Remoteness of Damages
| Author | Jamie Cassels |
| Profession | Professor of Law University of Victoria |
| Pages | 311-337 |
CHAPTER
11
REMOTENESS
OF
DAMAGES
A.
INTRODUCTION
The
common
law
places limits
on the
amount
of
damages recoverable
for
a
tort
or
breach
of
contract,
in
order
to
avoid unduly burdening
the
defendant
with
an
entirely unexpected
or
disproportionate degree
of
liability.
As
when
a
small pebble
is
thrown
in a
pond,
the
ripple
effects
from
the
commission
of a
tort
or a
breach
of
contract
can
spread
far
and
wide. Even
a
minor breach
of
contract
or
tort
may
cause damage
quite unforeseen
by the
parties
and out of
proportion
to the
culpability
of
wrong done.
As a
judge
in one
leading case explained,
the
relentless
pursuit
of the
compensation principle, without limit, would result
in
liability
for the
most improbable
and
unpredictable consequences
and
would
be
unduly harsh
on the
defendant.1
Thus, every system
of law
has a way of
limiting
the
damages
for
which
a
defendant
may be
responsible.
As
Lord Wright explained,
[t]he
law
cannot take account
of
everything that follows
a
wrongful
act;
it
regards some
subsequent
matters
as
outside
the
scope
of its
selection, because
"it
were infinite
for the law to
judge
the
cause
of
causes,"
or
consequences
of
consequences.
...
In the
varied
web of
1
Victoria Laundry (Windsor) Ltd.
v.
Newman
Industries
Ltd.,
(C.A.) [Victoria
Laundry].
311
312
REMEDIES:
THE LAW OF
DAMAGES
affairs,
the law
must abstract some consequence's
as
relevant,
not
per-
haps
on
grounds
of
pure logic
but
simply
for
practical
reasons.2
The
principle
of
remoteness
of
damages
is the
law's primary means
of
guarding against unduly burdening
the
defendant with
an
inappro-
priate
degree
of
liability.
The
question
is
whether,
on the
facts
of the
case,
the
damages claimed
are too
"remote"
to be
recoverable.
The
essential
issue
when addressing this question
is
whether
it is
fair
to
burden
the
defendant with
the
particular loss that
has
occurred.
B.
REMOTENESS
IN
CONTRACT
1) The
Rule
in
Hadley
v.
Baxendale
The
test
for
whether
a
particular loss
is too
remote
is one of
"reason-
able
contemplation."
The
defendant will
be
responsible
for a
loss when
that loss could
be
said
to be
within
his or her
reasonable contemplation
at
the
time
of
entering into
the
contract.
The
leading case
is
Hadley
v.
Baxendale,3
in
which
a
carrier (Pickford's,
a
company owned
by
Baxen-
dale)
was
late
in
delivering
a
broken mill
shaft
to a
manufacturer.
The
item
had
been shipped
as a
prototype
for the
manufacture
of a
replace-
ment.
As a
result
of the
late delivery,
the
plaintiff
mill owner lost
prof-
its
because
the
mill
was
idle
for
longer than necessary.
The
Court held
that
the
loss
was too
remote
to be
recoverable
and
provided
the
classic
formulation
of the
rule:
Now
we
think
the
proper rule
in
such
a
case
as the
present
is
this:
—
Where
two
parties have made
a
contract which
one of
them
has
bro-
ken,
the
damages which
the
other party ought
to
receive
in
respect
of
such breach
of
contract should
be
such
as may
fairly
and
reasonably
be
considered either arising naturally, i.e., according
to the
usual
course
of
things,
from
such breach
of
contract itself,
or
such
as may
reasonably
be
supposed
to
have been
in the
contemplation
of
both
parties,
at the
time they made
the
contract,
as the
probable result
of
the
breach
of it.
Now,
if the
special circumstances under which
the
contract
was
actually made were communicated
by the
plaintiffs
to
the
defendants,
and
thus known
to
both parties,
the
damages result-
ing
from
the
breach
of
such
a
contract, which they would reasonably
2
"Licsbosch,"
Dredger
v.
"Edison,"
S.S.
(Owners),
(H.L.)
[Liesbosch].
3
(1854),
9
Exch.
341,
[Hadley].
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