Date: Fri, 11 May 2007 09:22

From: Adam Kramer

Subject: Misstatement, physical damage and assumption of responsibility

A rejoinder to RS on this misstatement/economic loss point:

Clay v Crump is not a misstatement case - there is no misstatement to the third party. As against the third party, the architect can be characterised as a manufacturer, i.e. as one responsible for putting the dangerous building into circulation. It may be a difficult question as to when one's involvement means that one has crossed the line but I think it is an important line. The Nicholas H and Philcox are both cases where the defendant played a subsidiary role and so is not responsible for putting the thing into the world (like a manufacturer etc).

For Buxton LJ in Perrett, the inspector had crossed the line and was responsible for putting the thing into the world ("it was wrong to speak of the first defendant as primarily responsible, with the second defendant's role being subsidiary. The second defendant was not simply an inspector from outside, whose approval was in practice obligatory on the owner because of insurance pressures. Rather, as the judge found, the second defendant was involved with the inspection of the aircraft throughout"), and Hobhouse LJ in his less satisfactory judgment agreed ("Once the defendant has become involved in the activity which gives rise to the risk, he comes under the duty to act reasonably in all respects relevant to that risk"). Buxton LJ confirmed, however, that if the defendant was not so involved then there would be no proximity without an assumption of responsibility because the loss caused would, in that case, be too indirect (i.e. a misstatement that needs reliance by the claimant for loss to be caused).

I know that I am grouping misstatements with nonfeasance, but that is because like you I do not think assumption of responsibility is necessarily a misstatement thing. Assumption of responsibility is needed where the loss is only caused by the claimant's reliance upon the defendant in a situation where the claimant would normally have to pay to be entitled to so rely and otherwise does so at his own risk (e.g. relying upon the defendant's statement being correct, or on the defendant taking action, or on the defendant performing the service well enough to improve matters, rather than relying upon objects and buildings not being dangerous, which we are all entitled to do without paying or an assumption of responsibility). (For me, the economic loss/physical harm distinction is not needed to explain these cases.)

As for the blow torch, the blow torch is not itself dangerous (reasonable people would not need it to have a warning on it regarding hair drying, unless one takes the 'caution this bag of peanuts may contain nuts' approach to consumer intelligence) so I am not liable for putting something dangerous into the world. (Dangerous means likely to cause harm as a result of the disparity between what it is and what it appears to be: opaque bottles of ginger beer are dangerous.) I may assume responsibility to you or your children because you are a dimwit and therefore in a limited sense under my care (like serving a drunk drinks perhaps) but more likely I think that I am not liable to your children.

Adam

-----Original Message-----
From: Robert Stevens
Sent: 10 May 2007 17:25
Subject: Re: FW: [Fwd: [Fwd: ODG: RE: Good news/bad news]]

In reply to Adam:

(1) I'd certainly accept that the primary responsibility for our own well being lies with ourselves. So if someone stupidly runs a risk of which they ought to be aware they cannot look to shift the harm they suffer on to someone else (see McKew v Holland).

(2) I am very reluctant to accept that liability for a misstatement causing physical harm to someone else requires an assumption of responsibility towards that person. If I am a well known dimwit and borrow a blow torch from you, if you foolishly tell me that it is ok to use it as a hair drier, I think my children should have a claim against you for injuries they suffer as a result of my relying on your misstatement. You are certainly not assuming responsibility towards them.

Defective statements in architects plans where the building collapses on third parties is another obvious example. Clay v Crump [1963] 3 AER 687 has long been good authority on this.

(3)

(i) Perrett v Collins does not establish that the claim will fail where there is no assumption of responsibility. It establishes that an assumption of responsibility is a sufficient condition for owing a duty, not a necessary one. I'd accept that.

(ii) Philcox v CAA was not a misstatement case, as the court itself makes clear, but one where the CAA had negligently failed to prevent the claimant from suffering harm (ie it was what is usually called a non-feasance case).

(iii) Marc Rich is an odd case, determined, I think, by a concern not to upset the pattern of risks determined by the various conventions in international carriage.

(4) 'Assumption of responsibility' is nothing necessarily to do with the law of misstatements, as the House of Lords in Hedley Byrne make clear by the examples they rely upon. So, Wilkinson v Coverdale is not a misstatement case and the Good Samaritan was not making a misstatement to the man stripped of his raiment when he assumed responsibility towards him by picking him up and putting on the back of his donkey.

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