Junior Books Ltd v Veitchi Co Ltd [1983] 1 AC 520

Facts

• The claimant, a factory owner (Junior Books Ltd), entered a contract with a main contractor for construction work.
• The main contractor subcontracted the specialist flooring work to the defendant, Veitchi Co Ltd.
• There was no direct contractual relationship (no privity) between Junior Books and Veitchi.
• Junior Books alleged that Veitchi negligently installed a defective factory floor, causing it to require replacement and resulting in consequential economic loss, including the cost of replacement and lost profits.
• Junior Books claimed damages in negligence against Veitchi, arguing a duty of care was owed despite the absence of a contract.

Issues

1. Whether a duty of care in negligence could arise between the claimant and the defendant sub-contractor in the absence of a direct contractual relationship.
2. Whether the Anns test's concept of proximity was satisfied in this case, justifying liability for pure economic loss.
3. Whether policy considerations weighed against the imposition of a duty of care in this context.

Decision

• The House of Lords held that Veitchi did owe a duty of care to Junior Books despite the lack of a contract.
• The relationship between Junior Books and Veitchi was determined to be sufficiently proximate, described as being as close as possible to a contractual relationship.
• The specialist nature of Veitchi’s services and the claimant’s specific reliance on their skill were central to establishing proximity.
• No policy considerations were found to negate or reduce the scope of the duty.
• The case extended negligence liability to cover pure economic loss based on the closeness of the parties' relationship.

Legal Principles

• The Anns test provided a two-stage approach: proximity based on foreseeability and, if satisfied, consideration of policy factors negating or limiting the duty.
• Proximity can exist even without a contractual relationship, where the relationship is sufficiently close and reliance is present.
• The principle from Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465—assumption of responsibility leading to liability for economic loss—was referenced but its direct application was questioned.
• Subsequent authority, including Caparo Industries plc v Dickman [1990] 2 AC 605, shifted towards a tripartite test: foreseeability, proximity, and whether it is fair, just, and reasonable to impose a duty.
• Later case law, including Robinson v Chief Constable of West Yorkshire Police [2018] UKSC 4 and Murphy v Brentwood District Council [1991] 1 AC 398, moved away from the Anns test and restricted the broad liability established in Junior Books.

Conclusion

Junior Books v Veitchi marked a high point in applying the Anns test to impose a duty of care for pure economic loss in tort, relying heavily on proximity and reliance in the absence of a contract. However, subsequent cases, including Caparo and Robinson, retreated from this expansive approach, favoring a more incremental, precedent-based analysis and a narrower view of when liability arises for pure economic loss.