Economic loss can be identified as an event causing financial damage and loss. There are two types of economic loss: pure economic loss and consequential economic loss.
Pure economic loss refers to financial damage and loss not consequential upon physical damage to person or property. It arises when the defendant has engaged in negligent conduct which directly causes economic harm to the plaintiff’s person or property.
Also known as “secondary loss”, this occurs when a person suffers harm as a consequence of the defendant’s conduct. It includes the loss of goodwill, reputational harm to a business, and any loss associated with a defective product.
Negligent conduct by a defendant can only be found in cases where the defendant owed the plaintiff a duty of care, which is a question for the court to determine in the circumstances of the case.
For a duty of care to be established, the risk posed to the plaintiff or a class of people to which the plaintiff belongs must have been “reasonably foreseeable”.
In Queensland, the Civil Liability Act 2003 (Qld) limits the amount of damages for loss of earnings to an amount equal to “3 times average weekly earnings per week for each week of the period of loss of earnings”.
Past economic loss is calculated from the date of injury up to either the anticipated settlement or judgement. If the plaintiff was injured during the course of employment, the past economic loss is calculated as the weekly earnings of the plaintiff. If the plaintiff was not employed at the time of the incident, the court will then consider whether the injury would impact, or is likely to impact, the plaintiff’s ability to return to work and may award compensation.
At common law, damages are payable to compensate a person for a loss of future earning capacity where that loss of capacity is due to an injury caused by the wrongdoer’s negligent act or omission. The fact that a plaintiff may be predisposed to an injury caused by tortious conduct does not reduce the damages payable.
At common law, a court is required to consider factors which might have affected the applicant’s future earning capacity, and which would reduce any award of damages. This is regardless of the loss sustained due to the injury that is the subject of the proceedings.
The customary discount for such contingencies and vicissitudes is about 15%. In Arthur Robinson (Grafton) Pty Ltd v Carter (1968) 122 CLR 649 (at 659), Barwick CJ stated factors relevant to loss of earning capacity include “ill health, unemployment, road or rail accidents, wars, changes in industrial emphasis, so that industries move their location, or are superseded by new and different techniques, the onset and effect of automation, and the mere daily vicissitudes of life…”.
If you believe you have a claim for economic loss, contact Gibbs Wright Litigation Lawyers today for a no-obligation, confidential consultation about your legal rights and options.
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