Negligence: duty of care problem areas

You will recall that the origins of tort law were based upon losses in the form of physical injury and property damage. As negligence began to come to prominence in the second half of the nineteenth century, duties of care regarding physical injury and property damage continued to be recognized. However, psychological injury and economic loss went largely uncompensated, in cases where they did not occur as a consequence of physical injury or property damage. The twentieth century saw the significant development of duties of care in both of these areas and they present some of the most challenging but topical issues in the law of tort.

Firstly, psychiatric injury. It is important that you keep in mind that a certain level of serious injury must be sustained before a claim can begin. The claimant must have a medically recognized psychiatric condition - mere grief or anger will not suffice. Then, in order to find out if a duty of care was owed, foreseeability of this type of injury must be established. We do this now by determining if the claimant is a primary or secondary victim (see Page v Smith). A primary victim is one who either suffered physical injury or reasonably believed themselves to be at risk of physical injury. If physical injury was foreseeable, then psychiatric injury will be as well. The secondary victim is one who we might think of as a bystander - one whose injury has occurred as a result of observing the impact of an event on the primary victim. For them, what is known as the Alcock test must be applied to determine duty, and it is important that you understand this in some detail. There are many grey areas in psychiatric injury so you must familiarise yourself with cases illustrating a range of unusual factual scenarios.

When it comes to pure economic loss, it is important from the outset to be very clear in your mind what constitutes pure economic loss. We have seen that financial compensation is the main remedy sought in legal claims regarding torts. For example, if A’s car is damaged by negligent driver B, a successful negligence claim will require B to pay A the financial sum which will restore A’s car to its pre-accident condition. We would not describe this as ‘pure economic loss’ because it derives from the physical damage to the car. Pure economic loss is that which is not linked to physical injury, death, or property damage. It comes in the shape of failure to receive expected future profit or receipt of some financial benefit or it may result from the acquisition of an item of defective property, or be due to property damage sustained by a third party. As with psychiatric injury, there has been a judicial reluctance to recognize duties of care in negligence in respect of pure economic loss, for policy reasons to do with the overlap of this area with contract law, as well as the floodgates issue. You’ve seen that when the damage is incurred due to the creation of a defective product, such as a building, there will not be a duty of care, as in Murphy v Brentwood District Council. However, when the damage arises from a negligent misstatement, Hedley Byrne v Heller in 1964 established the possibility of a duty of care, if a ‘special relationship’ existed between the claimant and the defendant. You’ve learned that ‘misstatement’ can include references, advice, information and even the provision of services, and it is important to learn the key cases in which Hedley Byrne was applied, such as Caparo v Dickman. The test for duty of care for pure economic loss now can include the concept of ‘voluntary assumption of responsibility.’