Negligence: Pure Economic Loss Week 6

Question 1

What is the definition of pure economic loss?

Answer 1

Pure economic loss is economic loss that is not consequential upon physical damage to person or property
AUTHORITY: Marsh v Baxter 2015

Question 2

What is relational economic loss?

Answer 2

Pure economic loss caused by damage to the property of a third party

Question 3

What are 5 steps for establishing Duty of Care in a question on PURE ECONOMIC LOSS?

Answer 3

1) Make sure the the harm suffered is pure economic loss before you being writing your answer, then;
2) Classify the harm as relational economic loss using a definition and Identify that only a novel duty of care would exist based on the harm (Caltex Oil v The Dredge ‘Willemstad’)
3) Identify the Multi-factor approach used establish a duty of care. Include authority (Sullivan v Moody)
4) Assess reasonable foreseeability (Normal fortitude, direct perception, sudden shock and other factors) to establish duty of care
5) Consider the other tests from relevant judgments to establish a duty of care (Ascertained Class Test, Ascertainable Class Test, Five Salient Features Approach, Physical Propinquity Approach and the other factors raised in Fortuna Seafoods)

Question 4

What were the 5 tests to establish duty of care for Pure Economic Loss and their authorities?

Answer 4

1) Ascertained Class Test (Justice Gibbs and Justice Mason)
2) Ascertainable Class Test ( Fortuna Seafoods)
3) Five Salient Features Approach (Justice Stephen)
4) Physical Propinquity Test (Justice Jacobs)
5) Other factors raised in Fortuna Seafoods

Question 5

Explain the Ascertained Class Test for establishing Duty of Care for Pure Economic Loss

Answer 5

Ascertained Class Test (Justice Gibbs and Justice Mason)

i. Defendant must have knowledge of the plaintiff individually and not merely as a member of an unascertainable  class at the time of the interference and; 
- Some property of the plaintiff was in physical proximity to the damaged property
- The plaintiff and the defendant were engaged in a common enterprise/venture

Question 6

Explain the Ascertainable Class Test for establishing Duty of Care for Pure Economic Loss

Answer 6

Ascertainable Class Test (Fortuna Seafoods)

i. Duty of care is owed if defendant knows (or has the means of knowing) that the plaintiffs were members of ascertainable and vulnerable class unable to protect themselves from harm
        a) Ascertainable Class 
                      - Are the parties in a common enterprise? 
                       - Does an contractual right exist between them?
       b) Defendant had the means of knowing about this class
       c) Vulnerability - Did the plaintiff have the ability to protect themselves/

Question 7

Explain the 5 Salient Features Test for establishing Duty of Care for Pure Economic Loss

Answer 7

Five Salient Features Approach (Justice Stephen)

i. To prove there is sufficient proximity between tortious act and injury, you must identify;
	1) Def’s knowledge of likelihood of e/c loss if the pipes were damaged
	2) Def’s knowledge of the existence of the pipe and its use
	3) Negligent infliction of damage to the property of a 3rd party
	4) Nature of detriment suffered by the Pl 
				a) Whether there is a direct link to the damages claimed 
	5) Nature of the damages claimed 
				a) Whether there is a direct link to the detriment suffered

Question 8

Explain the Physical Propinquity Test for establishing Duty of Care for Pure Economic Loss

Answer 8

Physical Propinquity Approach (Justice Jacobs)
a) Was the negligent act physically close enough to the person or property of the plaintiff, that the physical effect of the negligence was foreseeable?

Question 9

Explain the ‘Other Factors’ identified in Fortuna Seafoods for establishing Duty of Care for Pure Economic Loss

Answer 9

5) Other factors raised in Fortuna Seafoods
i) Reasonable forseeability - of the harm negligence could cause
iii) Indeterminate liability - Is the plaintiff a closely related company or person
iv) Control - Defendants ability to prevent negligence