The Legal Issues Of Luxury Flats Ltd Essay example

The Legal Issues Of Luxury Flats Ltd Essay example

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The legal issues which Luxury Flats Ltd are facing relate to pure economic loss. The loss incurred has resulted from their being unable to sub-let flats which they have leased from Opportunity Developers Ltd on a long term basis, who constructed the development,. The building plans were approved by Melchester District Council. However, since completion the building has subsided as a result of the foundations being of insufficient depth. Luxury Flats Ltd have, therefore, suffered a substantial loss of rental income and are seeking to recover by bringing a claim against Melchester District Council for negligently approving the plans. Previously decided cases and relevant legislation will be used to identify any claim that can be made and how this can be addressed.



Pure economic losses are financial losses which have not flowed from damage to the property or personal injury to the claimant, this type of economic loss also arises when the damage that has been caused resulting in loss to the claimant flows from damage to the property of a third party. When the loss is caused by damage to the property of a third party it is referred to as relational economic loss which is not usually recoverable in English law. However, there is one exception to this rule which was identified in Morrison Steamship Co Ltd v Greystoke Castle [1947] AC 265. In this case there was a contractual relationship between the party who 's property was negligently damaged and the party who had suffered a pure financial loss relating to that damage. The plaintiff, therefore, succeeded in their claim for the relational financial loss that they incurred. In contrast, consequential economic loss flows directly from damage to the property owned by the claima...


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...arent that Opportunity Developers Ltd are the only party that can be held responsible for the defective work and for the losses suffered by Luxury flats Ltd as a consequence of that defective work.


In conclusion, Luxury Flats Ltd are to be advised that based on recently decided cases any claim brought that is brought against Melchester District Council would be unlikely to succeed. Therefore, given that there is legislation in place which protects against the provision of defective buildings by developers it would be advisable that a claim is made in contract against Opportunity Developers Ltd. Especially in the light of the fact that there is a close proximity of relationship between the parties and that the losses were caused as a direct result of the defective building work which rendered the premises uninhabitable contrary to the Defective Premises Act 1972.

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