Spartan Steel and Alloys Ltd v. Martin & Co. Ltd
| Spartan Steel & Alloys Ltd v Martin & Co (Contractors) Ltd | |
|---|---|
 |
|
| Court | Court of Appeal |
| Citation(s) | [1973] QB 27 |
| Case opinions | |
| Lord Denning MR | |
| Keywords | |
| Pure economic loss, negligence | |
Spartan Steel & Alloys Ltd v Martin & Co (Contractors) Ltd [1973] QB 27 is a well-known English Court of Appeal case concerning the recovery of pure economic loss in negligence.
Spartan Steel and Alloys Ltd had a stainless steel factory in Birmingham, which obtained its electricity by a direct cable from the power station. Martin & Co Ltd were doing work on the ground with an excavator and negligently damaged that cable (Spartan Steel did not own the cable). As a consequence, the factory was deprived of electricity for 15 hours which caused physical damage to the factory’s furnaces and metal, loss of profit on the damaged metal and loss of profit on the metal that was not melted during the time the electricity was off. Spartan Steel claimed all the three heads of damage.
The Court of Appeal, consisting of Lord Denning MR, Edmund-Davies LJ and Lawton LJ delivered a majority judgment (Edmund-Davies LJ dissenting), that the Spartan Steel could only recover the damages to their furnaces, the metal they had to discard and the profit lost on the discarded metal. They could not recover the profits lost due to the factory not being operational for 15 hours. Their main reasoning for this was that while the damage to the metal was "physical damage" and the lost profits on the metal was "directly consequential" upon it, the profits lost due to the blackout constituted "pure economic loss".
Although the majority seemed to agree that Martin & Co Ltd owed the Spartan Steel a duty of care and the damage was not too remote since it was foreseeable, they declined to allow the recovery of pure economic loss for policy reasons outlined by Lord Denning in his leading judgment.
Mr. Christopher Bathurst, for the plaintiffs, raised a point which was not discussed in SCM (United Kingdom) Ltd v WJ Whittall & Son Ltd. 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 he contended 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.
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