Aquilian liability for negligently caused pure economic loss

Basic principles Anton Fagan ‘Aquilian Liability for Negligently Caused Pure Economic Loss’ (2014) 131 SALJ 288 Herschel v Mrupe 1954 (3) SA 464 (A) Administrateur, Natal v Trust Bank van Afrika 1979 (3) SA 824 (A) Lillycrap, Wassenaar& Partners v Pilington Bros 1985 (1) SA 475 (A) Mukheiber v Raath 1990 (3) SA 1065 (SCA) Fourways Haulage SA v SA National Roads Agency 2009 (2) SA 150 (SCA) Lecture notes BASIC PRINCIPLES PEL PEL is financial loss with no accompanying damage to property or person. The classic case of this is where a bulldozer negligently severs an underground power cable on the land of person A, causing a power failure in the factory of B. The loss of profit caused to B in having his factory shut down is pure economic loss. It’s not that the consequential loss is distant from the wrongdoing; it’s that there was no harm to the plaintiff’s person or property whatsoever. The reason pure economic loss is tricky is that the lex Aquilia (which of course forms the basis of our law of delict) traditionally protects only bodily integrity (corpus) and real rights (and certain narrow extensions). In other words, damage to person or property is a precondition for liability under the lex Aquilia. If you are seeking to impose liability for financial loss caused without such damage (i.e. for pure economic loss), you face certain extra hurdles. Our case for this is obviously the great Administarteur Natal v Trust Bank van Afrika (explained in great detail below). It was here that for the first time the AD unequivocally acknowledged the possibility that a person could commit the kind of wrong required for Aquilian liability, not only if he negligently caused physical harm to another’s person or property, but also it he negligently causes another pure economic loss. The 5 propositions are our law today. 1.2.3.4.A person could commit the kind of wrong required for Aquilian liability, not only if he by his negligent conduct causes physical harm to another’s person or property, but also if he by his negligent conduct causes another pure economic loss. A person who negligently causes another pure economic loss thereby commits a wrong (of the required kind) against the person suffering the loss only if he owes the person suffering the loss a duty not to conduct himself negligently. The duty required for negligent conduct causing pure economic loss to constitute a wrong is not a general duty, owed by everyone to everyone else – however, there could be special circumstances in which a particular duty of this kind, owed by one person to another, exists. Whether one person owes another such a particular duty depends on whether policy requires that, if the former negligently causes the latter to suffer pure economic loss, he ought to be placed under a legal duty to compensate him for his loss.