img018 4

232 NECLICENCE: CAUSATION AND CONTKIBUTOKY NEGLICENCE

(2) Fairness

6.22 According to the Privy Council the test of directness works unfairly: "(i does not seem consonant with current ideas of justice or morality that f_0r an act of negligence, however slight or venial, which results in sonie trivial foreseeable damage the actor should be liable for all consequences however unforeseeable and however grave, so long as they can be said to be 'direct'."*’ It is no doubt hard on a negligent defendant that he should be held liable for unexpectedly large damages, but it is not elear that the finał outeome is any fairer if the claimant is left without redress for damage which he has suffered through no fault of his own. Bearing i_n mind that negligence involves the creation of an unreasonable risk of causing some foreseeable damage to the claimant it might be thought that even though "justice" may be impossible of achievement where unforeseeable damage occurs,³⁷ greater injustice is produced by The Wagon Mound than by Re Polemis.

Further principles as to remoteness

6.23 The preceding account of The Wagon Mound should not mislead one into thinking that foreseeability is all there is to the law of remoteness. As was stated at the beginning of this chapter remoteness is an aspect of legally effective causation and frequently the courts will speak in the language of causation because although the defendant's act is a cause in the "but for" sense some subsequent act or event is regarded as eelipsing it. Sometimes policy comes to the surface and a loss is dismissed as too remote simply because the court does not think it reasonable or desirable to impose it on the defendant. Thus, in Pritchard v. J. H. Cobden Ltd,^XH it was held that where the claimant's marriage broke up as a result of his injuries, orders for financial provision madę against him by the dworce court could not be the subject of a claim against the tortfeasor: quite apart from the point that redistribution of assets on dworce could not be regarded as a "loss", acceptance of such claims would risk confusion in the judicial process and be open to abuse. There are also a number of commonly-recurring situations in which principles have developed which are qualifications of foreseeability and which we niust consider in morę detail. However, the House of Lords has emphasised that in decid-ing the scope of the defendant's liability for the consequences of his wrong it is necessary to consider the naturę of the loss against which the legał rule in question is designed to keep the claimant harmless. It has been denied that this is a matter of causation,³⁹ but duty is already a somewhat overloaded topie for the purposes of exposition and it is

** (19611 A C. .11 422.

¹⁷ Prosser. loc. cit., at 17.

’ (19881 Fam 22. Set* also para. 23.19, bo Iow.

^v* Nykmiit Mortgnge Bank Pic v. Edward Erdnian Group Ud (No 21 [1997] 1 WLR 1627 at 163S. per l-oni Hoffmann.

yndeniable that the effect of this prindple is to limit the defendant's liability for loss which he caused in a factual sense.⁴"

The point is morę obvious in the tort of breach of statutory duty, so that, for example, a claim in respect of the loss of unpenned livestock from a _ship i^{n a} storm failed because the purpose of the statute requiring pen-„Ing was to prevent the spread of disease⁴¹; but the same prindple is applicable at common law and liability is generally limited to those _conset)uences, factually caused by the defendant and not otherwise too renrote, which are attributable to that which makes the act complained of wrongful. It is "the scope of the tort which determines the extent of the remedy to which the injured party is entitled".⁴² The cases generally involve a contract between the parties, but in the professional negligence context contract and tort are interchangeable. In Bauque Bruxelles Lambert SA v. Eagle Star Insurance Co. Lid⁴¹ the issue in a number of Consolidated appeals was whether a valuer who had negligently overvalued a property on which a lender advanced money on mortgage was liable not merely for the difterence between the valuation figurę and the amount which would have been realised on sale of the property at the time but for the further loss attributable to a generał fali in the property market. The lender would not have entered into the transaction if he had known the truth and it could hardly be denied that falls in markets are foreseeable as a generał rule. Nevertheless, the answer given by the House of Lords was "No", for in the case of liability for information proeided to enable the claimant to decide on a course of action, liability for negligence⁴⁴ was limited to the consecjuences of the information being wrong.⁴⁵ So, sup-pose property is valued at £500,000 when a true valuation would have been £400,000. When, on default, the property is sold, it realises only £300,000 because of a generał fali in the market. In a purely causative sense the lender's loss is £200,000^4<’ but the valuer's liability is only £100,000 because the balance represents the risk which the claimant would have taken on himself even if the transaction had been sound.⁴⁷

“See Lord Hobhouse in Platform Home Ijoans Lhl v. Oyston Shipways UJ [2000] 2 A C 190 at 208 ⁴¹Conti p. Scott (1874) LR. 9 F\ch. 125, pani. 7.11. below. This has obvious affinities with the notion of the "protectise purpose of the norm" which is toumi in Austrian and German law. See van Gerven. levor and Larouche, Tort Law (Common Im u- of Euni/re GischuofcO Chap. 4.1.1.

⁴¹ Platform Home Loans UJ o. Oyston Shipways LtJ 120001 2 A.C. 190 at 209, per Lord Hobhouse.

° [19971 A.C. 191 (reported in | i99ft) 3 All E R 365 sub nom South Australia e\sset Management Corp p. York Mmtlague UJ and commonly known as the "SAAMCO prindple"); Nykredit Mortgage Bank Ple r. Edirnrj Erdman Group UJ (No 2) 119971 1 W L R. 1627 cl. Kami/ Cr GooJ Pty UJ V. MGICA (1992< UJ ^ (1999) 163A.LR 611.

The position is diffcrent if the defendant is guilty of fraud, for then he is liable for all losses flowing from the fraudulently induced transaction: Smith New Court Sccurities UJ v. Scrimgcour Vickas tAsset Management i UJ 119971 A.C. 254 at 283. Indeed, he is liable cven for unforeseeable consequences. of- Capaw p. Dickman |1990| 2 A C. 605, para. 5.7. above. where the purpose of the rule intringed went •o whether a duty was owed to the claimant. Lord Hoffmann in Baruiiie Brutelles at |1997| A.C. 213 *xplains The Empire lamaica (19551 I’. 259 on a somewhat similar basis (negligence by matę whom owners knew to be uncertificated but whom they reasonably belieeed to be competent: damage not done with their "acfual fauli and privity").

In one of the cases reported as Bristol and lVcsf B.S p. lancy Cr jackson 11997) 4 All E R. 582 the defendants incorrectly represented to the mortgagees that they had an official search certificate, withoiit which the mortgagees would not have proceeded. The mortgagor defaulted. The breach was fot causative of the mortgagees' loss.

Nykmlit Mortgage Btink Pic p. EJ nor. I ErJman Group UJ (No 2). aboee, at 1631. ;>rr Lord Nicholls.