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"At present, the English law makes it relatively difficult to claim compensation for what it
defines as pure economic loss."
Those who have suffered bodily or property damage are fully protected by the Negligence Compensation
Act, both with regard to the damage itself and with regard to the financial consequences that follow directly
from the physical damage. Pure financial losses are only of a financial nature and do not involve personal
injury or bodily injury. Unlike physical injury, financial loss is often non-refundable due to the exclusion rule.
The question of whether this is a satisfactory or illogical and unsuitable distinction will be examined in
general, followed by a discussion of the many sorts of pure economic loss. In support of the present
difference between physical and financial damage, it appears logical that the law should safeguard personal
safety and health more than solely economic interests, and indeed, a general duty of care to prevent
causing foreseeable bodily injury or sickness is widely acknowledged. However, this rationale does not
explain why physical interests in real estate should be much better protected than economic ones. Courts
generally state that if the rule of exclusion did not apply, the locks on liability would open, exposing
defendants to an endless number of lawsuits. However, this argument can be easily refuted, as it is just as
likely that large liabilities will arise in circumstances with physical damage, such as product liability. For
example, hundreds of thousands of asbestos-related illness complaints have been filed. In these
circumstances no one has argued that the law should reject the existence of a duty of care merely because
of the extent of the damage done, so why should the existence of a duty be denied on purely economic
grounds? The best argument for maintaining a margin is that an indefinite duty of care in relation to
financial loss creates a risk of indefinite liability, unpredictable in terms of both the number of injuries and
the number of potential victims. Some believe that this element of uncertainty will have a deterrent effect
on socially necessary or desirable actions that will not be taken due to the possibility of such an
unpredictable and disruptive financial obligation. According to Markesinis and Deakin, if a reckless driver is
potentially liable not only to those directly involved in the collision, but to all persons whose business or
income is affected by the accident, the cost of driving (especially the cost of liability insurance) will be
prohibitively expensive for everyone. road users. As LaForest claimed in its separate post in Canadian
National Railway v. Norwegian Pacific Steamship Co., the exclusionary effect has the pragmatic advantage of
providing a degree of legal and economic clarity. The distinction and use of the exclusion rule was also
based on a preference for contract law rather than compensation as a means of protecting financial
interests. It can thus be argued that in order to avoid the lack of legal remedies for financial loss, plaintiffs
should seek to cover themselves by entering into direct contracts with potential tortfeasors or taking out
first-person insurance. On the other hand, there are arguments that the distinction between physical and
financial losses is unlikely, as some critics argue that the recovery of financial losses should not depend on
an accidental event when they occur as a result of physical damage or property damage. In addition, the
notion that net financial losses are more difficult to quantify than losses due to personal injury can be
refuted, since future wage losses due to personal injury are often no easier to accurately predict than those
reported in pure financial loss situations. Historically, one of the primary objectives of tort law, along with
the protection of life and health, has been the protection of property rights. However, this historical
element of tort law cannot explain the current strong distinction between bodily and economic loss,
especially since cultures and their values evolve over time. Finally, the fact that many other legal systems,
such as France, Italy, and the Netherlands, do not recognize the distinction between bodily and economic
harm supports the claim that it is irrational. Despite the main response presented above, Professor
Feldthusen stated that it was not possible to cover all examples of purely financial losses under one heading
and that a number of separate categories had to be distinguished. As a result, the difference may seem
reasonable in some cases, but meaningless in others. To begin with, despite Murphy v Brentwood DC, it is
still possible to obtain financial compensation, in line with the approach of the House of Lords in the
previous case of Hedley Bryne & Co. against Heller & Partners. In this case, the House of Lords found that
the defendants were under an obligation to exercise caution and be liable, save for a disclaimer according to
which their comments were made without any liability. Since both physical and financial losses can be
compensated, the question of the irrationality of separation does not matter here. The possibility of
indeterminate liability is considered with a test such as "voluntary admission of liability" or "reasonable
trust", but Lord Oliver in Caparo v. Dickman questions the validity of such tests. The same can be said for
negligence in the provision of services, since the House of Lords in Henderson v Merett Syndicates
considered that the Hadley Brown principle goes beyond liability for misrepresentation of property damage
to cover a wider range of cases of property damage caused by misrepresentation. service negligence.
According to Donoghue v. Stevenson, possible liability for items that actually cause physical injury or
damage to property is not contested in terms of financial loss due to design and product defects. However,
as was confirmed in the case of Murphy v. Brentwood District Council, there is no liability for an item being
considered defective. Following Murphy's decision, it is unclear whether the owner will be able to return an
item that is both defective and unsafe, as it will still be classified as a pure financial loss (thus overturning
Ann v Merton, London Borough Council). While the distinction between culpability for physical and financial
harm may seem meaningless, since the question of whether physical harm is caused or not depends on the
case, the exclusionary effect can be justified because it reduces the likelihood of legal action and ambiguous
liability. It may be less justified, however, that after Murphy's annulment of Ann's decision, the
expenditures of restoring the property to suitable condition are not reimbursed, because they are correctly
classified as solely financial losses. In actuality, due to economic concerns, this can be a barrier to safety,
especially since in this situation, the builders and producers of defective items are liable for defective
premises. Lord Keith, on the other hand, believes that if the act of averting pecuniary losses were permitted,
nothing would prevent the courts from extending culpability just to faulty items, which "would open up an
exceedingly wide range of possibilities." Another complaint leveled against Murphy's ruling is that it
dismisses the complicated structural reasoning put forward by Lord Bridge in D&F Estates against the
Church Commissioners of England. As an example, if a builder put a boiler accidentally, causing the home to
catch fire, the builder would only be accountable for the boiler. Much more important, however, is where
Murphy stands in relation to the Hadley Brian principle, which allows for the recovery of financial losses
caused by misinformation and, presumably, can be extended to cases that appear to have nothing to do
with negligent misinformation, such as Pirelli General Cable Works Ltd v Oscar Faber & Partners. The
problem is that courts are now having difficulty deciding whether a given case falls into the Hadley Brown
category, which allows for pecuniary damages, or the Murphy category, which does not.Thus, as Professor
Stapleton says, the decision will ultimately depend on which category the case is placed into. Lord Mastille's
opinion that judges should first determine matters and then search for explanations for their decisions may
apply here as well. As a result, even if a negligent developer is protected from culpability for financial
damage through compensation, consultant engineers, architects, or surveyors who provide inaccurate
advice to landowners or property buyers can be held accountable under Headley Brian, according to
Murphy. This may appear to be an odd outcome, because aspects of trust and closeness can be present in
either instance, and there does not appear to be a compelling political justification to impose a wider duty
of care against careless speaking than against careless activity. Thus, the division of liability for material and
financial damage here seems illogical. Finally, the category of relative financial loss arising from damage to
the property of a third party allows only the loss of one's own property, but not the loss of another's
property or purely financial losses. This was the case in Spartan Steel & Alloys Ltd v. Martin & Co
(Contractors Ltd), where the plaintiffs were able to recover damage actually caused to their property
(materials were mixed in a kiln during a power outage) but were unable to recover damages. net profit from
the other four melts they normally produced as they were purely economic losses rather than loss to
property. Another example may be seen in Cattle v Stockton Waterworks in which a contractor was unable
to complete a building job when the defendant flooded the land he was working on. The distinction here
between physical and financial losses can be justified, as it aims to establish clear limits for damages for
security reasons. Furthermore, it could be argued that those with only relative interests of this type should
be encouraged to protect themselves through a contract with the property owner, rather than relying on a
claim for compensation. This was the position taken by Lord Brandon in the Aliakmon case, when the buyer
was not entitled to compensation for damage to the goods from the carrier. In conclusion, it is fair to
separate bodily harm caused by negligence from purely financial harm, but it is more difficult to justify the
separation of property damage from it. Reasons for the difference, such as avoiding a flood of lawsuits and
uncertainty about guilt, may have some advantages, but they are not decisive. In fact, I believe that the
right to compensation is stuck in its historical basis, one of the main goals is the protection of property, and
has not evolved over time. On the other hand, loss of assets cannot be separated from purely financial
losses.