Who Said There Was No Liability For Pure Economic Loss Whether You Are A Contractor Or A Designer?

Following the decision in Murphy v Brentwood District Council [1991] 1 A.C. 398 HL, it was generally considered that the scope for the imposition of a duty of care not to cause economic loss was severely fettered. For some 13 years prior to that it was considered that if there was sufficient proximity between wrongdoer and claimant and no considerations to negate the imposition of a duty of care, a cause of action would arise when a building presented an immediate or imminent danger to health or safety. The decision in Murphy exposed the reality that until physical injury is caused to something other than the building itself or to a person, the loss is economic only and in such circumstances the test formulated in Anns v London Borough of Merton [1978] A.C. 728, was not a sufficient basis for the imposition of a duty of care to avoid causing economic loss. Since it is rare for buildings to be so poorly constructed or, more precisely, for such defects to remain latent until the building begins to collapse, it looked as if the days of multi-party litigation were over. I well remember going to a conference with Richard Ferneyhough QC in 1989 as the law of tort slipped through our fingers!

Of course the classic authority for the recovery of economic loss in tort is Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] A.C. 465. HL Briefly, liability can arise in negligence where advice is given and relied upon to the detriment of the claimant. In Henderson v Merrett [1995] 2 A.C.145 HL, Lord Goff held that the principle underlying Hedley Byrne was an assumption of responsibility by the person providing information or services to the claimant, coupled with reliance by the claimant, and that once this was established it was unnecessary to consider whether it was "fair, just and reasonable" to impose liability.

Just a few months after Henderson v Merrett it became apparent that this principle could have wide-ranging applications. After all, professionals in the construction industry provide information or advice and contractors and subcontractors provide services, all of which can be said to be relied upon by the employer. Thus in Barclays Bank plc v Fairclough Building Ltd (1995) 44 Con. L.R. 35, specialists were engaged to clean an asbestos cement roof. They did so using pressure washers but without taking the recommended precautions. As a result the impact of the water created a slurry containing asbestos which entered the building. It was held...