PROXIMITY - NEGLIGENCE

The range of the defendant's liability is determined by the concept of proximity, and this is certainly less than that encompassed by the notion of reasonable foreseeability. In this regard, the High Court has decided that where purely economic loss results from the defendant's negligence sufficient control on liability is exercised by confining the ambit of the duty to the circumstances where the plaintiff individually is (or ought to be) within the defendant's contemplation.

Therefore, liability for negligent misstatements is sufficiently confined if the defendant can reasonably contemplate that an individual (though unspecified) might properly place reliance on the defendant's words, and suffer loss if his statement is misleading. Therefore, an agent or valuer would not be liable to economic loss suffered by somebody who finds his/her lost professional report and acts on that advice. The agent could not have reasonably contemplated that his/her report would be used by a finder. All that is necessary to find liability is that the statement be of such a character as to engender in the plaintiff reasonable reliance thereon.