Pure Economic Loss and Defects in the Law of Negligence
Tort Law Review, Vol. 17, pp. 80-99, 2009
26 Pages Posted: 3 Oct 2017
Date Written: 2009
Abstract
This article argues for an expanded three-stage Caparo test to be applied when deciding whether an alleged tortfeasor owes a victim a duty of care in respect of the latter's economic interests. However, in deciding whether the second criterion of the Caparo test is satisfied, it is submitted that the following general rule should be observed in deducing this proximity. The relationship between the claimant and the tortfeasor will be sufficiently proximate when the defendant knows (or has reason to know) the actual economic interest(s), of a particular class of person(s) of which the claimant is a member, that will be affected by the defendant's failure to exercise due care. The presence of the Hedley Byrne configuration is a conclusive but not required means of ascertaining whether fused unless the claimant is seeking to avert imminent foreseeable physical injury to persons or property. Furthermore, the author argues that notwithstanding the proximity of relationship between the parties, and contrary to the views held by the House of Lords in Henderson v Merrett Syndicates Ltd [1995] 2 AC 145, a duty of care with respect to the economic loss should still be denied if there are countervailing policy considerations that will make the existence of a duty of care unfair, unjust or unreasonable.
Keywords: Negligence, duty of care
Suggested Citation: Suggested Citation