Related Studylists. There is a fundamental distinction between pure economic loss and consequential economic loss, as pure economic loss occurs independent of any physical damage to the person or property of the victim. As such the law places significant limits on the recovery of pure economic losses. because ‘the negligent causation of pure economic loss is prima facie not wrongful in the delictual sense and does not give rise to liability for damages unless policy considerations require that the plaintiff should be recompensed 1 Telematrix (Pty) Ltd t/a Matrix Vehicle Tracking v … Economic loss generally refers to financial detriment that can be seen on a balance sheet but not physically. In 1963, the House of Lords held that a claim for pure economic loss could be permitted if the loss was a result of things the defendant had said or information the defendant had provided. Now, however, patrimonial loss also includes monetary loss resulting from injury to the nervous system and pure economic loss. It is evident from the cases discussed above that in order for there to be liability for pure financial loss in delict, there has to be a special relationship between the defendant and plaintiff. Terms in this set (17) exclusionary rule. In general terms, "Pure economic loss" is not considered an actionable injury in delict, that is to say if a purchased item is faulty, but the fault cases no further damage except to the item itself, there is no action in delict (there may however be a claim in contract), as such the duty of care in such cases is found not to have a duty of care for such claims. If a claimant suffers personal injury or damage to his property this may lead to economic losses, such as loss of income or cost of hiring a substitute, such losses are categorised as consequential economic loss. In general terms, "Pure economic loss" is not considered an actionable injury in delict, that is to say if a purchased item is faulty, but the fault cases no further damage except to the item itself, there is no action in delict (there may however be a claim in contract), as such the duty of care in such cases is found not to have a duty of care for such claims. Scott, Johan, Delictual Liability for Disturbing the Airwaves – The Law of Delict Moving into the 21st Century. This included a claim by Scott's company for loss of contractual profits as a result for being arrested and then a certain contract being cancelled. • Patrimonial loss that does not result from damage to property or impairment of personality – Eg, X suffered pure economic loss because Z, an insurance broker, omitted to nominate her as beneficiary of a policy – Eg, X suffered pure economic loss as a result of an incorrect decision by Z, the City Council, that prevented him from continuing with his development project for a … In order to comply with its obligations under the construction contract Ilima had borrowed R12 million from Country Cloud (plaintiff). 2020_SEMESTER 1 Delict PVL3703. Topics will be discussed in a comparative, historical and/or theoretical context. In dismissing the claim for pure economic loss, JA Theron shared the sentiments expressed by JA Brand in Country Cloud in that imposition of liability on the Minister will have unmanageable consequences as it will open the door for indeterminable liability and it "would indeed be untenable to right minded people to hold the Minister liable to Scottco in the circumstances of this matter". The yardstick that must be applied in this determination is the general criterion of reasonableness or boni mores. A claim for pure economic loss is based on the negligence of the insured and often happens when the insured denied a third party access to something that the third party utilised to generate an income, or breach of an undertaking that caused financial loss. This was examined further in Caparo v Dickman where shareholders who relied upon a faulty audit in their investment decisions attempted to sue the auditor. He stated that "in the case of pure economic loss, wrongfulness performs the function of a safety valve, a control measure, a long stop which enables the court to curb liability where despite the presence of all other elements of the Aquilian action, right minded people will regard the imposition of liability as untenable". In this case, Scott and his company instituted action against the Minister for payment of damages arising from the alleged unlawful arrest and detention of Scott. In cementing his findings, JA Theron held that "to have damages imposed on the police for loss of contractual profits in relation to a contract they were unaware of and in circumstances where the arrest of Scott was effected on the basis of him having been the aggressor in a drunken brawl, and where the justification for the arrest can rightly be said to have been merely technical in error, is to cast the net too wide and to land the police with liability for loss that it too remote". criterion to determine the legal duty with regards to pure economic loss, It would be interesting to note under which circumstances our courts will abandon the bright line of limitation and whether the policy of the insured will respond to such instances or fall under the exclusion as provided in the cover. Kruger v Coetzee 1966 (2) SA 428 (A) Exam 2019, answers Exam 2015, questions and answers Sample/practice exam 18 June 2018, questions and answers Exam 2018, questions. Thereafter Country Cloud instituted damages action against the department. Delict is a term in civil law jurisdictions for a civil wrong consisting of an intentional or negligent breach of duty of care that inflicts loss or harm and which triggers legal liability for the wrongdoer; however, its meaning varies from one jurisdiction to another. It appears from the two recent cases that our courts have adopted a somewhat cautious approach bordering on restriction to delictual liability for pure economic loss, and these cases seem to have joined the long line of South African judgments grappling with this notion in our law. No, it is not generally delict. The House of Lords furthered this by saying a person can make a claim for pure economic loss as a result of negligent misstatements – providing there is a special relationship between the parties involved. In Junior books v Veitchi Co Lid, the court dealt with a situation where Juniour had contracted with a company called Ogilvie for some building work, who had then subcontracted the flooring work to Veitchi, who had laid it defectively. Recovery for pure economic loss in English law, arising from negligence, has traditionally been limited. Briefly, the facts were as follows: The department (defendant) had contracted with a third party (Ilima) for the latter to complete a hospital. In Trust Bank the court accepted that compensation for pure economic loss could be awarded in certain cases and delictual action was extended beyond the Roman law boundary of damage to property or person. The Roman-Dutch law attempts an extension to this action, to every kind of loss sustained by a person in consequence of wrongful acts of another. Liability for negligently caused economic loss - Delict at Cram.com. The court stated that there was no reason to extend the Aquilian remedy to rescue a plaintiff who was in a position to avoid the risk by contractual means, but failed to do so. Avizandum is a FANDOM Lifestyle Community. Cram.com makes it easy to get the grade you want! Generally, pure economic loss is aptly referred to as financial loss. To quote the essence of Judge Grosskopf’s judgement: "I do not consider that policy considerations require that delictual liability be imposed for the negligent breach of a contract of professional employment of the sort with which we are here concerned. Hot on the heels of Country Cloud and another case dealing with imposition of delictual action for pure economic loss was Minister for Safety & Security v Scott & Another. In Country Cloud the court was called upon to decide whether such factors existed for the extension of delictual action for pure economic loss. The department contended in turn that Country Cloud had failed to establish the element of wrongfulness required for delictual liability. Whilst the work was defective, it had caused no other harm, and thus seemed to come under the area of pure economic loss (the cost to correct the floor). Damages in delict are divided into: patrimonial/special damages (including medical costs, loss of income and the cost of repairs); non-patrimonial damages/general damages (including pain and suffering, disfigurement, loss of amenities and injury to personality); pure economic harm (not connected to any physical injury or damage to property). Shareholders cannot sue for the diminution in the value of their shares because any wrong can only be committed against the company and not a shareholder. It must be determined in each case whether, according to the circumstances, there was a legal duty to avoid pure economic loss. Whether or not a delictual action for pure economic loss will be allowed is dependent on whether or not the element of wrongfulness or, put differently, a legal duty, is established. Pure economic loss arises where a third party suffers a loss without there being injury or damage. Economic damage however, is far less easy to quantify, can grow out of proportion very quickly. Whilst Hedley were not successful in this case, the court did accept the possibility that if a special relationship, akin to a contract existed and the defender knew their advice would be used in such a manner, then there is the possibility of a valid claim. Employers are not owed a duty of care regarding their employees, as shown in Reavis v Clan Line Steamers Ltd; Ms Reavis employed an orchestra who sailed with Clan Line Steamers, she was unable to claim for loss of earnings from the orchestra. Preview text These two losses are known as "pure economic loss". The recoverability of pure economic loss in tort largely depends on which category of pure economic loss the loss falls in … Then the question arises, what does the future hold for delictual liability for pure economic loss? In the final analysis, the court took into account two policy considerations that weighed against the imposition of delictual liability. For it to be a delict there needs to be a factor beyond the mere occurrence of the loss and that its occurrence was foreseeable (Murphy v Brentwood). However, since the causing of pure economic loss is prima facie lawful (while positive conduct causing physical harm to person or property is prima facie wrongful), an important caveat in relation to pure economic loss is that the element of wrongfulness must be the function of the balancing exercise contemplated by the boni mores test, where the risk of indeterminate liability or the anti-circumvention … Keywords: delict, pure economic loss, wrongfulness, unlawfulness. Itzikowitz v Absa Bank Ltd (20729/2014) … It was found not to be fair and reasonable to impose a duty of care on the auditor to everyone (even though it was foreseeable that their advice would be used that way) due to the lack of any special (contract like) relationship between the shareholders and the auditor; it might however be imposed if the auditor knew the report would be communicated and knew it would be for that purpose. This is determined by reference to certain policy factors, the history of which will be dealt with below. This course builds upon the introduction to Delict provided in LS2025 and LS1536 examines a number of aspects of the law of delict in greater detail. Only the owner of the property damaged is usually able to sue, in Dynamo v Holland and Hannen and Cubitts, the owner of a factory who lost income due to a power cut caused by an excavator was unable to sue as there was no duty of care. Donoghue v Stevenson. Prior results do not guarantee a similar outcome. If a claimant suffers no personal injury or damage to property then his los… The specific topics covered will vary on a year-by-year basis as the course aims to examine issues of topical interest. Therefore, in general, if pure economic loss is the only damage suffered it is not recoverable. Following in the footsteps of Trust Bank was Lillicrap Wassenaar & Partners v Pilkington Bros SA. In essence, it is a loss that is purely financial. The second factor was non-vulnerability, "that Country Cloud could have taken alternative steps to recover its loss, for example, by claiming repayment from Ilima in terms of the loan contract or taking cession of Ilima's claim against the department". Study Flashcards On 3. In Country Cloud and Scott one can argue that even though the approach was cautious, it is apparent that our courts will readily abandon the bright line of limitation if the circumstances so dictate. pure economic loss not recoverable under delict. Therefore the approach taken by our courts in interpreting delictual liability for pure economic loss to an insured has implications to the formulation and extent of the cover both for the insured and the insurer. South African law approaches the matter in a more cautious way, as I have indicated and does not extend the scope of Aquilian action to new situations unless there are positive policy considerations which favour such an extension.". In Hedley Byrne and Co v Heller and Partners, the courts were asked to examine a case where Hedley Byrne did business with a third party company on the basis of a positive reference from Heller and Partners. The court was asked to determine liability in delict for so called pure economic loss resulting from a negligent design by structural engineers. Ebotswana (Pty) Ltd v Sentech (Pty) Ltd (November 30, 2014). This is because a duty of care must be consistent with an assumption of responsibility. Most importantly, the element of wrongfulness needs to be established in these type of cases. Quickly memorize the terms, phrases and much more. As established in cases like Murphy v Brentwood district council, it is established where A performs a contract with B to a substandard level (such as say, laying foundation) and B sells the property on to C, C has no claim to A for the pure economic loss. It is apparent that our courts have consistently adopted a cautious approach and rightly so having regard to the facts of each particular case weighed against policy considerations. The SCC majority acknowledged the three categories of pure economic loss that it had previously narrowed in Deloitte & Touche v. Livent Inc. (Receiver of) 3: 1) negligent misrepresentation or performance of a service; 2) negligent supply of shoddy goods or structures; and 3) relational economic loss. However there are some cases where this can apply. This principle was confirmed in AB Ventures Limited v Siemens Limited, which followed the decision of Lillicrap. It has also been … The SCA disallowed the appeal. This can take the form of lost profits, the cost of replacing or repairing a defective building, or the defective item itself. The court was called upon to consider the imposition of delictual liability in circumstances that had never been imposed before, namely, where a stranger to a contract has suffered economic loss as a result of the intentional repudiation of the contract by one of the contracting parties. Obviously for a plaintiff to successfully prove a delictual action, the elements of delict should be proven. Pure economic loss may also refer to financial loss that does flow from the damage to prop or impairment to personality, but which doesn’t involve the Pl’s prop or person. 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