Date: Fri, 11 Feb 2005 18:05:25

From: Robert Stevens

Subject: Remoteness

As an inclusionary rule HvB is clearly insufficient. No one thinks that all loss which is suffered which is reasonably foreseeable is recoverable either in contract or tort (SAAMCO, Chester v Afshar etc).

Whether we should abandon HvB as an exclusionary rule is another issue.

In those cases where the tortious duty depends upon a voluntary assumption of responsibility (eg Brown v KMR) the contract test must apply. These cases are decided in this way because the duty in tort arises from a 'voluntary assumption of responsibility' (i.e. the duty to take care arises from the promise to take care both in contract and tort.)

If you take the view (per Lord Reid in Heron II) that the tort test is more generous than the contract test because in a contractual relationship you have the opportunity to warn the other side of potential risks ("I really need you to get here on time as I don't have a spare mill shaft"), where liability is concurrent and the opportunity to warn exists you should apply the contract test.

If you take the view that the contract test is determined by those risks we have consented to run, where the tortious duty is similarly based upon the assumption of responsibility the test should be the same.

But in Doughty v Turner (twisted) can it really be right that the contract test trumps tort?

A Ltd employs B to work dipping asbestos into a melt. Injuries from splashes are, at the time of contracting, reasonably foreseeable but no other injury. After B has started work it becomes apparent that the asbestos can explode. B is subsequently seriously injured because of carelessness for which A Ltd is responsible. A claim is available in tort or in contract for the breach of an implied duty to provide a safe system of work.

The traditional formulation of the contract test would indicate that the loss is too remote as the injury was not within the contemplation of the parties at the time of contracting (H v B). Under the formulation of the tort test in WM (1) as it was foreseeable at the time of breach.

I would have thought the more generous tort test must apply. B didn't have the opportunity to warn of the risk - they didn't know of it. The duty in tort is independent of any assumption of responsibility by B Ltd.

Perhaps Lord Denning's view in Parsons v Uttley is near (if not quite) the truth after all - we have one rule for economic loss (at least where dependent upon an assumption of responsibility) and another for other forms of loss? We would have to modify our traditional formulation of the rules though.

RS

----- Original Message -----
From: Adam Kramer
Sent: Friday, February 11, 2005 5:39 PM
Subject: ODG: Remoteness

On the latest discussion:

Price: I agree with David that the price is relevant to remoteness. For me it is because the price is a relevant factor in determining what responsibility the other party can be assumed to have taken. I think that the 'foreseeability without tacit assumption' theory collapses in the face of the old taxi example:

Bill Gates gets into a taxi at 11.30am and asks the driver how much it costs to get to the airport. £15, says the driver. Bill tells the driver that he has a meeting at the airport at 12pm with some very easily-offended people, and that if he is late then a £100 million deal will definitely collapse and Bill will personally lose £20 million in profits. He asks if the driver can promise to get him to the airport in time for the meeting. "No problem guvnor", says the driver. But he fails.

Of course, the driver is not liable even though he foresaw (through specially communicated information) that £20 million would be lost as a result of breach of the undertaking to arrive by 12pm. However if the driver had replied to Bill's question with: "No problem guvnor, but the journey will cost you £100,000", then we can be sure that the driver has assumed responsibility. The price increase has "signalised" (Lightman QC, Seven Seas Properties Ltd. v Al-Essa (No. 2) [1993] 1 WLR 1083 , 1088 (Ch D)) the assumption of responsibility. The increase in price is not necessary for such an assumption - if the taxi driver was known to be a billionaire or a compulsive gambler, or the airport was next door, then Bill might also reasonably interpret the driver as taking responsibility - but it does the job.

Concurrent liability and Doughty v Turner: I agree with Jason and Andrew that contract limits tort. Anyway, where the tort duty is due to an assumption of responsibility, the scope of that assumption will be governed by exactly the same factors (at the same time- the time of contracting/assuming responsibility) as the scope of the contract duty - indeed, contract judges can learn a few tricks from tort judges as to working out the scope of assumed responsibility (see particularly Banque Bruxelles v Eagle Star / South Australia Asset Management v York Montague). I think John Cartwright talks about this in his classic article [1996] CLJ 488. Also, it is my view that the scope of responsibility for personal injury will not be as nicely sculpted by price/insurance and other known factors, since most people cannot be reasonably assumed to take responsibility for their own personal injury arising from breach however cheap the service. Parsons v Uttley Ingham might be based on similar reasoning. I have a sneaking suspicion that there is still a problem in Robert's Doughty example though, but will have to give it some wet-towel-around-the-head thinking.

Strict Liability: Robert, I don't see a problem with contract liability being strict and yet the scope of responsibility being often dependant upon foreseeability. Both are subject to the parties' agreement, it is merely that it is generally normal to take a promise as being subject to strict liability but a scope of responsibility for consequences that is limited by factors dependant upon why the promisor is making the promise (to make money) etc.

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