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Problem areas in damages: economic loss, remoteness and betterment
Helen Evans and Clare Dixon
June 2017
Key topics covered by the talk
· Economic loss: is it always a roadblock for claimants or are there routes round it?
· Remoteness: anticipated losses and losses which should have been anticipated.
· Betterment: can a defendant ever be required to put the claimant in a better situation than they were before the damage?
Economic loss
Helen Evans
What is the reason for different treatment of pure economic loss?
• “The infliction of physical injury to the person or property of another universally requires to be justified. The causing of economic loss does not. If it is to be categorised as wrongful it is necessary to find some factor beyond the mere occurrence of the loss and the fact that its occurrence could be foreseen. Thus the categorisation of damage as economic serves at least the useful purpose of indicating that something more is required.” Murphy v Brentwood DC [1991] 1 WC 398
• “if claims for economic loss were permitted for this particular hazard [power cuts], there would be no end of claims. Some might be genuine, but many might be inflated, or even false. ……. It would be well-nigh impossible to check the claims.” Spartan Steel & Alloys v Martin [1972] 1 WLR 502.
In what circumstances does a defendant owe a duty not to cause economic loss?
Assumption of responsibility:
• Assumption of responsibility not limited merely to statements but which may also apply to an assumption of responsibility for services;
• The test for whether the defendant has assumed responsibility is an objective one, meaning that the focus is on things said or done by the defendant rather than on his state of mind;
• Reliance by the claimant is a necessary ingredient.
Sainsbury’s Supermarkets Ltd v Condek Holdings Ltd [2014] EWHC 2016 (TCC).
Restrictive approach:
• Courts slow to extend the categories of case in which a duty to protect against pure economic loss arises, and astute to examine voluntary assumption of responsibility: Greenway v Johnson Matthey plc [2016] 1 WLR 4503.
What is “property”?
Classic test:
“… in order to enable a person to claim in negligence for loss caused to him by reason of loss of or damage to property, he must have had either the legal ownership of or a possessory title to the property concerned at the time when the loss or damage occurred, and it is not enough for him to have only had contractual rights in relation to such property which have been adversely affected by the loss of or damage to it.”
Leigh & Sillavan Ltd v Aliakmon Shipping Co Ltd [1986] AC 785.
Extension to the type of interest in property that suffices
Court of Appeal “prepared to hold that a duty of care is owed to a beneficial owner of property (just as much as to a legal owner of property) by a defendant….who can reasonably foresee that his negligent actions will damage that property. If therefore, such property is, in breach of duty, damaged by the defendant, that defendant will be liable not merely for the physical loss of that property but also the foreseeable consequences of that loss, such as the extra expenditure to which the beneficial owner is put or the loss of profit which he incurs
Shell UK & Ors v Total UK Ltd & Ors[2010] 1 WLR 1192.
What does the future hold?
• Informal arrangements for use of property
• Law dealing with informal business relationships
• Joint ventures: controversial area developed in Canada but not England & Wales.
Foreseeability
Section 2
Why does recovery need to be limited by reference to foreseeability?
“The possible consequences of any human conduct are potentially endless. The defendant’s wrongdoing may trigger a series of events stretching well beyond one’s normal expectations of possible consequences.”
Clerk & Lindsell, para 2-136
Differing test depending on the cause of action.
• Contract: a contract breaker is liable for damage resulting from his breach if, at the time of making the contract, a reasonable person in his shoes would have had damage of that kind in mind as not unlikely to result from the breach.
• Tort: at the time the breach was committed the type of damage must have been reasonably foreseeable as a consequence.
• Rylands v Fletcher: strict liability, but foreseeability of damage of the requisite type is still a pre-requisite to liability.
• More than one cause of action? Wellesley v Withers [2016] Ch 529
Type of damage (1): Muirhead v Industrial Tank Specialities [1986] QB 507
Type of damage (2)
“…the fact that by reason of the full stocking of the relevant tank, the fish died more quickly or in greater quantities was of no relevance, unless it could be said that over-stocking of the tank constituted the sole or a contributory cause of the disaster which took place…”.
Muirhead v Industrial Tank Specialities Ltd [1986] QB 507 per Goff L.J.
Relevance of the extent or amount of damage
“…Here it was a foreseeable consequence of the supply of boron tribromide... that in the ordinary course of industrial use it could come into contact with water and cause a violent reaction and possibly an explosion. It would also be foreseeable that some damage to property would or might result. In my judgment the explosion and the type of damage being foreseeable, it matters not in the law that the magnitude of the former and the extent of the latter were not…”
Vacwell Engineering v BDH Chemicals Ltd [1971] 1 QB 88
An exception…
Holbeck Hall Hotel v Scarborough Borough Council [2000] QB 836
Betterment
Section 3
Voaden v Champion, The Baltic Surveyor [2002] 1 Lloyd’s Rep 623
• Sunk pontoon: was due to be replaced in the next 8 years and no second hand market from which to replace it.
• New pontoon: cost £60,00 and was expected to last 30 years.
• First instance awarded £16,000 ie 8/30 x £60,000n
The Baltic Surveyor
• Unless the parties have agreed otherwise the measure of loss should be the same in contract or tort.
• It should be exceptional for a claimant to recover more than he as lost.
• Where a claimant has lost a second hand chattel and there is no market for its replacement then the court should make a “fact specific review” applying the “test of reasonableness”.
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Litigating Property Damage Claims: Tactics, Tips and Pitfalls
Richard Liddell
Miles Harris
20 June 2017
Evidence Gathering
• Expert
• Factual
Cooper v Thameside[2016] EWHC 1248
• Gaps in the evidence and competing theories about how the damage occurred
• Missing key witnesses
• Claim fails on balance of probabilities
Expert Evidence
Expert Evidence: PRIVILEGE
Litigation privilege will not be available unless the document is confidential and was created for the dominant purpose of that litigation
"What then is the purpose of the reports? The learned judge found a duality of purpose because, he said, the Insurers wanted not only to obtain the advice of their solicitors, but also wanted to ascertain the cause of the fire. Now, for my part, I find these two quite inseparable“: see Re Highgrade Traders Ltd[1984] BCLC 151 (CA)
But then came along…Axa Seguros SA v Allianz Insurance plc [2011] EWHC 268 (Comm)
A contemporaneous expert report of someone instructed almost immediately after the event who is then retained to act as a CPR 35 expert will almost certainly not be privileged
Strict approach of the Courts apparent from SFO v Eurasian Natural Resources Corporation Ltd (ENRC) 2017 [EWHC] 1017 (QB)
(1)
(2)
(3)
(4)
(5)
Wheeldon Bros v Millennium Insurance [2017] EWHC 218 (TCC)
Claimant unsuccessfully challenges Defendant’s use of Mr B as expert
Allen Tod Architecture Ltd v. Capita Property & Infrastructure Ltd [2016] EWHC 2171 (TCC)
When may a party be allowed to change experts and what conditions, if any, will be imposed?
Recent TCC Order: Experts
(1) Experts in like fields to hold discussions in
accordance with rule 35.12 by 2 May 2017.
(2) Experts' joint statements pursuant to rule 35.12(3) to
be prepared and filed by 5pm on 23 May 2017.
(3) Experts’ reports to be served by 5pm on 7 June
2017.
(4) Questions to be put to the experts by 5pm on 27 June
2017 with responses by 5pm on 14 July 2017.
NB. Key to the success of the experts’ discussions is to
ensure your expert is properly instructed, prepared and is armed with an agenda and questions for their expert.
Factual Evidence Gathering
• Preserve all relevant evidence
• Ensure adequate photographs have been taken
• Remind your client(s) of their disclosure obligations
• Obtain copies of third party reports as soon as practicable
• Identify potential witnesses as soon as possible
Frasca-Judd v Golovina [2016] Lloyd’s
Rep IR 447.
A cautionary tale:
• Call the right witnesses
• Gather physical evidence to support the claim at the earliest opportunity
Costs Management
• Incurred Costs
• Asymmetry of Hourly Rates
• Realism
(1) Incurred Costs
• The relevance of incurred costs to the budgeting process.
• Practice Direction 3E, para7.4
• CIP Properties (AIPT) Ltd v Galliford Try Infrastructure Ltd, Yeo v Times Newspapers Ltd [2015] EWHC 209 (QB) and Redfern v Corby BC [2014] EWHC 4526 (QB)
• What if the Court concludes you have had your allowance?
• Strategies?
- Spend money well pre-CCMC
- Be able to position to explain
- Write off incurred costs
(2) Disparity of Rates?
• Dramatic disparity in rates, apparently caused by the funding mechanism of a lot of claims
• Is it possible to take points on rates charged?
• See Group Seven & Anr v Notable Services LLP [2016] EWHC 620 (Ch)
• Cheaper rate = more hours
(3) A Realistic Approach
• Findcharm Ltd v Churchill Group [2017] EWHC 1108
• Other pressures from the bench- dedicated Costs Management Hearings
• A place for disputing costs, but must be realistic
• Aspects of realism:
• No single figure for what is reasonable and proportionate
• Principled basis for objections
• Objections that take into account your own assumptions and figures
• The person responsible for the case taking control
Disclosure
Disclosure
Risk of potentially privileged and/or damaging or embarrassing material
For Example:
Expert reports/investigations
Loss adjusters reports
Documents generated by the insured
Correspondence between insurers/their representatives and the insured/their representative
Solutions?
Care in the first place
Proper analysis of whether documents are relevant and admissible
Preliminary Issues
Preliminary Issues
• Larkfleet -v- Allison Homes Eastern Limited [2016] EWHC 195 (TCC)
Preliminary Issues
• Compare with a Staged Trial
• See Section 8 of the TCC Guide
• “The court would ordinarily expect that, if issues are to be dealt with by way of a PI hearing, there would be either no or relatively limited oral evidence. If extensive oral evidence was required on any proposed PI, then it may not be suitable for a PI hearing. Although it is difficult to give specific guidance on this point, it is generally considered that a PI hearing in a smaller case should not take more than about 2 days, and in a larger and more complex case, should not take more than about 4 days.” (para 8.2.2)
Preliminary Issues (Cont…)
• Making a success of it?
• What are the issues in the case?
• Circulate precise wording before CCMC/application hearing
• What costs will be saved- alternative budgets
• Clear agreement regarding the factual basis
Litigating Property Damage Claims: Tactics, Tips and Pitfalls
Richard Liddell
Miles Harris
20 June 2017
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Fire, flood and tree roots – recent developments in nuisance
Nicola Shaldon
Pippa Manby
20 June 2017
Fire Claims
Testing the limits of Rylands v Fletcher
“… I feel bound to hold that in anappropriate case damage causedby fire emanating from anadjoining property can fallwithin the Rylands v Fletcherrule. The appropriate case islikely to be very rare ….”Ward L.J.
Gore v Stannard [2012] EWCA Civ 1248
Rylands v Fletcher
He must bring or keep or collect an exceptionally dangerous or mischievous thing on his land
He must have recognised or ought reasonably to have recognised, judgedby the standards appropriate at the relevant place and time, that there isan exceptionally high risk of danger or mischief if that thing shouldescape, however unlikely an escape may have been thought to be
His use of the land must be extraordinary and unusual having regard to allthe circumstances of time and place
The thing itself must escape from his property into or onto the property ofanother
D –Owner/Occupier
Gore v Stannard – conclusions
No liability because:
• The “thing” brought on to premises was large stock of tyres
• Tyres are not exceptionally dangerous or mischievous
• Tyres did not escape – what escaped was the fire
• Keeping a stock of tyres on tyre-fitting premises is not extraordinary or unusual use of land
• No evidence of negligence
Flood Claims
Flood claims
Pre Leakey
• No liability for naturally occurring floodwater
• Potential liability where artificial user of land or diversion of flow of existing watercourse
• Common enemy rule – landowner entitled to protect their land from encroaching water
A Measured Duty of Care
Leakey v National Trust [1980] 1 QB485
Imposition of potential liability fornuisance arising from natural forces
Measured duty of care
“The duty is a duty to do that which isreasonable in all the circumstances,and no more than what, if anything,is reasonable, to prevent or minimisethe known risk of damage or injury toone’s neighbour or property”
Extent of the Duty
“If a stream flows through A’s land, A being a small farmer, and there is aknown danger that in times of heavy rainfall, because of the configurationof A’s land and the nature of the stream’s course and flow, there may be anoverflow, which will pass beyond A’s land and damage the property of A’sneighbours, perhaps much wealthier neighbours, it may require expensiveworks, far beyond A’s means, to prevent or even diminish the risk of suchflooding. Is A to be liable for all the loss that occurs when the flood comes, ifhe has not done the impossible and carried out these works at his ownexpense?”
Control factors include:
• The extent of the foreseeable risk and damage
• Complexity and cost of measures to avert
• Respective resources of the parties
Application to flood claims
Green v Lord Somerleyton [2003] EWCA 198
“Leakey” duty does apply in principle to naturally flowing water
“in the English landscape – most of which (as the judge rightly pointed out…) is man-made – the distinction between “natural” features and those which are “artificial” inthe sense that they owe something to human agency may not be an easy one to draw.… what at first glance may be appear as a wholly “natural” feature of the landscapemay, on further examination, turn out to owe something to the intervention of man.To my mind, therefore, in the context of the English landscape a distinction between“natural” and “artificial” features is an inherently uncertain foundation on which torest a decision as to liability in nuisance.”
• No liability • No cause of action demonstrated by the C to the Ds which it was
reasonable for them to take to remove or reduce flooding risk• Possible to preempt flooding by clearing dykes but at disproportionate
cost for the damage likely to occur
Lambert v Barrett Homes (1) Rochdale MBC (2) [2010] EWCA Civ 681
• Cs own properties backing on to former playing-field owned by D2
• D2 sells off part of field to D1, developer, which blocks part of drainage ditch and culvert used to carry off water from D2’s land away from Cs’ houses
• Properties flood
Who is responsible for relief works required on D2’s land?
D1 – negligence – liable at first instance – no appeal
Cs
D2 – nuisance – also liable at first instance – failure to abate nuisance
Lambert - conclusions
What was scope of D2’s duty of care?
Continuing and varying duty in accordance with the change in circumstances
Duty to co-operate in solution involving works to their land
Open question whether extends to carrying out work themselves
Did not extend to meeting the cost especially given established liability against D1
Relevant factors in determining scope of duty:
• D1 responsible for cause of flooding
• Value of rights against D1
• Cs covered by insurance
• D2 under financial pressure, resources not generally available for public purpose not for benefit of private citizens
Vernon Knight Associates v Cornwall D.C. [2013] EWCA Civ 950
Jackson LJ:
“The judge is required to carry out a somewhat daunting multifactorialassessment.”
(i) “A landowner owes a measured duty of care in both negligence and nuisance to takereasonable steps to prevent natural occurrences on his land from causing damageto neighbouring properties;
(ii) In determining the content of the measured duty, the court must consider what isfair, just and reasonable as between the two neighbouring landowners. It musthave regard to all the circumstances, including the extent of the foreseeable risk, theavailable preventive measures, the costs of such measures and the resources of bothparties; and
(iii) Where the defendant is a public authority with substantial resources, the court musttake into account the competing demands on those resources and the publicpurposes for which they are held. It may not be fair, just or reasonable to require apublic authority to expend those resources on infrastructure works in order toprotect a few individuals against a modest risk of property damage.”
Vernon Knight – the outcome
The Council was held liable:–
Effectively for operational negligence – failure to operate an established procedure forclearing flooding hotspot
Relevant factors:
• Most of floodwater from land owned by third party
• The Council in its capacity as highway authority was taking steps to reduce the flow
• The court should not impose unduly onerous requirements given demands onresources
• Adequate system in place
Non-relevant factors:
• C’s historic conduct in filling old ditch – the court must determine the duties oflandowners and local authorities by reference to current arrangements not historicevents
• Relevance of insurance doubted
Developments since Marcic
“Thames Water is no ordinary occupier of land ….Thames Water’s obligations cannot be sensiblyconsidered without regard to the elaborate statutoryscheme …. The common law of nuisance should notimpose on Thames Water obligations inconsistentwith the statutory scheme ….”Marcic v Thames Water Utilities Ltd [2004] 2 AC 57
“I consider that there is in principle, a boundary tobe drawn between matters which would fall withinthe duties under s.94 (1) and are actionable unders.18 and matters which are actionable apart fromthe existence of any statutory duty. That boundarymay be difficult to draw and may depend on suchuncertain matters or decisions relating to “policy” or“capital expenditure” matters or decisions ascontrasted with “operational” or “current
expenditure” matters or decisions.”Dobson v Thames Water Utilities Ltd [2008]Env.L.R. 21
Operational vs strategic/policy (1)
Oldcorn v Southern Water Services Ltd [2017] EWHC 62 TCC
• Cs owned property 75m from sea wall in Bognor Regis
• Surface water flooding due to the restricting effect of a valve installed by Dto
• prevent seawater flooding
• D relies on Marcic to negate duty of care
• Duty of care in respect of positive act – negligent installation of valve
• Standard – not measured duty because not a “natural” nuisance and notomission
Operational vs strategic/policy (2)
Bell v Northumbrian Water [2016] EWHC 133 (TCC)
• Cs claim in nuisance against D for undermining support to neighbouringland owned by third party with knock on effect to C’s land
• D liable in nuisance – failure to maintain pipes was operational ratherthan strategic
Tree root Claims
Berent v Family Mosaic Housing [2012] EWCA Civ 961
• C alleged that plane trees on Highbury New Park caused propertydamage. D relied on other causes of damage.
• CA upheld trial judge’s decision dismissing the claim:
• Cases involving tree root damage are subject to the same rulesof law as claims brought in common law negligence.
• C must show reasonable foreseeability of a “real” risk.
• In establishing whether there has been a breach of duty thecourt is required to carry out a balancing exercise between therisk of damage, the seriousness of the potential damage, thecost of removing the risk and the social value of the trees.
Robbins v London Borough of Bexley [2012] EWHC 2257 (TCC) and [2013] EWCA Civ 1233
• Council liable although not notified of the damage to theproperty as knew of damage to other properties and thusreasonably foreseeable risk of damage to the property.
• Court should ask what D would have done had it takenreasonable steps to prevent the damage.
• Salutary reminder about critical importance of choice ofexpert.
Denness v East Hampshire District Council [2012] EWHC 2951
• Decision on appeal of Mr Recorder Acton Davis QC shortly after CAdecision Berent.
• Case failed on causation as Cs were unable to show that the trees ortheir roots had caused the damage and it appeared probable thatthe damage was, instead, caused by heave. Cs also failed toestablish that there was sufficient risk that damage would occurand what preventative measures were required.
• Another salutary tale about having sufficient expert and layevidence to support all facets of the claim.
Khan v (1) Harrow Council and (2) Sheila Kane[2013] EWHC 2687 (TCC)
• Burden on C to show actual or imputed knowledge of a real risk of damage to C’s property by the relevant trees. Needed knowledge of the actual risk posed by the particular trees in question.
• Imputed knowledge is to be assessed from the perspective of the reasonably competent landowner of a property with tree(s).
• Notice relevant in two ways: “First, if the risk of damage caused bythe roots of a particular tree is not foreseeable to a prudentlandowner so there is no liability in nuisance, then if damage iscaused and the landowner is put on notice of the damage then thatlandowner would be liable for the continuing nuisance based onthat actual knowledge. Secondly, if a neighbour contends thatdamage has been caused by a landowner’s trees then the neighbourshould give notice to the landowner of any proposed remedial workso that the landowner can take any necessary steps to abate thenuisance, otherwise remedial work may not be recoverable.”
Burge v South Gloucestershire Council [2016] UKUT 300 (LC)
• Claim under section 203 of the Town and Country Planning Act 1990:
“A tree preservation order may make provision for the payment by the local planningauthority, subject to such exceptions and conditions as may be specified in the order, ofcompensation in respect of loss or damage caused or incurred in consequence:
(a) of the refusal of any consent required under the order, or
(b) of the grant of any such consent subject to conditions.”
• The TPO in question provided for exceptions to compensation: (a) where the damage wasnot reasonably foreseeable; and (b) where the damage was reasonably foreseeable by theproperty owner and attributable to a failure to aver the loss or mitigate.
• The Upper Tribunal rejected D’s arguments that this case fell within the exceptions. It wasfor the Council to show that the exceptions were engaged and it had not done so. Claimsucceeded even though the experts essentially agreed that the damage to the propertywould have occurred in any event. The Upper Tribunal said that causation was not relevantto statutory compensation under s.203.
• Date for assessing foreseeability: when consent refused cf. nuisance (date of damage).
Issues for the Court to consider
• Causation of the damage
• Extent of risk of damage and the chances that it would eventuate
• What damage was foreseeable if the risk eventuated?
• Was it practical to prevent or minimise the damage?
• Cost / effort of preventative action
• Was there sufficient time for preventative action to have been taken by
persons acting reasonably between the time when the known risk became
known or ought to have been known by the defendant and the date on
which damage occurred?
• Quantum of loss / mitigation / appropriate remedy
• Defences? Limitation / Contributory Negligence
Japanese Knotweed
What is Japanese knotweed?
• Fallopia Japonica
• Originally imported from Japan as an ornamental plant.
• Mainly known for its invasive and destructive qualities which can
cause serious structural damage to buildings.
• Needs careful management as a small fragment spreading can be
enough for a new plant to be established.
• If property within 7 metre radius of Japanese knotweed many
mortgage lenders will not lend in respect of it.
Sources
• S. 14 of Wildlife and Countryside Act 1981 – offence to plant or
otherwise cause knotweed to grow in the wild.
• Environmental Agency Knotweed Code of Practice: not an offence to
have JK on land and is not a notifiable weed.
• Environmental Protection Act 1990: all knotweed material and soil
containing knotweed is classed as controlled waste and must be
disposed of at a licensed landfill site under associated codes of
practice.
• Town and Country Planning Act 1990: powers for LAs to require
landowners to treat the land if it detracts from local amenities – could
be used to deal with knotweed.
Williams v Network Rail Infrastructure Ltd
• Cardiff County Court decision of a Recorder. Appeal heard in CA early June2017 – decision awaited.
• Claim by two homeowners against NR in private nuisance. Argued thatknotweed had (a) encroached on to their land from a railway embankment and(b) the mere presence of knotweed in close proximity interfered withenjoyment of their land because they could not sell their properties at propervalue.
• (a) failed because no physical damage to the properties.
• However, (b) succeeded with the judge holding: “the right to use and disposeof a residential property at a market value is … so important a part of anordinary householder’s enjoyment of his property that an interference withthis right would result in a reduction in the amenity value of the property.”
• NR had known about the knotweed and its potential risk to Cs but had nottaken reasonable steps to prevent or minimise the potential damage.
• Cs recovered damages representing: costs of treatment programme andinsurance-backed guarantee, miscellaneous losses, general damages andresidual diminution in value of their properties.
Coventry v Lawrence
Lawrence v Fen Tigers Ltd [2014] UKSC 13
• Not a property damage case.
• Damages v injunction:
• End to line of authorities suggesting that damages in lieu of aninjunction will only be awarded in exceptional circumstances.
• Prima facie position is that an injunction will be awarded – for D to showwhy one should not be granted.
• No presumption or inclination by the court either way.
• Relevance of D’s conduct.
• Relevance of planning permission for the matter complained of:
• Will not found a complete defence.
• Can alter the assessment of the character of the area.
• Relevant to consideration of the appropriate remedy. More likely toaward damages where there is PP in place.
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Exhausting Causation: Where Causation, Mitigation and Reliance Collide
David Turner QC & Alison Padfield
4 New Square Property Damage Afternoon
20 June 2017
The Issues
• In what circumstances does an act or omission of the purchaser and/or end user of a defective article relieve the manufacturer of liability for breach of contract or negligence?
• Is the proper analysis based on causation, mitigation or reliance – and does it matter?
Liability of manufacturer to end user in tort
• Where there is no reasonable possibility of intermediate examination, & the absence of reasonable care will give rise to a foreseeable risk of injury, a manufacturer owes a duty to end user to take reasonable care article will not cause bodily injury or damage to property:
• Donoghue v Stevenson 1932 HL (bodily injury; later extended to damage to property)
• But if a hidden defect is discovered before damage is caused, no room for application of this principle: article is now defective in quality but no longer dangerous:
• D&F Estates 1989 HL
• Murphy v Brentwood DC 1991 HL
Liability of seller to purchaser in contract
• Sale of goods: implied warranty on which purchaser can rely as excusing it from examining goods (no duty to examine)
• Mowbray v Merryweather 1895 CA
• Lambert v Lewis 1981 HL
• But no continuing warranty on which purchaser can rely once she knows goods are defective
• Lambert v Lewis 1981 HL
Duty, causation, reliance, failure to mitigate?
• Schering Agrichemicals v Resibel 1992 CA:• The facts• Causation analysis: failure breaks chain of causation• Mitigation analysis: purchaser cannot show damage
caused by fire was damage it could not reasonably be expected to have avoided
• Purchas LJ: does not matter whether causation or mitigation;
• Nolan LJ: mitigation; • Scott LJ: causation (but judgment has been criticised
as straying into remoteness: see County Ltd v Girozentrale Securities 1995 CA)
• Purchaser cannot recover where there is an earlier incident sufficient to alert it to existence of defect / pre-existing breach
Duty, causation, reliance, failure to mitigate?
• But (i) nature of duty assumed by defendant and (ii) claimant’s knowledge may be critical
• Trebor Bassett v ADT• The facts• Duty owed = exercise reasonable care and skill• No warranty that fire could not escape from the
hopper• Escape of fire from the hopper was considered
unremarkable at the time• 2004 fire was therefore insufficient to put
claimant on notice of defendant’s breach• correct approach was to apportion liability
between claimant and defendant• Decision potentially explained as one turning on lack
of pleading / evidence as to significance of the 2004 fire
Duty, causation, reliance, failure to mitigate?
• Howmet v Economy Devices Ltd (2016, CA):
• The facts
• Duty pleaded as duty to exercise reasonable care and skill in design and manufacture of thermolevel so as to prevent damage to purchaser’s property
• Fire alleged to have been caused by negligent design/manufacture of thermolevel
• Claim dismissed by Edwards-Stuart J: C had failed to establish causation (applying The ‘PopiM’)
• Majority of CA approached liability by reference to Donoghue v Stevenson and D&F Estates
• NB: no reference to Trebor Bassett
Duty, causation, reliance, failure to mitigate?
• Howmet aware of malfunction due to earlier incidents
• Jackson LJ (Sir Robert Akenhead agreeing):
• Manufacturer owed no continuing duty
or
• Breach of duty by manufacturer not causative of loss – ie break in chain of causation
• In any event, no room for application of 1945 Act (disagreeing with Nolan LJ in Schering that this would have been correct approach if available): an end user who has been alerted to a dangerous defect thereafter normally uses the chattel at his own risk
• Possible exception where claimant has no choice but to continue using defective chattel/building
Duty, causation, reliance, failure to mitigate?
• Arden LJ dissenting:
• True question = whether claimant has acted reasonably to remove/avoid the danger posed by the defect
• But same result (no recovery): true cause of fire = owner’s incompetent system of ‘operator vigilance’ in face of malfunction
• Had owner’s case not failed in this way, 1945 Act would have applied if judge had found fire was in some way caused by defective thermolevel(agreeing with Nolan LJ in Schering)
Knowledge & attribution
• Actual knowledge of defect is not necessary: purchaser must be alerted to need to inspect/investigate:
• Lambert v Lewis: farmer ought to have known that handle of locking mechanism was missing & to have investigated (NB that was the basis of his liability to the Lamberts)
• Schering: vendor entitled to expect purchaser’s production line to be properly supervised & incidents investigated; if earlier incident had been investigated, defect would have been discovered
Knowledge & attribution
• Trebor Bassett (Tomlinson LJ): • Whether an act is voluntary or amounts to a failure
to mitigate requires identification of natural person whose knowledge is to be equated with claimant’s
• Necessary to consider delegation of duties within claimant
• Howmet (Jackson LJ):• Knowledge of earlier incident may be attributed to
corporate purchaser on ordinary principles relevant employees were those to whom directors had entrusted task of operating line in safe manneror
• Purchaser may have constructive knowledge of earlier incident via junior employee who fails to report up the line
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Panel DiscussionFiona Sinclair QCNeil Hext QCSian MirchandaniAmanda Savage
Chaired by Mr Justice Stuart-Smith
20th June 2017
