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.