Damage, Causation and Remoteness

Held. The appeal was allowed. A duty of care must be established and is not created merely by the existence of a statutory power; the fall of the tree was not reasonably foreseeable by the Corporation; and the damage was too remote. The Court nevertheless directed that the Rs. 45,000 already paid should not be recovered from the claimants, who were poor.

Why it matters here. It shows the Indian courts applying foreseeability at both ends of the claim: to the existence of the duty and to the remoteness of the damage. Read it against Municipal Corporation of Delhi v. Subhagwanti, AIR 1966 SC 1750, where the collapse of an eighty-year-old, never-inspected structure was both foreseeable and proximate.

Damage that the law recognises

Not every kind of loss is compensable in negligence.

Physical injury and damage to property are the paradigm.

Consequential economic loss, that is, loss flowing from physical injury or property damage, is recoverable.

Pure economic loss, that is, financial loss unconnected with any physical injury to the plaintiff or his property, is recoverable only in narrow circumstances, because a duty to avoid it is rarely held to be fair, just and reasonable, as chapter [The Duty of Care] explains.

Nervous shock, that is, a recognisable psychiatric injury, is recoverable subject to the control mechanisms in chapter [Nervous Shock].

A worked example

A tanker driver parks on a slope without applying the handbrake. The tanker rolls, hits a wall, and petrol leaks.

A pedestrian is crushed. But for the breach he would not have been hurt; the harm is of a foreseeable kind; the claim succeeds.

A worker with a weak heart dies of shock at the noise. The kind of harm, personal injury, was foreseeable, and the eggshell skull rule makes the defendant liable for the extent.

A passer-by lights a cigarette near the leak and there is an explosion. Whether the chain is broken depends on whether that act was truly independent. If the leak was obvious and the passer-by acted deliberately in the face of it, the chain may be broken; if he had no reason to know, it is not.

A factory a kilometre away loses a day's production because the road is closed. That is pure economic loss unconnected with any damage to the factory's property, and it is very unlikely to be recoverable.

A rescuer is burned pulling the driver out. The chain is not broken, a duty is owed to rescuers, and volenti non fit injuria does not run against him.

Distinctions that carry marks

What it does NOT mean

It does not require the extent of the harm to be foreseeable. Only its kind.

It does not excuse a defendant because the victim was unusually vulnerable. The eggshell skull rule.

It does not break the chain merely because somebody else also acted. The intervening act must be truly independent, and rescue and medical treatment ordinarily are not.

It does not make all financial loss recoverable. Pure economic loss is recoverable only exceptionally.

Quick revision

1. The third element of negligence is damage caused by the breach and not too remote.
2. Causation: the but-for test, with material contribution where causes are multiple.
3. Novus actus interveniens: an independent intervening act breaks the chain; rescue, medical treatment and reasonable acts in an emergency do not.
4. Remoteness: directness in Re Polemis, reasonable foresight in The Wagon Mound, and foresight is the test now applied.
5. The kind of harm must be foreseeable; its extent need not be.
6. The eggshell skull rule: take your victim as you find him.
7. Rajkot Municipal Corporation v. Manjulben Jayantilal Nakum, (1997) 9 SCC 552: the fall of the tree was not foreseeable and the damage was too remote.
8. Pure economic loss is recoverable only in narrow circumstances.

Test yourself

1. Explain the tests of remoteness of damage. Two tests compete. The test of directness, associated with Re Polemis, makes a defendant liable for all the direct consequences of his negligent act whether or not they were foreseeable, which is simple to apply but can make liability disproportionate to fault. The test of reasonable foresight, associated with The Wagon Mound, limits liability to consequences of a kind that a reasonable person would have foreseen, and it is the test now generally applied. Two refinements soften it: the kind of harm and not its extent must be foreseeable, and under the eggshell skull rule a defendant takes his victim as he finds him, so that a foreseeable injury made far worse by the plaintiff's unusual susceptibility is compensated in full. Indian courts apply foreseeability, and in Rajkot Municipal Corporation v. Manjulben Jayantilal Nakum, (1997) 9 SCC 552, the Supreme Court set aside decrees on the ground, among others, that the damage was too remote.

2. What is a novus actus interveniens? A new act intervening: an act, event or decision occurring after the defendant's breach which is so independent of it that the law treats it as breaking the chain of causation, so that the defendant is not liable for what follows. The intervening act must be genuinely independent, and voluntary human conduct that is deliberate and informed is the clearest example. What does not break the chain is action taken by a rescuer, since rescue is a foreseeable response to the danger the defendant created; medical treatment of the injury, unless it is grossly negligent; and conduct of the plaintiff which is a reasonable reaction to the emergency in which the defendant placed him. The question is always whether the later event was within the risk the defendant created or outside it.

3. Does the law of negligence compensate every financial loss? No. Physical injury and damage to property are the paradigm heads, and economic loss consequential on them, such as lost earnings or lost profits from a damaged machine, is recoverable. Pure economic loss, that is, financial loss suffered without any physical injury to the plaintiff or his property, is recoverable only in narrow circumstances, typically where there is a special relationship of reliance or an assumption of responsibility, because courts have generally held that it is not fair, just and reasonable to impose a duty of that width; otherwise a single accident on a road could give a claim to every business inconvenienced by the closure. Nervous shock is recoverable where it amounts to a recognisable psychiatric injury and the control mechanisms in chapter [Nervous Shock] are satisfied.