London, UK: A recent Court of Appeal decision in England has clarified the extent of a person’s duty of care. A negligent driver damaging revenue-generating property is liable not just for simple reinstatement costs says David Arnott at law firm MacRoberts.
The appeal case, Conarken Group Limited and Farrell Transport Limited v Network Rail Infrastructure Limited, concerned two instances of negligent driving. In each instance Network Rail infrastructure was damaged and temporarily put out of use.
Network Rail was contractually liable in damages to the train operating companies (known as schedule 8 payments) in the event of unavailability of the track.
“It is settled law that where there has been physical damage to property, the direct and foreseeable economic losses flowing naturally from that physical damage may be recoverable in law. Even so, there is routinely much debate about how far such a general principle extends and the categories of economic loss so recoverable,” says Arnott.
“The matter at issue in this case was whether economic loss of the type sustained by Network Rail under schedule 8 was recoverable and if so on what basis.”
The Appeal Court upheld the decision of the trial judge and held that losses of the type sustained by Network Rail – well over a £1m – were recoverable.
There are three key decisions from this case says Arnott. Making a contract does not confer a licence on the contracting parties to determine the extent of third party liability.
Secondly, loss of future business as a result of damage to property may be recoverable; the question remains one of forseeability. That losses would be sustained by Network Rail, where its apparatus was damaged, was reasonably foreseeable, said the court. The complexity of the arrangements governing the method by which that loss is calculated does not limit its recovery, in itself. Such an approach was not tantamount to conferring a licence or free reign on contracting parties to determine the extent of third party liability the court said.
Thirdly, one of the recognised categories of recoverable economic loss is loss of income following damage to revenue generating property. It follows that “where a claimant can demonstrate that the property damaged was ‘revenue generating’, a claim for economic loss may be on firmer ground,” Arnott says.
“In summary, quite separate from being a cautionary tale for negligent drivers, those working upon or in close proximity to, revenue generating property (in particular) should, in the absence of contract provisions limiting the same, be aware of the extent of the duties which may be placed upon them.
“Liability may well extend significantly beyond simple reinstatement costs. In contrast, those who sustain physical damage to their property should sensibly consider the extent and nature of the losses sustained with a view to exploring whether they may be recoverable in law,” Arnott says.
For further information contact David Arnott or Chris Duff
