Sunday, April 22, 2007

Tort's Wrongs, Part 3: The Impecunious Defendant

The final example I shall use in this series is theoretically the simplest. It deals with the ability of the defendant to pay the compensation ordered. Simply put, even if a case is watertight and a favourable ruling guaranteed, it is just not worth anyone's time and trouble to sue a tortfeasor with little money. Such a claimant would take as much as the defendant had and then be forced to rely on the state welfare system along with all those who suffer non-tortious injuries - receiving a far lower degree of compensation.

Without some ingenious legal methods, this would massively lower the effectiveness of tort law as a corrective system - the majority of people cannot personally afford to pay the costs ordered in compensation. However, methods have been used with the effect of greatly increasing the number of cases where claimants are able to get full compensation. Of these, by far the most significant is vicarious liability of employers.

Vicarious liability is liability for someone else's acts. Clearly where an employer can be found vicariously liable for an employee's tort, the claimant is in luck - companies are far more likely to have the resources (and often liability insurance) to compensate them fully. But why are the employers liable? This is a controversial issue involving many theories, but these can be roughly split into two camps:

On the one hand, there are theories that the employer has in fact done something morally culpable, making it just to make them compensate. Perhaps the employer is culpably responsible for the chance for the employee to commit the tort, or should pay the costs of an activity from which it takes profits. Such theories are intuitively attractive as satisfying the moral hurdle usually required for liability. However, it does not really mesh with the reality of the situation. Firstly, because the employer cannot discharge such a duty no matter how comprehensive the methods it uses. So even if it takes all steps possible to prevent employee torts, it will still be liable if such torts occur. Moreover, once a tort is established on the part of the employee, none of the normal tort defences can be invoked by the employer. Secondly, the liability only applies in the case of employees, not independent contractors. Case law on the distinction is complicated, but suffice to say that the kinds of criteria by which the distinction is applied do not really suggest a clear line in the moral responsibility of the employer. The result of these observations is that it is difficult to view vicarious liability as simply a form of primary liability.

On the other hand we have theories that moral culpability on the part of the employer is entirely irrelevant, and that what is important is ensuring compensation. The fact that employers are more likely to be able to pay is used as the justification for making them pay, either simply because they have deep pockets or because this is the best way to spread the loss to society as a whole through their customers, who will bear slightly higher prices. Textbook writers have suggested that courts lean more and more in this direction, but of course from the point of view of morality or justice this looks completely unprincipled. Those who are able to invoke vicarious liability can rely on this 'loss spreading' rationale while those hurt by individuals just being individuals are often short-changed by the tort system. Meanwhile companies which may be no more morally culpable than any others have to bear the brunt of paying compensation. Even if they can spread the loss, it will usually still be to their detriment.

The inability of employers to exclude liability through reasonable precautions makes sense on this rationale. So does the distinction between employees and contractors, in a way - individuals often hire contractors (not employees) to perform jobs around their houses, and courts are eager to avoid forcing them to pay for such contractors' torts. More honest (and less arbitrary) would be to draw the line according to whether the employer was acting as a business or as an individual, but this would expose the rationale to more direct scrutiny: It might well be thought unfair that a business is liable but an individual is not for the same conduct.

Once a tort and a contract of employment is established, the last limiting factor for vicarious liability is that the tort be done in the course of employment. This may sound like common sense, but without some fault element on the part of employers, it is baffling. If the employer need not have any moral culpability for the torts, why should it matter whether or not they were done on company time? If loss spreading is the aim, why not make all employers vicariously liable for torts committed by current employees no matter what the connection to their work?

The traditional test for a course of employment is the 'Salmond test', that the tort be authorised by the employer or be an unauthorised way of doing an authorised task. The first of these is unproblematic - this would make the employer morally culpable. The second appears to be neat, but as mentioned above there is no way to exclude liability. Rose v Plenty determined that even if the employer specifically forbids the employee from acting in the manner in question (here, using the help of young children to complete a milk round), they will still be vicariously liable for it.

The test for course of employment changed in Lister v Hesley Hall (and for the better, all things considered) but it only got wider. This was a case about a school boarding house where the warden abused the children. The House of Lords found that this could not be seen as a way of doing his task. However vicarious liability was assured under the new test of the tort being 'closely connected with the employment'. This standard is more vague and difficult to apply, but it does better reflect our sense of justice. If he had failed to stop someone else from abusing them, this would have been negligent performance of an authorised task (looking after them) so negating vicarious liability because it was him doing the abusing would appear absurd. After all, the distinction appears to have nothing whatsoever to do with the moral position of the employer - we may well consider them more at fault for hiring a paedophile than a mere idiot.

Our instincts drag us back towards a view resting vicarious liability on some form of moral culpability. I would support this - I am certainly not arguing against all vicarious liability. Employers create situations which reckless and malicious employees can exploit in ways otherwise impossible - Hesley Hall is an example. However a loss spreading rationale seems to preclude such considerations, insisting instead that the claimant be compensated one way or another. I certainly have sympathy with that impulse, but its effect on tort law has been to create even more arbitrariness and separate it further from the penal function which intuitive justice requires. Just as in the previous examples I have put forward, actual fault should determine the liability of defendants, not the claimant's need. The latter should be satisfied, but this is true whether vicarious liability can be found, whether it is just the tort of the random (and often broke) man in the street, or whether no-one is tortiously at fault (in a random accident). In my final post on this topic, I will attempt to show how such a split of the penal and compensatory functions of tort law could be achieved, and its implications.

Saturday, April 07, 2007

Tort's Wrongs, Part 2: Damages and Loss

In the previous post I suggested that instinctive justice required a penal element to tort law, in the area of causation. Today I will argue the same thing in an area which actually has, in some ways, been modified in line with that - assessment of damages.

Assessment of tort damages was always going to be a difficult enterprise. For starters, it is inevitably incredibly difficult and fictionalised to put monetary amounts to certain kinds of loss, like pain, cuts and the loss of limbs. However, the problems I will be looking at are more about tension between different theories of what compensation should do. The two crucial theories are that objective loss (loss in comparison to an alternate world where the tort never happened) should be compensated, and that compensation should be required as far as it is in fact possible to cure someone (to the state in which they would be in the alternate world). Some cases will show why I think the first of these to be vastly superior.

Firstly, we have the West v Shephard situation of a tort putting someone into a permanent vegitative state. The costs of care for him were vastly less than the money he would have received for loss of amenity, loss of earnings etc. had he been awake to appreciate these losses. However compensation could not in fact do him any more good than compensating the cost of care. The Law Lords were split in the measure of damages. Lord Reid felt that damages must actually be able to help the person in some way, improving their position, and so would have limited them to the cost of care. However the majority went with Lord Devlin who thought that the compensation should reflect the actual loss, even if not appreciated. The reasoning behind his judgement is not quite clear, but the biggest concern was almost certainly that the tortfeasor should not have to pay less for causing more harm. This reflects the intuitive view that the damages should be proportionate to the harm done, and so the wrongdoing. Given that the victim could not actually benefit from the increased damages, the rationale looks suspiciously penal, ensuring that the tortfeasor is punished in line with his wrong.

A similar dilemma should in theory present itself when it comes to torts causing death. After all, surely there is even less chance of a cure? However, the Fatal Accident Act 1976 attempts to smoothe over the proposterous conclusion that there should be no damages for death by providing actions which can be used by dependents left behind. They are allowed to recover what the victim would have been able to collect had he lived, as well as a fixed sum for bereavement, and compensation for funeral charges. Of course, this means that if someone dies without dependents, then the tortfeasor is not liable. Only the rarety of this situation prevents this unsightly fact from having more influence.

For dependants, this solution is extremely helpful and often very necessary. However, it is slightly odd that they get the entirety of the compensation the victim would have received, because on the cost of cure approach this must rest on the fiction that had he lived, all of the damages would have been spent on them. It would seem that a healthy discount for the costs of living the victim himself would have had to expend during his lifetime would seem to make sense, if we were trying to put the family members in the position they would have been in without the death. Again, the fact that this has not been suggested (and it's not a problem of quantifying the discount, as will be shown below) suggests that really, the legislature is keen to ensure that tortfeasors don't have to pay any less because of causing death - a penal concern.

A closely related area is the 'lost years' problem - how to deal with compensating for loss of earnings where the number of years the person would be able to work has been cut short because their death will now be premature? On objective loss principles, it would be thought that they should still be paid exactly as much as if they hadn't lost years off their life. However on the cost of cure view, they only need as much as to keep them in the same lifestyle for those years they will in fact survive. Giving them more would be overcompensating. Happily, the objective loss model is once again generally applied - Picket v British Rail. Here, however, the logic appears to be to compensate for the loss of dependants in the lost years. This is shown in a couple of ways. Firstly, here a deduction *is* made for the amount during the lost years which the victim would have spent on himself. Secondly, Croke v Wiseman showed that if one was harmed so as to ensure that they never have dependants, then they cannot claim for the lost years. Given the objective approach in West and the FAA 1976, this is really surprising, and an example of more harm leading to fewer damages under the cost of cure rationale.

What is the heart of the difference between the objective loss and cost of cure approaches? It is the party on which the focus is laid. Objective loss looks at the actual harm done so as to determine the level of wrongdoing, and charges the tortfeasor accordingly. Cost of cure instead looks at what the victim should actually get, in terms of what will do the most justice for him - curing without providing over-compensation (lovingly referred to as a 'windfall' among lawyers). This dichotomy between claimant-centred compensation and defendant-centred compensation exposes the heart of the contradiction of tort law. For when we focus on the claimant, we ignore the very agent whose actions bring the scenario into the region of wrongs. If we are using the tort as the gatekeeper to decide whether to allow compensation, why should its seriousness not determine the level of compensation? On the defendant's side, this looks unjust. However when we take the objective approach the claimant can on his side appear overcompensated, with nothing useful to do with the money received. The tension between the two sides can only be solved by separating the amount taken from the one party from the amoutn received by the other. That is the theme I will be taking up when I come to draw my conclusions from this series.

Friday, April 06, 2007

Tort's Wrongs, Part 1: Loss of a Chance

Tort embodies the odd distinction of being one of the branches of law least recognisable by name, while actually being one of the top contributors to stereotypes of lawyers and the law. It is the law of civil wrongs, encompassing most cases of people suing each other for wrongdoing (as opposed to breach of obligations under contract). The ideas of 'ambulance chasing' and 'no win no fee' arise from tort law.

The basic idea behind tort law is to restore people who have been wronged against to their previous position (or as far as money will go to that end) at the expense of the one who wronged them. Judges insist that, with very few minor exceptions, tort law does not have a penal function; it is compensatory, while penalty is left to the criminal law. This should immediately strike one as somewhat odd. The fact that the compensation comes from the tortfeasor (the one who commits the tort) rather than anyone else must be punishment as it is a negative consequence inflicted due to the wrongdoing. I will try to show that the attempt to avoid penalising tortfeasors inevitably leads to a tort law which appears and is unjust and contradictory.

I will use three major examples of injustice before coming to my main point and drawing them together. My first will be liability for loss of a chance.

To establish liability in tort the facts upon which it rests must be shown to be true 'on the balance of probabilities,' which means more than 50% likely to be true. This can be contrasted with the standard of proof in the criminal law of 'beyond reasonable doubt,' which might mean something like 95% or 99% likely to be true. To receive compensation for my negligence, you will have to show on the balance of probabilities things like it being foreseeable to me that my actions might hurt someone like you and (at issue here) that my actions did, as a matter of fact, cause your harm.

This becomes very tricky in a number of cases. The first is where medical negligence damaging someone's chances to avoid a harm (loss of a chance) like in Hotson v East Berkshire, but only reducing those chances by less than 50%. Because then the chance that they caused the harm will be less that 50%, there is no liability. None at all. If they are 45% likely to have been the cause they will have to pay nothing, while if they are 55% likely to have been the cause they will have to pay the whole amount for it.

Another situation is cases where multiple factors may have caused the harm like in Fairchild v Glenhaven. Where each causes a bit of the harm this is no problem, but where only one of them did, the probabilities become tricky. A classic scenario will involve multiple employers negligently exposing an employee to asbestos, leading to him contracting mesothelioma. Causally, only one will have been responsibly for the harm, but each individual may be only be 30% or 40% likely to be responsible. Following the orthodox approach, none should have to pay anything. However, in this case the Law Lords responded to the patent injustice by creating an exception to the rule: If you add up all the tortious causes and they come to over 50%, then the tortfeasors together are liable for the whole amount, in proportion to the likelihood of each being responsible. This may look fair, but in Wilsher v Essex there was a new twist to the tale. Here multiple tortfeasors were not liable, and the best explanation appears to be that it is because the harm was not all caused by the same 'agent' i.e. asbestos fibres! This is almost universally recognised as patently absurd.

What becomes clear from these cases is a devotion to all or nothing liability. It may appear extremely odd that no-one has suggested apportioning liability in accordance with the percentage chance of having caused the harm. In the Hotson case, why not make the doctors liable in proportion to the chance of them having caused the harm? If someone is 45% likely to have caused harm, charge them 45% of the loss, and if 55% likely, charge them 55%. In the Fairchild and Wilsher cases, make each tortfeasor responsible for their share of the chance of harm they caused, rather than arbitrarily splitting between cases where full compensation will be awarded and where none will be. This instinctively appears the most just solution. So why is it not adopted?

The best answer appears to be because this would no longer be compensating based on actual causal responsibility for the harm. It will be penalising for wrongdoing (contributing to a risk of harm) and then using the proceeds to compensate the victims of this. This is truly penal in that it is sensitive to the degree of responsibility and sees causing risk as wrong, even if the risk did not in actual fact come about. It is recognising that people should not get away with such actions simply because of statistics in their favour.

A classic thought experiment is put forward to explain the results of the current approach (minus the Fairchild exception). It imagines a nuclear facility which negligently increases the risk of leukemia among nearby children, increasing the number of cases of leukemia so that 40% of cases are due to its negligence, and for any particular ill child there is a 40% chance that their leukemia is due to the negligence. On orthodox, Hotson principles, the facility is not liable for a thing. If on the other hand the percentage was 60%, it would be liable for the entire damages of every child with leukemia in the area. To me, the just thing to do would be to penalise it for causing the risk, forcing it to pay to each child with leukemia the percentage of its losses, 40% or 60%, in proportion to the chance of its responsibility. But tort law as it is just can not cope with this.

If it were to be remedied as I suggest, the system would appear much more just and would, for me, actually be more just. To the non-legal observer, it may seem incredible that this is avoided for the sake of keeping tort law 'non-penal.' However once you accept that the causal link is not sacrosanct, you start to unravel the foundations of the discipline. I will continue to explain why this is in my next post.