Court of Appeal decision on economic loss

23 June, 2011

A recent Court of Appeal decision1 has confirmed that economic loss can be recovered as a result of negligent damage to property.

This case involved two separate incidents in which two heavy goods vehicle companies, Conarken Group Limited and Farrell Transport Limited, caused damage to Network Rail’s infrastructure. Conarken and Farrell both agreed that the damage had been negligently caused and were liable to pay Network Rail for the cost of repairing the damage itself.

Network Rail was also required to make compensation payments to the train operating companies affected by the disruption to the railways as a result of the damage caused. These payments, known as Schedule 8 payments, amounted to economic loss.

Although Conarken and Farrell accepted that they were liable to Network Rail for the cost of repairing the damaged infrastructure, they denied liability to Network Rail for the Schedule 8 payments, arguing that this economic loss was not a reasonably foreseeable consequence of the breach of their duty of care to Network Rail.

At first instance, the High Court found in favour of Network Rail and held that Conarken and Farrell were liable to Network Rail for both the cost of repairing the damage and for the Schedule 8 payments. The Court of Appeal upheld this decision, dismissing Conarken and Farrell’s arguments, and finding that the losses caused to Network Rail were a direct result of the negligence, were reasonably foreseeable and were not too remote to be recoverable.

This case demonstrates that where there has been negligent damage to property, the resulting economic loss can be recovered if such loss is reasonably foreseeable. The court in this case also confirmed that an objective test should be applied when considering foreseeability, stressing that whether something is reasonably foreseeable should not be dependent on what the negligent party in question foresaw.

 

1Link to judgment: Conarken Group Ltd and another v Network Rail Infrastructure Ltd [2011] EWCA Civ 644

 

 

Reviewed in 2015