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Tort problem - who is claiming what?! Negligence; pure economic loss

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    Hi, I am really bad at tort law for some reason, and would appreciate some help practicing this question!

    Ellie has bought a house from Sam. Sam had built the house, which was fitted with an expensive heating system under the floor.

    Before the purchase, Ellie asked her friend John, who is a surveyor, to survey the house to see whether the house was worth £500,000. John reported back that he was sure the house is worth at least 550,000 but he advised Ellie that she should make further inquiries about the heating system.

    Ellie then asks her friend Tina, who used to be a heating engineer, about the heating system. Tina says that although she hadn't been working for a while, she thinks the heating system is perfectly safe.

    Ellie buys the house and moves in. Cracks start to appear in the walls, owing to defects in the foundations. This reduces the value of the house to £200,000. The heating system then explodes because the floorboards were too close to the heating system. This causes some of the rooms in the house to be totally destroyed. The value of the house is then reduced to £100,000. Then there is a fall in the housing market reducing the value of the house to £50,000.
    Ellie v Jane
    Would Ellie be bringing a claim against Jane in negligence or under the Defective Premises Act 1972? Would she succeed?
    I would say that Jane would be liable for the heating system. Not for the cracks because we know from Murphy v Brentwood that the cracks resulting from defective structures are purely economic losses and not recoverable.


    Ellie v John
    What I don't understand is whether the heating system is pure economic loss? Or is it physical damage which can be recovered in tort? I came to the conclusion that it's pure economic loss - so need a Hedley Byrne relationship - which won't apply because he asked her to make further inquiries so no assumption of responsibility? And because John not liable for pure economic loss to heater, cannot be liable for consequential loss to the rooms? Or can he?

    John can't be liable for the cracks - pure economic loss not recoverable (murphy).

    Ellie v Tina
    Seems like she will be liable in negligence, if you establish all the elements of Hedley Byrne. So liable for the pure economic loss to the heater plus the consequential loss to the rooms that are destroyed. Can't be liable for the downturn in the market (Banque Bruxelles) because not foreseeable.


    Have I got this totally wrong?

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Updated: May 13, 2012
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