How can the courts determine the extent of economic loss due to financial downturns in a tort claim? Ian Gascoigne discusses the challenges of striking the right balance
- In tort, a court’s task is to determine objectively the types of loss that would foreseeably be anticipated at the time that the breach of duty happened.
- Having to assess whether a falling market is within the scope of the particular duty of care affords the judge an effective check.
Quantifying the recovery under a claim for economic loss following breach of a duty of care in tort is difficult. The breach can push the victim into a set of dramatic consequences.
In resolving such claims, judges have two roles. The first is to establish a dividing line on the facts; and the second, for higher courts, is to set out a workable principle for future reference. Courts can address a victim’s financial recovery in terms of a combination of arguments over the scope of the duty, causation, remoteness and (sometimes) contributory negligence. Even so, drawing the dividing line between
