Is a Negligent Driver Liable for Economic Damages to a Business Affected by an Accident?

When you normally think about damages caused by a truck accident, you are probably imagining physical injuries to people in the other vehicles or property damage to other cars or trucks on the road. What about collateral damage to third parties who were not directly involved in the accident?

For example, let us say that a negligent truck driver smashes into a power pole, causing nearby businesses to lose power for an extended period of time. Can those business owners recover damages for their economic losses tied to the power outage?

Case Study: Bond Reproductions, Inc. v. Revolution Resource Recovery Inc.

A B.C. small claims judge recently confronted this question. The claimant in this case was a Vancouver business that suffered losses due to a power outage in September 2017.

According to the claimant’s chief financial officer (CFO), at around 12:30 p.m. on the day in question, he “heard a noise” from outside the building. The CFO went outside to see what had happened, and he saw “that a garbage truck had backed into a power pole.” This caused a power line to sag and cut off power to the claimant’s building.

Overall, more than 400 residences and businesses lost power due to the accident, according to BC Hydro.

The garbage truck was owned by the defendant and operated by one of its employees at the time of the accident. The defendant admitted that it was responsible for the accident and the subsequent power outage, but it disputed liability for the economic losses to the claimant’s business.

Business Losses Claimed by Plaintiff

What were those losses? The claimant is a digital and offset printing company. On the day of the accident, the CFO said the company was “extremely busy and working round the clock using three eight-hour shifts.” But according to the CFO, the claimant’s employees were unable to work for approximately five hours due to the power outage. The CFO estimated claimant’s economic losses as follows:

  • $9,438 for a “day of lost sales opportunity.” The CFO based this figure on the company’s average sales for the month when the accident took place (September 2017) times its average profit margin.
  • $2,480 for buyouts. This figure represented four jobs that the claimant needed to contract out to other providers on the day of the accident in order to meet time-sensitive deadlines.
  • $3,658 for overtime wages paid to 20 employees in order to help the claimant “make up for production lost during the power outage.”
  • $3,378 for idle wages, which are the amounts paid to employees for the time they were unable to work due to lack of power.
  • $1,600 in physical damages to the claimant’s printing presses. More specifically, this figure represented the cost of replacing aluminum plates that were damaged when the presses suddenly lost power.

Altogether, the claimant said the defendant owed it over $20,000. In British Columbia, personal injury claims valued between $5,001 and $35,000 are heard by the Small Claims court, which is part of the Provincial Court of B.C. Small claims proceedings tend to follow less formal rules than cases in the B.C. Supreme Court. Parties may represent themselves or act through the assistance of a qualified lawyer.

In this particular case, the only witness who testified in court was the claimant’s CFO. The defence cross-examined the CFO but did not present any witnesses of its own. The case was tried before Judge Wilson Lee of the Divisional Court.

Small Claims Court: B.C. Law Does Not Cover These Types of Losses

Judge Lee ultimately dismissed the claimant’s lawsuit. He determined the defendant was not liable for the claimant’s losses arising from the power outage. Although the defendant admitted responsibility for the underlying accident, Judge Lee said the claimant’s damages were simply “not recoverable” under these circumstances.

As the judge explained, in Canadian law there is a clear distinction “between pure economic loss and consequential economic loss.” A consequential loss refers to damage against the claimant’s property. For instance, if the defendant’s garbage truck had struck and damaged the claimant’s building, that would be a consequential economic loss. Such damages could be recovered against a negligent defendant.

Unfortunately for the claimant here, none of its alleged losses were consequential. There was no damage to its building, and it did not own the power pole struck by the defendant’s truck. Nor was there any evidence of an economic loss tied directly to the pole itself–i.e., the claimant was not responsible for the costs of its repair or replacement.

Recovering Pure Economic Losses

This leaves only “pure” economic losses. According to the Supreme Court of Canada, there are generally five categories of such losses where a defendant may be liable for damages. These are:

  • The Independent Liability of Statutory Public Authorities;
  • Negligent Misrepresentation;
  • Negligent Performance of a Service;
  • Negligent Supply of Shoddy Goods or Structures; and
  • Relational Economic Loss.

The first four categories clearly did not apply to this case. This meant the claimant had to prove its damages fell within the fifth and final category–relational economic loss. Judge Lee noted that in B.C., a relational economic loss only applied in the following situations:

  • The claimant has a “possessory or proprietary interest in the damaged property”;
  • The claim falls under maritime law; or
  • There is a joint venture between the claimant and the owners of the damaged property.

Again, none of these circumstances applied to this case. The claimant did not own the power pole. And there was no evidence it was part of a “joint venture” with the pole’s owner, BC Hydro.

That said, Judge Lee noted there was a “second approach to pure economic loss claims” recognized by the Supreme Court. This approach holds that a defendant may be liable “where, in addition to negligence and foreseeable loss, there is sufficient proximity between the negligent act and the loss.”

Even under this standard, the claimant here failed to make its case. As Judge Lee explained, “There was no evidence that [the defendant] was made aware of the risk faced by [the claimant] if the power pole were struck.”

Contact the Preszler Law Firm Today if You Have Suffered Damages in a B.C. Truck Accident

If you suffer losses in a Vancouver truck accident, do not assume the law is on your side. You need to speak with an experienced B.C. personal injury lawyer who can review the facts of your case and advise you on the appropriate steps to take against the negligent parties. Contact the Preszler Law Firm today to schedule a free consultation with a member of our legal team to discuss your case.

Source: CanLII

Learn more: Can You Prove a Car Accident Caused You to Lose Your Business?

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