Legal Principles and Key Points
- In the case of D Pride Partners v Institute for Animal Health  EWHC 685 (QB), it was held that if breach of a relevant duty of care results in produce passing the stage of natural development at which it could be marketed, the court could potentially accept that deficiency as physical damage for a negligence claim. However, if the other elements of negligence cannot be shown, this will be treated as pure economic loss.
Facts of the Case
- D (substantially funded by the Department of Environment, Food and Rural Affairs or DEFRA) consisted of companies concerned with the diagnosis, prevention, and cure of animal diseases.
- In 2007, a broken drain at D’s facility allowed live Foot and Mouth Disease (FMD) virus to leak, resulting in an outbreak.
- C, consisting of farmers, brought a damages claim against D for losses they alleged they suffered as a result of the leak.
- D applied for the claims to be struck out on the grounds that they disclosed no good cause of action.
- The first 7 members of C came to a settlement with D, leading to these claims being dropped.
- The remaining members of C maintained their claims, even though none of them had their livestock culled. Their claims resulted from costs associated with oversized livestock, being unable to move them and additional labour and management costs.
- Is produce passing the natural stage at which it is marketed a form of physical damage that could be action for a claim?
- Did D owe a duty of care to C to avoid inadvertently causing them indirect physical or economic loss?
Held by the Queen’s Bench Division
- Finding for D, that while produce passing the natural stage at which it is marketed could constitute physical damage, most damages claimed were pure economic loss.
- The farmers making up C were not an identifiable class of which membership could be ascertained in respect of the facilities concerned.
- There was no connecting link between livestock that was/suspected of infection and livestock and so liable to be slaughtered, with livestock not liable to be slaughtered. Therefore, there was no real prospect of C establishing a duty of care relating to the alleged loss or damage.
The Honourable Mr Justice Tugendhat
- “C submit that this analysis fails to address the particular features of animal produce that distinguish it from many types of inorganic matter. Buyers will commonly be unwilling to take organic produce beyond or below a certain stage of natural development…if a relevant duty of care is breached, resulting in the produce passing the stage of its natural development at which it can be marketed, then I consider that there is a real prospect of a court accepting that as physical damage. In the present case the prospects of success of such an argument may depend upon more detailed information as to the precise losses and their causes that is not available at this stage of the proceedings” .
- There is nothing pleaded presently that suggests a contractual or similar relationship between C and D or any dealings between them. D are said to have been performing ‘a task,’ but they were not providing a service to C in the sense required.
- The touchstone of liability established in Williams v Natural Life  1 WLR 830 is ‘things said or done by D or his behalf in dealings with C…on exchanges…which cross the line between D and C.’
- Nothing pleaded could be characterised as reliance. The test is not simply reliance in fact, but whether C could reasonably rely on an assumption of responsibility. The relationship here is no more than one of dependence, which does create duty of care.