Content area
Full Text
"Pure economic loss" has been defined as "a diminution of worth incurred without any physical injury to any asset of the plaintiff." (A. G. Ont. v. Fatehi 1984)
[Graph Not Transcribed]
The law of negligence is the most important and best known part of the whole subject of tort law. Negligence has been most concerned with compensating those who suffer personal injury or property damage or both at the hands of other careless persons. This is the enduring legacy of the landmark Donoghue v. Stevenson case.
Personal injury and property damage, both of which are in the category of physical damage, ultimately lead to some economic loss too. If one is off work due to a personal injury, there are economic consequences which negligence law stands ready to address. The same can be said where one's vehicle was smashed and has been written off. One will be compensated for that property damage in economic terms. Almost all issues in law and wrongdoing can be reduced to money, which is the best available form of compensation.
Now, what if the only injury resulting from the negligence is economic? What if, for example, one accepts an employment position on what turns out to be careless representations of the employer? What if a contractor relies on an engineering report in constructing a shopping centre and the engineering advice turns out to be incorrect, leading to hundreds of thousands of dollars in re-design work and delays in opening? The Donoghue "neighbour principle" setting out a common law duty to take care is capable of being extended just as easily to other kinds of foreseeable losses. The question is whether the judges who shape this law will do so.
Appellate courts in Canada are just beginning to settle the law on whether someone should recover money if all that one has suffered by the negligence is economic loss. Hence the term pure economic loss. Historically, it was difficult to win a claim in this category, and while the courts are again opening their doors to it, the law is only emerging on the scope of protection that should be given to economic interests within a number of different classes of loss.
Reasons for Denying Economic Loss Claims
Contract law...