Monday, 1 July 2013

[Torts] Consequential and Relation Economic Loss

Consequential and Relational Economic loss

Consequential physical damage
It is foreseeable physical damage to property and is therefore recoverable as property damage under normal Donoghue v Stevenson’s neighbour principles.

Employee losing earnings (relational economic loss case)
Fiji Gas mentioned in Fortuna expressly denied recovery on the basis that the group was not reasonably ascertainable. The victim is most likely to be considered a second line victim because of remoteness (truckers in Perre). Even if they are ascertainable, they must be “specific” according to McHugh. This means that the actual knowledge of individual plaintiff does not necessary mean that they are “distinct” from others. Fiji Gas (unidentified plaintiffs on board; relational economic loss but no recovery) may be similar but ascertainability could be the main discrepancy. Anyways, there is reasonable chance of success if indeterminacy concern overcome.

Business losing earnings (consequential economic loss case)
Loss of profit is consequential upon the property damage and therefore recoverable under Spartan Steel. Perre is therefore not relevant. 

Plaintiff’s property in/on victim’s control e.g. transportation of goods (relational economic loss)
There is precedent for recovery of costs (of loading and unloading) based on the common venture or joint venture idea, The Greystoke case. Under Caltex, alternative means of transportation may be recoverable. Application of Perre v Apand is likely to conclude similarly.

Plaintiff’s loss due to contractual relationship(?)  
The facts are likely to be analogous to Woolcock and the Aliakmon scenario. If the court is to follow the former, there is very high chance of recovery. However, if plaintiff’s business is of commercial nature, there could be arguments about absence of vulnerability as there could have been means of protection such as contract (Woolcock).

Locals losing business (relational economic loss case)
For example: contamination and evacuation (Perre v Apand). Ascertainability, under indeterminacy, will be the main issue. Whether the defendant ought to have known specific class of plaintiffs (Johnson Tiles: all business users sufficiently ascertainable by D) or whether it was merely foreseeable that plaintiffs would be affected is uncertain (Fortuna Fishing; defendant would not have known in advance of the precise way in which…)

If the location of business is in very close physical propinquity (Jacobs J in Caltex), plaintiff has high chance of recover under Perre and Caltex as an identifiable plaintiff.

Defendant, however, will argue that the plaintiff[s] with commercial nature are not vulnerable as they could have protected themselves (Woolcock, Johnson Tiles) and that they are not first class victims.

Temporary ceasing of operation (relational economic loss case)
The plaintiff is usually vulnerable as they could not have taken reasonable measures to protect themselves (like Perre v Apand). Considering Perre v Apand, the indeterminacy will be the biggest issue in claiming for recovery. If applied, reasonable foreseeability will not be a big issue given that it had some proximity. see above*
However, there are cures for indeterminacy: first line victim for example like Caltex where there was close physical propinquity? (Fortuna Seafoods) Knowledge of ascertainable class? (McMullin v ICI Australia) Joint venture? (Fortuna Seafoods). If recoverable, the recovery may only be limited to activities that will replace the means of production/transportation such as Caltex (only transportation cost).  
Discretion of government to ban (less likely to be identifiable) vs Explicit provision (Perre; more likely to be identifiable)

Vulnerability and Insurance (in all pure economic loss cases)
The issue regarding insurance and whether the plaintiff could have protected himself is contentious. Judges in Caltex v Willemstad and Perre v Apand indicate that ability of a plaintiff to obtain insurance is “generally” irrelevant but these dicta are confused by comments in Johnson Tiles v Esso (Gillard J) and somewhat also by Woolcock Street Investments (where it could have protected itself via its contract with the other). 

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