ATTORNEY(S) ACTS. Firstly, contract was traditionally the means by which pure economic loss was compensated and the courts were reluctant to disturb this. Hedley Byrne v Heller Smith v Eric S Bush Secondly, if the first question is answered affirmatively, it is necessary to consider whether there are any considerations which ought to negative, or to reduce or limit the scope of the duty or the class of person to whom it is owed or the damages to which a breach of it may give rise”. In … In all cases, he said, “First one has to ask whether, as between the alleged wrongdoer and the person who has suffered damage there is a sufficient relationship of proximity or neighbourhood such that, in the reasonable contemplation of the former, carelessness on his part may be likely to cause damage to the latter—in which case a prima facie duty of care arises. : However, the courts held that there was a duty of care between the builders and factory owners with regard to the defect in the floor. The defendants could not be expected to foresee that, years later, their advice to their patient might be communicated to and relied on, hence the relationship was not sufficiently proximate. Facts . Damage to the metal (physical damage to property); Loss of profit from the sale of the metal (economic loss from damage to property); Loss of profit on metal which would have been processed (pure economic loss). In most cases, what we are really talking about is not loss, but failure to make a gain. Wikipedia. When the Hedley Byrne principles are fulfilled, pure economic loss is recoverable where it is caused by, Pure economic loss is still not recoverable where it is caused by. Hedley Byrne asked National Provincial to check on Easipower. Their property was damaged due to insufficient foundations which failed to meet the statutory requirements (set out in local byelaws). The accountants (defendants) to a firm of solicitors failed to uncover the fact that a senior partner in the firm was defrauding clients, and over 300 clients claimed compensation from the Law Society. Caparo v Dickman Anns v Merton London Borough Council  UKHL 4,  AC 728. The defendants negligently cut the power of the claimant’s furnace, making the metal solidify and the claimants were forced to shut down temporarily. The Anns Test. The House of Lords then laid down requirements which claimants would need to satisfy in order to establish a duty of care under Hedley Byrne. Pure economic loss is where a claimant has suffered financial damage that does not directly result from personal injury or damage to property – for example, where a product bought turns out to be defective, but does not actually cause injury or damage to other property. We are not responsible for republished content from this blog on other blogs or websites without our permission. This is known as negligent misstatement. But the court decided that the cracks could be viewed as damage to property rather than economic loss, and therefore compensated. There was sufficient proximity between the accountant and the Law Society, and it was fair and reasonable to impose a duty. Anns v Merton London Borough The claimant’s house was badly built and the defective foundation had caused cracking in the walls. In fact, the time off resulted in his losing the allowance for ever. Anns v Merton London Borough Council A.C. 728 was decided in the House of Lords. In the case of Anns v Merton 1977, the plaintiffs were tenants in flats. Despite this, the significance of this case did not come until White v Jones.