chief Constable of the Northumbria Police) any more than they have, that is necessary in personal injury cases. However it is possibly not fair to impose liability on the public; however as D held himself out to do the work of a professional he should be liable for his work. This is straightforwardly applied as D’s broken arm counts as an economic loss; a loss that flows directly from damage to the person or property, by D’s negligence.
The duty of care has been breached as far as D owes a duty of care to anyone who is his neighbour; he has fallen bellow this duty of care. Although C as a professional boiler fitter should possibly have the experience to allow him to have the sense to take all health and safety precautions to prevent this from having happened. But these precautions may not be practical, as in Latimer v AEC. However as D was doing the job of a professional, he should have done to the standard of a ‘reasonable’ professional boiler fitter, although he was not a specialist (Wells v Cooper).
C would not be injured, with a broken arm, ‘but for’ D’s act (Barnett v Chelsea Hospital).D’s lesser quality of work; the badly made joint, which caused C to be stunned when spurted with water from that pipe started the chain of causation. There were no intervening acts; it was reasonably foreseeable that he would drop what he was holding; the drill, and that that could cause the ladder to fall over. It was not too remote (the wagon mound), as only the general, not actual type of damage need be foreseen (Bradford v Robinson Rentals). Nor do the precise consequences have top be reasonably foreseen; it was conceiverable that if he fell he would break a bone. And that the thin skull rule would apply if he were particularly perceptible to broken bones.
Although the loss of profits are a purely economic loss; pure economic loss is suffered by a claimant whereby the claimant has simply lost money indirectly and with no causal link to any physical damage either to himself or his property. In these situations, though there is no uniform rule, the claimant has, generally, no claim under negligence, which was first laid down in Candler v Crane, Christmas & Co (1951). His loss of profits would probably be considered too speculative, and therefore purely economic. This would not be a matter for the courts, but rather a matter for his insurers to sort out. The purpose is to put the C back to their original financial situation, and D has not had to take a lesser paid job as a result of his injury, merely time off of work.
The different margins of losses are illustrated in Sparton Steel v Martin & Co, whereby the D shut down a furnace which was undamaged. It caused two different types of losses, namely loss caused by the physical damage to metal in the furnace and loss of profits in not being able to use the furnace for the duration of the power cut. The damages were recoverable for the physical damage to the metal in the furnace (including the consequential loss of profit) but not for the loss of profits for the duration of the power cut.
In this case Lord Denning ruled earnings as pure economic loss, and therefore irrecoverable through the courts (mostly) for policy reasons; in saying that essentially that liability has to stop somewhere and to allow these types of claim would open the floodgates to numerous claims. And as C’s profits account for his earnings, it could be argued that they too are pure economic loss, and not recoverable through the courts.
In conclusion, James is able to claim through the courts for his losses in relation to his broken arm, as these would be economic loss. Although would probably have to claim through his insurance for his loss of profits; as these are conceived to be pure economic losses; and too remote. Also the courts do not want to put the C in a better position than he was before the tortuous act. Which arguably recovery for pure economic losses would lead to. Or to open the floodgates; which in turn would cost the courts more.
