Wielding Occam's Razor: Pruning Strategies for Economic Loss

The English Court of Appeal is currently faced with three analyticallydistinct approaches to the question of when one party owes anothera duty of care in respect of her economic interests, all ofwhich bear the authority of the House of Lords. Unable to choosebetween them, it has recently adopted a fourth approach combiningwhich combines them, in the apparent belief that the combinationwill eradicate any individual deficiencies. Against the backgroundof a recent case, the author argues that this is a holding strategyat best and methodologically deficient. He also challenges thecontinuing lip-service paid by courts to models of liabilitybased upon ‘assumptions of responsibility,’ examiningand criticising the causes of their persistence in the law inthe face of widespread academic criticism. Instead, the authorargues, the House of Lords should now clearly endorse a singlereasoning strategy to economic loss cases based on the three-stageapproach in Caparo Industries v Dickman. Properly understood,this approach offers the best prospect of facilitating consistentand transparent decision-making in the longer term.