Spartan Steel & Alloys Ltd v Martin & Company (Contractors) Ltd

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeTHE MASTER OF THE ROLLS,LORD JUSTICE LAWTON
Judgment Date22 June 1972
Judgment citation (vLex)[1972] EWCA Civ J0622-3
Date22 June 1972

[1972] EWCA Civ J0622-3

In The Supreme Court of Judicature

Court of Appeal

Appeal by defendants from judgment of Mr. Justice Faulk, on at Birmingham Assizes 14th December, 1971.

Before

The Master of the Rolls (Lord Denning)

Lord Justice Edmund Davies

Lord Justice Lawton

Between
Spartan Steel And Alloys Limited
Plaintiffs Respondants
and
Martin & Company (Contractors) Limited
Defendants Appellants

Mr. RICHARD TUCKER, Q.C., and Mr. A. ASHWORTH (instructed by Messrs. William F. Hatton & Co. of Dudley, Wores.) appeared on behalf of the Appellant Defendants.

The Honourable Christopher BATHURST (instructed by Messrs. Herbert Oppenheimer, Nathan and Vandyk) appeared on behalf of the Respondent Plaintiffs.

THE MASTER OF THE ROLLS
1

Spartan Steel have a factory in Birmingham where they manufacture stainless steel. The factory obtains its electricity by a direct cable from a power station of the Midlands Electricity Board.

2

In June 1969 contractors called Martins were doing work on a road about a quarter-of-a-mile away. They were going to dig up the road with a big power-driven excavating shovel. They made inquiries about the place of the cables, mains, and so forth, under the road. They were given plans showing them. But unfortunately their men did not take reasonable care. The shovel damaged the cable which supplied electricity to the Spartan works. The Electricity Board shut down the power whilst they mended the cable.

3

The factory was at that time working continuously for twenty-four hours all round the clock. The electric power was shut off at 7.40 p.m. on 12th June, 1969, and was off for 14½ hours until it was restored at 10.00 a.m. on 13th June, 1969. This was all through the night and a couple of hours more. But, as this factory vas doing night work, it suffered loss.

4

At the time when the power was shut off, there was an arc furnace in which metal was being melted in order to be converted into ingots, electric power was needed throughout in order to maintain the temperature and melt the metal. When the power failed, there was a danger that the metal might solidify in the furnace and do damage to the lining of the furnace. So the plaintiffs used oxygen to melt the material and poured it from a tap out of the furnace. But this meant that the melted material was of much less value. The physical damage was assessed at £368.

5

In addition, if that particular melt had been properlycompleted, the plaintiffs would have made a profit on it of £400.

6

Furthermore, during those 14½ hours, when the power was cut off, the plaintiffs would have been able to put four more melts through the furnace: and, by being unable to do so, they lost a profit of £1,767.

7

The plaintiffs claim all those sums as damages against the contractors for negligence. No evidence was given at the trial: because the defendants admitted that they had been negligent. The contest was solely on the amount of damages. The defendants take their stand on the recent decision in this Court of S.C.M. ( United Kingdom Ltd M.J. Whittall & Sons (1971) 1 -Q.E. 337. They admit that they are liable for the £368 physical damages. They did not greatly dispute that they are also liable for the £400 loss of profit on the first melt, because that was truly consequential on the physical damages and thus covered by S.C.M. Ltd. v. Whittall. But t by deny that they are liable for the £1,767 for the other four melts. They say that was economic loss for which they are not liable. The Judge rejected their contention and held them liable for all the loss. The defendants appeal to this Court.

8

Mr. Christopher Bathurst, for the plaintiff, raised a point which was not discussed in S.C.M. V. Whittall. He contended that there was a principle of English law relating to 'parasitic damages'. By this he meant that there are some heads of damage which, if they stood alone, would not be recoverable: but, nevertheless, if they can be annexed to some other legitimate claim for damages, may yet be recoverable. They are said to be "parasitic" because, like a parasite, in biology, they cannot exist on their own, but depend on others for their life and nourishment. Applying this principle hecontended that, even if the economic loss (£1,767) on these four melts, standing alone, would not be recoverable, nevertheless by-being attached to the other claim it can be added to it, and recovered as a "parasite" to it.

9

Mr. Bathurst sought to establish this principle by reference to the books. He cited a case whore the owner of an old house was entitled to ancient lights for some small old windows. He pulled down the old house and put up a new house with big new windows. The defendants afterwards put up a building which obstructed the big new windows. The plaintiff was held entitled to be compensated for the loss of light through the whole space of the big new windows and not merely through the little space of the small old windows - see the Tilbury Case 24 Q.B.D. 326. That decision was considered in Horton v. Colwyn Bay (1908) 1 K.B. 327, and Lord Justice Buckley drew from it a general proposition which he stated to be this (at page 341):

10

"if an actionable wrong has been done to the claimant, he is entitled to recover all the damages resulting from that wrong, and none the less because he would have had no right of action for some part of that damage if the wrong had not also created a damage which was also actionable".

11

In a similar case relating to ancient lights, a similar result was reached, see Griffith v. Richard Clay (1912) 2 Ch. 291.

12

Mr. Bathurst drew our attention to a number of other cases in which, he said, the same principle was applied, although it was not expressly stated in them.

13

I do not like this doctrine of "parasitic damages". I do not like the very word "parasite". A "parasite" is one who is a useless hanger-on sucking the substance out of others. "Parasitic" is the adjective derived from it. It is a term of abuse. It is an opprobrious epithet. The phrase "parasitic damages" conveys to mymind the idea of damages which ought not in justice to be awarded, but which somehow or other have been allowed to get through by hanging on to others. If such be the concept underlying the doctrine, then the sooner it is got rid of the better. It has never been used in any case up till now. It has only appeared hitherto in the textbooks. I hope it will disappear from them after this case.

14

I do not believe there is any such doctrine. The cases on ancient lights stand in a category by themselves and are to be explained in this way: If a house has ancient lights which are threatened by a new building, the owner, if he moves promptly, may obtain an injunction to restrain the erection of the new building. The Court, however, may refuse an injunction and ward him damages in lieu of an injunction - See Leeds Industrial Co-op Soc. Ltd. v. Blake (1924) A.C. 851. These damages would be, in effect, buying a right to put up the new building. If the owner, however, delays and allows the new building to go up without making any objection - so that he cannot seek an injunction - I do not think he should recover damages for his big new windows (for which he has no right), He ought only to recover damages for the small old windows (for which he has a right).

15

None of the other cases gives any difficulty. In all of them there was some good reason for adding on the extra damages - not because they were improper, but because they flowed naturally and directly from the wrong done and could reasonably have been foreseen as a consequence of it.

16

I reject, therefore, Mr. Bathurst's argument based on "parasitic damages.

17

Mr. Bathurst submitted in the alternative that the views expressed by Lord Justice Winn and me in S.C.N v. Whittall (1971) 1 Q.B. 337 were wrong. He said that if there was any limitation on the recovery of economic loss, it was to be found by restricting the sphere of duty, and not by limiting: the type of damages recoverable. In this present case, he said, the defendants admittedly were under a duty to the plaintiffs and had broken it. The damages by way of economic loss were foreseeable, and, therefore, they should be recoverable. He cited several statements from the books in support of his submissions, including some by myself.

18

At bottom I think the question of recovering economic loss is one of policy. Whenever the Courts draw a line to mark out the bounds of duty, they do it as matter of policy so as to limit the responsibility of the defendant, whenever the Courts set bounds to the damages recoverable - saying that they are, or are not, too remote - they do it as matter of policy so as to limit the liability of the defendants.

19

In many of the cases where economic loss has been held not to be recoverable, it has been put on the ground that the defendant was under no duty to the plaintiff. Thus "where a person is injured in a road accident by the negligence of another, the negligent driver owes a duty to the injured man himself, but he owes no duty to the servant of the injured man - see Best v. Fox (1952) A.C. at page 731: nor to the master of the injured man - Inland Revenue Commissioners v. Hambrook (1956) 2 Q.B. 656 at page 660: nor to anyone else who suffers loss because he had a contract with the injured man - see Simpson v. Thomson (1877) 3 A.C. at page 289: nor indeed to anyone who only suffers economic loss on account of the accident - see Krikham v. Boughey (1958)2 Q.B. at page 341. Likewise, when property is damaged by the negligence of another, the negligent tortfeasor owes a duty to the owner or possessor of the chattel, but not to one who suffers loss only because he had a contract entitling him to use the chattel or giving him a right to receive it at some later date - see Elliott Steam Tug Company v. Shiping Controller (1922) 1 K.B. at page 139; Margarine Union ...

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