pure economic loss delict

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. 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. 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. • 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 … Suggested Citation: Suggested Citation. Delict: A delict is an act of a person, which in a wrongful & culpable way causes harm to another. 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. Whether to extend delictual liability for pure economic loss has been a thorny issue for our courts since the landmark judgement of Administrator, Natal v Trust Bank van Afrika. The SCA disallowed the appeal. The Aquilian action has reached its end development in South African law, where compensation for negligent misrepresentation may be claimed ex lege Aquilia. 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. 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. 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. Generally, pure economic loss is aptly referred to as financial loss. 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. Economic Loss is a potential injury that may arise in Delict cases. 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. GenerallyReluctance to compensate for financial loss Intrinsic Value to what is LostMoney “Less Valuable”Consider the relativity of pecuniary loss, personal and proprietary – money will be the least in needof protection- Money is just a means to an end, Societal Value of LossCompared to pecuniary loss, proprietary/personal is of bigger social significance, e.g. 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). In deciding the issue, the court delved in detail into the historical jurisprudence for extension of delictual liability by examining decided cases. 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. In doing so, the court will ordinarily establish whether a legal duty exists and it will be guided by examining several policy factors. Prior results do not guarantee a similar outcome. This is the so-called Hedley Byrne principle following the case ofHedley Byrne & Co Ltd v Heller & Partners Ltd [1964] … Recoverable pure economic loss. In order to comply with its obligations under the construction contract Ilima had borrowed R12 million from Country Cloud (plaintiff). 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. All rights reserved. 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. Topics will be discussed in a comparative, historical and/or theoretical context. This can take the form of lost profits, the cost of replacing or repairing a defective building, or the defective item itself. Topics will be discussed in a comparative, historical and/or theoretical context. 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). Economic damage however, is far less easy to quantify, can grow out of proportion very quickly. Take your favorite fandoms with you and never miss a beat. As such the law places significant limits on the recovery of pure economic losses. Liability for negligently caused economic loss - Delict at Cram.com. However there are some cases where this can apply. Avizandum is a FANDOM Lifestyle Community. pure economic loss not recoverable under delict. Briefly, the facts were as follows: The department (defendant) had contracted with a third party (Ilima) for the latter to complete a hospital. Prior to Administrator, Natal v Trust Bank van Afrika delictual liability was limited as a general rule, to loss resulting from physical injury to a person or property. criterion to determine the legal duty with regards to pure economic loss, This is because a duty of care must be consistent with an assumption of responsibility. Economic Loss1. Most importantly, the element of wrongfulness needs to be established in these type of cases. The first was the indeterminacy issue that,  "holding contracting parties delictually liable for harm suffered by strangers, flowing from the repudiation of their contracts, would raise the spectre of indeterminate liability to a multiplicity of potential claimants". The court was reluctant to extend the scope of Aquilian action to new situations, especially from a contractual context unless there are positive considerations that favour such an extension. 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. Quickly memorize the terms, phrases and much more. Generally, pure economic loss is aptly referred to as financial loss. The specific topics covered will vary on a year-by-year basis as the course aims to examine issues of topical interest. Cram.com makes it easy to get the grade you want! © 2020 Hogan Lovells. No, it is not generally delict. Then the question arises, what does the future hold for delictual liability for pure economic loss? [2] The yardstick that must be applied in this determination is the general criterion of reasonableness or boni mores. Pure economic loss arises where a third party suffers a loss without there being injury or damage. The department, however, cancelled the Ilima contract because of the eventual liquidation of Ilima. Following in the footsteps of Trust Bank was Lillicrap Wassenaar & Partners v Pilkington Bros SA. The court was asked to determine liability in delict for so called pure economic loss resulting from a negligent design by structural engineers. Donoghue v Stevenson. Thereafter Country Cloud instituted damages action against the department. Obviously for a plaintiff to successfully prove a delictual action, the elements of delict should be proven. This was on the basis that the defenders had a contract to lay the floor, knew that Junior would be relying on the floor, that their skills were being relied upon by the per suers, and that they must have known that this was the case, and that any defects would be at some time corrected at a financial cost. 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. 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". In Country Cloud the court was called upon to decide whether such factors existed for the extension of delictual action for pure economic loss. Pure economic loss may comprise patrimonial loss that does not result from damage to property or impairment of personality. 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 … 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. 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. The appellant’s cause of action was founded in delict and was for pure economic loss. 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