MLL217 Study Guide - Final Guide: Instrumentation, Richard Howland Hunt, Ormeau Baths Gallery
2 Jun 2018
School
Department
Course
Professor
1
Other Torts Protecting Economic Interests
Recovery in negligence for pure economic loss
- Two areas to be considered:
▪ Economic loss consequential upon damage to property belonging to Defendant or a
Third Party
▪ Liability for defective structures
Concept of pure economic loss
▪ Pure economic loss = loss not consequential upon personal injury or property
damage
vs
▪ Consequential pecuniary loss (such as loss of earning capacity or medical expenses
resulting from physical/psychiatric injury)
▪ Only the former is a special duty situation; the latter is merely a claim for
damages for physical injury (a simple case)
Economic loss consequential upon damage to property of Defendant or Third Party
▪ P suffers economic loss because D has negligently damaged their own property or
the property of a third party
▪ Caltex Oil v The Dredge Willemstad
▪ Perre v Apand
▪ Johnson Tiles Pty Ltd v Esso Pty Ltd
Caltex Oil v The Dredge Willemstad
▪ A defendant will owe plaintiff a duty of care where D knew, or should have known, of
the plaintiff as an individual and not merely as a member of an unascertained class.
▪ Applied in Ball v Consolidated Rutile Ltd to deny recovery.
Perre v Apand
▪ Defendant sent a new brand of potatoes to the plaintiff that were infected
▪ Prohibited from being exported if the crops had been grown within 20kms of the
wilting
▪ Plaintiff suffered significant loss
▪ Plaintiff could only recover if the defendant had knowledge of the plaintiff
▪ A multi-factorial salient features approach (see McHugh J in particular)
▪ Factors weighing heavily in the various judgments:
▪ The indeterminacy or otherwise of liability
▪ The need to ensure that unreasonable burdens are not placed on people
pursuing legitimate trading or social activities.
▪ Ps vulnerability and dependence on D to protect it against economic loss,
▪ Ds position of control over the activity and knowledge of the risk and of Ps
vulnerability.
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2
▪ A duty of care was owed on the facts
▪ D could reasonably foresee that P would suffer economic loss if it negligently
introduced bacterial wilt into the area.
▪ Liability was not indeterminate -
▪ Liability was limited to those potato growers within 20 km of the
Sparnons property who exported to WA
▪ These growers were members of a class that could be readily
ascertained by D – stable membership, and D had links with potato
growing industry.
▪ Liability would not impose unreasonable burdens on Ds legitimate trading
activities as D was already under a duty to Sparnons not to introduce
bacterial wilt.
▪ D was in control of the experiment on the Sparnons property and P was
vulnerable to suffering economic loss if D acted negligently in its control of the
activities on the Sparnon property.
▪ P did not know of the risk, but even if it had, it could not have taken
steps to protect itself eg by contract or by setting up barriers.
▪ D knew of the vulnerability of potato growers within 20 km of the Sparnon
property to suffer economic loss. It was aware of the WA legislation and that
the proximity of growers to WA made it likely they would export their potatoes
to WA.
Johnson Tiles Pty Ltd v Esso
▪ 3 groups of claimants:
i. Commercial/industry gas customers
ii. Residential gas customers
iii. Stood down workers
• Re groups i and ii, group determinate but not vulnerable; liability
disproportionate to individual consumers losses
o Size and scope known
o Type of damages suffered was also known
• Re group iii, group indeterminate
o Perre – size is not decisive, nor is the number of claims
Indeterminacy of liability
▪ Traditional rule = no recovery
▪ Liability denied where recovery will expose Defendant to liability in an
indeterminate amount for an indeterminate time to an indeterminate class:
Ultramares Corp v Touche, Niven & Co (1931)
▪ Real concern is not the number of potential plaintiffs or size of the claims, but
that the Defendant cannot determine beforehand the number or volume of the
claims (the ripple effect)
▪ Defendant must be able to calculate (at least roughly) the likely number and
nature of claims
▪ Perre v Apand
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3
▪ Indeterminacy still a very important consideration: courts more likely to find a
duty of care where liability is determinate
▪ Bryan v Maloney
▪ The issue is not the size or number of the claims. The question is whether D can
reasonably estimate the number of people to which it will be liable and the size and
nature of those claims.
▪ The duty will extend to members of an ascertainable class that D knows, or should
know, will suffer economic loss if he acts negligently.
▪ An ascertainable class is a specific class whose membership can be readily
ascertained by D.
▪ Primary vs Secondary Victims
▪ A P who is primarily (directly) affected by Ds negligence can recover - provided
ascertainable so that liability is not indeterminate.
▪ Ps who are only secondarily affected by the negligence (example, those who suffer
economic loss because of their contractual relationships with the primary victims)
will ordinarily not be owed a duty of care – these are part of the ripple effect of the
negligence.
Liability for defective structures
▪ An inherent defect in a building (or in goods) resulting in a diminution in the value of
the building is mere economic loss.
▪ Example – if the house falls down and injures occupants or damages other goods -
this is personal injury and property damage respectively.
▪ Sutherland SC v Heyman
▪ Bryan v Maloney – key case
Bryan v Maloney
▪ Residential property as distinct from commercial property
▪ The High Court held that a builder of a residential house owes a duty of care to a
subsequent purchaser of the house.
▪ The factors (or salient features) that the Court had regard to in determining that a
duty of care was owed included:
(a) a builder, by agreeing to build a house, assumes the responsibility of ensuring
that it is built adequately, and
(b) subsequent purchasers rely on the builder to build the house adequately.
▪ It was apparently irrelevant that the plaintiff had not specifically relied on the builder –
in fact, did not even know who the builder was. It appeared to be sufficient that
purchasers have a general expectation that a house will be built properly.
▪ Liability is not indeterminate - it is limited to subsequent purchasers and to the value
of the house.
▪ A duty of care on the part of a builder established:
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Two areas to be considered: economic loss consequential upon damage to property belonging to defendant or a. It was aware of the wa legislation and that the proximity of growers to wa made it likely they would export their potatoes to wa. Johnson tiles pty ltd v esso: 3 groups of claimants, commercial/industry gas customers, residential gas customers. Indeterminacy of liability: traditional rule = no recovery, liability denied where recovery will expose defendant to liability (cid:1684)in an indeterminate amount for an indeterminate time to an indeterminate class(cid:1685): Indeterminacy still a very important consideration: courts more likely to find a duty of care where liability is determinate: bryan v maloney, the issue is not the size or number of the claims. It was apparently irrelevant that the plaintiff had not specifically relied on the builder in fact, did not even know who the builder was.
