Nominated Sub-contractors - Building Contract - page 437

of the law in the last fifty years shows that fears aroused by the 'floodgates' argument have
been unfounded. Cook J in Bowen described the 'floodgates' argument as specious and the
argument against allowing a cause of action such as was allowed in Dutton , Anns and Bowen
as ' in terrorem or doctrinaire'.
Turning back to the present appeal I therefore ask first whether there was the requisite
degree of proximity so as to give rise to the relevant duty of care relied on by the respondents.
I regard the following facts as of crucial importance in requiring an affirmative answer to that
question: (1) the appellants were nominated sub-contractors; (2) the appellants were special-
ists in flooring; (3) the appellants knew what products were required by the respondents and
their main contractors and specialised in the production of those products; (4) the appellants
alone were responsible for the composition and construction of the flooring; (5) the respond-
ents relied on the appellants' skill and experience; (6) the appellants as nominated sub-
contractors must have known that the respondents relied on their skill and experience; (7) the
relationship between the parties was as close as it could be short of actual privity of contract;
(8) the appellants must be taken to have known that if they did the work negligently (as it
must be assumed that they did) the resulting defects would at some time require remedying
by the respondents expending money on the remedial measures as a consequence of which
the respondents would suffer financial or economic loss.
My Lords, reverting to Lord Devlin's speech in Hedley Byrne & Co Ltd v. Heller & Partners
Ltd (1963), it seems to me that all the conditions existed which give rise to the relevant duty
of care owed by the appellants to the respondents.
I then turn to Lord Wilberforce's second proposition. On the facts I have just stated, I
see nothing whatever to restrict the duty of care arising from the proximity of which I
have spoken. During the argument it was asked what the position would be in a case where
there was a relevant exclusion clause in the main contract. My Lords, that question does not
arise for decision in the instant appeal, but in principle I would venture the view that such
a clause according to the manner in which it was worded might in some circumstances limit
the duty of care just as in the Hedley Byrne case the plaintiffs were ultimately defeated by
the defendants' disclaimer of responsibility. But in the present case the only suggested reason
for limiting the damage ( ex hypothesi economic or financial only) recoverable for the breach
of the duty of care just enunciated is that hitherto the law has not allowed such recovery
and therefore ought not in the future to do so. My Lords, with all respect to those who find
this a sufficient answer I do not. I think this is the next logical step forward in the develop-
ment of this branch of the law. I see no reason why what was called during the argument
'damage to the pocket' simpliciter should be disallowed when 'damage to the pocket' coupled
with physical damage has hitherto always been allowed. I do not think that this development,
if development it be, will lead to untoward consequences. The concept of proximity must
always involve, at least in most cases, some degree of reliance; I have already mentioned the
words 'skill' and 'judgment' in the speech of Lord Morris in Hedley Byrne . These words seem
to me to be an echo, be it conscious or unconscious, of the language of section 14(1) of the
Sale of Goods Act 1893. My Lords, though the analogy is not exact, I do not find it unhelpful
for I think the concept of proximity of which I have spoken and the reasoning of Lord Devlin
in the Hedley Byrne case involve factual considerations not unlike those involved in a claim
under section 14(1); and as between an ultimate purchaser and a manufacturer would not
easily be found to exist in the ordinary everyday transaction of purchasing chattels when it
is obvious that in truth the real reliance was on the immediate vendor and not on the
manufacturer.