Unformatted text preview: e proved, th action failed.60 Litigants found it difficult to establish this duty when the courts held rigid rule that if there was no injury to the actual property or person of the plaintiff
action was not recognised in common law.61 The case law further divided into two lines
of authority, one which awarded economic losses despite the conspicuous absence of a strict attachment to person or property, and one which adhered to the strict interpretat
of the restriction. This dichotomy in case authority persisted notwithstanding the far reaching social changes and the growth of contractual relationships in society since the
19th century. 5 * The Marpessa (1891) P. 403.
Caltex Oil (Australia) Pty. Ltd. v The Dredge "Willemstad" (1976) 136 C.L.R. 529 at 545 per Gibbs J.
Chargeurs Reunis Compagnie Francaise De Navigation A Vapeur and Others v English & American
Shipping Company  9 LI. L R 464 per Bankes LJ.
La Societe Anonyme De Remorquage A Helic v Bennets  1 K B 243 at 248 per Hamilton J.;
Simpson v Thompson  3 A p p Cas 279 at 289 per Penzance LJ. It is true that if another cause of
action could be found, i might provide the plaintiff with a remedy. Such was the case in Attorney-General
for NSW v Perpetual Trustee Co. Ltd. (1955) 92 C.L.R. 113, where the House of Lords recognised that if
the action had been founded per quod sevitium amisit [ancient c o m m o n law action based in master-servant
relationships] i would have succeeded.
59 253 T he 1 964 case of Hedley Byrne v Heller and Partners?1 w here a firm recovered purely
financial damages incurred from reliance upon statements made in a special purpose
financial assessment by the defendants, was restrictively interpreted when it was first
handed down. In 1966, the Queen's Bench refused to award economic losses to
auctioneers whose sale yards were closed due to the negligent release of virus from a
cattle disease research institute near the sale yards. Widgery J pointed out that:
[t]he world of commerce would come to a halt and ordinary life would become intolerable if the
law imposed a duty on all persons at all times to refrain from any conduct which might
foreseeably cause detriment to another, but where an absence of reasonable care may foreseeably
cause direct injury to the person or property of another, a duty to take such care exists. . . The
duty of care [arises] only because a lack of care might cause direct injury to the person or property
of s omeone, and the duty was owed only to those whose person or property was foreseeably at
risk. . . What [Hedley Byrne v Heller] does not decide is that an ability to foresee indirect or
economic loss to another as a result of one's conduct automatically imposes a duty to take care to
avoid that loss. The curial distinction between proprietary losses and economic losses maintained a
persistent resistance toward plaintiffs who claimed economic losses where physical
damage was lacking.65 In contrast, where some physical damage was caused by the
defendant's actions, the plaintiffs recovered all of the costs related to the physical
damage and, in addition, all the consequential economic losses which were sufficiently
associated with the material injury.66 The courts' position was clearly inconsistent. 62  A .C. 465.
S.C.M. (United Kingdom) Ltd. v W. J Whittall & son Ltd. (1971) 1 Q. B. 337; Electrochrome Ltd. v
Welsh Plastics Ltd. (1968) 2 All E.R. 205.
Wetter & Co. v Foot and Mouth Disease Research Institute (1966) 1 Q.B. 569 at 585-7 per Widgery J.
Electrochrome Ltd. v Welsh Plastics Ltd. (1968) 2 All E.R. 205; Dynamco Ltd. v Holland and Hannen
andCubitts (Scotland) Ltd. (1971) S L T 150; John C Dalziel (Airdrie) Ltd. v Burgh ofAirdrie (1966) S L T
(Sh Ct) 39; Caltex Oil (Australia) Pty. Ltd. v The Dredge "Willemstad" (1976) 136 C.L.R. 529 at 550.
British Celanese Ltd. v A. H. Hunt (Capacitors) Ltd. v W. J. Whittall & Son Ltd. (1971) 1 Q. B. 337
Spartan Steel & Alloys Ltd. v Martin & Co. (Contractors) Ltd. (1973) 1 Q. B. 27.
63 254 T he criticism of the inconsistency of the court's distinction and prohibition of recovery
of pure economic loss gained momentum during the same period the courts were attempting to restrict the application of Hedley Byrne. The dicta of Lord Denning M.R
Spartan Steel & Alloys v Martin & Co. 67 (1973) questioned the usefulness of historic doctrine of the courts, and instead advocated a reliance upon the creation and
maintenance of a curial policy:
The more I think about these cases, the more difficult I find it to put each into its proper pigeonhole. S ometimes I say: "There was no duty.' In others I say: 'The damage was too remote.' So
much so that I think the time has come to discard those tests which have proved so elusive. It
seems to m e better to consider the particular relationship in hand, and see whether or not, as a
matter of policy, economic loss should be recoverable, or not.68 Although Lord Denning M.R. questioned the illogical defense of the distinction which
the courts had raised between proprietary and economic interests, His Honour still
refused to award the additional economi...
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