In the case of Anns v Merton 1977, the plaintiffs were tenants in flats. The flats suffered from damage due to improper foundations which were 2ft 6in deep instead of 3ft deep as required. The defendant Council was accountable for inspecting the foundations during the flats construction and had failed to do so. The House of Lords held that the defendant owed a duty of care to ensure the foundations were of the right depth. Lord Wilberforce introduced a two stage test for imposing a duty of care.
In the case of Murphy v Brentwood, the Local Authority failed to inspect the foundations of the building the plaintiffs were residing in. The negligent inspection of the foundations resulted in the building being unstable. The plaintiff could not afford the repairs and had to sell the house at a loss. The plaintiff wanted to recover the loss made on the house from the Local Authority.
In the cases of Anns v Merton and Murphy v Brentwood, the grounds for action was for the court to consider if the local authorities were bound by a duty of care towards the tenants of the flats. In Anns – Lord Wilberforce proposed a new two stage test for the duty of care. The first stage being whether there is a sufficient relationship of proximity between the wrongdoer and the person who has suffered; in which case an on the facts duty of care arises. Secondly if the first question is answered yes, whether there are any considerations which reduce the duty owed. Possible defences such as policy reasons and disclaimer of liability would limit a duty of care otherwise owed.
In Anns v Merton, the claimants initial hearing failed because the action was taken six years after the first sale of the flat. It was then successfully appealed on the point that action could only be taken when it was discovered. Lord Wilberforce classified the damage suffered by Mr Anns as physical damage to the property and that where there was foreseeability and proximity there should be a duty of care. Thus the defendant was held liable.
In Murphy v Brentwood, the initial hearing decided that the Councils engineers had not checked or approved the inadequate foundations, therefore the Council were held liable to the plaintiff. However in 1990, on appeal, the House of Lords decided that the reference to Anns should be overruled with Lord Kieth stating ‘although the damage in Anns was characterised as physical damage by Lord Wilberforce, it was purely economic losses. Thus unable to depend on Anns, the plaintiff lost the case.
Anns v Merton showed a test for determining the duty of care in the tort of negligence by the two stage test and shows the English courts willingness to provide for claims in negligence for pure economic loss. This two-stage test on the whole favours the plaintiff, because it suggests that once `proximity’ is established, there is an on the facts duty of care, which can only be reduced on policy grounds.
In Anns, Lord Wilberforce had to deal with a new factual situation whereas the situation in some later cases had arisen in other previous case precedent. Rejecting the Anns approach in Murphy v Brentwood suggests that a judge faced with a new factual situation should consider earlier cases if relevant and extend their principles in the case, thus moving away from the concept that there should be a general principle of duty of care.
In Donoghue v Stevenson this case established modern concept of negligence in English law. In this case the claimant had been bought a bottle of ginger beer (in opaque bottle) and having drank some, then discovered the decomposing remains of a snail in the bottle. She suffered shock and gastro enteritis but could not bring an action for breach of contract against the bar owner, as her friend had paid for the ginger beer. She therefore sued the manufacture of the ginger beer in tort for negligence. Lord Atkin decided that the manufacture did owe a duty of care as the ginger beer was in an opaque bottle and once sealed could not be examined for impurities until the consumer opened the bottle and consumed its contents.
The basic test for duty of care is now summarised by Capro v Dicman. Previous case precedent should be used if it is relevant, but if there is no precedent then three stage test should be adopted:
Was the loss to the claimant foreseeable?
Was there sufficient proximity between the parties?
Is it fair, just and reasonable to impose a duty of care?
In Caparo v Dickman the loss suffered was economic due to a negligent statement. The House of Lords held that while it is probable that investors may use published accounts to make decisions, the accountants who created the accounts would not be liable for losses as a result of the accounts being incorrect. This is because there is not enough proximity between the accountants and those who rely on them.
The case of Hedley Byrne v Heller & Partners Ltd, shows there can be liability for pure economic loss for negligent statements, not reliant on contractual relationships. The House of Lords held that pure economic loss did not come from a contractual relationship but that of ‘assumption of responsibility’ or where a ‘special relationship’ exists. However in this case, the defendant’s disclaimer was enough to discharge any duty owed to the plaintiffs – whom lost the case for damages.
To summarise, there have been differing approaches in deciding the issue of duty of care and negligence. Rejecting the two stage test in Anns and the judgments in later cases show that the courts have found it favourable to develop new categories of negligence by using previous case precedent. If there is no relevant precedent – the general principle now accepted is the three stage test established in Caparo v Dickman i.e. foreseeability of harm, proximity of relationship and just and reasonable to impose a duty.
Within a civil engineering or construction contract, the above issues do play a significant part. The case of Anns v Merton and its effect on Murphy v Brentwood, because of the direct correlation and its significance on economic loss, this can be linked in the same way to a construction contract. For example if you take out a contract with a contractor to carry out some work which have been approved but later the works are defective – Legal action can be taken because of negligence and a duty of care that is owed upon the contractor to the client to carry out the correct standard of work.
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