Problem areas in damages: economic loss, remoteness and betterment. Helen Evans and Clare Dixon June 2017

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1 Problem areas in damages: economic loss, remoteness and betterment Helen Evans and Clare Dixon June 2017

2 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?

3 Economic loss Helen Evans

4 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.

5 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.

6 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

7 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.

8 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.

9 Foreseeability Section 2

10 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

11 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

12 Type of damage (1): Muirhead v Industrial Tank Specialities [1986] QB 507

said that over-stocking of the tank constituted the sole or a contributory cause of the

13 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.

14 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

15 An exception Holbeck Hall Hotel v Scarborough Borough Council [2000] QB 836

16 Betterment Section 3

17 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

18 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.

19 4 NEW SQUARE LINCOLN S INN LONDON WC2A 3RJ T: DX: LDE 1041 E: CLERKS@4NEWSQUARE.COM

20 Litigating Property Damage Claims: Tactics, Tips and Pitfalls Richard Liddell Miles Harris 20 June 2017

21 Evidence Gathering Expert Factual

22 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

23 Expert Evidence

Expert Evidence: PRIVILEGE (1) Litigation privilege will not be available unless the document is confidential and was created for the dominant purpose of that litigation (2) "What then is the purpose

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.

24 Expert Evidence: PRIVILEGE (1) Litigation privilege will not be available unless the document is confidential and was created for the dominant purpose of that litigation (2) "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) (3) But then came along Axa Seguros SA v Allianz Insurance plc [2011] EWHC 268 (Comm) (4) 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 (5) Strict approach of the Courts apparent from SFO v Eurasian Natural Resources Corporation Ltd (ENRC) 2017 [EWHC] 1017 (QB)

25 Wheeldon Bros v Millennium Insurance [2017] EWHC 218 (TCC) Claimant unsuccessfully challenges Defendant s use of Mr B as expert

26 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?

27 Recent TCC Order: Experts (1) Experts in like fields to hold discussions in accordance with rule by 2 May (2) Experts' joint statements pursuant to rule 35.12(3) to be prepared and filed by 5pm on 23 May (3) Experts reports to be served by 5pm on 7 June (4) Questions to be put to the experts by 5pm on 27 June 2017 with responses by 5pm on 14 July 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.

28 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

29 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

30 Costs Management Incurred Costs Asymmetry of Hourly Rates Realism

31 (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

32 (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

33 (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

34 Disclosure

35 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

36 Preliminary Issues

37 Preliminary Issues Larkfleet -v- Allison Homes Eastern Limited [2016] EWHC 195 (TCC)

38 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)

39 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

40 Litigating Property Damage Claims: Tactics, Tips and Pitfalls Richard Liddell Miles Harris 20 June 2017

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42 Fire, flood and tree roots recent developments in nuisance Nicola Shaldon Pippa Manby 20 June 2017

43 Fire Claims

44 Gore v Stannard [2012] EWCA Civ 1248 Testing the limits of Rylands v Fletcher I feel bound to hold that in an appropriate case damage caused by fire emanating from an adjoining property can fall within the Rylands v Fletcher rule. The appropriate case is likely to be very rare. Ward L.J.

45 Rylands v Fletcher He must bring or keep or collect an exceptionally dangerous or mischievous thing on his land D Owner/ Occupier He must have recognised or ought reasonably to have recognised, judged by the standards appropriate at the relevant place and time, that there is an exceptionally high risk of danger or mischief if that thing should escape, however unlikely an escape may have been thought to be His use of the land must be extraordinary and unusual having regard to all the circumstances of time and place The thing itself must escape from his property into or onto the property of another

46 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

47 Flood Claims

48 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 QB 485 Imposition of potential liability for nuisance arising from natural forces Measured duty of care The duty is a duty to do

49 A Measured Duty of Care Leakey v National Trust [1980] 1 QB 485 Imposition of potential liability for nuisance arising from natural forces Measured duty of care The duty is a duty to do that which is reasonable in all the circumstances, and no more than what, if anything, is reasonable, to prevent or minimise the known risk of damage or injury to one s neighbour or property

50 Extent of the Duty If a stream flows through A s land, A being a small farmer, and there is a known danger that in times of heavy rainfall, because of the configuration of A s land and the nature of the stream s course and flow, there may be an overflow, which will pass beyond A s land and damage the property of A s neighbours, perhaps much wealthier neighbours, it may require expensive works, far beyond A s means, to prevent or even diminish the risk of such flooding. Is A to be liable for all the loss that occurs when the flood comes, if he has not done the impossible and carried out these works at his own expense? Control factors include: The extent of the foreseeable risk and damage Complexity and cost of measures to avert Respective resources of the parties

51 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 manmade the distinction between natural features and those which are artificial in the 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 landscape may, 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 to rest 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

52 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

53 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

54 Vernon Knight Associates v Cornwall D.C. [2013] EWCA Civ 950 Jackson LJ: The judge is required to carry out a somewhat daunting multifactorial assessment. (i) A landowner owes a measured duty of care in both negligence and nuisance to take reasonable steps to prevent natural occurrences on his land from causing damage to neighbouring properties; (ii) In determining the content of the measured duty, the court must consider what is fair, just and reasonable as between the two neighbouring landowners. It must have regard to all the circumstances, including the extent of the foreseeable risk, the available preventive measures, the costs of such measures and the resources of both parties; and (iii) Where the defendant is a public authority with substantial resources, the court must take into account the competing demands on those resources and the public purposes for which they are held. It may not be fair, just or reasonable to require a public authority to expend those resources on infrastructure works in order to protect a few individuals against a modest risk of property damage.

55 Vernon Knight the outcome The Council was held liable: Effectively for operational negligence failure to operate an established procedure for clearing 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 on resources Adequate system in place Non-relevant factors: C s historic conduct in filling old ditch the court must determine the duties of landowners and local authorities by reference to current arrangements not historic events Relevance of insurance doubted

Developments since Marcic Thames Water is no ordinary occupier of land. Thames Water s obligations cannot be sensibly considered without regard to the elaborate statutory scheme.

56 Developments since Marcic Thames Water is no ordinary occupier of land. Thames Water s obligations cannot be sensibly considered without regard to the elaborate statutory scheme. The common law of nuisance should not impose on Thames Water obligations inconsistent with the statutory scheme. Marcic v Thames Water Utilities Ltd [2004] 2 AC 57 I consider that there is in principle, a boundary to be drawn between matters which would fall within the duties under s.94 (1) and are actionable under s.18 and matters which are actionable apart from the existence of any statutory duty. That boundary may be difficult to draw and may depend on such uncertain matters or decisions relating to policy or capital expenditure matters or decisions as contrasted with operational or current expenditure matters or decisions. Dobson v Thames Water Utilities Ltd [2008] Env.L.R. 21

57 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 D to 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 not omission

58 Operational vs strategic/policy (2) Bell v Northumbrian Water [2016] EWHC 133 (TCC) Cs claim in nuisance against D for undermining support to neighbouring land owned by third party with knock on effect to C s land D liable in nuisance failure to maintain pipes was operational rather than strategic

59 Tree root Claims

60 Berent v Family Mosaic Housing [2012] EWCA Civ 961 C alleged that plane trees on Highbury New Park caused property damage. 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 rules of 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 the court is required to carry out a balancing exercise between the risk of damage, the seriousness of the potential damage, the cost of removing the risk and the social value of the trees.

61 Robbins v London Borough of Bexley [2012] EWHC 2257 (TCC) and [2013] EWCA Civ 1233 Council liable although not notified of the damage to the property as knew of damage to other properties and thus reasonably foreseeable risk of damage to the property. Court should ask what D would have done had it taken reasonable steps to prevent the damage. Salutary reminder about critical importance of choice of expert.

62 Denness v East Hampshire District Council [2012] EWHC 2951 Decision on appeal of Mr Recorder Acton Davis QC shortly after CA decision Berent. Case failed on causation as Cs were unable to show that the trees or their roots had caused the damage and it appeared probable that the damage was, instead, caused by heave. Cs also failed to establish that there was sufficient risk that damage would occur and what preventative measures were required. Another salutary tale about having sufficient expert and lay evidence to support all facets of the claim.

63 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 by the roots of a particular tree is not foreseeable to a prudent landowner so there is no liability in nuisance, then if damage is caused and the landowner is put on notice of the damage then that landowner would be liable for the continuing nuisance based on that actual knowledge. Secondly, if a neighbour contends that damage has been caused by a landowner s trees then the neighbour should give notice to the landowner of any proposed remedial work so that the landowner can take any necessary steps to abate the nuisance, otherwise remedial work may not be recoverable.

64 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 planning authority, subject to such exceptions and conditions as may be specified in the order, of compensation 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 was not reasonably foreseeable; and (b) where the damage was reasonably foreseeable by the property 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 was for the Council to show that the exceptions were engaged and it had not done so. Claim succeeded even though the experts essentially agreed that the damage to the property would have occurred in any event. The Upper Tribunal said that causation was not relevant to statutory compensation under s.203. Date for assessing foreseeability: when consent refused cf. nuisance (date of damage).

65 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

66 Japanese Knotweed

67 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.

68 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.

69 Williams v Network Rail Infrastructure Ltd Cardiff County Court decision of a Recorder. Appeal heard in CA early June 2017 decision awaited. Claim by two homeowners against NR in private nuisance. Argued that knotweed had (a) encroached on to their land from a railway embankment and (b) the mere presence of knotweed in close proximity interfered with enjoyment of their land because they could not sell their properties at proper value. (a) failed because no physical damage to the properties. However, (b) succeeded with the judge holding: the right to use and dispose of a residential property at a market value is so important a part of an ordinary householder s enjoyment of his property that an interference with this 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 not taken reasonable steps to prevent or minimise the potential damage. Cs recovered damages representing: costs of treatment programme and insurance-backed guarantee, miscellaneous losses, general damages and residual diminution in value of their properties.

70 Coventry v Lawrence

71 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 an injunction will only be awarded in exceptional circumstances. Prima facie position is that an injunction will be awarded for D to show why 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 to award damages where there is PP in place.

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73 Exhausting Causation: Where Causation, Mitigation and Reliance Collide David Turner QC & Alison Padfield 4 New Square Property Damage Afternoon 20 June 2017

74 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?

75 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

76 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

77 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 / preexisting breach

78 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

79 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 Popi M ) Majority of CA approached liability by reference to Donoghue v Stevenson and D&F Estates NB: no reference to Trebor Bassett

80 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

81 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)

82 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

83 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 manner or Purchaser may have constructive knowledge of earlier incident via junior employee who fails to report up the line

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85 Panel Discussion Fiona Sinclair QC Neil Hext QC Sian Mirchandani Amanda Savage Chaired by Mr Justice Stuart-Smith 20 th June 2017

Problem areas in damages: economic loss, remoteness and betterment. Helen Evans and Clare Dixon, 4 New Square

Problem areas in damages: economic loss, remoteness and betterment Helen Evans and Clare Dixon, 4 New Square Economic loss (Helen Evans) What is the general rule, why does it exist and when is it relevant?