ECONOMIC LOSS FLOWING DIRECTLY AND FORESEEABLY FROM PHYSICAL DAMAGE TO PROPERTY HELD TO BE RECOVERABLE

In National Rail Infrastructure Ltd v Conarken Group Ltd [2011] EWCA Civ 644, [2011] All ER (D) 288 (May) the Court of Appeal dismissed an appeal from the decision of Mr Justice Akenhead (on which see our August/September 2010 issue, pp9-12). The economic loss in respect of which damages were claimed flowed directly and foreseeably from physical damage to the property of the claimant and in principle loss of this nature is recoverable in tort. The court experienced greater difficulty in explaining the extent of a defendant’s liability for a loss of this nature. Much will depend upon the facts and circumstances of the individual case. Factors which the courts will take into account when deciding whether the claimant can recover the sum claimed include the foreseeability of the loss, the scope of the duty of care assumed by the defendant, whether the sum claimed is fair and reasonable and the nature of the relationship between the parties.

The Facts

The claimant, Network Rail Infrastructure Ltd, was responsible for the rail track system in the UK and in that capacity entered into agreements with Train Operating Companies (referred to hereafter as ‘TOCs’) which were known as Track Access Agreements. Under these agreements the TOCs paid substantial sums to the claimant in return for a licence to use the track. The agreements further provided that, in the event that the track was not available through no fault of the TOC, the TOC would be compensated by the claimant by means of what were known as Schedule 8 payments or allowances.