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Recouping pure economic loss

19th June 2009

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The driver of an articulated truck carrying hazardous chrysolite asbestos negligently caused a collision, with the result that the national road on which the collision occurred, had to be closed for 24 hours. That portion of the road was also a toll road. The alternative route, to which traffic was diverted, was not a toll road, which meant that two toll plazas could not collect toll for a day. The Supreme Court of Appeal held that the damage was not too remote and held that the owner of the truck was liable to the South African National Road Agency ("SANRAL") in the matter Fourway Haulage SA (Pty) Ltd v SA National Roads Agency Ltd, 2009 (2) SA 150 (SCA). The court held as follows:

* Pure economic loss connotes loss that does not arise directly from damage to the plaintiff's person or property, but in consequence of the negligent act. SANRAL's case fell in this category, as it claimed for loss of revenue. It did not, for example, claim that the road itself was damaged.
* The causation of pure economic loss is only wrongful if a legal duty existed not to cause the loss. This is a judicial determination involving consideration of whether public or legal policy considerations require that such conduct, if negligent, should attract legal liability for the loss.
* Liability does not depend on the specific views of an individual judge. Absolute legal certainty in this regard is however unattainable. Policy considerations that must be weighed against one another include whether there is a danger of limitless liability; whether the plaintiff was in a position to avoid the risk of the loss by contractual means; and whether an unwarranted, additional burden would be put on a defendant.
* The loss claimed was by a single plaintiff and was finite in its extent. The plaintiff was unable to protect itself by contract - it could not, for example, have concluded a contract with every user of the toll road. The defendant's driver was already under an obligation towards other road users to drive with reasonable care. It would be inappropriate to spread the loss by for example increasing the toll fee to make up for the loss in revenue. That would amount to prejudicing innocent road users in favour of a negligent driver.
* The loss was not too remote as it followed directly from the negligent conduct of the driver; no intervening action broke the chain of events; and it was reasonably foreseeable that a collision could cause spillage and that a spillage could cause a road closure because of the dangerous nature of the cargo.

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By: Webber Wentzel

 

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