Remoteness of Damages
| Author | Jamie Cassels/Elizabeth Adjin-Tettey |
| Profession | Professor of Law, Vice President Academic, and Provost, University of Victoria/Professor of Law, University of Victoria |
| Pages | 345-374 |
345
CHA PTER 11
REMOTENESS OF
DA M AGES
A. INTRODUCTION
The common law places limit s on the amount of d amages 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 throw n in a pond, the ripple effects
from t he 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 explai ned, 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 t he d amages for which a defendant may be re-
sponsible. As Lord Wright explai ned,
[t]he law cannot take account of everyt hing that follows a wrongful
act; it re gards some subsequent matters as outside the scope of its
selection, b ecause “ it were infinite for the law to judge t he cause of
causes,” or consequences of cons equences… . In the varied web of
1 Victoria Laun dry (Windsor) Ltd. v. Newman Industrie s Ltd., [1949] 2 K.B. 528
(C.A.) [Victoria Laundry].
REMEDIES: THE L AW OF DAMAGES346
affairs, the law must abstract some consequences as relevant, not per-
haps on grounds of pure logic but si mply for practical reason s.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 add ressing this que stion is whether it is fair to
burden the defendant with the particular loss th at has occurred. A s
Cromwell J.A. said in D.W. Matheson & Sons Contracting Ltd. v. Canada
(Attorney General), “remoteness imposes on damage awards reasonable
limits which are required by fairness.”3
B. REMOTENESS IN CONTR ACT
1) The Rule in Hadley v. Baxendale
The test for whether a particular loss is too remote is one of “reasonable
contemplation.” The defendant will be responsible for a loss when that
loss could be said to be within her reasonable contemplation at the time
of entering into the contract. The leading case is Hadley v. Baxe ndale,4
in which a carr ier (Pickford’s, a company owned by Ba xendale) wa s
late in delivering a broken mill shaft to a manufacturer. The item had
been shipped as a prototype for t he manufacture of a replacement. As
a result of the late delivery, the plaintiff mill owner lost profits 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 t hem
has broken, t he damages which t he other part y ought to receive in
respect of such breach of contract should be such as may fa irly and
reasonably be considered either ar ising natura lly, i.e., according to
the usual cou rse of thin gs, from such breach of contract its elf, or
such as may reasonably be suppose d to have been in the contem-
plation of both parties, at the time they m ade the contract, as the
2 “Liesbosch,” Dredger v. “Edison,” S.S. (Owners), [1933] A.C. 449 at 460 (H.L .)
[Liesbosch].
3 D.W. Matheson & Sons Contracting Lt d. v. Canada (Attorney General) (2000), 187
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