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Anns & Others v Merton London Borough Council (1977). 492HL

The plaintiffs leased seven flats and maisonettes built in 1962 from Merton. In 1970 structural movements began to occur, resulting in cracked walls. The plaintiffs contended that these were due to inadequate foundations. A claim was made against Merton for damages in negligence: it was argued that a duty of care was owed to the owners or occupiers by the local authority under the Public Health Act 1936. Under that Act authorities had power to inspect foundations to ensure compliance with bylaws. The defendant authority failed to inspect the foundations under the statutory powers vested in it. It was held that authorities exercising their statutory functions and duties to control building work under the Public Health Act 1936 could be held liable for negligent inspection of foundations or failure to properly carry out a building inspection. -

D & F Estates Ltd v Church Commissioners for England & Others (1989). 368 HL

The Church Commissioners owned a block of flats built by a firm of contractors (who were the third defendants). The plastering work was subcontracted. Fifteen years after construction the plaintiffs, who were lessees and occupiers of a flat in the block, found that plaster in their flat was loose. As there was no direct contractual relationship between the plaintiffs and the subcontractors an action was brought in tort for the cost of remedial work, both already done and estimated for the future. The Court of Appeal found that the main contractor had employed a competent subcontractor and therefore no duty of care was owed to the plaintiffs. They also found that the cost of replacing the defective plaster was pure economic loss and not recoverable in tort. The House of Lords held that damages were not recoverable in tort in respect of the defect in the product itself, but that such a claim lay only in contract. Damages were recoverable in tort only where a defective product caused damage or injury other than to the defective product itself, -

Donoghue v Stevenson

Snail in bottle of ginger beer. Purchased for friend. Privity of contract prevented claim under contract. Held that manufacturer owed a duty of care not to cause her personal injury. "You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour." (Lord Atkin) - Citation: [1932]SC(HL) 31

Galoo Ltd v Bright Grahame Murray (1994) 1 WLR 1360

Galoo had a subsidiary known as Gamine. Various share purchases and loans were made by third parties based on the audited accounts of the companies. One company, Hillsdown, purchased 51% of the shares in Gamine, with the price fixed by reference to Galoo’s profits, as stated in the accounts. Hillsdown alleged that the auditors were aware of their (Hillsdown’s) intention to purchase the majority of the shares in Gamine. It was held, and confirmed by the Court of Appeal, that a duty of care existed. -

Hedley Byrne & Co. Ltd. V. Heller and Partners (1964) 575 HL

Hedley Byrne were advertising agents who needed to check the creditworthiness of a prospective client. The bankers, Heller, provided a favourable reference headed ‘Without responsibility’. The plaintiff relied on this reference and lost a large amount of money. They sued the bankers. The House of Lords held that there is liability for negligent misstatement where the provider of the information knows that it will be relied upon. However, in this case, Heller were able to avoid liability through their endorsement of ‘Without responsibility’. -

Henderson and Others v Merrett Syndicates Ltd (1994).145HL

Merrett Syndicates Ltd. acted as both Members’ Agents and Managing Agents. The plaintiffs were Lloyd’s ‘names’ who were either placed on Merrett’s own syndicates or through other Managing Agents. The relationship was evidenced by agency and sub-agency agreements that gave the agent absolute discretion in respect of underwriting business conducted on behalf of each ‘name’. It was accepted that there was an implied term that the agents would exercise reasonable skill and care in the carrying out of their duties. The plaintiffs alleged that the defendants had been negligent in the management of the plaintiffs’ syndicate and sought to establish a duty of care in tort in addition to any contractual duty. The issues were:- 1. Whether members’ agents owed a duty of care to their members notwithstanding contractual relationships; 2. Whether managing agents appointed as sub-agents by members’ agents had a duty of care to indirect ‘names; 3. Whether members’ agents were responsible to ‘names’ for any failure to exercise reasonable skill and care by the managing agents to whom underwriting was delegated by the members’ agents; 4. Whether the members’ agents were required to exercise care and skill only in relation to those activities which members’ agents by custom and practice actually performed for the ‘names’ personally. The House of Lords held that the relationship between the parties was itself sufficient to give rise to a duty to exercise reasonable skill and care. Managing agents therefore owed a duty of care to ‘names’ who were members of syndicates under their management. The agreements that gave the agent absolute discretion in respect of underwriting business did not exclude a duty of care. The discretion defined the scope of the agents’ authority, not the standard of skill and care required. Members’ agents were responsible to names for any failure to exercise reasonable skill and care by managing agents to whom underwriting was delegated and an independent tortious duty of care between parties is not necessarily prevented by the existence of a contract between them. -

Junior Books Ltd v Veitchi & Co. Ltd (1982).520HL

Junior Books commissioned a factory, and their architects nominated Veitchi, as specialist subcontractors, to lay a concrete floor. The subcontractors entered into a contract with the main contractor, but not with the owners. The floor developed cracks and Junior Books brought an action against the subcontractors in negligence. They claimed the cost of replacing the floor and as well as consequential economic loss. The subcontractors claimed that in the absence of a contractual relationship, and as the floor was not a danger to persons or other property, there was no cause of action. The Court of Session held that the owners were entitled to proceed with the action. The subcontractors appealed on the basis that subcontractors were similar to manufacturers or suppliers of goods or work, and the decision would give the same warranty regarding the goods to an indeterminate class of potential litigants. The House of Lords found against the subcontractors. They maintained that there was physical damage as well as consequential economic loss and proximity. The subcontractors were nominated by the owners, and must have known that the owners relied on their skill and experience, therefore the damage was a direct foreseeable result of their negligence. -

Murphy v Brentwood District Council (1991) AC398

Mr Murphy had purchased his house from the local council. The house developed serious cracks which appeared in the internal walls, wet patches that appeared in the lawn, and a gas pipe and soil pipe that cracked. It was found that damage had occurred as the result of the design of a concrete raft being defective and unsuitable for the site. The council had negligently relied on consulting engineers who had approved the design of the raft as suitable. The House of Lords found, based on public policy, that there was no course of action in tort. -

Verity and Spindler v Lloyds Bank plc (1995) CLC 1557

A bank manager advised Verity and Spindler to buy a particular property, saying that it would be a viable project for re-development, having previously advised them to turn down another property. Verity and Spindler acted on the advice and borrowed from the bank to fund the work. The work took much longer than anticipated causing them financial loss. It was held that the bank manager had assumed the role of financial adviser and therefore also owes a duty to advise on the wisdom of the proposition. -