Case 1: Perre & Ors v Apand Pty Ltd (1999)
Facts of the case
Apand was a nationwide producer of crisp potato chips and distributed trial potato seeds to Sparnon within the Berri area of South Australia. Sparnon, with his potato farmers neighbours (Perre and other Plaintiffs), boasted of a profitable business of trading potatoes to Western Australia. This was because the price of potatoes in Western Australia was superior to the price in South Australia.
The seeds supplied to Sparnon had been infected with bacterial wilt, therefore, making his potatoes to be infected. As a result, laws in Western Australia banned the importation of infected potatoes as well as the importation of potatoes from farms within a 20-kilometre radius adjoining an infected ranch. Sparnon, alongside other potato growers, were therefore forbidden from selling potatoes to Western Australia for five years (Doyles, 2007).
Perre, with the other potato growers, litigated Apand for the “economic loss” they had borne owing to the loss of the right of entry to the Western Australian market. Actually, Apand had knowledge of the Western Australian law barring the importation of infected potatoes and the circumstances therein (Doyles, 2007).
Legal Issues
The legal question was if Apand owed a “duty of care” to Perre along with other potato farmers to evade damage-causing monetary loss to the farmers, despite the fact that there was no related physical damage to property or an individual.
Findings of the case
According to the high court decision, it was established that it was true that Apand owed a duty of care to Perre as well as other potato farmers. The Judges had inconsistent rationale in deciding how a duty of care was enforced on Apand. Nevertheless, everyone settled that Apand ought to have anticipated that bringing infected seeds to a potato cultivator in South Australia would influence the capacity of neighbouring potato farmers to vend potatoes. This would therefore lead to cases of economic loss due to the reduction in sales (Doyles 2007).
Case 2: Caltex Oil (Australia) Pty Ltd v The Dredge “Willemstad”
Facts of the case
In this case, the defendant (The Dredge) owned a barge, which was being operated in Botany Bay. Because of its negligent steering, it cut off an oil pipeline. The pipelined in question belonged to AOR Company and served to provide oil for a refinery belonging to Caltex Oil Ltd, which is the plaintiff in this case. It should, however, be noted that the pipeline did not belong to Caltex (Gillies 2004). Owing to the severing of the pipeline, Caltex suffered additional costs in transporting the petroleum products to the refinery using other means. This case was concerned with the imposition of the economic loss upon the claimant by a negligent physical act even though the plaintiff did not suffer any damage to hit property (Gillies 2004).
Legal issues
The issue of concern was whether negligent acts and unlike negligent statements could limit the persons or a class of persons to whom a duty of care is due with regard to economic loss (Gillies 2004).
Findings of the case
The reasoning of the judges was varied. Some argued that the negligence for economic loss is recoverable when the defendant had knowledge that the plaintiff specifically may end up suffering economic losses. Another judge argued that recovery could be determined by the adequate closeness between the tortious act and the damage. The last one argued that economic losses emanate from a physical result on the individual or property of the plaintiff. It is not recoverable due to the mere fact that it is an economic loss. All the same, the judges ruled in favour of Caltex Oil Ltd. Despite the fact that the judgments exhibited a degree of variance in expression, the High Court of Australia, later on, indicated that no variations of principles amid affiliates of that court were intentional in so doing (Gillies 2004).
A Comparison of the two cases
The first difference between the two cases is that the case of Caltex involves a physical act of negligence to the plaintiff while the other case of Perre & Ors v Apand Pty Ltd did not involve any physical activity leading to economic losses. In Caltex Oil Pty Ltd v The Dredge, a physical act of negligence brought about economic losses, while in the case of Apand the financial loss was not caused by any physical damage but rather because of negligence on the defendant who acted contrary to particular provisions.
The second difference is that in the case of Perre & Ors v Apand Pty Ltd it was foreseeable on the part of the plaintiff that an economic loss would arise. Apand was very much aware of the laws of Western Australia and could foresee the damage. On the contrary, in the case of Caltex Oil Pty Ltd v The Dredge, the defender did not foresee any economic loss, especially to the third party, in this case, Caltex Oil Ltd.
The third difference in these two cases is that of the impact of the third party. In Caltex Oil Pty Ltd v The Dredge, the pipeline did not belong to Caltex, but The Dredge was answerable to Caltex for negligence. As a result, any economic losses arising in that act of negligence are recoverable. That is, there is the claim of negligence for the economic losses incurred only. It is also clear that duty of care may be claimed where one threatens the economic interest of others. This is the situation in the case of Perre & Ors v Apand Pty Ltd. Interestingly. One is liable for duty of care not only for physical damage but also for pure economic losses. These can be termed as modern developments in the law of torts.