Government Reviews

The Fairness Of Minimising Liability In Tort

The Fairness of Minimising Liability In Tort

The law of tort governs the behaviour of the citizen towards his fellow citizen, or indeed the actions of a company to a citizen or fellow company, in the absence of criminal conduct or contractual remedies. Present in most legal systems in some form, the law of tort (or delict) covers civil 'wrongs', where one party has suffered damages as a consequence of another's actions. Of course there are permitted damages that one can occasion to another party, such as one company undercutting a competitor to his detriment. Tort is concerned largely with prohibited or negligent behaviour that can be attributed towards one specific party, opening the path for an award of compensation or damages. One major point of criticism and debate in the area of tort is that of indeterminate or indiscriminate liability, which is designed to minimise the potential for floodgate liability.

Tort imposes a number of criteria, which must be satisfied before a party can be liable for his negligent actions. These are naturally strict to avoid the potential economic crisis arising from a 'compensation culture'. Additionally, there is a pressure to encourage risk to a certain extent in order to promote economic activity, and to avoid easily conceding liability to encourage 'normal' daily activity. In a weak tort system, paranoia hinders economic growth and creates a multitude of socio-economic problems. From this, the conditions of indeterminate liability have arisen, as well as numerous other high standards that must be satisfied before a court will impose liability and the corresponding financial repercussions.

Imagine the scenario where a protruding paving stone causes an actual risk of injury to the public at large. Because there is a potential for such a widespread liability, courts around the world impose various mechanisms to rule out claims of any sort to avoid the potential for ruining local authorities and in the interests of 'common sense'. In much of Europe and the UK, the mechanism of choice is a 'remoteness criterion', which provides that where the liability for the victim's injury is too 'remote', no liability shall be borne. In other words, there is a requirement that the potentially liable party should have had a direct impact on the specific victims injury.

Another argument against the principle of precluding liability on this basis is that it encourages 'bigger' tort. In this sense, it ensures more caution towards situations where a specific person may be injured, but also encourages a lack of consideration for safety in situations where hundreds or potentially thousands may be subject to injury, given the unlikely possibility of successful legal challenge. This creates an obvious social problem, which must be weighed by legislatures and courts in order to solve the problem. As this area of the law continues to develop, the importance of finding a workable solution to this situation will become more apparent.

Ultimately, in the scenario envisaged above, an injury from the paving stone could happen to anyone using the pathway, thus there could be no liability because the injury would be too remote. Although an effective means of achieving the ends, doubts have been cast as to the fairness of indeterminate liability, particularly in consideration of victims of real injury in these circumstances who would otherwise be entitled to compensation in respect of the damages sustained. In protecting the potentially liable, the relevant courts are unjustifiably prejudicing the victims of injury. Perhaps it can be seen as the lesser of two evils, but this is poor consolation for the victims of this sort of injury. Arguably a better mechanism for dealing with this sort of situation would be to present a 'first come first serve' basis, or to create a common indemnity fund, or compulsory insurance for organisations likely to be subject to multiple tort claims. This would help curb the apparent inequity in tort claims where liability is precluded by virtue of its wide-ranging effects.