Spartan Steel v Martin & Co

Legal Case Summary

Spartan Steel & Alloys Ltd v Martin & Co (Contractors) Ltd [1973] 1 QB 27

NEGLIGENT DAMAGE TO PROPERTY – QUANTUM OF DAMAGES

Facts

The defendants were responsible for digging up a road outside the plaintiff’s smelting factory. As a result of their negligence when carrying out this task, they inadvertently severed a power supply under the road resulting in a loss of power to the plaintiff’s factory. The plaintiffs suffered a number of forms of damage as a result of this, including loss of profits as a consequence of the factory being non-operational for the period while it was without power, and physical damage to the metal which was in the process of being smelted at the time the power was lost.  

Issues

The question was whether the plaintiff could recover damages for the loss of profits or whether this was irrecoverable in negligence as it was a ‘pure economic loss’.

Decision / Outcome

The Court of Appeal held that even where a plaintiff is clearly owed a duty in respect of physical damage to property, any 'pure' economic loss suffered in addition to physical damage are unrecoverable as either too remote, or outside the scope of the duty of care. However, economic losses consequential on the damage to the metal in the melt (such as lost profits on the damaged metal) were recoverable. The result was therefore that the damage to the metal which was damaged due to the smelting process being cut short was recoverable (as were the lost profits from the sale of this metal), but the loss of profits from further melts which could have been completed during the time the factory was without power could not be recovered as this was ‘pure’ economic loss.