THE DAMAGES LOTTERY - USP€¦ · Legal aid and 'no win, no fee' cases 2 6 2. HOW THE LAW HAS BEEN STRETCHE 3D 2 Stretching the concept o f fault 33 Stretching the law where the defendant

THE DAMAGES LOTTERY

THE DAMAGESLOTTERY

P. S. ATI YAHFormerly Professor of English Law

University of Oxford

• H A R T -PUBLISHING

OXFORD1997

Hart PublishingOxford

UK

Published in the United States by Hart Publishing

© Patrick Selim Atiyah 1997

Hart Publishing is a specialist legal publisher based in Oxford,England. To order further copies of this book or to request a list

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Printed in Great Britain on acid-free paperby Biddies Ltd. Guilford and Kings Lynn

TABLE OF CONTENTS

Preface1. SUING FOR DAMAGES I

The law of negligence 3Strict liability 6Intentional torts 7Liability for how much? 8Who pays? 21Suing and settlements 22Legal aid and 'no win, no fee' cases 26

2 . HOW THE LAW HAS BEEN STRETCHED 32

Stretching the concept of fault 33Stretching the law where the defendant is not

solely to blame 3 8Stretching the rules of causation 45Stretching the kinds of injury you can claim damages

for 52

3 . MORE STRETCHING OF THE LAW 66

Stretching the damages which can be awarded 66Stretching the number of people you can sue 72More stretching of the people you can sue:

public authorities 78Has the stretching gone too far? 93

4. WHO RECEIVES DAMAGES? 96

Claims for personal injuries 99Road accidents 101Industrial accidents 103

vi C O N T E N T S

5. WHO PAYS? IO8

The guilty parties do not pay 108The public pays 111The consequences of recognising that the public pays 113The insurance companies 117Who pays in contractual cases? 134

6. AN UNJUST AND INEFFICIENT SYSTEM I38

The law encourages the blame culture 138The system is a lottery 143The system is inefficient 150How have we got into this mess? 154

7 . DOES THE SYSTEM HAVE NON-COMPENSATORY

BENEFITS? 159

Punishment and deterrence 159Economic considerations 165Public accountability 169

8. WHAT CAN WE DO ABOUT IT? 173

A new look at the whole system of civil liability 174Personal injuries: some dead ends 177The way ahead: road accidents 185The way ahead: other accidents and injuries 188

Index 195

PREFACE

THIS book is designed for the ordinary reader who may,perhaps, have read accounts of strange cases in which hugedamages have been awarded for bizarre events, and won-ders whether the law has gone mad. It is written in non-technical language and requires no previous knowledge ofthe law or the legal system. For the same reason it is notstuffed with learned references and lengthy footnotes. Thatdoes not mean that the facts and statistics presented herehave been plucked out of the air — they are all capable ofbeing documented and come from reputable scholarlysources or government publications. Anybody who seeksthis documentation will find most of it in the author'sAccidents, Compensation and the Law, the fifth edition ofwhich, by Mr Peter Cane, was published in 1993 byButterworth & Co. Although the present book has notbeen written for lawyers, some of them may find materialhere which will probably provoke them, and may evencause them to think more seriously about the issues dis-cussed.

Some readers (especially those who may themselves havebeen involved in claims for damages) may feel that thisbook displays a lack of sympathy and compassion for acci-dent victims. I entirely accept that sympathy and compas-sion have their proper place, but that place is in personalrelationships. Those who care for the accident victim, evenpublic officials like police and doctors, must provide theirservices with due regard for the emotional needs of acci-dent victims. But legal and social structures, which dealwith hard cash, must be subjected to rational discussion

viii PREFACE

from time to time, and that kind of discussion is hinderedrather than helped by emotional responses. It is that sort ofrational approach which is offered in this book.

I am grateful to Peter Cane and Jane Stapleton for manyhelpful suggestions, and thanks are also due to my sonJulian for the diagram in Chapter 4, and above all toChristine for giving me her reactions to the first draft in thecapacity of'ordinary reader'.

P.S. Atiyah

1. SUING FOR DAMAGES

IN 1995-96 two stories were reported in the national press.The first was about a man who slipped on a dance floor andfractured his leg. It was quite a bad injury which causedhim some pain, and he was off work for several months,though in the end he made a full recovery. The dance hallwas owned by the local authority and the injured manobtained over .£10,000 in damages against them (whichwas in effect an award against the public taxpayers) becausehe was able to prove that the floor had been over polishedand was hence too slippery. The second story was about alittle girl of five years of age who was taken to hospital witha severe attack of meningitis. The doctors saved her life,but in order to do so they had to amputate both her legs.She had no chance of obtaining damages from anybodybecause her injuries were nobody's fault. It was just badluck.

This book is largely about the different responses of thelaw to these two cases. They are not, of course, unique.There are many injured and disabled or handicappedpeople in our society. Some are unfortunate enough to beborn with disabilities or handicaps; others suffer disabilitiesor injuries in accidents, others suffer disabling diseases orother conditions. There are also many accidental deaths,and many premature deaths from natural causes. Most ofthese people are entitled to some benefit or other from thesocial security system; some get assistance from localauthorities' social service departments. But a tiny handfulreceive large damages under the system of civil liability —what lawyers call the law of torts. Who are the few who

2 SUING FOR DAMAGES

receive such damages? Why do they get such generoustreatment compared to the thousands of others who suffersimilar injuries or handicaps? Who is actually paying for thedamages? How fair is the system? How efficient is it?

In recent years actions for damages for injuries, real orimagined, appear to have become far more common.Levels of damages, for some cases at least, are far higherthan they were a few years ago — in the most serious casesof personal injury, damages may now be of the order of amillion pounds or more. New types of cases are constantlybeing recognised by the courts, especially claims for post-traumatic stress and other psychological conditions. Overthe past fifty years the law has been stretched in manydirections — in nearly every case the stretching is favourableto plaintiffs by enlarging the number of cases in whichdamages can be awarded, or by improving the levels ofdamages. The stretching is still going on, though somejudges are at last beginning to resist the attempt to enlargelegal liability still further at the frontiers. Complaints areoften heard that we "are going down the American road"without, very often, explaining what the American road is,and what is wrong with it. But what is increasingly obvi-ous is that the present system is as unjust and inefficient asit could be. A lot of people — especially lawyers — think thepresent system is unjust because too few people are entitledto damages, and they get too little. They think accidentvictims are badly treated by the legal system. This book hasbeen written in the conviction that the truth is preciselythe reverse of this. The system is indeed unjust, but forquite different reasons. Many of the wrong people getcompensated, they get too much and the wrong peoplepay for it - in fact, the public pays for it, but not in fairshares. The system is not only unjust, but also exceedinglycostly and inefficient, and this has been proved time andagain by research studies all over the world.

This book attempts to explain to the concerned citizen

SUING FOR DAMAGES 3

some of the issues involved, gives a brief account of thelaw, and discusses what has gone wrong. In the concludingchapter some suggestions are offered for a completely newapproach to the problems of compensation for personalinjury. Although the details are complex, in its essentialsthe subject is straightforward and not difficult to under-stand even for those with no knowledge of the law, or thelegal system.

THE LAW OF NEGLIGENCE

I start with a very brief account of the law of negligence.The first thing that must be grasped is that the law of dam-ages, or more accurately, the law of civil liability, is notgenerally designed to punish anyone. Punishment is thefunction of the criminal law; compensation is the functionof the civil law. The possibility of punishing those guilty ofcausing injuries is dealt with more fully in Chapter 7, butfor the moment we will concentrate on the compensationquestion.

In very straightforward cases the law of negligence isreally perfectly simple. In general terms the law providesthat any person who is injured by the fault of another canclaim damages for those injuries. Lawyers call the com-plaining or suing party the plaintiff, and the person who isbeing sued, the defendant, and it will be convenient tostick with these words. In simple cases there is nothingesoteric about the legal concept of fault — lawyers define itas a failure to take reasonable care according to all the cir-cumstances of the case. In the case of road accidents, withwhich most people are familiar, the concept of negligenceincludes such simple faults as driving too fast in the condi-tions, overtaking on a dangerous corner or bend, failing tokeep a proper look-out for other road users, and so on.What is more, in simple cases like this, most people wouldfind the law not only quite straightforward and intelligible,

4 SUING FOR DAMAGES

but also entirely fair. If we put aside injury cases for themoment and consider a simple case where one person'svehicle is damaged by the fault of another driver, not manypeople would disagree with the fairness of the law whichsays that in these circumstances the person at fault shouldpay for the damage done. People may, of course disagreestrongly about who actually was at fault in a particular situ-ation, but where the element of fault is quite clear, veryfew people would find it unfair that the guilty party shouldpay for the damage. For example, where a person damagesa car by carelessly reversing into it in a car park, there is notmuch room for argument over whose fault the accident is,and in a case like this, where the damage is likely to bequite modest, a reasonable motorist would readily agreethat the guilty party should pay — even where he is himselfthe guilty party. The existence of insurance is a complicat-ing factor, which will have to be considered at length later,but in a very simple case like this, insurance is often disre-garded by both motorists for very good reasons, and thejustice of requiring the guilty driver to pay would gener-ally be unquestioned.

The law only requires reasonable care - it does not requireall possible care, nor does it generally impose legal liabilitywhere damage or injury is caused by pure accident. Forexample, staying for the moment with road accidents,which are likely to be within the experience of manypeople, a driver who causes an accident because he isstricken with a sudden incapacitating heart attack may beacquitted of negligence, because the accident simply wasnot his fault. He may have caused the accident, but he hasnot necessarily been guilty of a lack of reasonable care. Butthat assumes that the heart attack has come suddenly andwithout warning. A reasonable driver who feels seriouslyill while driving, and is aware, or ought reasonably to beaware, that he may be unable to control the vehicle prop-erly, ought perhaps to pull over and wait until he feels

SUING FOR DAMAGES 5

better. If he carries on regardless, he may be guilty of neg-ligence. Notice how I say that the driver may be, ratherthan that he is guilty of negligence in such circumstances.That is because negligence must be looked at according toall the circumstances of the case. So, for instance, whether adriver who feels ill ought to pull over and rest, or isjustified in carrying on, may depend on a whole range offactors - how ill does he feel, is he aware that he may haveheart disease, what are the road conditions at the time,what kind of road is he on (motorway or country lane?),does he have good reasons for wishing to press on, and soon.

On the other hand, although the law only requires rea-sonable care, it is no defence for a driver to say that he wasdoing his best. His best may simply not be good enough.Drivers do not have to display the abilities and skill of aDamon Hill or a Michael Schumacher, but they must dis-play the abilities of the ordinary reasonably careful driver.And a driver who is simply unable to do this, because hejust is a bad driver, or even because he has a physical dis-ability, will be guilty of negligence just the same.

It must be stressed that negligence is a very minor kindof fault, in the legal sense. All sorts of acts may be held tobe negligent by lawyers which are only marginally blame-worthy - a doctor, for instance, fails to ask a patientwhether he is allergic to penicillin, or an employer fails toprovide his workers with earmuffs when they are engagedin noisy work which may over a long period damage theirhearing. Although negligence can sometimes be followedby devastating consequences (for example, serious injuryor even death), and the lay public may for that reason tendto think that some serious fault has occurred, lawyers insist— and rightly insist - that consequences like this are oftenmore or less accidental, for example because they were notreally foreseeable. A minor act of negligence is not mademore morally culpable because, by mischance, it leads to

SUING FOR DAMAGES

very serious injuries to another person. Nor must we thinkthat, because a defendant is held to have committed someact of negligence, he has necessarily done something whichwould be morally blameworthy.

STRICT LIABILITY

In addition to liability for negligence, lawyers recogniseanother form of liability which they call "strict liability". Inthese cases it is not necessary to prove negligence at all inorder to claim damages, but it is relatively unusual to beable to claim damages for injury in a strict liability case.There are two kinds of cases in which such a claim may bemade which could be of relevance for our purposes.

First, a person who can sue for damages for breach ofcontract may not have to prove negligence, so if you buydangerous or defective goods (which is in law a contract)you can claim damages from the seller, not merely for thevalue of the goods themselves (or the cost of repairingthem) but also for any any damage done by the goods. Soif, for instance, you buy a new washing machine which is,say, electrically faulty, and it blows up throwing water allover your kitchen, destroying the clothes in it, and perhapsinjuring you into the bargain, you can claim damages forall these things. You will not need to prove the seller wasnegligent; it is sufficient that the goods you have boughtare faulty within the definitions laid down in the Sale ofGoods Act. And these definitions are very wide indeed.Similarly, if you buy infected meat from a butcher, and themeat poisons you, it is not necessary to prove it was thebutcher's fault that the meat was infected, because buyingmeat is a contract of sale of goods just as much as buying awashing machine.

Second, there are other cases where you may sometimesbe able to claim damages for defective goods under theConsumer Protection Act 1987, without proof of negli-

SUING FOR DAMAGES 7gence. As against the seller this is not very importantbecause your rights under the Sale of Goods Act are soextensive; but if you want to sue the manufacturer orimporter (rather than the seller), or if a member of yourfamily is injured and wants to sue someone, it may not bepossible to claim under the Sale of Goods Act. In this caseit is sometimes possible to sue under the ConsumerProtection Act, and again negligence is not needed. Butyou will still have to show that the goods were "defective"and in practice this kind of strict liability will not often adda great deal to your right to sue for negligence.

A consumer's right to claim damages for faulty goods isof course an important part of the law, but his right to suefor damage done by faulty goods is less important, and inthis book I shall in general ignore these possible strict liab-ility claims for damages. Statistically speaking they are ofvery minor importance compared to the great mass ofclaims for damages for negligence.

INTENTIONAL TORTS

Naturally, the civil law provides redress for intentionalwrongdoing as well as in cases of negligence and strict liab-ility. So there are obvious torts like assault and wrongfularrest (strictly, false imprisonment), though here too the"stretching" process goes on, and the judges have recentlyrecognised harassment as a new intentional tort, whichmay well prove an important "growth" area of the law. Ingeneral this book is not concerned with these intentionaltorts, and certainly no proposal will be found here to abol-ish or reduce the liability of a person who commits anintentional tort. But there are some cases which do raiseissues with intentional torts which are really identical toissues which arise with negligence, and which are discussedmore fully later. These cases concern the liability ofemployers or others for the actions of a wrongdoer. When,

8 SUING FOR DAMAGES

for instance, a policeman uses excessive force in arrestingsomeone (and thereby commits a tort) the police authoritywill be liable for the damages, just as much as the police-man himself. This kind of liability — which is actually theliability of the public in the last resort — is very much theconcern of this book, and raises problems in no way dif-ferent from the liability of police officers for negligence.But apart from that this book is not concerned with inten-tional torts which do not give rise to anything like the vol-ume of claims and litigation which negligence does.

LIABILITY FOR HOW MUCH?

Lawyers commonly keep quite separate two importantquestions. The first is the question of liability, which islargely dependent on the proof of negligence, as alreadyexplained; the second is the question of what damages areto be awarded. But when the fairness or justice of the lawis being examined many people might find it odd to sepa-rate these two questions. Surely, most people would say,whether the law is fair depends not only on whether adefendant is held liable, but on how much he is liable for?The reason that lawyers do not generally perceive this isprobably because they take the basic principle of the law ofdamages to be entirely self-evident and reasonable: thedefendant is liable to pay whatever sum of money is neces-sary to put the plaintiff back in the position, so far as moneycan do it, in which he would have been if there had beenno negligence, no injury at all. In very simple cases of dam-age to property (such as the road accident which damagesa car but causes no injury) this principle works perfectlyeasily. The defendant has to pay the cost of repairing thedamaged car, or if it has to be written off altogether, themarket value of the car.

But in cases of personal injury, and in fatal cases, the basicprinciple has to be supplemented by so many further rules,

SUING FOR DAMAGES 9

that things get a lot more complicated. At the moment wewill try to concentrate on the essentials, leaving furtherdetails to be elaborated later.

Injury cases: financial losses

In injury cases the damages to which the plaintiff is entitledfall into two categories. First, there are damages to coverthe plaintiff's money losses. For instance the plaintiff mayhave been off-work for a few weeks and so lost wages ofso many hundred pounds. These are recoverable in full aspart of the damages. This means that high earners willrecover much larger damages than low earners, or thosewho are not employed at all. The higher your earnings, themore your losses will be if you are deprived of them.Monica Seles, the tennis star, is currently suing for some£10 million for her lost earnings as a result of being stabbedby a deranged spectator at a German tennis tournament,though she has lost the first legal round of her claim. A QCwho suffers a minor injury and so misses a single courtappearance may lose several thousand pounds, and canrecover the whole lot in damages (less tax). A labourermight recover only £50 for his lost earnings for thatperiod; a housewife not gainfully employed will notrecover anything for loss of earnings because she has lostnone, and the same is true of an unemployed person. (Onthe other hand, it is also true that some highly paidemployees will actually suffer little or no loss of earningsfor short-term incapacities, because their employers willcontinue to pay their salaries for a few weeks' or evenmonths' of absence, where a lower paid employee mayactually lose his pay.)

The plaintiff is not, however, limited to claiming for pastlost earnings — if he suffers a long-term injury he will beable to claim for estimated future losses, and it is thesefuture losses which often inflate the damages into verylarge figures. Naturally, when a young person suffers a

io SUING FOR DAMAGES

permanent injury, and is compensated for loss of earningsfor his whole working life, the damages may be enormous.Even if he was not earning at all when injured, because (forinstance) he was then unemployed, or was still a studentwho had not begun to work, he may be able to recover forfuture earnings losses, because he might have had reason-able expectations of securing some employment in thefuture.

If the plaintiff is so badly injured that he will never workagain, everything that he might have earned in the futureis treated as a "loss", so it will be necessary to estimate theentire loss of earnings throughout his life in order to cal-culate the damages. This is often a difficult business: wherethe plaintiff suffers his injury at a relatively young age it isnecessary to predict what would have happened to him ifhe had not been injured — would he, for example, havebeen promoted, would he have had a successful profes-sional career, or in the case of a woman, would she havemarried and had children, or would she have remained inemployment throughout her life, and so on. It is even nec-essary to estimate how much the plaintiff might haveearned by way of pension — years before he has reachedretiring age. Obviously all these questions can only beanswered with rough and ready estimates - "guesstimates",perhaps. In theory judges are supposed to make allowancefor the fact that they are indeed making estimates aboutuncertain possibilities, so the damages are discounted(reduced) because even if the plaintiff had not been injuredin this accident he might in the future have anyhow hadperiods of unemployment or sickness. One does wonder,though, whether these discounts adequately reflect thepossibility that work prospects in our society may them-selves be changing quite radically.

Where the plaintiff's injuries are really serious — wherehe is, for instance, permanently paralysed or bedridden — itis obviously necessary that he should have an income from

SUING FOR DAMAGES nsome source or other, throughout his life, and it is hardlysurprising that if he is entitled to damages, they will coverhis whole working life. But today judges often seem to bevery generous in assuming that other less serious injurieswill render the plaintiff permanently unemployable. Thereare, for instance, many claims for post-traumatic stress thesedays in which relatively young people are declared by doc-tors to be incapable of working again, and judges acceptthese findings, apparently without question. In 1996 a caseof this kind came before the Court of Appeal in which over-£1.3 million had been awarded but the plaintiff had madean almost complete recovery within a few months. Becausethe facts came to light before the court's final order wasdrawn up the damages were substantially reduced as a result- but if the facts had come to light only a few months later,the plaintiff would probably have kept the whole lot.

When a person suffers injuries or shock of this kind, hecan respond in one of three ways. He may, first, makeevery effort to rehabilitate himself, to overcome his hand-icaps, and try to fit himself so far as he can for a job, and asnormal a life as possible. Not every injury prevents a per-son working — after all there are many disabled people whomanage to lead useful and fulfilling lives — there are blindand deaf members of parliament, for instance. Other blindpeople have had very successful careers as academics or inother walks of life. Douglas Bader became a famous ace-pilot in the war despite having lost both legs in a pre-waraccident. Franklin Roosevelt served as President of theUnited States for over twelve years, though crippled bypolio and unable to walk unaided. Not everybody can bea Bader or a Roosevelt, but many disabled people, forcedto use wheelchairs for their transport, are vigorous in theirdemands that working opportunities should be opened forthem. It is paradoxical, and undesirable, that when a claimfor damages is pending, such people should be told thatthey cannot be expected to work again.

12 SUING FOR DAMAGES

Faced with this sort of response, it is not surprising if thevictim responds to his injuries in quite a different way. Hemay simply assume that he can never lead a normal lifeagain, never work again, and make no effort to rehabilitatehimself. A third possibility is that an injured person maydecide that he cannot hope to recover while his claim fordamages is pending, and may prefer to get that settledbefore he decides what to do with his life.

A major problem with the law at present is that itpenalises the person who reacts in the first way describedabove, and rewards anybody who responds in the second orthird way. In these respects the law clearly sends out thewrong messages to accident victims. It positively invitesthem to exaggerate their symptoms, to make no effort torehabilitate themselves before their claims are settled. Thosewho manage to find some useful employment will onlyrecover damages for the difference between what they cannow earn and what they might have earned if they had notbeen injured. Those who can persuade the judge that theycan never work again will receive the highest damages -though once they are awarded the plaintiff is not preventedfrom then trying to find useful work to do. It may well bethat the severity of the recent recession, with high unem-ployment rates, has resulted in an increase in the levels ofdamages, as those who are seriously injured are likely tohave more difficulty in finding work when they haverecovered, and may also find it easier to persuade judgesthat they will never work again. Of course judges who haveto decide whether an injured victim is likely to be able towork again have to base their decisions on the evidence,and doctors seem as much to blame for the present state ofaffairs as judges. They appear far too willing to tell a seriousinjury victim that he has no chance of ever working again,and to encourage the victim to believe just that.

It is unhappily true that the disincentive effects ofcompensation systems are not confined to cases in which

SUING FOR DAMAGES 13

damages are claimed. Social security and private insurancesystems may also suffer to some degree from the sameproblem, but the situation is greatly aggravated by the factthat damages are usually paid in a single lump sum.

In addition to losses of earnings, there may be all kindsof medical and even social costs to be estimated as well.Despite the existence of the NHS an injured person is enti-tled to seek private medical and hospital treatment, andhave all the costs (and estimated future costs) paid for bythe defendant as part of the damages. This right extends tonursing care, too. For instance the plaintiff, if so seriouslyinjured that he is likely to remain bedridden, may be en-titled to claim the estimated cost of private nursing carethroughout his life (for 24 hours a day, in the most seriouscases). Then there are what may be called social costs. Ahousewife who is injured may be able to recover the costof employing someone to do her work while she is out ofaction, even though she cannot recover for lost earnings.In other cases there may be additional costs such as theadaptation or even the purchase of a specially suitablehouse, a car, and other amenities. Damages to cover theseexpenses are often awarded on the most generous basis,which it may seem mean to question given the very seri-ous injuries which the plaintiff may have suffered. Yet ithas to be remembered constantly that many others whosuffer equally (or even more) devastating injuries, notcaused by anybody's fault, receive no damages at all. Whenthis is borne in mind, the extreme generosity displayed bythe law to plaintiffs who are entitled to damages seemsmore questionable.

In principle these claims to financial losses are simple: theplaintiff is entitled to be compensated for every penny ofhis financial losses, once it is understood that all futurelosses are also included in this term. In practice, of course,the process often requires difficult estimates to be made. Inaddition, there is the further complication that whenever

i4 SUING FOR DAMAGES

an estimate is made of future financial loss, but the damagesare to be paid at once, the total figure must be discounted,that is reduced, to reflect the fact that the plaintiff is goingto receive it now, and obviously a lump sum today is worthmore than a future income which would have beenreceived over many years. The method of discountingthese future financial losses is complex and controversial,but the details need not concern us. What does need to beunderstood is that many of these difficulties stem from thefact that the damages are usually estimated and paid oncefor all. Under a different system, where the compensationis paid weekly, or monthly, it would be unnecessary tomake these guesses about the future.

Injury cases: non-pecuniary loss

The second head under which the plaintiff is entitled to becompensated is for non-pecuniary losses — what are some-times called damages for pain and suffering, or damages forloss of amenity. Lawyers take the view that the plaintiffwould not be fully compensated if he did not receivesomething for the injury itself, over and above the finan-cial losses he has suffered. In the most serious cases of all,where the plaintiff is permanently incapacitated - rendereda quadriplegic, for example, paralysed in all four limbs -simply replacing his financial losses does not come any-where near to offering him genuine compensation. So theplaintiff is entitled to additional damages for these "non-pecuniary losses". Although sometimes called damages forpain and suffering, actual pain and suffering do not have tobe proved. In fact these damages can be awarded (thoughusually at a somewhat lower rate) even to a plaintiff who isin a permanent vegetative state, and never recovers at all.For this reason judges now tend to call the damages fornon-pecuniary loss awards for "loss of amenity".

Of course there is a serious problem about these damagesfor loss of amenity, because there is no way of putting any


real financial figure to them — there is no market value forthese "losses". This difficulty has been solved by the courtsby the adoption of a sort of tariff in which the most seriousinjuries of all are given a value of (today) around £130,000,while other injuries are then tested against this figure.Nobody pretends that this is a completely satisfactorymethod of solving the problem, but it has some advantages.First, it is administratively workable, because the judgesand barristers and insurance administrators who operate thesystem know the tariff and can usually predict fairly closelythe point on the scale where the plaintiff's case will fall. So,although nobody can expect to predict the exact figurewhich a judge is likely to award for non-pecuniary loss, anexperienced barrister can usually say that the case is likelyto fall within the range (say) of £10,000 to £15,000, orperhaps of £60,000 to £70,000 in a more serious case. Thesecond advantage of the system is that it has a reasonableinternal consistency, in that the more serious injuries willusually be compensated more generously. In general,damages for non-pecuniary losses are no more for higherearners than for lower earners.

Is the maximum figure for damages for non-pecuniaryloss too low at around £130,000? Many people probablythink it is, though it must be remembered that, in caseswhere the maximum is likely to be awarded, the damagesfor the pecuniary losses could easily be a million pounds ormore. English judges would agree that it is exceptionallydifficult to fix an actual figure for the highest levels of dam-ages for non-pecuniary loss (from which figures for all lessserious cases are ultimately derived) but would argue thatthere is simply no purpose in piling on the damages in thesecases. As a judge once said of an unfortunate girl who waspermanently paralysed and bed-ridden, in one sense all thegold in the Bank of England would not really compensateher for what had happened. There is simply no point inawarding immense sums to injured people who will never


really get much benefit from them. Provided that theirmedical and other needs are met, and something can bedone to let them enjoy their lives to the limits of theirmedical condition, still further payments serve no real pur-pose.

What is more, although it may seem callous to drawattention to the fact, it has to be faced that where the plain-tiff is so badly injured that he is unable to use the compen-sation to any great degree, much of it is likely to pass to hisheirs in due course, and frequently after no great length oftime. Those who suffer the sort of terrible injuries whichlead to the highest damages generally have a shortenedexpectation of life. To some degree this problem is nowalleviated by the fact that in the worst cases of all the dam-ages are often awarded by means of an annuity, which willof course come to an end when the plaintiff dies.

Although in very serious injury cases the damages fornon-pecuniary loss will be a relatively small proportion ofthe total damages awarded, this is not generally true of lessserious injury cases. Indeed, at the time of the PearsonRoyal Commission Report in 1978 it was estimated thatabout two thirds of all damages were paid as compensationfor non-pecuniary loss. This was much higher than mostpeople thought, and it tends to confirm doubts about theutility of the whole system. Once it is understood thatdamages are not meant to punish the defendant, and thatthey will not actually be paid by the wrongdoer anyhow, itmust be accepted that damages for non-pecuniary loss arein most cases plainly a lower priority than damages forpecuniary loss. It is clearly more important that the victimhave an income, than that he has something extra for painand suffering, especially for minor injuries. If you doubtthis, ask yourself which risk you yourself would choose toinsure against if you were buying the insurance and payingthe premium — loss of your income, or pain and suffering?Yet a very large part of the cost of the whole system is


actually devoted to funding these small claims for non-pecuniary loss.

Damages for non-pecuniary loss have probably declinedover the last few decades as a proportion of the total dam-ages awarded in injury cases, but the reason for this is thatthere has been a corresponding increase in damages forpecuniary loss. This has occurred because plaintiffs' lawyersnowadays try to think up every conceivable way in whichan injured person may have suffered financial loss as a resultof his injuries, and then claim for these losses. For example,a plaintiff who used to do — as most of us do — his own gar-dening, or home decorating and other DIY jobs round thehouse, may now claim he is unable to do these as a resultof his injuries, and so has to pay someone else to do them.Very well - an estimate of these sums (past and future) nowbecomes a pecuniary loss which can be recovered by theplaintiff. Or again, the plaintiff now has to remain at homewhen before he went out to work, so in the winter hishouse has to be heated all day. So increased winter fuel billsbecome another item of financial loss, recoverable by theplaintiff.

The result is that damages for non-pecuniary loss maywell be somewhat lower (allowing for inflation) than theyused to be. They are certainly very far from Americanlevels, where, as is well known, such damages often runinto millions even for relatively minor injuries. This is cer-tainly one road we have not gone down, and there is nolikelihood that we will, because damages in America areusually fixed by juries and in England by judges. Juries areapt to be profligate with other people's money, and maynot appreciate that they, in common with other membersof the public must in the end pay for the damages theyaward through their insurance premiums and other pay-ments. Some American insurance companies have tried toeducate juries on these matters, even to the extent of hand-ing out leaflets to potential jurors saying: "Higher verdicts


mean higher premiums". That too is a road down whichwe are unlikely to travel in England.

All the elements of the damages are of course cumula-tive, so the plaintiff is entitled to the figure for his financiallosses and his non-pecuniary losses, added together. Inaddition he is often entitled to interest on the totals becausein serious cases it is often years before the money is paid.

Members of the public sometimes get an exaggeratedidea of the amount of damages that can be claimed inminor cases. They read in the press of someone receiving^30,000 for being bullied in school and they may wellthink that this is an absurd amount of compensation forsuch a minor injury as being bullied. Or again, they mayread of the plaintiff who was awarded _£2oo,ooo for post-traumatic stress following the death of his brother in theHillsborough disaster.1 This book argues that damages areoften too high, but it must be understood that awards ofthis kind are likely to be based on the assumption that theplaintiff has suffered substantial losses of earnings. Figureslike this are based on medical evidence suggesting that theplaintiff has been so traumatised that he has suffered a seri-ous mental illness which has prevented him from workingfor some considerable time, or perhaps, will prevent himworking again at all. In other words these damages arebeing awarded not because the plaintiff has been bulh'ed orbecause he has lost his brother. They are awarded becausethe plaintiff has lost earnings (which will have to bedemonstrated) as a result of the trauma following the bul-lying or the death of his brother.

Fatal cases

Fatal cases present special difficulty. They fall into twoclasses. First, there are cases falling under the FatalAccidents Acts, where the plaintiff claims for the financial

1 The Times, 12 December 1996, p. 9.


losses he (or more usually she) has suffered as a result of thedeath of someone on whom he may have been dependent.A wife who is being maintained by her husband, or a childmaintained by a parent, is generally held to suffer financiallosses when the spouse or parent is killed in an accident.That financial loss is recoverable against a negligent defen-dant in very much the same way that a living accidentvictim can recover for his financial loss. First it is necessaryto estimate how much the deceased used to spend on thespouse or child, then to estimate for how long this depen-dency would probably have lasted, and then to make someglobal estimate, discounting the future loss because a capi-tal sum is going to be awarded. As in the case of a livingvictim, the principle is relatively straightforward — theplaintiff is entitled to full compensation for every penny offinancial loss — but obviously the precise quantification isoften a bit of a rough estimate. Once again, the dependantsof a high earner will receive much higher compensationthan those of a lower earner. What is more, the young wifeof a wealthy earner who is completely maintained by himwill recover much higher damages than the young work-ing wife who keeps herself and shares the bills with herhusband.

The second class of case concerns the death of someonewho has left no dependants (or probable future depen-dants). For instance, when a minor child is killed, or whenan elderly retired person is killed, there will often be nofinancial loss to anyone. So in principle, nobody would beable to sue at all in this situation. But many people wouldfind this logic too much to stomach, and the law doestherefore make some provision for a very modest form ofcompensation for the death of an unmarried minor child,or of a spouse, which is in addition to any claim for finan-cial loss. The amount to be awarded in this type of case isfixed by statute and is at present £7,500. Many peopleclearly find this sum extremely low as compensation for the

20 SUING FOR D A M A G E S

sha t te r ing loss o f a y o u n g ch i ld , and cer ta in ly in o t h e r legal

sys tems, s u c h as m o s t o f the U n i t e d States, e n o r m o u s

awards o f d a m a g e s m a y b e m a d e for dea th in such a case.

B u t this is an A m e r i c a n e x a m p l e w h i c h o u r l a w has so

far n o t f o l l o w e d , and sure ly w i t h g o o d reason . W h a t is the

p o i n t o f a w a r d i n g large d a m a g e s for the dea th o f a small

ch i ld? It w i l l n o t b r i n g the c h i l d b a c k , and it can surely d o

n o t h i n g to assuage the g r i e f w h i c h mus t b e felt b y the par

ents . It is natural to feel s y m p a t h y for the g r i e v i n g parents

w h o h a v e lost the i r c h i l d in w h a t m a y b e a ho r r ib l e a c c i

den t , b u t w h a t p u r p o s e is s e r v e d b y translat ing this s y m p a

t h y i n t o c o l d p o u n d s ? O n c e aga in , it mus t b e a c c e p t e d that

n o t all the g o l d in the w o r l d w o u l d really c o m p e n s a t e a

pa ren t for loss o f a ch i ld . It s eems v e r y l i ke ly that w h a t

m o t i v a t e s paren ta l d e m a n d s for h i g h e r damages in such

cases ( if it is n o t distasteful g o l d - d i g g i n g ) is a desire to p u n

ish those t h e y b e l i e v e to b e respons ib le for the acc iden t .

B u t as w e h a v e seen , the c iv i l l a w is n o t c o n c e r n e d w i t h

p u n i s h m e n t . I f the r e spons ib le par ty has c o m m i t t e d a

c r i m e , h e can and s h o u l d b e p r o s e c u t e d , and deal t w i t h b y

the c r imina l cour t s , b u t r e q u i r i n g large d a m a g e s to b e pa id

w i l l a c h i e v e n o t h i n g . It w i l l a c h i e v e n o t h i n g becaus e the

d a m a g e s w i l l n o t ac tua l ly b e pa id b y the par ty respons ib le ,

b u t b y his e m p l o y e r , o r m o s t l i ke ly b y an insurance c o m

pany . O n c e aga in , o n e c a n test the va l id i ty o f these a r g u

m e n t s b y a sk ing w h e t h e r y o u w o u l d w a n t to insure the life

o f y o u r c h i l d r e n i f y o u w e r e p a y i n g the p r e m i u m s yoursel f .

S u r e l y m o s t p e o p l e w o u l d f ind the v e r y idea repu l s ive (and

it is ac tua l ly i l legal a n y h o w ) . N o b o d y w a n t s f inancial c o m

pensa t i on for the d e a t h o f a ch i ld , l o o k i n g at the poss ib i l i

ties i n the future .

W e shall see later (p. 56 ff.) that inc reas ing ly l a w y e r s are

f i n d i n g a w a y r o u n d the l imi t o f ¿7,500 w h i c h is r e c o v e r

able b y the parents o f y o u n g c h i l d r e n k i l l ed in acc iden ts .

W h a t has b e e n h a p p e n i n g la te ly is that l a w y e r s are p e r

s u a d i n g j u d g e s that the parents are en t i t l ed to damages in

SUING FOR D A M A G E S 21

their own right for the t rauma t h e y h a v e suffered (and its

consequences ) f o l l o w i n g the dea th o f a ch i ld . In this w a y

they m a y s u c c e e d in r e c o v e r i n g vast ly m o r e than ^ 7 , 5 0 0 .

W H O PAYS?

W h o pays these damages? T h a t is ac tua l ly qu i t e a c o m p l e x

ques t ion w h i c h w i l l b e dealt w i t h in s o m e detai l in C h a p t e r

5, bu t it is such an i m p o r t a n t q u e s t i o n , and it is so i n t e r

related w i t h the sub jec t -ma t t e r o f this and the n e x t t w o

chapters , that a f e w p r e l i m i n a r y w o r d s m u s t b e said a b o u t

it he re . A l t h o u g h it is of ten diff icul t to say w h o e x a c t l y

does (in the last analysis) p a y for awards o f d a m a g e s , it is at

any rate clear w h o does not p a y t h e m . T h e d a m a g e s are

hardly ever pa id b y the actual w r o n g d o e r , the n e g l i g e n t

party. T h e y are usual ly pa id , in the first ins tance , b y insu r

ance c o m p a n i e s , o r b y pub l i c b o d i e s l i ke the g o v e r n m e n t

o r trust hospitals . B u t insurance c o m p a n i e s d o n o t (as s o m e

p e o p l e s e e m to th ink) j u s t p a y these sums o u t o f "p ro f i t s " .

T h e y pay t h e m o u t o f p r e m i u m s p a i d b y the p u b l i c ,

d i rec t ly o r indi rec t ly . U l t i m a t e l y , m o s t d a m a g e s are pa id

for b y the p u b l i c , v e r y m u c h as t h e y p a y taxes ; that is, t he

cost is spread a r o u n d fairly th inly . B u t as e v e r y b o d y k n o w s ,

taxes add u p , and so d o d a m a g e awards . S o the first t h i n g

to b e grasped h e r e is that any d e m a n d for m o r e d a m a g e s

and h i g h e r damages mus t lead to h i g h e r p r e m i u m s for the

pub l i c . T h i s is a vi tal p o i n t b e c a u s e m u c h p u b l i c a n d e v e n

legal c o m m e n t a r y o n the desirabi l i ty o f e x t e n d i n g lega l

l iabil i ty o r a w a r d i n g h i g h e r d a m a g e s seems t o assume that

the damages fall f r o m the sky. T h e fairness o f the

sys tem o f damages and the appropr ia te sums that s h o u l d b e

pa id in damages , are of ten discussed en t i r e ly w i t h o u t re fer

e n c e to the o t h e r side o f the e q u a t i o n . E v e n the L a w

C o m m i s s i o n (an i n d e p e n d e n t b o d y o f e x p e r t l a w y e r s w i t h

a genera l responsibi l i ty for l a w re fo rm) w h o s e proposa ls are

usually w e l l t h o u g h t - o u t , is qu i te p r e p a r e d to discuss the


q u e s t i o n w h e t h e r d a m a g e s for in jury are t o o l o w w i t h o u t

a sk ing w h a t the effect o f inc reas ing damages w o u l d b e o n

insu rance p r e m i u m s . T h i s is absurd. It is j u s t l ike ca l l ing for

h i g h e r soc ia l secur i ty benef i t s w i t h o u t ask ing w h a t extra

taxes w i l l h a v e to b e raised t o c o v e r t h e m . M o s t p e o p l e

t o d a y k n o w that that k i n d o f t h i n g is i r respons ib le , bu t

e v e r y b o d y s h o u l d unde r s t and that calls for h i g h e r damages

are e q u i v a l e n t to calls for h i g h e r insurance p r e m i u m s and

also (as w e shall see) h i g h e r pr ices for g o o d s and services .

S U I N G A N D S E T T L E M E N T S

In o r d e r t o unders tand , e v e n in gene ra l te rms , h o w the

p resen t s y s t e m w o r k s , the reader needs to realise that m o s t

c la imants w h o r e c o v e r d a m a g e s d o n o t ac tual ly n e e d to

sue . M o s t c la ims - a b o u t n i n e t y - n i n e p e r c e n t in fact - are

s i m p l y p r e s e n t e d b y a so l ic i to r a c t i n g o n b e h a l f o f the

plaintiff, and are t h e n ba rga ined o v e r b e t w e e n the sol ic i tor

and the insurance c o m p a n y r ep re sen t ing the party r e s p o n

sible. S t r ic t ly s p e a k i n g the re fo re there m a y n e v e r b e an

ac tua l l a w suit, t he re is n o su ing , and the parties n e v e r a c t u

ally b e c o m e p la in t i f f and defendan t , the terms appropr ia te

to l ega l p r o c e e d i n g s . B u t it is c o n v e n i e n t to c o n t i n u e us ing

these t e rms a n y h o w . B o t h parties are w e l l a w a r e that it is a

l e n g t h y and cos t ly business ac tua l ly to f ight o u t a case in

c o u r t , and so it is usual ly in the interests o f the parties to

" se t t l e " the case o u t o f c o u r t , i f t h e y can d o so. In m o s t

cases, after a cer ta in a m o u n t o f c o r r e s p o n d e n c e and h a g

g l i n g b e t w e e n the part ies o r the i r representa t ives , the

i n su rance c o m p a n y w i l l m a k e an offer to the plaint i f f

w h i c h h e is w i l l i n g to a c c e p t , and that w i l l b e the e n d o f

the case. S o the p la in t i f f n e v e r ac tua l ly has to g o to c o u r t

to g i v e e v i d e n c e .

T h e b a r g a i n i n g p rocess in pe r sona l in jury cases s o m e

t imes favours the insu rance c o m p a n y rather than the p la in

tiff, pa r t i cu la r ly i n v e r y ser ious cases. S o m e t i m e s this


happens simply because the insurers (and their lawyers) aremuch more experienced in handling cases of this kind thansome solicitors acting for plaintiffs. Sometimes it happensbecause the plaintiff may be in rather desperate financialstraits, and so may be willing to settle for less than he couldexpect to get if he held out for more. Sometimes it isbecause of an important rule about costs. Suppose theinsurance company offers a definite sum to settle the case- say, £10,000 — and the plaintiff refuses the offer. If thecase goes to trial, the plaintiff is indulging in a high riskstrategy because even if he wins the action he will beordered to pay a large part of the costs of the action if he iseventually awarded less than X1 0 ' 0 0 0- This may swallowup most or even all of the damages, in which case theplaintiff won't actually receive anything at all — in fact hemay even be left owing his solicitor a substantial debt. Sothe plaintiff is under great pressure to accept what may beoffered.

On the other hand in less serious cases, the pressure tosettle may be the other way. Every claim, no matter howtrivial, has a nuisance value, and will cost the insurancecompany money to handle and process. So the temptationto pay off a small claim for a few hundred or even a fewthousand pounds may be very great even though the insur-ance company may strongly suspect that the claim is largelya put-up job, with very little merit - for example, becausethey think the plaintiff was himself to blame for the acci-dent. Or because they are very sceptical of his claim forfinancial losses, or to have had any real pain and suffering.What is more, many plaintiffs can easily obtain legal aid inthese personal injury cases (provided only that they qualifyunder the means test), and in legal aid cases the plaintiffcannot be required to pay the defendant's costs if he loseshis action. This means that the insurance company is oftenon a hiding to nothing in cases of this kind. Suppose theircosts are likely to amount to at least -£5,000 even for a fairly


trivial case, which they probably will if the case goes tocourt. If the insurance company lose the case they will haveto pay the plaintiff damages and his costs, as well as theirown costs. If they win the case, they will still have to paytheir own £5,000 worth of costs. If the plaintiff knowsthese facts (and his solicitor should explain them to him) hewill appreciate that he himself stands to lose very little outof an exaggerated or even a wholly bogus claim. Not sur-prisingly, in a case like this, the insurance company maywell feel obliged to try to settle the case by offering (say)£2,000 in damages.

Another factor which often explains why some appar-ently unmeritorious claim may be paid off with substantialdamages in settlement, is that the claim may be typical ofmany others in the pipe-line, and the insurance companywants to avoid setting a precedent which may become verycostly to it in the future. Two cases of this kind haverecently been reported in the press. In the first a youngperson obtained £30,000 in settlement of a claim against alocal authority school for injuries caused by prolonged bul-lying; and in the second a payment of £1,000 was made toa boy whose teeth were said to have been mottled by awell-known brand of toothpaste. It rather detracts from theinsurance company's purpose if these cases are widelyreported in the press because even though the settlementmay not constitute a legal precedent, the publicity alonemay well generate lots of new claims, so sometimes insur-ers only settle on condition that the amount paid is not dis-closed. And if they know that there are a lot of claimswhich are definitely going to be pressed, then this mayoperate in precisely the reverse direction, that is to say theinsurance company will be more likely to fight from thebeginning rather than to settle.

There can also be other - perfectly praiseworthy - reasonswhy a defendant may prefer to settle. Suppose, for instance,that a trust hospital is being sued in a complicated negligence


case. They may be confident that the plaintiff's chances ofproving negligence against them are low, but to allow thecase to go to trial may mean that many doctors and nursesemployed by the hospital will be distracted for a prolongedperiod - for years, indeed - by the threat of the litigationand ultimately the trial itself. Endless detailed inquiries mayneed to be made, records searched, staff interviewed and soon - none of this is likely to be conducive to the hospital'smain job of treating its patients. It is not surprising that hos-pitals prefer to settle claims against them.

One other thing needs to be said about the settlementprocess. In legal theory the plaintiff himself remains incharge of the procedure, and his solicitor is simply his agentwho must do what he is told. So the plaintiff may at anytime drop the case, or choose to accept whatever has beenoffered, contrary to his solicitor's advice. Quite often hecan even insist on continuing with the case contrary to hissolicitor's advice, although in an extreme case the solicitormay decide he will not continue to handle the claim. Butin practice it may well be that many plaintiffs find it hardto reject the advice they are given, or to interfere verymuch in the process. This means that, once the case gets toa solicitor, the usual legal procedure tends to be followed.The solicitor will regard it as his duty to seek the best pos-sible result for his client, and the client gets caught up in aprocess he does not understand. Of course it is the solici-tor's duty to explain matters to his client, and to indicatethe possible choices he may have, but there will be a strongtendency for the solicitor to assume that the client wantswhat the law expects him to want - namely to claim thedamages to which he is legally entitled. So even if the clientapproaches a solicitor in the first instance with only a veryhazy understanding of his rights or what he wants - he mayfor instance, not even be seeking damages, but rather wish-ing to punish a defendant - the case may in practice get outof his hands very quickly.


LEGAL AID, AND "NO WIN NO FEE" CASES

As everybody knows, going to law, or even going tolawyers, can be a pretty expensive business, but this doesnot in practice prevent poor people from making manykinds of claims for damages. In straightforward personalinjury cases, where there seems a clear case of negligence,a solicitor will often be quite willing to try to negotiate asettlement for the plaintiff, without asking for any advanceon his fees, in the confident expectation that his fees willeventually be paid by the defendant's insurance company.

In more complicated cases a solicitor may be unwillingto proceed unless the plaintiff can obtain legal aid, but forpeople of modest means this is relatively easy and painless— provided the plaintiff is poor enough and has a reason-able case in law, he will be entitled to legal aid. Paradox-ically, middle income people will be worse off, becausethey may not qualify for legal aid (nearly half the countrywill not qualify) and may be seriously at risk if they pro-ceed very far with a claim, although even then many casesare so clear-cut that some settlement is virtually certain.

Legal aid is now costing the taxpayers about one billionpounds a year, but civil claims for damages only accountfor a small part of this. Since most claims do result in somepayment from the defendant's insurers, and it is the customfor insurers to pay the legal bill almost as a matter of coursewhenever a settlement is reached, the legal costs do notgenerally fall on the Legal Aid authority in the long run.They may have to fund a claim in its early stages, but ulti-mately the costs will be paid by the defendant's insurers andthe Legal Aid authorities are then reimbursed. Only in therelatively rare cases where there is a complete victory forthe defendant, is the Legal Aid authority left holding thebill for the plaintiff's lawyers. The Legal Aid authority isvery keen to stress this fact so that the public should notthink they — the public — are funding all these claims. But


it must be understood that, even though most legal costsare paid for by the defendant's insurers, the public is stillultimately paying the bill, although they are paying as pre-mium payers rather than as taxpayers. As we saw in the lastsection (p. 21) it is actually the public who pay most of thedamages in the end, and they have to pay the costs too.

Recently lawyers have been permitted to take cases on anew basis - the "no win no fee" basis. A lawyer willing totake on a case on this basis is entitled to charge more if hedoes succeed in getting some compensation for his client;but if nothing is recovered the client is not at risk at all.These cases are similar to the American "contingent fee"cases which are often criticised by English lawyers, thoughAmericans think they are an excellent way of ensuring thatreally poor people can get access to the courts. The maindifference between the American practice and the newEnglish practice is that in America the lawyer charges theclient a percentage of the damages recovered — commonlyforty percent. That is still not permitted in England, wherethe lawyer's fees must be proportionate to the workrequired of him, and not to the damages recovered.

What is not yet clear — though there are ominous signs- is whether the new English practice will bring in its trainsome of the undesirable results of the American contingentfee. These undesirable results flow from the fact that theclient has absolutely nothing to lose by embarking on aclaim, however exaggerated or bogus the claim may be,and some lawyers may find it worth taking on such claimsbecause there is always the possibility that they may be ableto get something by way of a settlement even in the mostunpromising circumstances. Given how easy it is to getlegal aid for most damages claims, it is only too likely thatthe ones taken on the "no win, no fee basis" will be theleast promising cases where legal aid is refused. There istherefore a real possibility that this procedure may actuallyfoment litigation. People who would not otherwise think


of suing or making a claim may be encouraged to do so.Lawyers may not only find it worth taking on these sort ofclaims, they may actually go out looking for them.

In extreme cases this can lead to the behaviour known inAmerica as "ambulance chasing", that is, having lawyers ortheir touts pursuing injured people into hospitals and try-ing to persuade them while still lying injured in bed to signcontracts for the lawyer to take up their claims for damages.Lawyers do not indulge in this sort of thing in England, andhopefully they never will. But less extreme forms of behav-iour may be encouraged which still help to foment claimsor litigation — lawyers may, in other words, start advertisingfor clients, and this can get pretty close to ambulance chas-ing, for example where the advertisements are posted up inhospital casualty departments. In fact advertisements havealready begun to appear in England suggesting that if youhave been involved in an accident, or been injured some-how, the advertiser may be able to help you recover dam-ages. In America advertisements are often even moreobviously designed to stir up litigation, for example, theymay say:

Anxious? Depressed? Stressed?Is your employer treating you fairly?

You may be entitled to compensation.All cases taken on contingent fee.

Naturally, this sort of advertising encourages litigationand the attitude of mind that leads to claims being made,even where the injured person would not otherwise havethought of it at all. Lawyers tend to argue that this is not abad thing. If people have legal rights, they should be madeaware of them, and encouraged to pursue them. If others


have infringed their rights by negligence, it is a good thing(they say) if litigation against these wrongdoers is actuallyencouraged. But this seems facile. For one thing, as weshall have to emphasise over and over again, it is not thenegligent wrongdoer who will pay the damages at all. Andanyhow, if people do not feel seriously aggrieved, it doesnot seem desirable that they should actually be encouragedto feel aggrieved. It seems particularly undesirable thatpeople should be encouraged to feel aggrieved, and toclaim damages for their grievances, when they are alsolikely to be told that the more miserable and depressed theyare, the more they are incapable of leading a normal lifeand getting back to work, the higher will be the damagesthey can recover. Litigation, and even making claims thatcan be easily settled, is also costly to society, and in the longrun, the more of it there is, the more the cost to the pub-lic. We have seen, too, that negligence is often a veryminor fault, and we should not think that it is objection-able that negligence should go unpunished or even uncor-rected.

Although ambulance chasing by lawyers is unknown inEngland, there are today a number of people calling them-selves "claims assessors" or "claims negotiators" whosepractices sometimes come close to ambulance chasing.These people have no legal or other qualifications, thoughthey are not prohibited from acting on behalf of claimantsfor damages. But anybody who uses their services isunlikely to obtain a satisfactory settlement because they arenot entitled to issue proceedings on behalf of a client, noreven to recommend them to a solicitor.

The contingent fee, or the no win, no fee practice, maylead to entrepreneurial lawyers investing large sums ofmoney in bringing on a whole series of similar cases, withall the planning and research that may be involved, evenwhere there is very little justification for the claims at all.It is, for instance, well known in the US that there are


several groups of lawyers at present engaged in three mas-sive litigation battles, or campaigns, as it might be moreaccurate to call them, which have been going on for wellover a decade. There are those involving litigation againsttobacco companies on behalf of lung cancer and other vic-tims of smoking; there are those involving similar litigationon behalf of many alcoholics (and their families) against theproducers and importers of spirits and other liquor, andthere is a third group who are the victims of shootings byhand guns who are suing the hand gun manufacturers.Very few of these claims would have much chance of suc-cess if they went to trial, for reasons which will becomeclearer during the course of this book, but they are stillserious enough to involve the tobacco, alcohol and handgun industries in massive legal expenditure; so a few strate-gic settlements may from time to time be necessary. At theend of the day, huge settlements have been made in someother cases of this kind, though when the amounts paidover are distributed to thousands of plaintiffs it has beenfound that they receive only a handful of dollars each whilethe lawyers collect several million dollars in fees.

Conditions in England are not quite the same, althoughhere too there is now a considerable effort being put intothe planning of some litigation against the tobacco compa-nies. Legal aid has been withdrawn from these claimantsbecause the legal aid authorities apparently no longerbelieve they have a reasonable case in law; but the solici-tors involved are still pursuing them on the no win, no feebasis.

There have also been other similar mass-action cam-paigns arising from use of drugs or medical procedures laterdiscovered to be, or claimed to be, defective or dangerous.Most of these claims originate in the US where the samedrugs or procedures have been used, and spread to Englandwhen the publicity starts encouraging people to go tolawyers. Despite the immense effort and money put into


some of these mass claims in America, very few of themhave produced significant gains to the plaintiffs, or haveeven succeeded in proving that the drugs or procedures inquestion were faulty, or the cause of the conditions ofwhich complaint was made. In fact in some cases thesesame medical procedures are still in use in England wheredoctors do not believe there is anything wrong with them,even after damages have been obtained in the US. InEngland one large mass claim financed by legal aid (ratherthan the no win, no fee basis), has recently been con-cluded. This case, concerning allegedly faulty tranquillisers,cost the Legal Aid authorities some ^30 million in fees forlawyers (and expert consultants, medical drug advisers etc.)although at the end of the day all the actions were struckout before they even reached trial. This was certainly tax-payers' money down the drain.

2. HOW THE LAW HAS BEEN

STRETCHED

IN simple cases, as we saw in the last chapter, the law looksperfectly fair and straightforward. A person who injuresanother as a result of negligence or fault should pay fullcompensation to the injured party. But we shall now lookat a variety of ways in which the law has been stretched outof all recognition. In almost every situation, the stretchinghas been done in favour of injured accident victims.

The reader may wonder what is wrong with stretchingthe law in this way — perhaps this is the law actually beinghuman, showing sympathy for victims. Unfortunately,stretching the law like this is not really a good idea, forreasons which will become apparent in the course of thisbook. The basic problem is that those who are compen-sated with damages are a tiny minority of all victims ofaccidents and disabilities, and the more we squeeze intothis category, the less money is likely to be available for thegreat majority of these victims. It is rather as though, facedwith a hundred homeless people living on the street, wepicked out one or two and lodged them in the Ritz at ourexpense. If we then stretch things a little more here and alittle more there, perhaps we could afford to help one ortwo more of the homeless and put them in the Ritz too.But we shall then find that the bill from the Ritz is so largethat we shall have little or nothing to spend on the remain-ing 96 still sleeping on the street. So stretching things herewill actually have made things worse.

THE LAW STRETCHED 33

STRETCHING THE CONCEPT OF FAULT

The first thing that has been stretched is the very conceptof negligence itself. It must be repeated that negligence isnot the same thing as moral fault — which is one of thereasons that negligent behaviour is often not criminal, butonly gives rise to civil liability. People can easily commitacts of negligence without being in a moral sense person-ally to blame for what has happened. They may cause anaccident for reasons of inexperience, or clumsiness or evenbasic incompetence. Obviously there are a lot of motoristson the road who are not very skilful drivers — the elderly,the excessively cautious, the timid, the learner drivers,those who have little experience of particularly bad condi-tions, such as heavy rain or night driving, and so on. Thelaw does make some allowance for these things, but gener-ally speaking, only in a broad brush sort of way. So, forinstance, the law may indeed make some allowance for thefact that the weather conditions are very bad, so that a per-son cannot be expected to be able to stop his car as quicklywhen the road is icy as when conditions are good — but hemust still drive as carefully as a reasonably skilled driver,even though he may never have encountered such condi-tions before himself. Or again, the law may distinguishbetween the skill of a medical GP and that of a consultant,so that a GP may not be negligent if he fails to spot a con-dition that a consultant ought to spot; but the law does notdistinguish between the care and skill required of a GP justbecause he has only recently qualified. So a professionalperson can easily be held guilty of negligence even wherehe does not himself feel that he did anything wrong, evenperhaps where he thinks he would do the same thingagain.

Then again, the law often seems to mean that a personcan never be allowed to make a mistake without beingbranded as negligent. Actually that is not quite correct.

34 THE LAW STRETCHED

Here too the law does sometimes make allowances. Itrecognises that in some circumstances even a reasonableman may make a mistake — where for instance, some dis-aster occurs, and instant decisions are required, but in the"agony of the moment" somebody makes the wrongchoice. This may be held not to amount to negligence.

At the same time, people in all walks of life do oftenmake mistakes - and they may well be mistakes whichcareful and prudent people should not make, so they will beheld to amount to negligence. Yet who can be reasonablycareful and prudent all the time? We all commit negli-gence, probably several times every few minutes when dri-ving a car, and often when doing our work as well. Eventhe most dedicated and skilled professional people makemistakes which they should not make - even (perish thethought) barristers and judges do so. The finest sportsmenin the world constantly commit errors which the merestschoolboy might have avoided. Think, for example, of theprofessional footballer, who skies his shot over the barwhen faced with an open goal, or the tennis championwho tamely nets his shot when his opponent's court iswide open. Luckily mistakes like this do not often causeanybody an injury so sportsmen do not find themselvesaccused of negligence for making them — though perhapsone day a Wimbledon ball boy will be injured by a wildshot and will claim compensation on the ground that theplayer was negligent.

Being wise after the event

As we all know, it is easy to be wise after the event, andsome may feel that judges are prone to this temptation,branding as negligence conduct which seemed perfectlyacceptable at the time. Actually, the law does recognise thisdanger, and it is quite clear as a matter of strict theory thatjudges are not supposed to decide that someone has beennegligent in the light of subsequent events or subsequent


knowledge. But some may feel that, despite this, judges dosometimes fall into the temptation of doing so. This is par-ticularly liable to occur when the allegation of negligencedoes not turn upon some simple act like a piece of care-lessness in driving on the road, but arises from much morecomplex situations - when it is suggested (for instance) thata company should have been aware that certain chemicalsused in their plants carried a risk of long-term injury to thehealth of the workers in that plant. In modern timesemployers are expected to be well-versed in the literatureof occupational risks arising from chemicals and other haz-ards like dust or asbestos or (still more obviously) radiation,and if they are not, they are certainly likely to be found tobe negligent. But thirty or forty years ago many of theserisks were much less well-known to employers, eventhough they were actually documented in scientific litera-ture. The result is that (for example) many employers haverecently been held liable for negligence for failing to takeprecautions to protect their workers from exposure toasbestos thirty years ago, and there does seem to be an ele-ment of being wise after the event about some of thesedecisions. The fact that asbestos was still being widely used,not merely by profit-seeking companies, but also by pub-lic authorities (including the Royal Navy) long after thescientific facts were known, will doubtless enrage thosepeople who are convinced that all companies and all pub-lic bodies are invariably engaged in a conspiracy to dodown the common man; but others may feel less sureabout this. After all, public bodies are not out to makemoney, and the officials who authorised the use of materi-als which eventually turned out to be extremely dangerousdid not personally gain from their conduct. So when weask why they did it, the honest answer must often be,because everybody else was doing it, and the full extent ofthe risks was not really appreciated even though in an idealworld perhaps they should have been.


The stretching effect of sympathy

It will be seen that we encounter here a problem which, inone shape or another, lies at the heart of the mess intowhich the law has got. On the one hand, we feel sympa-thy for the injured person. And this sympathy is likely tobe stirred all the more strongly if we have listened to a verydetailed account, from medical witnesses, of the injuries hehas received, have heard, for instance, about the fracturesand pain that have been suffered, about the operationsneeded, about the likely future disability that the injuredplaintiff may have to live with for years, about the fact thathe is now unemployable, and so on. Lawyers and judgesare human, and they do, in many cases, have to go throughprecisely this procedure. On the other hand, what aboutthe defendant? Does anybody feel sorry for him? If he hasnot been morally at fault, but may possibly have fallenbelow the standard of care required by the law, it may seemhard to condemn him as negligent, and order him to paymany thousands of pounds (perhaps hundreds of thou-sands) in damages. But sympathy for the defendant is veryrarely as great as sympathy for the plaintiff, and there aretwo reasons for this, one obvious, one less obvious. First,and most obviously, sympathy for the damage to the defen-dant's reputation is a small matter, in most cases, whenweighed against sympathy for injury to life or limb.Occasionally, but only occasionally, the matter of thedefendant's reputation may assume greater importance,especially when he is a doctor or surgeon, to whom thedamage to his reputation may be especially wounding; andin these cases it may well be that the law is not so oftenstretched as it is in other cases.

But even in these cases, there is a second factor whichmakes sympathy for the plaintiff usually outweigh any anx-ieties we feel about the defendant. And this is - a pointwhich we will have to return to again and again - that the


defendant will not actually pay the damages even if he isfound guilty of negligence. The damages will in almostevery case be paid for by an insurance company, or anemployer or other public body. So the lawyers and judgesknow perfectly well that an adverse finding of negligenceagainst a defendant will not actually hurt him in any mater-ial respect, whereas an adverse finding against the plaintiffwill deprive him of his chance of compensation. What ismore, even in cases where the defendant's reputation maybe a matter of great personal importance to him, as wherehe is a doctor or other skilled professional, the judge willknow that an adverse finding of negligence is unlikely tohave any serious consequences. After all, the doctor'semployers, or partners, will know, or will be told, that afinding of negligence carries no necessary moral blame,and should not be taken as an imputation of generalincompetence or lack of care, so it is unlikely that hiscareer will suffer. In fact judges sometimes go out of theirway, when recording a finding of negligence against a pro-fessional person, to make it clear that they intend no gen-eral reflection on the defendant's competence. So thedefendant's amourpropre may be hurt, but his pocket and hiscareer are unlikely to be affected.

Some readers may wonder about my suggestion that thelaw can be "stretched" by sympathy. Surely, they maythink, judges are supposed to be neutral and dispassionateenforcers of the law. Of course that is true, as a matter oftheory. But judges are human, and can feel the tug of sym-pathy, like everybody else. When the facts of a case arequite clear, and when the law to be applied to those facts isalso clear, no judge is likely to be false to his oath becauseof sympathy for one litigant rather than another. And wecan also reject the preposterous slur on the judges (propa-gated by Auberon Waugh in the Sunday Telegraph1) that

1 24 November 1996.


they expand the law of liability because they are lawyersand more liability is good for the lawyers. But when thefacts are not entirely clear, and still more, when the law isnot wholly settled, there is room for judges to develop it inone direction or another. As we shall see, the developmentof the law has in the past fifty years or so been almost uni-formly in the direction of expanding liability — more liab-ility for more damages. And, as we shall also see, it is notonly the judges who are to blame for these developments.Parliament, the Law Commission and perhaps even acade-mics, may have a share of the responsibility.

STRETCHING THE LAW WHERE THE DEFENDANT IS

NOT SOLELY TO BLAME

In many cases of accident or injury, the causes are complex,and more than one person may well be responsible. Inmany road accidents, for instance, it is the combined faultof two (or even more) drivers which produces the acci-dent. What is to happen then? We will distinguish two sit-uations — in the first, the plaintiff himself is partly to blame,and in the second there are two or more defendants whoare all to blame.

If the plaintiff is partly to blame for his own injuries, therule of the early common law was that he could notrecover any damages at all. It did not matter that the defen-dant was more to blame — if the plaintiff had any share ofthe responsibility for the accident or the injuries, he couldnot recover at all. The plaintiff was said to be guilty of"contributory negligence". This often seemed unfair, andjudges frequently stretched the law in a variety of ways tohelp an injured plaintiff. We need not go into these in anydetail, because they are today obsolete. An Act passed byParliament in 1945 says that where an injury is causedpartly by the fault of the defendant, and partly by the plain-tiff's own fault, the damages must now be apportioned


according to the degree of fault of the parties. Of coursetranslating fault into percentage terms cannot be done inany very precise arithmetic way, but in practice it does notseem to give judges much trouble. In a rough and readyway, it is often quite easy to say that the parties were (forinstance) equally to blame, or that the defendant was per-haps seventy percent to blame while the plaintiff was thirtypercent to blame. If the parties were equally to blame, thatmeans that the plaintiff will recover half the compensationwhich would otherwise be awarded; if the defendant isheld seventy percent to blame, that means that the plaintiffwill only recover seventy percent of the damages which hewould otherwise have got. So contributory negligencereduces the damages but does not deprive the plaintiff of allright to claim.

At first sight, this reform looks quite reasonable and fair,like the negligence principle itself. After all, if the defen-dant is partly responsible for the accident, why should henot pay for that partial responsibility? So long as we looksolely at the two parties in the case, sheer justice seems todemand this result. But actually, a little thought will showthat this reform was a far more profound change than wasappreciated by Parliament who passed it, or the judges whoimplement it. To appreciate how profound a change it was,it is necessary to bring together two points. First, the newAct for the first time breached the principle that a personshould not be compensated for injuries which were evenpartly his own fault; and secondly, we must remember thatthe compensation will not be paid by the guilty party him-self, but by an insurance company or other broad sectionof the community. That means that the plaintiffs who areentitled to obtain compensation in civil liability claims canno longer be treated as an innocent group who, as a whole,deserve specially generous treatment at the hands of thepublic. After all, lots of people suffer injuries, accidents,disabling illnesses, congenital disabilities and so on. Very


few of them obtain, or have any chance of obtaining, dam-ages. At one time, those who did obtain damages could atleast be seen to be a group who were quite free of respons-ibility for their injuries — even though that might also besaid of many others who could not obtain damages. Butnow we see that many of those who do obtain damages arepartly responsible for their own injuries, yet they are stillmore generously treated than many who have no entitle-ment to damages, and yet have no responsibility for theirinjuries at all.

What is more, it must be remembered that damages inserious cases can be very high indeed, even after a substan-tial reduction because of the plaintiff's own share of theresponsibility for his contributory negligence. Take onecasual example, drawn from the newspapers.2 InNovember 1996 a young man of 24 was awarded £3 50,000in damages for injuries received in a cycling accidenteleven years earlier, when he was only 13. Despite hisyouth, the judge held that the boy was seventy percentresponsible for his own injuries, otherwise he would havebeen awarded about £1.2 million. By chance, the damagesin this case were awarded against the Ministry of Defence,because the vehicle involved was an army truck, and thenegligent driver was an army employee. Damages awardedagainst the Ministry of Defence must, of course, be paid forby the public, the taxpayers. So this plaintiff who was sev-enty percent responsible for his own injuries was paid£350,000 in compensation by the public. Yet every year,many babies are born with very serious congenital defor-mities and disabilities, none of whom will ever receive anydamages from the public. This does not seem fair or just.

Another case, also by chance against the Ministry ofDefence, is perhaps even more offensive to normal ideas ofjustice. In this case (in 1995) the plaintiff's husband, a naval

2 Oxford Times, 22 November 1996.


airman, drank himself into an alcoholic stupor, and thenchoked to death on his own vomit. The court decidedthat, although the Ministry was not, of course, responsiblefor the man's getting himself drunk, Ministry employeesdid see him when he was completely incapable of lookingafter himself, and failed to realise (as a reasonable personwould have done) that a person in such a drunken condi-tion might indeed choke on his own vomit, and shouldtherefore have been monitored constantly. The man washeld two thirds to blame for his own death, but that still leftthe widow with an award of over ^70,000 in damages —about twenty times as much as the annual pension which awidow with young children would receive in social secur-ity benefits. But this widow would have been entitled toher social security benefits as well as the damages.

These may have been extreme cases, but road accidentsconstitute the main single source of compensation claims,and in a very high proportion of road accidents, the plain-tiff is at least partly to blame for his injuries. So this meansthat a good proportion of those who obtain damages underthe present law are partly responsible for their own injuries.

We mentioned above that there is a different set of rulesapplicable where the plaintiff was not himself to blame, butthe defendant was only partly to blame. There are, in otherwords, several guilty defendants, or anyhow several partiesresponsible who could be held to be negligent. Now heretoo the law is "stretched" in favour of the plaintiff, thoughin rather a different way from the stretching in cases ofcontributory negligence. The stretching in these cases takesthe form of allowing the plaintiff to choose which defen-dant or defendants he will sue, and permitting him torecover all the damages from any of them. (But he cannotrecover more than he has lost by suing more than onedefendant — he will still only recover once for his losses.)The defendants who are sued and made to pay can, inturn, recover a share of the damages from the other guilty


parties. Again, it all sounds very fair on the surface. Whyshould the plaintiff be forced to worry about which defen-dant to sue? Why should he be involved in arguments overwhich defendant was responsible for how much of thedamage? Why should they not fight that out themselves,leaving the plaintiff meanwhile to quit the fray, as it were?

But once again, the apparent fairness only exists on thesurface. The real problem is that one or more of the defen-dants may be impecunious and uninsured, while othersmay be insured, or may be wealthy corporations or publicbodies. When this is the case the plaintiff naturally claimsall the damages from the defendants who can pay, leavingthem to claim in turn against the defendants who can't pay.What is more, this remains the situation even if the defen-dant who can pay is only slightly responsible for the acci-dent, while the one who can't pay was largely responsible.To illustrate - suppose an accident occurs which is theresult of the combined negligence of a cyclist and a lorrydriver, and a third party is injured in this accident. Thethird party will claim against the driver and recover all hisdamages from the driver's insurance company. The insur-ance company could in theory turn round and sue thecyclist for his share of the third party's damages. But acyclist is very unlikely to be insured against that liability, sothey would not recover any of the damages that way. Andthat would still be the case even if the cyclist was ninetypercent responsible for the accident and the driver only tenpercent responsible. In this kind of situation the judge willbe under a great temptation to "stretch" the facts and findthat the lorry driver was partly responsible even if only tothe extent of ten percent or five percent. That is enoughfor the third party to recover all his damages.

The fact that you can claim all the damages from anyperson bearing any responsibility for the accident leads to avery important practical rule of thumb followed by alllawyers. This rule is, in effect, cherchez Vargent (as distin-


guished from cherchez lafemme), or, search for a defendantwho can pay, rather than for the person who is most toblame. Once you have found a possible defendant who canpay (either because he is insured or because he - or it - isa wealthy corporation, or a public body) then you can setabout trying to pin some share of the blame on that per-son. With a bit of ingenuity, it is surprising how easy it canbe to construct a case against a potential defendant eventhough, on the face of it, his connection with the accidentwas minimal. In fact accident victims sometimes thinknobody was really to blame for their injuries until a solici-tor explains to them that somebody can be blamed for whathas happened, as a matter of law. To illustrate, suppose aroad accident is caused by a child running across the roadand causing a vehicle to swerve into another: here the childseems the responsible party, but a child pedestrian wouldnot make a good defendant. But suppose the child was inthe care of some adult — perhaps a schoolteacher. Now weare getting somewhere. Where there is a teacher, theremust be a school which employs the teacher, and a schoolshould make an excellent defendant. There are many othersituations in which this simple principle is at work. A per-son is injured in a rugby match. Tough luck, you maythink, rugby is a physical game. But perhaps the referee wasto blame - try suing him, rugby referees are insured. Oragain, a police driver chasing a car thief skids on some iceand crashes into a lamp-post injuring himself, while the carthief speeds away. The thief does not appear to have beendirectly responsible for the policeman's injuries, but evenhis indirect responsibility is enough for the law to hold himliable, and enable the policeman to recover damages fromthe car owner's insurance company. Surprising as it mayseem, the insurance company will be liable for the thief'snegligence in this situation not as a matter of general law,but under special arrangements negotiated with the gov-ernment (see below, p. 102).


There is another kind of defence — very similar to thedefence of contributory negligence — which can sometimesbe set up in negligence actions, and that is the defence ofassumption of risk. It was at one time common for thedefendant to argue that the plaintiff had voluntarily chosento accept the risk of injury. Anybody who chooses toindulge in some risky activity may be thought to have onlyhimself to blame if he is injured. But this defence too hasbeen much curtailed by the judges over the years, espe-cially where an employee sues his employer for unreason-ably exposing him to a risk. It is, for instance, often saidthat an employee who is required to work under danger-ous conditions is not truly acting voluntarily — he is beingcompelled to take the risks, so if he is injured the employershould be liable. Then too it is often said that the plaintiffmay not have been fully informed about the risks - thisargument is often raised when plaintiffs sue surgeons andhospitals for operations which go wrong. Unless the plain-tiff is fully informed of the risks entailed by the operation,this defence against him will fail. So hospitals have nowbecome much more careful and strict about warningpatients of all the risks that may be involved in some med-ical or surgical procedure, even though many patientswould probably rather be left in blissful ignorance.

This defence is likely to be especially important if actionsagainst the tobacco companies for smoking-induced can-cers ever come to court. The tobacco companies willdoubtless argue that the risks of smoking have been publicknowledge for at least forty years, so that anybody who hassmoked must be regarded as having accepted the risks. Theanswer to that which the victims' lawyers are likely tomake will probably be that the risks were not acknow-ledged by the tobacco companies, or even that they sup-pressed information about the risks, and perhaps also thatbecause tobacco is addictive, smokers who were oncehooked did not truly choose to continue smoking but sim-


ply were unable to give it up. If it is then suggested that, atleast when the victims first started to smoke, they musthave voluntarily chosen to do so, the plaintiffs' lawyers arelikely to respond that most smokers have acquired the habitwhile they are still minors, and therefore not fully respon-sible for what they were doing. It will be seen that there isplenty of room for stretching things here too.

STRETCHING THE RULES OF CAUSATION

A basic requirement of a successful claim for damages fornegligence is that the defendant must have caused the plain-tiff's injuries. It is not enough to show that the defendantwas negligent if the plaintiff would have suffered the sameinjuries anyhow. For instance if a hospital negligently failsto diagnose a patient's illness correctly, and the patient dies,no damages will be recoverable for his death if it is shownthat the patient would have died even if his illness had beencorrectly diagnosed. The negligence in such a case iscausally irrelevant.

The rules of causation often lead to difficulty in the lawbecause of the problem of tracing the effects of an actionthrough a long sequence of consequences. Even if thedefendant was negligent in the first instance, how far doeshis liability extend when unusual or even bizarre eventsflow from his initial act of negligence? Generally speaking,a defendant's liability continues for most of the conse-quences of his negligence, even through a long sequenceof events, so long as they are in a broad sense, natural orforeseeable outcomes.

The "egg-shell skull" rule

In personal injury cases these normal rules of causation aregreatly modified in the plaintiff's favour by what lawyersknow as "the egg-shell skull" rule. This says that if theplaintiff suffers from some idiosyncratic or rare condition


(such as an abnormally thin skull) then any act of negli-gence which has much more serious consequences thancould have been expected in the normal course of events,will still be treated as having been caused by the defendant.For instance, in a case in 1962 where a workman wasslightly injured by a negligent colleague (for whom hisemployer was responsible) when a drop of hot liquid wassplashed on his lip, and the splash triggered off a pre-cancerous condition from which the plaintiff ultimatelydied, his death was actionable against the employer. And inanother case in 1968 a post office worker grazed his kneeslightly on a ladder on which he had slipped because someoil had been carelessly spilled on it; he was given a tetanusinjection as a precaution but unfortunately had a freakreaction to the injection with devastating results. Here theonly negligence consisted in spilling a little oil, but theemployers were held liable for very substantial damages forthe unfortunate consequences. An even more extremecase, perhaps, was decided by the House of Lords3 in 1995.Here the plaintiff, who had suffered for 20 years from ME,(now normally called chronic fatigue syndrome) but whoclaimed to have been recovering, was involved in a minorroad collision with the defendant, which was the latter'sfault. Nobody was injured in the collision, and the plaintiffwas able to drive home after the accident, but some hourslater claimed to have felt the onset of a renewed attack ofME. He was awarded damages of over ,£162,000 on theground that he would never be able to work again as aresult of the defendant's negligence. This award was ulti-mately upheld after an appeal to the House of Lords.

It is hardly necessary to stress that decisions like thiswhittle away the distinction between negligence and pure

3 The reader may need warning that the "House of Lords" referred to inthis book is the final court of appeal for England, staffed by senior judges, andis not the legislative House of Lords which is the second House of Parliament,in which all peers and peeresses are entitled to sit.


accident, for which of course damages cannot be recoveredat all. On the one hand the defendant's negligence is justbeing used as a mere excuse to make him liable for suchbizarre consequences — nobody would regard the defen-dant as morally responsible for the extraordinary results inthese three cases. On the other hand, looking at mattersfrom the plaintiff's point of view, what is the relevant dis-tinction, morally speaking, between a plaintiff who isinjured or killed in such a freak way and one who is injuredor killed by pure accident for which no one is to blame,and for which damages cannot be recovered at all? In eachof these last three cases it is quite possible that some otherevent altogether would have triggered off the conse-quences which occurred. The pre-cancerous conditioncould have turned cancerous without external injury at all- such conditions often do turn cancerous; the post officeworker who suffered the freak reaction to the tetanusinjection might have had a tetanus injection for anotherreason at another time, and nobody could have beenblamed at all; and the sufferer from ME might have had arecurrence of his illness for any number of reasons — MEtends to be like that.

Causation and the "blame culture"

There are other important kinds of cases where the rules ofcausation have been stretched in modern times, and theseare especially interesting, because they reveal how this"stretching" is often a result of the "blame culture" inwhich we live. Suppose a person gives negligent advice toanother, and the other person relies on that advice and losessome money as a result. Who has "caused" the ultimateloss? In one sense, of course, it must be the person who hasacted on the advice — after all you don't have to act onadvice, and if you choose to do so, you are (it may bethought) the author of your own misfortune. But thisviewpoint, though it might be acceptable in a highly


individualistic society, has not been found acceptable inmodern times in Britain. Too often, as a practical matter,we do have to rely on the advice of others, because we lackthe expertise to act by ourselves. This is obvious enoughwhen, say, you act on the advice of your doctor who neg-ligently and wrongly tells you that you must stop work fora month so you lose a month's pay; or perhaps even whenyou rely on the advice of your central heating engineerwho mistakenly tells you that your boiler needs replacingand acting on that advice costs you £500. But how far doesthis go? Nobody would suggest that if you act on theadvice of a racing tipster and put ^500 on a horse whichloses, you should be able to claim damages from the tipster.It would be said that you acted on your own responsibil-ity, and were the cause of your own loss. But in betweenthese two types of case there is a grey area where it is moredifficult to say whether you should be able to claim dam-ages.

There has, for instance, recently been a huge public out-cry over the "scandal" of pension plans which have been"wrongly sold" — that is, where employees have beenadvised to move out of an employer's company pensionscheme and set up their own pension plan with an insur-ance company. It has been complained that much of theadvice given has been negligent and that employees havelost by moving to these private pension plans - they wouldhave been better advised to stay with their company plans.Rather surprisingly perhaps the insurance industry haslargely accepted these complaints and has promised tocompensate those who have suffered loss; yet it might havebeen thought that a person bears some responsibility formaking his own financial decisions of this kind. Of course,where there has been actual fraud or misrepresentation byan insurance company or salesman, there must be properredress, but many of the complaints about these pensionplans appear to be nothing more than allegations that the


salesman gave "bad advice", which, on financial matters, isafter all a matter of judgment and opinion. Perhaps theseplans have been "wrongly bought" as much as "wronglysold".

It is now being suggested4 that an even more extensiveresponsibility rests on insurance companies who sell privatepension plans. When these plans mature, there is a largecapital sum available which has to be converted into apension or annuity. The insured person is entitled to "buy"this annuity from the same insurance company or to havethe capital value transferred to another insurance companyand buy the annuity from them. The suggestion is that it isthe responsibility of the first insurance company to tell theinsured person that other companies may have betterannuity rates than they do, and that he may be better offtransferring the capital value elsewhere to buy his annuity.It has even been suggested that if the first company fails todo this they may be legally liable for damages. If these sug-gestions are right it will surely be proof that the legal sys-tem has finally gone mad! One might as well argue thatwhen you apply to a company for motor insurance theyought to be legally bound to inform you that other com-panies have lower premiums, and you should be entitled tosue them if they fail to tell you this; or perhaps when some-one buys a television set the sales assistant should be legallyobliged to tell him that he could buy the same set morecheaply at a rival store.

It is unlikely that the law will ever go to such absurdextremes because judges say that parties relying on some-one else's advice must take "reasonable" steps to protecttheir own interests. But how far you think it is reasonableto rely on advice given to you by others depends ultimatelyon whether you think people should make their own deci-sions, and stand on their own feet, or whether you believe

4 See Sunday Telegraph, Business Section, 8 December 1996.

5o THE LAW STRETCHED

in a more paternalist society in which less well informedand more vulnerable people are enitled to rely on others.So the more paternalist a society gets, the more the blameculture develops, the more the public and perhaps the lawwill be inclined to say that losses caused to you by yourown actions are "really" the result of someone else's negli-gence. This is one way the law can be stretched withoutthe judges even realising what they are doing. We returnto the theme of the "blame culture" in Chapter 6.

Omissions

There are other respects in which the rules of causationhave been stretched in recent decades. In particular, theyhave been stretched to encompass many cases of negli-gence by omission. Suppose the plaintiff has been injured bythe actions of X, but Y could have prevented X from caus-ing the injuries or damage. Plainly X will be liable in thiscase, but X may be uninsured and not worth suing. Y, onthe other hand, may be insured or may be a wealthy cor-poration or some public body, quite capable of paying thedamages. So the plaintiff will try to sue Y. He has thedifficulty of showing that Y has caused his injuries, but thisis now often surmounted. There is no problem over thefact that X is obviously the main party responsible; the lawhas no difficulty in treating both X and Y as having causedthe injuries, where appropriate. And, as we have alreadyseen, it matters not one whit that the main, indeed, theoverwhelming responsibility, may be X's. If any part of theresponsibility, no matter how small, can be placed on Y, hecan be sued for the entire loss, leaving him to get what joyhe can out of a possible claim over against X for a share ofthe damages that he has to pay.

In order to establish a case against Y in this sort of situ-ation the plaintiff will have to show some reason that Yshould have prevented X from causing the damage. Thiswill usually be found in some degree of control which Y


may have over X. For example, in one leading case in 1970known as Dorset Yacht Co. v. Home Office5 some HomeOffice officials allowed a party of Borstal boys (as they usedto be known) to escape onto the plaintiff's yacht wherethey did considerable damage. Obviously the Home Officeofficials did not directly cause the damage themselves — thatwas done by the Borstal boys. But the officials were incharge of the boys, and had negligently allowed them toescape from their control, so the Home Office was heldliable for the damage.

Similarly, a school may be liable for negligently failing tocontrol its pupils if they cause injury to other pupils, orperhaps, even if they escape and cause injury in schoolhours to persons outside the school. It is on this groundthat the recent claim for damages by the ex-pupil whocomplained of bullying was presumably made against theschool authority.

In rare cases this kind of liability may even be imposedon someone who fails to prevent a person from deliberatelyinjuring himself. In 1970 there was a rather remarkable caseof a hospital being held liable to a known psychiatric andsuicidal risk who injured himself when he jumped out ofthe window. This is the kind of case which can make thelaw look absurd when taken out of context, but it is per-fectly in accordance with modern legal principles. Morecommonly, this kind of liability would be imposed on adefendant for injury to children under his control — forinstance a schoolteacher could be liable for allowing ayoung child to injure itself.

Another modern instance of the stretching of the rules ofcausation in cases of omissions is the statutory liabiHty ofhighway authorities for damage or injury caused by theirfailure to repair the highway. Until 1961 highway authoritieswere only liable for damage or injury caused by badly

5 [1970] AC 1004.


executed repairs, but now their liability extends to cases ofnon-repair as well. At first sight this seems a relativelyminor change, but actually it is really quite a major one.Obviously if repairs are actually carried out, it will not nor-mally be more costly to do them properly than to do themnegligently, so the burden on the highway authority to seethat they are done properly is not unduly severe. But theliability for non-repair actually imposes a duty on highwayauthorities regularly to inspect their roads (and pavements,which are legally part of the highway) and then to repairthem should defects or dangers appear. In fact every localauthority (which is the highway authority for urban roads)is now constantly having to meet claims for damages bymembers of the public who claim they have injured them-selves by tripping over protruding paving stones and thelike. It is, of course, very difficult to verify these claims, andno doubt rather easy to exaggerate their seriousness. Yetthe cost of meeting them, or trying to avoid them by con-stantly repairing the roads and pavings, has to competewith other demands on local authority spending, such asschools, police expenditure and so on. Fortunately a recentdecision of the House of Lords has put a stop to some ofthe more extreme possibilities, such as holding a localauthority liable for failing to actually improve its roads,rather than just to maintain them in repair. This case is fur-ther discussed in Chapter 3 (see p. 83).

STRETCHING THE KINDS OF INJURY YOU CAN CLAIM

DAMAGES FOR

At one time damages for injury, especially for personalinjury, were almost entirely confined to cases where thevictim suffered a plain and obvious physical injury. Theseare the obvious and straightforward results of many physi-cal acts of negligence — road accidents, damages in facto-ries, and the like.


But in recent years the law here too has been stretchedin half a dozen different directions. First, it has come to berecognised — indeed it has never really been doubted — thatdamages can be recovered for any physical harm, not justfor ordinary injuries. So for example, if a person contractseven an ordinary illness as a result of somebody's negli-gence, that is now plainly actionable. So if a person isunreasonably exposed to the risk of contagion in a hospital,for instance, and catches even a perfectly ordinary disease— bronchitis, say — he can get damages for that. (Of course,most victims of bronchitis can't recover damages for itbecause they can't prove it was the result of anybody else'snegligence.) Similarly, anybody who suffers from a diseaseas a result of being exposed to some unreasonable risk attheir place of employment, can recover damages if he canprove the necessary facts. Many miners and asbestos work-ers who have contracted lung diseases or cancers in recentyears have recovered damages. Some have, unfortunately,died, and then their families may have been able to claimcompensation. The family of someone who dies pre-maturely from other cancers or illnesses, not contracted inthis way, have no such claims even though, from theirpoint of view, the result is exactly the same.

Then there are claims by or on behalf of babies injuredin the course of or the aftermath of birth. It is tragically truethat many babies suffer terrible brain damage as a result ofbirth injuries, and injuries like this are actually more com-mon today than they were formerly - until recently thebabies would have died because of the then state ofmedical science. Today frantic efforts are often made bydoctors and hospitals to save the lives of these babies butsometimes, unfortunately, at the price of brain damage orother severe side effects like blindness. Provided negli-gence can be proved, heavy damages can be recovered forthese injuries or conditions, against the very doctors andhospitals responsible for saving the baby's life.


There is another type of case where damages have beenawarded for the unexpected physical consequences ofmedical procedures, even where they cannot be said to beinjuries at all. Damages have occasionally been awardedagainst hospitals for badly performed sterilisation proced-ures, with the result that a child has been born. Givingbirth is hardly a physical injury, but it does cost quite a lotto maintain a child for the whole 18 years of its minority,and if lawyers so arrange matters that this cost can be passedonto a negligent surgeon, or a Trust Hospital or HealthAuthority, no doubt some people will take advantage ofthe law. Some, indeed, have. (Scots judges have declinedto follow this particular piece of English folly.)

Second, purely cosmetic injury — something whichaffects your appearance rather than your physical well-being - is also plainly actionable. The case of the boy whoclaimed for the discolouration of his teeth is a simple exam-ple. And despite sex equality laws, nearly all judges willaward more damages to a girl or young woman than to aman, for a cosmetic injury — a small scar on her face or evenon her body which would prevent her wearing a bikini, forinstance.

Attempts to push the boundaries of the law even furtherwere recently made, but have so far been rebuffed by thecourts. In 1995 several actions by children and their fami-lies were brought against local authorities for failing to takereasonable care in the exercise of their statutory powers toprotect the children from potential abuse, or, conversely,to separate the children from their parents in cases of sus-pected abuse when in fact there was none, and in yet othercases, for failing to make special educational provision forchildren with special learning needs. In some of these casesthe children suffered physical harm but in others the kindof harm being complained about did not really fall withinany of the traditional areas of the law - the mental distresscaused to a child and parent by their being forcibly sepa-


rated, or to a child not being offered appropriate educa-tional provision is really of a wholly new kind despiteattempts by their lawyers to claim that they were sufferingfrom "anxiety neurosis". All these claims failed on highlycomplex legal grounds, more to do with the undesirabilityof imposing legal liabilities of this kind on local authorities,but doubtless also influenced by the fact that the kind ofharm complained about here was wholly outside the law'straditional areas of concern.

Another decision, also in 1995, rejected claims for dam-ages against the Crown Prosecution Service by twoaccused persons who were detained pending trial, butreleased when the prosecutions were abandoned. In bothcases the essential complaint was that the CrownProsecution Service had been negligent in not appreciatingat an early enough stage that the evidence was too weaktoo justify the prosecutions. Of course the "injury" beingcomplained of here was that the men were in jail pendingtrial, and that kind of injury has always been remediable bya special action for malicious prosecution which requiresproof of "malice" or improper motive; but this was the firsttime that someone had tried to obtain damages merely onthe ground of negligence in such a case.

The attempt to dream up new kinds of harm for whichdamages may be recovered goes on all the time. Even asthis book was written a solicitor announced that legal aidhad been granted to enable him to pursue a claim for dam-ages on behalf of two schoolchildren against their schools(presumably local education authority schools) for failingto give them a decent education, so that they failed to passtheir GCSE examinations and had to spend another year atschool to retake them.6 It is very unlikely that these claimscan succeed, and it seems astonishing that legal aid shouldhave been granted for them to proceed at all, in view of the

6 The Times, 2 December 1996, p. 4.


decision of the House of Lords against similar claims onlylast year. But of course if claims like this do succeed schoolswill probably have to take out (or spend more on) insur-ance against the risk of being sued on this ground, andmoney which could be spent on improving the educa-tional facilities will be diverted to paying insurance com-panies (and lawyers).

Mental injury

By far the most worrying development in the law relatingto the kind of harm for which you can recover damages,however, has been the huge growth of claims in recentyears for damages for "nervous or emotional shock" or,what nowadays tends to be called post-traumatic stress.The law on this point is quite complicated, and still not set-tled by the courts in various particulars. Only a bare sum-mary will be offered here. It must first be understood thatthe courts have always refused to award damages for baremental distress or grief, except to those who also suffer physicalinjury. Obviously when people are seriously injured orkilled in accidents, close relatives of the primary victimswill often be severely shocked and grief-stricken. But thishas never been allowed to develop of its own into action-able injury. Of course if damages were awarded for meregrief or shock, then parents and close relatives of everychild injured or killed in an accident would be able torecover damages on their own behalf, but the law does notgo that far as a general rule. The death of a young childallows the parents to recover only a fixed sum, now.£7,500, as damages for bereavement, which is technicallypayable to the child's estate, regardless of the parents' griefor shock.

But what has happened in the past few years is that thecourts have increasingly come to recognise that many closerelatives of primary accident victims may suffer moresevere consequences than grief or distress, however pro-


longed. Sometimes, the mental reactions may be verysevere — leading to deep depressions, or even suicidal ten-dencies. Often there are (or are claimed to be) a variety ofother symptoms present, such as inability to work, sleep-lessness, nightmares, and so on. The judges have been tornby their desire to award damages in the most serious ofthese cases, while not opening the floodgates to everysingle relative or parent of primary accident victims. Sothey have allowed some of these claimants to obtain dam-ages, but to keep the numbers within limits they haveinsisted on two conditions: (1) the claimant must have suf-fered a recognisable psychiatric illness or condition, and not justbe suffering from grief or deep unhappiness, however pro-longed and serious in itself; and (2) the claimant must havewitnessed the accident, or been sufficiently close to it, intime and space to make his reaction a foreseeable one, andnot something quite extraordinary. This means that closerelatives of primary victims who actually witness a partic-ularly horrifying accident or disaster, and are close to thescene when it occurs, or even come upon its aftermathalmost immediately, may be able to recover damages forpsychological illness consequent on what they have seen.Others more remote from the immediate scene, or lessclosely connected with the primary victims are unlikely tobe able to claim, although in specially strong circumstancesmere bystanders may be able to recover. In the legal actionsfollowing the Hillsborough football stadium disaster in1989 many claims were made for damages for shock andpsychiatric illness by relatives of those injured and killed. Ingeneral, those who only saw the events on television werenot permitted to recover, and even among those in the sta-dium itself, damages were not awarded except to the clos-est relatives such as parents or (in one case) a fiance.

But the tendency to "stretch" the law goes on all thetime, especially, perhaps, when settlements are being nego-tiated. In November 1996, for instance, the Lincolnshire


Health Authority paid half a million pounds to settle claimsfor post-traumatic stress by the parents of thirteen childrenbizarrely killed or injured by their nurse Beverly Allitt whowas convicted of manslaughter.7 These parents were not atthe immediate scene of the hospital when the deaths orinjuries occurred, though naturally they visited their chil-dren while they were still alive in the hospital. Moreover,damages in these cases are only supposed to be awarded toplaintiffs who suffer genuine psychiatric disorders, and it ishard to credit that all these parents were suffering fromsuch disorders, as opposed to merely natural human grieffor the deaths or injuries to their children. It must beunderstood that the injured children, and the estates (thatis, the parents) of the children who had been killed, hadalready received damages from the Health Authority forthe injuries and deaths. The half million pound settlementwas for the parents for their own trauma. In the fatal casesthe parents recovered twice over, since money received bythe estate of a small child is necessarily passed on to the par-ents (a young child cannot make a will, so its heirs willalways be its parents.)

Yet another claim in 1996 was allowed by a judge,though later overturned by the Court of Appeal.8 In thiscase a Health Authority discovered that an obstetricsworker in the hospital was infected with HIV, and thoughthe risk of infection for patients was extremely low, itwrote to 900 patients who had been in contact with theworker, advising them of what they had discovered, andoffering them HIV testing, counselling and advice. Notone of these patients actually proved to be HIV positive,but 114 of them sued the hospital for anxiety and shock. Itwas not suggested that the hospital had been in any waynegligent in employing the obstetrics worker or in failingto discover that she was HIV positive; but it was claimed

7 The Times, 28 November 1996.8 The Times, 27 November 1996.


that the hospital had been negligent in sending out letters,rather than in calling in the patients for personal face to faceconsultations at which counselling could have been imme-diately available. The trial judge agreed, though once againit is almost beyond belief that 114 patients out of 900should have suffered from recognised psychiatric illnesses(as distinguished from natural worry or anxiety) throughthe receipt of the warning letter. As already indicated, theAppeal Court threw out the case.

Other claims stemming from the Hillsborough stadiumdisaster made by a number of policemen on duty at the sta-dium have recently been permitted by the Court of Appeal(though they may yet be carried to the House of Lords onfurther appeal), on the ground that policemen attemptingto render assistance in a disaster fall within the category of"rescuers", a group long favoured by the law, who areoften allowed to sue when others cannot. In particular,rescuers cannot normally be defeated by the argument thatthey have themselves been guilty of contributory negli-gence or that they voluntarily assumed the risk of injury.The Court of Appeal's decision in these cases has beengreeted with considerable indignation by many membersof the public, some of whom have written letters to thenewspapers pointing out that policemen, members of theemergency services and the armed forces and others simi-larly placed, have always been expected to encounter trau-matic and horrifying events in the course of their duties,and it is difficult to see why they should be better treatedthan the relatives of many of the killed and injured whowatched the tragedy on television. To be fair, many mem-bers of emergency services and armed forces have alsowritten letters to the press taking the same line, pointingout that literally millions of them suffered traumatic andhorrifying experiences in the last war, and insisting thatthey would never contemplate suing in such circum-stances.


There is considerable force in these criticisms of thecourt's decision, which if left standing, may have profoundsignificance far beyond the case in hand. Is a hospital nowbound to ensure that its nurses and emergency staff (serv-ing perhaps in casualty units) are adequately sheltered from,or able to cope with the effects, of what they see in theirdaily work? Is every police force bound to take care that itsyoung and untried staff can cope with murder and may-hem and other emergencies which they may encounter?And what about members of the armed services? Ofcourse, as always, negligence must be proved before dam-ages can be recovered, but it is easy to see how a plaintiffcan argue that the mere failure to give adequate trainingbeforehand, or counselling afterwards, itself amounts tonegligence in certain circumstances. Many people work instressful employment of one kind or another (though someof the unemployed might think they are lucky to be inwork at all) and recent years have seen increasing numbersof claims for damages for stress and anxiety against employ-ers, in some of which very substantial damages have beenawarded. One might think that if a person cannot copewith the stress of his job he simply ought to find a lessstressful job. President Truman was once credited with theadvice, "If you can't stand the heat, get out of the kitchen".Now, it would seem more accurate to say, "If you can'tstand the heat go and see a solicitor."

One reason why these claims cause particular difficultyis that the legal requirement that the plaintiff must provehe has suffered from a recognisable psychiatric conditiondoes not seem to have worked very well as a way of iden-tifying really genuine cases. It must be said that the med-ical profession — like the judges themselves — are verysympathetic to those who claim to have suffered such psy-chiatric conditions. A patient whose close relative has beeninvolved in a serious accident, or who has witnessed a seri-ous accident affecting, perhaps, a young child, may well


suffer great mental distress and shock. But it is not reallyobvious that doctors are much better than judges at sepa-rating those who merely suffer from normal grief andshock, from those who actually suffer from some real ill-ness. So many of the symptoms of these psychiatric condi-tions appear to be subjective — depressions, loss of interestin life, inability to work or to sleep well, etc., etc., — thatone is entitled to feel sceptical over the prevalence of theseconditions among those who claim damages. Giving theseperfectly natural conditions fancy names like "post-traumatic stress" does not actually demonstrate that theyhave a real, objective existence, though judges striving notto appear old-fashioned fuddy duddies, are naturally per-suaded by the doctors that they have.

One particularly worrying feature of these cases is thatpredictions about the plaintiff's long-term employmentprospects are (or appear to be) especially suspect. When aperson has an objectively serious physical condition it iseasy to predict that he may be unable to work again; butwhen the condition is entirely mental, such predictionsseem more dubious — and indeed, as events have shown,sometimes prove quite unreliable (for one such case seep. 11 above). Yet enormous damages awards are sometimesbased on these predictions.

It is interesting to note that the social security system hasbeen suffering from exactly the same problems as the lawof tort. Until 1994 anybody who suffered from long-termdisability was entitled to social security invalidity benefit,but claims for long-term invalidity had soared from600,000 in 1978-79 to almost 1.5 million in 1992-93 at atime when the nation's health was generally improving. Allthese claims were, of course, backed by doctors who read-ily enough certified that their patients were incapable ofwork. Since the health of the nation was generally improv-ing over this fifteen year period, it seems likely that muchof the increase in claims for invalidity benefit stemmed


from depressive and other psychological or mental condi-tions. In 1994 the government responded to this massive(and costly) growth by abolishing invalidity benefit andreplacing it with incapacity benefit - and the claimants forincapacity benefit are required to prove rather more objec-tive symptoms of their inability to work. Perhaps thejudges should follow suit.

There is one other reason why claims by policemen andother emergency workers for damages for psychiatric injuryare particularly undeserving. Most employees in these cat-egories work under statutory schemes which permit themto retire on pension if they suffer injuries or disabling con-ditions arising out of their employment. So a policemanwho is so traumatized by something he encounters in hiswork that he is compelled to give up his work is alreadysubstantially better off than many other members of thepublic in a similar situation. Of course this does not preventtheir seeking damages as well if they are legally entitled tothem (in which case they are still entitled to their pensions,and no deductions are made from the damages on accountof them), but it is a reason for thinking that sympathy forthe claimants of damages may sometimes be misplaced.

Economic loss

There is one other kind of damage which a plaintiff maysometimes wish to claim for, and which can give rise tovery difficult questions of law and policy, and that is, aclaim for pure economic or pecuniary loss, without anyphysical (or even mental) injury. Suppose a contractor neg-ligently cuts through a power cable while he is digging upthe road to repair a drain or telephone cable. The resultmay be to deprive local consumers, and even local busi-nesses and factories, of their power supply for a few hoursor perhaps longer. This may cause not just inconvenience,but actual financial loss, for instance, to a company whosefactory has to close for half a day. Claims of this kind were


unknown to the law until modern times, and even todaythey are not generally allowed at all. The main reason forthis is the purely pragmatic consideration that if such claimswere once allowed the possible consequences could belimitless. All sorts of people may suffer financial loss whensome physical injury or damage is caused to another personor his property. In the case of the power cable, for instance,the factory owner may not be the only person to sufferfinancial loss — perhaps his workers may also suffer losses ofearnings (for overtime, for example), and his customersmay also suffer financial loss through delayed deliveries.What is more, each of these parties may be connected withfurther persons who in turn suffer money losses when theysuffer. If the factory owner's workers suffer lost wages, per-haps the local pub owner also suffers, and the local footballteam may find its takings down that week, and so on.Plainly, the repercussions of losses like this are endless, andit is perfectly sensible of the courts to refuse to allowactions to be brought in such circumstances.

However, things do not stop there. If the claim is forpure economic loss, you can't generally sue for damages inan ordinary negligence action (as we have just seen) butyou can sue for breach of contract, and there are some actionsfor breach of contract which are very similar to negligenceactions. We have already discussed a number of cases con-cerning pension plans sold by insurance companies, whereeven claims for purely economic loss are being met,because there was a contractual liability for negligence (seep. 48). But allowing claims of this kind for breach of con-tract brings with it a very worrying possibility, namely thatsome contractual claims for damages for negligence can befor such fantastic sums of money that the legal systemsimply cannot cope properly with the consequences, andeven if it could, the resulting social and commercial dislo-cation would be in nobody's real interest. In particular thepotential liability of firms of accountants, where they have


been involved in professional auditing or giving advice inmulti-million pound business activities, is simply astro-nomical. Suppose one company wishes to take overanother at a cost of several billion pounds — by no meansan abnormal business deal these days. Before making itstake-over offer the buying company (call them A) willwish to satisfy themselves of the value of the second com-pany (let's call them B). For this purpose they will have torely on accountants who will examine what books anddocuments they can, and may then give A the necessaryassurances. If the accountants have been negligent it mayturn out eventually that B is worth much less than A antic-ipated, and A may feel aggrieved - indeed, they may feelso aggrieved that they may try to claim damages against theaccountants for neghgence. If this were purely a negligenceclaim it would not be permitted, but because the accoun-tants will have been working for A under a contract fortheir professional services, an action for neghgence is inprinciple available. Indeed, it is not really problematical inlaw. The only real problem is that, according to ordinarylegal principles, the accountants may be liable for damagesrunning into hundreds of millions of pounds, or occasion-ally even more.

There is absolutely nothing fanciful about this scenario.Many of the world's leading accountancy firms (which areenormous organizations) are currently being threatenedwith law suits whose total value certainly does run intohundreds of millions of pounds. Firms of solicitors may alsofind themselves threatened by similar liabilities. It is noanswer to this problem to say that accountants and solici-tors should insure against their liabilities — they already do,but even insurance companies are unwilling to cover lia-bilities of this sort of magnitude. Most firms will find itimpossible to obtain insurance cover for liabilities much inexcess of £50 million, so if firms actually are renderedliable for such damages, each of the partners will be liable


to his last penny. Partners in professional firms (likeaccountants, solicitors, doctors and so forth) do not oper-ate like businessmen under the protection of the limitedliability system. In business, companies may go bankrupt,and shareholders will then lose what they have invested inthem, but the directors of the company are not as a matterof general law personally liable for the company's debts.But partners are so liable, and a massive liability whichexceeds the firm's insurance cover could leave them bank-rupted, their houses and other assets seized to pay the debt,and the firm itself completely broken up and liquidated. Allthis could follow from a single act of negligence, a singlepiece of negligent advice.

These potential consequences are just absurd, and totallydisproportionate to the gravity of the fault which may haveled to the liability. They are also completely contraryto thepublic interest since large firms of accountants are sociallyand commercially useful bodies of well qualified profes-sional people, whose services are in constant need. Theresult of these fears is that many large firms of accountantsare today seeking ways of limiting the personal liability oftheir partners, for example, by operating as limited liabilitycompanies, or setting up their head office abroad in somecountry whose laws might protect them. There are seriousdifficulties about either of these courses, however, and forthe moment, the threat to large professional firms from thiskind of litigation remains a very real one.

What this tends to show is that it is only the existence ofinsurance which makes most of the law of negligenceacceptable, and where insurance is unavailable, the law isnot acceptable nor fair nor in the public interest.Fortunately, in the case of ordinary injury and accidentclaims, where physical damage and injury is in question,the liabilities are so much lower than these potential astro-nomical financial losses, that insurance is readily available.We return to this important question in Chapter 5.

3. MORE STRETCHING OF THE

LAW

STRETCHING THE DAMAGES WHICH CAN BE

AWARDED

A SIMPLE outline of the principles on which damages areassessed has already been given. Here it is proposed to adda few words to show how modern changes in the lawnearly always seem to favour the plaintiff, and enhance thedamages available. These changes have by no means comepurely from the judges. Many of them have come fromParliament, and many of them have also followed recom-mendations from the Law Commission. All this goes toshow how powerful is the pressure constantly to improvethe position of those who claim damages for injury anddeath. In Chapter 6 we shall see in some detail why thispolicy is so mistaken, even though it largely stems from anatural sympathy and compassion for the injured. Here,the reader is asked to keep in the forefront of his mind thatfor every accident victim who obtains damages, there maybe eight or nine other victims of similar accidents, andprobably a further ninety disabled persons whose incapac-ity does not derive from an accident, who obtain none.

The rules relating to the assessment of damages forinjuries have not changed greatly in the past thirty or fortyyears, and it is actually difficult to say how far, allowing forinflation, damage awards have increased. Damages forpecuniary losses, as we have seen, include principally earn-ings losses and medical costs of various kinds. Since realearnings have obviously gone up a good deal in recent

MORE STRETCHING OF THE LAW 67

decades and medical costs have also increased far higherthan the general rate of inflation, it is entirely natural toexpect that the total sums awarded for pecuniary lossesshould also have gone up a good deal. Damages for non-pecuniary losses may, as we have previously seen, haveactually gone down slightly, though this is probably morethan offset by the fact that so many new and different typesof loss are nowadays included as separate items in the dam-ages for pecuniary losses.

It does seem certain at least that maximum awards ofdamages (including both pecuniary and non-pecuniaryelements) in the most serious cases of all have increasedvery dramatically in the past thirty years. In 1968 the Courtof Appeal reduced a then unprecedentedly high award ofsome ,£66,000 to about ^51,000 in a case of high earningsand maximum severity. So this can be taken as the bench-mark for the highest sort of award then thought permiss-ible. But today maximum awards in the worst cases exceedtwo or three million pounds in value (some of these aretoday made as part of a "structured settlement" in whichthe money is actually paid over in the form of an annuity,rather than a lump sum). Maximum awards thereforeappear to have increased by about thirty to fifty times dur-ing these thirty years, while earnings in general haveincreased by ten or twelve times during the same period.

Other changes which have improved the position ofplaintiffs with regard to the size of damages include thestatutory requirement, introduced in 1969, that damagesawarded for personal injuries should now include interestunless there are special reasons to the contrary. Given thelong delays often involved in the settlement or trial of thesecases, the entitlement to interest often raises the total dam-ages by as much as ten or even twenty percent.

Another change — as a result of judicial decisions — hasbeen to give additional damages to an accident victim whohas been nursed or cared for by a relative. Judges thought

68 MORE STRETCHING OF THE LAW

it unfair that if the plaintiff was so badly injured that heneeded to employ someone to care for him, and paidwages to that person, the wages would be a recoverableitem of damages, while if his wife or parent (for instance)took on the burden for love rather than money, nothingshould be paid. So the plaintiff is now entitled to recoveran additional sum for these care costs, even though they arenot actually incurred.

In a case in 1994 a young motor cyclist seriously injuredhis pillion passenger who he later married. Commendably,he took care of her at home in her injured state. In anaction nominally against her husband, she recovered over£600,000 in damages, which included a sum of £77,000which was intended as a recompense for her husband's careof her. This sum was struck out on appeal because theHouse of Lords decided that, as the husband was himselfthe wrongdoer, he could not expect to be paid for provid-ing the care which his own negligence had made necessary.The Law Commission has recently proposed that thisdecision be reversed so that in such cases the carer shouldbe recompensed for his work. This recommendationmakes no sense except on the assumption that the legal"wrong" on which the liability is based is a technical,minor matter of no importance, and that in reality the rightto compensation is based on insurance and not on wrong-doing. But once that conclusion is reached, the whole sys-tem makes no sense — why should a person suffering similarinjuries to this young woman be unable to obtain any dam-ages at all (let alone the extra £77,000) if the accident wasnot due to someone's fault?

Another judge-made rule has gone through severalfluctuations in recent years. This rule concerns the ques-tion of offsetting benefits. When a plaintiff is injured he isoften entitled to other benefits from other sources, quiteapart from any damages. Should the damages be reduced totake account of these benefits? Suppose, for instance, the


plaintiff is a police officer who has to retire, with a policepension, as a result of being injured in an accident. Shouldthe damages be reduced because of the pension? No, saidthe House of Lords in 1969, and the police officer in thatcase ended up, not only with damages and a police pensionbut also with a social security pension as well. In later casesattempts have been made to persuade the courts to awarddamages for losses of earning even though the earningswere in fact made up by the employer, but these attemptshave failed. The line must be drawn somewhere, evenwhen all allowance is made for sympathy for the plaintiff.If he has not lost any earnings he cannot recover damagesfor lost earnings.

Similar problems arise with regard to social securitybenefits payable to accident victims. In this respect theplaintiff's position has actually been made worse in recentyears — one of the very few modern legal changes whichoperate to the disadvantage of plaintiffs in personal injuryactions. At one time any social security benefits the plain-tiff might have been paid were largely ignored in the assess-ment of the damages — a small deduction was made forsome (but not all) of the benefits. More recently the gov-ernment has made serious efforts to claw back larger sumsof benefit from the damages under a complex set of statut-ory provisions. These are too technical to discuss in detail,but they only apply to damage awards exceeding ^2,500.Below this sum, the plaintiff is entitled to keep his damagesand his benefits, subject only to the minor deductionarrangements previously in force, as mentioned above.Above the ,£2,500 figure, the insurer paying the damagesmust deduct the full value of any social security benefitspaid in respect of the injury and pay the money over to theDSS. Of course these are not designed to reduce the plain-tiff's total compensation, but only to cut down on theduplication involved where the plaintiff obtains benefitswhile his legal claim is proceeding, and then perhaps


recovers a large sum which is entirely adequate to repay thebenefits, and, often, still leave him plenty left over.

In fatal cases the law is particularly favourable to theclaims of dependants, and especially widows (and less com-monly, widowers). In these cases, there is virtually noattempt to avoid duplication at all, and many a widow musthave been relieved to discover that her financial positionafter her husband has been killed in an accident has actu-ally improved, sometimes quite substantially. For instance,all life insurance benefits are, by express statutory provi-sion, excluded from the calculation of the damages, and soare pension entitlements under the deceased's employmentscheme, and social security pension entitlements. Further-more , by another express statutory provision passed in1971 (on a free parliamentary vote) the fact or possibility ofa widow's remarriage is also excluded from consideration.Since many young widows do remarry, often within a yearor two, and since it often takes some time for their cases toreach court or to be settled, it is by no means unknown fordamages to be awarded to a widow for the loss she sufferedon the death of her (first) husband, while she is happilymarried to a wealthier husband. In America it is notunknown for a w idow to be married to husband no. 3before her claim to damages for the loss of husband no. 1is disposed of. If the case goes to court, the fact of theremarriages then has to be concealed from the jury w ho aresometimes faced with a widow dressed in black, and carry-ing the prescribed handkerchief, with which she wipes hereyes delicately from time to time. We avoid this farce inEngland — but the damages still have to be assessed asthough she had not remarried.

In one extreme case a wealthy man had made substantialdonations amounting to some .£40,000 to a child, and hadthen taken out life insurance to cover the risk of early deathwith a consequent liability for ^17 ,000 additional deathduties. W h e n he was killed in an accident his family


obtained the benefits of the life insurance, and were able torecover, as an additional item of damages, the ,£ 17,000from the defendant. In other words they obtained the;£ 17,000 twice over, from different sources. Some peoplemay be inclined to say: well, good luck to a plaintiff whorecovers these windfall sums. But before taking this view,it is necessary to remember that the cost of all these dam-ages is ultimately falling on the public, as we shall see inmore detail later.

The cost of assessing the damages

The damages awarded for the injuries the plaintiff has suf-fered, and the probable future effect of these damages onhis employment prospects and indeed, his whole life style,are, in many serious cases, matters of considerable difficultyand trouble to assess. Many medical and consultants'reports may be needed for this purpose, often involvingseveral different consultants (usually one for the plaintiffand another for the defendant), and often being repeatedover a period of time before the claim is finalised. And ofcourse while consultants are seeing patients for this purposethey are the less available for NHS duties. In addition, theplaintiff's more social needs — adapting a house, installingspecial facilities to enable a disabled plaintiff to cope with akitchen or bathroom, and so on — may nowadays beassessed by other experts. This is, of course, a Rolls Royceservice. All these consultants and experts will be privatelyengaged and paid substantial professional fees and expenses.These costs will ultimately have to be paid for by thedefendant (or his insurers) if the action succeeds. If theplaintiff is on legal aid, they will be paid by the legal aidauthorities if the action fails. The care and attention lav-ished on plaintiffs in this situation can be contrasted withthe sort of frugal fare meted out to ordinary social servicesclients.


STRETCHING THE NUMBER

OF PEOPLE YOU CAN SUE

Spouses

Do you know that you can sue your husband or wife fordamages? Well, you may say, (unless you happen to beconsidering divorce) what's the point? The point, ofcourse, is that your spouse won't actually have to pay — aninsurance company will pay. If one spouse injures the otherthrough negligence, the ordinary rules of law now apply.This happens commonly enough when one spouse is dri-ving a car and the other spouse is a passenger in the car.Until 1962 spouses could not sue each other for torts, anduntil 1971 passengers often could not obtain damages forinjuries in car accidents because insurance policies did nothave to cover them. The law on both points having nowbeen altered by Parliament in favour of injured parties, theresult is that a spouse can now claim in this kind of case.

Of course negligence must, as always, be proved. But aspouse who has injured another spouse while driving hasonly to admit that he was going too fast, or failing to keepan adequate look-out, or overtaking dangerously, and thetrick is done. The insurance company may try to argue thathe was driving with all due care, but if he gives evidencein court, they are going to have a hard job defending theaction when it is so obviously in his interest to lose it. Thetwo spouses can, as the saying goes, laugh all the way to thebank — or perhaps take a good holiday on the proceeds. Ofcourse there are also tragic cases where the injuries are tooserious to be a cause for rejoicing, no matter how generousthe compensation.

The same thing can happen with accidents in the home,but before trying it on, check your insurance policy. It isnot compulsory for home insurance policies (as opposed tomotor policies) to cover liability to other members of the


family, and some do not do so. Bear in mind also, that evenin the case of motor accidents, a spouse can only obtaindamages from the insurance company if the other spousewas negligent in the course of driving or using the car. If yourspouse nags you to distraction while you are driving, andan accident results in which you are injured, you can't getat the insurance company because they are only answerablefor negligent driving, not for nagging spouses. But the pas-senger-spouse may be able to get at the insurance com-pany, because a reasonably careful driver should not allowhimself (or herself) to be distracted by a nagging spouse. Itis also necessary to remember that you cannot sue yourself.If you are entirely responsible for your own injuries thereis no way you can get damages for the result, though (as wehave seen, p. 43) with a bit of ingenuity your lawyer maybe able to show that you were not solely to blame, and thatsomebody else was partly to blame.

Everybody understands perfectly well what is going onin these inter-family cases. Introducing the law of negli-gence is purely a device to help the parties get compensa-tion from an insurance company — it is not intended to betaken seriously. But, of course, in the end the law'srequirements do have to be satisfied if damages are to beobtained in this way so a family can obtain damages if onespouse injures the other, but not if one spouse injures him-self, or herself. There is no sense in this.

Suing the estate of a deceased wrongdoer

At one time you could not sue the estate of a deceasedwrongdoer at all. The idea was that a tort was a personalwrong, and if the person who committed it had died therewas no point in allowing an action. But then road accidentsbecame common, and in a bad road accident the person toblame may himself be killed in the accident. What wasmore, insurance became compulsory for road accidents, sothere seemed no reason why the insurance company


should not pay even if the wrongdoer was dead. So the lawwas changed in 1934 and actions of this kind came to bepermitted.

That may have been a perfectly reasonable reform, but italso applies to family cases, which may sometimes producessome pretty odd results. For instance if a husband injureshis wife in an accident in which he is killed, she can stillclaim against his estate (and therefore his insurance com-pany) which is perhaps understandable; but if they are bothkilled in the accident, their dependent children can sue theestate of the parent who was driving and get damages forbeing deprived of their other parent. So if both parents ofa young child die from natural causes, there will be nocompensation, but if one kills the other by negligence,damages can be obtained. Again, there seems no sense inthese distinctions.

The liability of employers

There is a very important set of rules in the law known asthe doctrine of vicarious liability. Under this doctrine anemployer is legally answerable for the negligence of anemployee committed in the course of his employment. Itis not necessary to show that the employer was himself oritself in any way to blame or negligent for what has hap-pened. Employers may, of course, be careless in their selec-tion of employees, or in failing to supervise themadequately, or in failing to check their qualifications, andso on. Even these forms of negligence may well be thenegligence of other employees, more senior ones, such asmanagers and so on, but it is possible for companies to benegligent on their own account, as it were, and not just asa result of what their employees have done, so companiesmay be liable either for their own negligence, or vicari-ously liable for the negligence of their employees. Butwhen the plaintiff claims against an employer under thedoctrine of vicarious liability he does not have to show that


the company was itself negligent at all. All that he has toshow is that the person who was negligent was anemployee, and that he was working on the job when thenegligence occurred.

This means that a huge number of accidents and injuriescan and do lead to claims against employers. Every busdriver, every lorry driver, every factory worker, may makehis employer liable if he negligently injures any person inthe course of his employment. This doctrine is by nomeans new — it has been with us at least since 1700; andeven its great expansion was mostly achieved in the lastcentury. One very important change was, however, intro-duced in 1948. Until then, one employee could not gen-erally sue the employer for the negligence of anotheremployee if they were in "common employment", that is,working together. This meant that the doctrine of vicari-ous liability was most important, generally speaking, increating legal liability to the public - to those outside theemployment or business in question. But since 1948,employers have been liable to one employee who isinjured by the negligence of another employee, and thiskind of liability has vastly increased in scope and import-ance over the years. A good proportion of all work acci-dents (at least ten percent and possibly many more) todaylead to claims for damages against the employer.

Apart from this one major change in the doctrine of vic-arious liability, what has happened in this century has beenlittle more than minor tidying up — though once againalways in favour of plaintiffs. For example, one way inwhich the doctrine has been extended in the past forty orfifty years concerns the definition of an employee. At onetime professional people like doctors were thought to beexcluded from the doctrine, but that idea has long sincedisappeared. Doctors employed by hospitals are nowtreated like any other employee. GPs, it is true, are notemployed by the Health Service, but are self-employed,


but anyhow that does not matter for our purposes, becauseeven if they have no employer, they have insurers.

The second way in which the doctrine has beenexpanded in modern times is by stretching the concept ofthe employee's "course of employment", that is, by treat-ing the worker as engaged on his job even when he wasdoing something he clearly should not have been doing.The doctrine is easiest to understand, and perhaps to jus-tify, where the employee is actually engaged in doing thevery thing he is employed to do when the negligenceoccurs, but today the doctrine is very much wider thanthis. An employer may be liable, for instance, even wherethe employee has been doing something entirely for hisown purposes and benefit, while still generally doing hiswork. So an employee at a filling station who smokedwhile on duty, and caused a fire, rendered his employerliable. And the employer may be liable even where theemployee does an act which is expressly forbidden, so longas the employee is still engaged in the general class of actshe is employed to do. An employee who is, for instance,required to clean some electrical machinery in a factory,but is expressly forbidden from doing so unless themachine is first switched off, may still render his employerliable if he cleans the machinery without switching it off.The nurse Beverly Allitt who killed and injured severalpatients by deliberately giving them the wrong drugs, orexcessive doses, was clearly acting in the course of heremployment as a nurse in the legal sense, and so the hos-pital had to accept liability for her actions. (If she had triedto perform an operation on a patient, that would, however,have plainly been outside the course of her employmentaltogether.) Similarly, prison warders who place a prisonerin a "strip cell" and forcibly strip him contrary to PrisonRegulations may render the Home Office liable for theiractions, so long as they amount only to a "misguided andunauthorised method of performing their duties" rather


than acts right outside the scope of their normal duties. Itis only where the employee is off "on a frolic of his own"as a famous judgment once expressed it, that the employerwill not be liable.

Vicarious liability also applies to partners, who are liablefor each other's actions in the course of working forthe partnership. This is one of the things that causes suchtrouble with professional firms as we saw earlier (p. 64).Very large firms of accountants may have several hundredpartners, and each partner has to accept full legal respons-ibility for the liabilities of his colleagues in the course oftheir work. The partners are all liable for their employeesas well, under the ordinary rules of vicarious liability.

The law of vicarious liability does not exonerate theemployee guilty of negligence from liability — all that it doesis to make the employer liable as well as the employee.Since the plaintiff is entitled to sue any of the parties who islegally responsible to him, he can sue the employer alone,and recover in full from him even though the employer isentirely free of any moral responsibility and the wholeblame rests on the employee. In legal theory the employer,having paid the damages, could claim reimbursement fromthe employee. But in practice this never happens.Employers do not want to antagonise their workforces bymaking such claims, and in the social and employment con-text the legal culture which treats negligence as a blame-worthy fault is entirely absent. Most people assume thatordinary acts of everyday negligence (such the careless dri-ving of a lorry) are not seriously blameworthy acts, and thatit would be unfair to penalise their employees for commit-ting such acts, for which anyhow, the employer is usuallyinsured. Where the fault is more serious the employee maybe disciplined, or even dismissed for his acts, but it is almostunheard of for the employer to claim that the employeeshould share in the liability to third parties. In fact there isa widespread agreement between insurers and employers

7« MORE S T R E T C H I N G OF THE LAW

that these claims will not be pursued. This means that the damages system encourages too great a laxity about the actual causes of accidents, and it distracts from the important task of trying to discipline or punish those who are responsible for injuries and losses. The law is so concerned to see that the plaintiff gets his money that it does not worry overmuch about who pays it.

M O R E S T R E T C H I N G OF THE PEOPLE Y O U C A N SUE:

P U B L I C A U T H O R I T I E S

During the past fifty years there has been a huge growth of liability on the part of public authorities under the law of tort, but it is also in this area that in the past decade or so the judges appear finally to have decided to take a stand against some of the most extreme forms of stretching.

The first major development here was the passing of the Crown Proceedings Act in 1947 which rendered the state, or the government, liable to pay damages for the negligence of their employees in pretty much the same way as all ordinary employers. This Act does not apply to employees of other public bodies, such as the former nationalised industries, local authorities and so on. These public bodies are legally distinct from the Crown, or central government, and have always been liable for the negligence of their own employees, in the same way as ordinary companies. What the 1947 Act did was to extend this form of liability to the employees of the central government itself - that is civil servants and government officials. At first post office workers were also covered by the 1947 Act though now that the Post Office is a public corporation these liabilities have been hived off to that body; the armed forces were originally excluded from the 1947 Act but (as we note below) that too has recently changed. Later, other Acts have created vicarious liability for other public officials, not all of who were originally covered by the 1947


Act. For instance, since 1964 the local police force (in theperson of the Chief Constable) has been vicariously liablefor the acts of police officers.

The 1947 Act was at first hailed as a welcome gain forthe small person against the Goliath of big government.When the Labour government of that time seemed aboutto turn Britain into a socialist state, so that more and morepeople were being employed by central government, manypeople thought it unfair and wrong that you could not suethe government for the negligence of these employees. Upto a point this complaint was justified, and in the case ofordinary everyday accidents (like motoring accidents) it isno doubt fair enough that the government should be liablein the same way as everybody else. If the law is a mess here,it was even worse before. But it was perhaps naive oflawyers to believe that you could simply equate the posi-tion of the government with that of ordinary businesses,though it has taken some time for the problems to begin toreally show up. Recently it has become clear that the lawmust draw some distinctions between the activities ofgovernment and the activities of ordinary businesses. Oneobviously cannot have people suing the governmentclaiming (for instance) that the Chancellor of theExchequer has been so negligent in his economic policiesthat the plaintiff's employer has become bankrupt, and hehas become unemployed. What is more, if the police ser-vices and the fire services and all other public services areto be judged as if they were ordinary businesses, they mayfind themselves held liable for negligence because theyhave not spent enough money on safety precautions — but"their" money is in fact taxpayers' money, and it is thegovernment, representing the taxpayers which decideshow much money they should have. Judges surely cannotbe allowed to override government decisions about theallocation of money to public bodies.

In the past decade or two there have been numerous


cases brought against the government and other publicbodies which have raised some of these very difficult ques-tions. One of the first main cases was the Dorset Yacht case(about the escaping Borstal boys who damaged the plain-tiffs' yacht), which has already been referred to (p. 51).This was treated very much as an ordinary action of negli-gence in which the Home Office officials were held to benegligent in allowing the boys to escape. But the case haddeeper problems which later began to surface. One of theseproblems is that cases of this nature may involve policydecisions by governments or other public bodies to whomthese policy decisions are constitutionally entrusted in oursystem of government. If the Home Office decides as amatter of policy that Borstal boys should occasionally beallowed out on outings to encourage them to develop asnormal citizens, it is worrying if judges are then allowed todeclare that their actions amount to negligence because itinvolves too great a risk to the public. Recently the courtshave become sensitive to this kind of argument and arenow more careful to avoid entrenching on these policydecisions, but of course lower-grade activities or decisionsmay still be judged to be negligent.

Another problem is the financial one, referred to above,and more needs to be said about this in due course.Judgments for damages against the government or otherpublic authorities have to be paid for by taxpayers, and itmight be thought that they have some real interest in see-ing, therefore, who the money is paid to, and how muchis being paid. For example, police and health authoritieswhich now pay millions of pounds in damages every yearfor the negligence or other torts of their employees arefinding their budgets depleted by these huge payments.Every pound they pay in damages is a pound less availablefor their ordinary tasks — preserving law and order, or thetreatment of other patients. In really bad cases a healthauthority may pay out a million pounds for a single patient


- which of course means longer waiting lists, cancelledoperations and all the rest of it, for many other patients.The question of priorities necessarily arises. Are parentswho have suffered trauma and emotional disturbance, forinstance, as a result of the death or injuries suffered by theirchildren, morally entitled to half a million pounds if thismeans that really sick patients have to have their operationscancelled or postponed?

And what about huge damage payments by the police tomembers of the public who claim that they have beenwrongly arrested? Because of traditional sensitivity shownto cases involving infringements of personal liberty, a per-son may recover many thousands of pounds in damagesagainst the police for wrongful arrest, even if the arrest lastsonly a few hours, even if he is completely unhurt physically,and does not even suffer any emotional trauma or shock. Heis entitled to these large damages because his basic rightshave been infringed — strictly these are not cases of negli-gence at all, but for our purposes they raise many similarquestions. In 1995 the Metropolitan Police alone paid out,£i .6 million in damages - nearly double the figure for 1990,and eight times the total ten years' earlier.1 It is hard tobelieve that police malpractices have increased so much inthese ten years - what seems to have happened rather is thatmore people sue and higher damages are awarded. And thisis happening at a time when police resources are stretchedas never before by the levels of crime. There is particularabsurdity in these huge payouts in cases against the police,because this is one of the rare cases in which damages areawarded for the purposes of punishment — the law recog-nises that punitive or exemplary damages may be awardedin cases of this kind where the plaintiff's basic constitu-tional rights have been flouted in a flagrant manner.Unfortunately, since the damages are always awarded

1 Sunday Telegraph, I December 1996, p. 9.


against, and paid by, the employers — that is the policeauthority, which in effect means the public at large — thewrong people are being punished. Individual policemen arerarely even disciplined for their behaviour in cases of thiskind, let alone made to pay any of the damages. In early 1997the Court of Appeal decided that exemplary damagesagainst the police should not exceed £50,000, but they didnot question the appropriateness of such awards.

As we have noted, the judges do appear to have decidedfinally to call a halt to some of the more extreme types ofcase in which it has been sought to render public authori-ties liable for damages for negligence. For instance, theyhave now overruled a series of cases in which local author-ities were held liable to buyers of houses who found thattheir houses had been badly built, contrary to the localauthority bye-laws. Local authorities, of course, employinspectors whose job it is to ensure that buildings complywith the bye-laws, but inspectors are sometimes negligent,and may fail to notice breaches of the bye-laws which theyshould notice. At first it was concluded from this that thelocal authorities who employed the inspectors should bevicariously liable for these acts of negligence. These deci-sions have now been overruled, though mainly on theground that the housebuyer's complaint is really that he hassuffered economic loss only (even if the house is physicallyfaulty, the actual loss to the housebuyer is the moneyneeded to put the faults right), and this (as we have seen) isnot normally actionable. But it might have been better ifthese decisions had been overruled on broader grounds,because it is not really obvious why the local authorityshould be any more liable if the housebuyer is physicallyinjured by a part of the house collapsing on his head.Obviously the real responsibility for the bad constructionin all these cases is that of the builder, not that of the localauthority. But (as we have already seen) you can alwayssue any one of the people responsible for injuring you or


causing you loss, and it does not matter that somebody elseis more responsible. Since local authorities are always able topay damages awarded against them, and are easy to find,lawyers prefer to sue them than to sue builders who maybe small-time contractors without resources to meet ajudgment, and who may even have disappeared or goneout of business.

The intelligent layman may well think that in this kindof case, more effort should be put into seeing that the realresponsibility is met by the builders responsible, and theintelligent layman would be entirely right. But the law ofdamages is extremely uninterested in seeing that the partiesreally responsible for causing the damage should pay forwhat they have done, it is only interested in seeing thatevery effort is made to enable the injured party to recoverfrom someone, no matter who. Fortunately, there have beensome moves in the direction of placing liability on buildersof new houses for faults in construction, through theNational House Builders' Council, and that may well needfurther development. But for the moment anyhow, localauthorities can breathe more easily over these cases.

Another very important decision of the House of Lordsonly last year2 has put important limits on the possibility ofactions against highway authorities for failure to eliminateor reduce dangers on or adjacent to the roads for whichthey are responsible. Although highway authorities can inprinciple now be held liable for failure to repair, thisdecision involved an attempt to make the authority liablefor failure to improve the road in the interests of road safety,by removing a bank of earth which obstructed vision at ajunction. It can be seen easily enough that if the law startsgoing in this direction, it is on a very slippery slope indeed— are we going to see judges decide that it would be neg-ligent of a local highway authority not to build a new

2 Stovin v. Wise [1996] 3 All ER 801.


roundabout here, or to install traffic lights there, or perhapsto turn a single carriage road into a dual carriage road? Yet,as we know, the sympathy of judges for injured accidentvictims, and their desire to see them compensated, areoften so great that they are under constant pressure to findthat someone, it hardly matters who, is liable for negligence.Fortunately, this decision appears to show the higher courtsat least determined to leave these matters to be decided bylocal authorities, and not by judges, but it was a close runthing - the House of Lords' decision was only made bythree judges to two.

Another important decision of the House of Lords in1995 is now under challenge. In this case it was held that alocal authority which fails to take children into care orotherwise protect them from abuse by their parents cannotbe sued for damages by the children even if negligence isproved. The Official Solicitor is planning to take this caseto the European Court of Human Rights,3 which meansthat the taxpayer is paying the salary of an official who seesit as his job to try to force the taxpayer to pay damages tochildren who have been abused by their own parents.Truly, this is a Gilbertian situation.

The possibility of police forces being held liable for theirfailures (as opposed to ordinary acts of commission or pos-itive acts of negligence) has also been firmly scotched bythe courts. In 1988 the mother of a young woman who wasmurdered by the notorious "Yorkshire ripper" (who killedthirteen women and tried to kill another eight) sued thepolice for failing to arrest the ripper when (so she claimed)they had sufficient evidence to identify him long beforeher daughter was killed. Once again, it will be seen thepolice were not the actual parties responsible for thekillings; the argument simply was that they had negligentlyfailed to prevent the killings. The House of Lords threw

3 The Times, 4 January 1997, p. 2.


out the claim,4 holding firmly that the police could not bemade liable in such a claim, even if they had been negli-gent. One of the main reasons for this sort of holding is thatit is impossible to discuss what the police should do withouthaving regard to resources. And here, as we saw earlier, itis important that judges should not impose their views onhow much money public bodies ought to spend, becausethose sorts of decisions are constitutionally made inEngland by Ministers and Parliament. In the US wherejudges have traditionally wielded much greater powersthan in England, judges have frequently forced local stateauthorities to spend huge sums of money (which theytherefore have to raise in taxes) to improve standards inmental homes, prisons and similar institutions. This is oneAmerican road we do not need to go down. In England itis usually accepted that judges have no business tellingMinisters or other elected authorities how much moneythey should spend (and therefore what taxes they need toraise) though it must be said that some recent decisionshave got very close to doing this sort of thing.

All this does not mean that the police are not still liablefor ordinary acts of negligence like careless driving, or,indeed, other torts like wrongful arrest, committed bypolicemen. What it means is that they cannot be madeliable for failure to prevent crime, at any rate in the ordin-ary way, though in special circumstances (for instance ifthey know that a person is threatening the life of a partic-ular individual) they may possibly come under a liabilityfor failing to protect that person. If the courts allowed suchclaims for negligence more widely it is easy to see what aspate of litigation might follow. Have you been injured bya drunk driver? No matter, you could sue the police whoought to have stopped him. Have you been burgled?Perhaps you could claim for negligence because there was

4 Hillv. Chief Constable of West Yorkshire [1988] 2 All ER 238.


no bobby on the beat. Have you been mugged? Perhapsthe criminal was previously arrested and released by thepolice without charge, or let off with a caution - then youmight be able to argue that they were negligent in not tak-ing him before a court. Fortunately, claims of this kind arenow unlikely to succeed. There may, of course, be difficultborderline cases, such as where the police respond to anemergency call but are so dilatory and inefficient in doingso, that a serious crime is committed which they could per-haps have prevented.

Things might have been worse still: suppose ParoleBoards could be sued for negligently recommending therelease of someone who goes on to commit more crimes?Or suppose (as happened in a case in 1996) that magistratesrelease a person on bail despite strenuous police objectionsand the accused proceeds to commit a murder — should themagistrates be liable for negligence? It seems safe to say thatsuch actions would today have no chance of success.

It will be noticed that many of the difficult cases referredto above concern omissions to act by public bodies. Now itis paradoxical that the more things that governments do,the more frequently they try to protect the public frominjury or other wrongs, the more likely it is that they willbe criticised and attacked for not doing still more. If gov-ernment public health authorities try to prevent the spreadof infectious diseases, someone is sure to criticise them, andperhaps to sue them, for not taking steps earlier and moreeffectively to control a particular outbreak. If governmentsset up bodies to regulate and control fraud, in order to pro-tect the public, they will certainly be open to criticism andoften to legal action for not taking more effective steps toprevent fraud in a particular case. If governments establishfire services to put out fires, they will surely be criticisedand perhaps sued for not fighting a particular fire moreeffectively, or putting it out sooner. If governments (orlocal councils) grit the roads in severe weather conditions,


they will be sure to be criticised and sometimes sued fornot gritting them sooner or in less severe weather condi-tions.

These may be quite natural reactions on the part of thosewho have been injured (as they think) by the failures ofgovernment or government-established bodies, but whengovernments take steps to protect members of the publicagainst certain losses or injuries it does not follow that theyshould have to pay damages if their protective measures failto work properly or efficiently. There is nothing absurd orunreasonable about setting up machinery to protect thepublic in various ways, while also refusing to compensateindividuals who are injured or suffer losses when themachinery fails to work. In fact once it is appreciated thatthe damages system is fundamentally an insurance system(as appears more fully in Chapter 5) then the argument forholding the government liable for damages when theirprotective arrangements have failed to work, is seen to be,in effect, an argument that the government should providefree insurance to protect the public against losses andinjuries. But there is no such thing as free insurance, so ifthe government is liable to pay damages, the public willhave to pay for the insurance being given by the govern-ment.

So it must be understood that even when the govern-ment tries to protect the public against risks and injuries,these risks and injuries may still be the kinds of thingspeople just have to learn to accept, unless they can protectthemselves or their property, for instance by insurance orin some other way. Merely because the government pro-vides a fire service, for instance, does not mean that thegovernment is taking on responsibility for insuring housesagainst fires which they fail to put out. Merely because thegovernment tries to prevent children from being abused bytheir parents does not mean that the public should have topay damages to those children if they fail — though the


Official Solicitor wants to persuade the European Court ofHuman Rights otherwise.

Of course governments and government-establishedpublic bodies should not be immune from criticism for theway they have failed to use their powers in particular cases,but an action for damages is a very poor weapon for inves-tigating whether public bodies have behaved well or badly.Because its main purpose is to compensate those who suf-fer injuries or losses the whole of the law becomes skewedto these purposes; and if the real purpose of the action is toinvestigate the efficiency of the body in question it cannotbe done well by these means. Apart from anything else,payment may be offered to settle the claim out of court,and the worse the behaviour of the public body in ques-tion, the more likely it is that any liability will be met bysuch an offer of settlement. It is partly for these reasons,partly for more complex reasons perhaps, that judges arenow beginning to acknowledge that there are great prob-lems in expanding the liability of public bodies too freelyin these negligence claims.

But many claims of this kind have still to be litigated andfought every inch of the way, often at great expense to allconcerned. For example, problems have recently beenraised about the local fire authorities, and are currentlybeing litigated in a series of cases which may well eventu-ally go to the House of Lords. Here the problems areslightly different from some referred to above, but theclaims are even less meritorious. Because most fire damageis covered by the property owner's insurance, he will notnormally be interested in claiming that the damage wasworse than it should have been because the fire brigade wasnegligent in not putting the fire out quickly enough or inthe most efficient way possible. But the property owner'sinsurance company is itself legally entitled to bring a claimin his name (under the doctrine of subrogation which isexplained later, p. 131) and they may well be interested in

MORE STRETCHING OF THE LAW 89suing the fire brigade, or strictly the local authority whichemploys the firemen, under the vicarious liability system.If many of these claims succeed the net result will be that apart of the cost of fire damage will be transferred from theproperty owners' insurance companies onto the shouldersof the local authority taxpayers. (Of course, in the process,a huge additional bill in legal costs will be incurred, so thatif insurance companies recover say ̂ 10 millions a year, thebill for the local authority will be jfio million plus legalcosts of probably another five or six million.) All this showswhat happens when the legal system gets out of control.The wrong people will get compensated, the wrongpeople will pay, and only the lawyers will benefit.

The armed forces

As noted above, members of the armed forces were origi-nally excluded from the right to sue under the CrownProceedings Act of 1947, so that one member of the ser-vices was not permitted to sue the Crown (or the govern-ment, or the taxpayer, in other words) for injuries causedby the negligence of another member of the armed services— ordinary members of the public could sue, but not mem-bers of the services themselves. One very good reason forthis exclusion was that members of the services injured onduty were entitled to pensions, as were the dependants ofthose killed on duty. But as the culture of damages grew,people began to question the immunity. Why should notmembers of the armed forces be entitled to the samebonanza as other members of the public if injured on duty?(One is reminded of the story of the young child who criedwhen shown a picture of ancient Christians being eaten bylions in the Coliseum, because one poor lion did notappear to have an ancient Christian to eat.) The inevitableconsequence ensued, though in this case it was Parliament(supported by the public) which was to blame, not thejudges. The Crown Proceedings Act was amended in 1987


by a private member's bill, to allow members of the ser-vices to sue for damages when injured by the negligence ofanother member. It is worth adding that the new Act doesnot deprive a serviceman who gets damages of his right toa service pension in respect of the same accident.

A small clause in the amending bill provided that the extraexpenses incurred as a result of the bill by the armed forces(that is, the taxpayer) would be met out of sums to be pro-vided by Parliament in the future. Members of Parliamentwere appalled when they were told what this actuallymeant. It was estimated that the cost of the Bill would beover £13 million per annum, of which almost half would goon legal costs. It was also estimated that twenty-four newlawyers would need to be employed by the Ministry ofDefence to handle these cases at a cost (in 1987) of approx-imately ^700,000 a year. That so many Members ofParliament were shocked by these figures is a shamefulreflection on their own ignorance, since the facts about thelegal costs of the damages system have been well known atleast since the present writer's book, Accidents, Compensationand the Law was first published in 1970, and certainly sincethe Report of the Pearson Royal Commission was publishedin 1978. It is deplorable that the law was so lightly amendedin this fashion on the assumption that the system of legalliability for damages is a fair and efficient way of compen-sating the injured.

In 1996 this change in the law led to a case beingbrought5 which is surely entitled to the prize for the mostundeserving damages claim of the decade (which is sayingsomething). I will quote from the law report:

"The plaintiff was a soldier serving with a British Armyartillery unit during the Gulf War. While his unit wasdeployed in Saudi Arabia firing a howitzer into Iraq he wasordered by the gun commander to fetch some water from in

5 Mulcahy v. Ministry of Defence [1996] 2 All ER 758.


front of the gun carriage. While he was in front of the gun thegun commander negligently caused the gun to fire. The dis-charge knocked the plaintiff off his feet and adversely affectedhis hearing."

So the plaintiff claimed damages from the Ministry ofDefence (the taxpayer) for the alleged negligence of hisgun commander in adversely affecting his hearing. In thiswar, it will be remembered, British service personnelrisked, and in some cases, lost their lives. Casualties were,fortunately, very light, but there were some deaths andsome injuries. Some airforce personnel were also capturedby the Iraqis and suffered ill-treatment at their hands.Naturally, none of these people could claim damagesbecause the Iraqis and not other British servicemen wereresponsible for the injuries and deaths. This was, moreover,a time when the British Army was a volunteer force, anddid not include conscripts, so one might have thought thatsome degree of acceptance of risk was implicit in the merefact of volunteering. Yet this claim for damages foradversely affected hearing was brought in an English court,and was permitted to proceed by a Circuit judge. Only inthe Court of Appeal was the action thrown out on theentirely sensible ground that military personnel could notbe made liable for what they did to other personnel in theheat of an actual battle. (Of course the action cost the tax-payer something anyhow, in legal fees for the Ministry ofDefence, and possibly — this cannot be judged from the lawreport — for the plaintiff too if he had legal aid.)

The case deserves a little further thought. Why was it soeasy to whip up enthusiasm for this change in the CrownProceedings Act, when it could give rise to such absurdi-ties? The answer, it has to be said, is because the promot-ers of the bill made good use of the procedure of selectivecomparison. When people are injured in accidents, some ofthem get damages. It seems unfair if those similarly injuredin similar circumstances, can't get damages. So if an army


lorry driver injures two people in an accident caused by hisnegligence, one of whom is a member of the public and oneis another member of the forces, it seems unfair to some ifthe former can get damages and the latter cannot (eventhough the whole reason for this is that the latter gets a pen-sion instead). But this argument requires a most amazingdegree of selective comparison. In the Gulf War case referredto above our sense of fairness is surely profoundly affected bythe comparisons we choose to make. We may say: this per-son has had his hearing affected by being unfortunatelyinjured in an accident by the negligence of his officer; eventhough this was in a battle the officer should have been morecareful; after all if this accident had happened back inEngland in a factory instead of on the battlefield, the plain-tiff would have been entitled to damages. If we follow thisline of comparison, the conclusion admittedly seems to bethat it is unfair to deprive the plaintiff of damages. But wecan draw a different set of comparisons, as I have tried to doabove. We can say: this was a war, other people were killedand injured and captured, and none of them is entitled todamages. Why on earth should this plaintiff get any damages?Surely in a case like this, the second set of comparisons ismore relevant than the first.

This process of selective comparison seems to be one ofthe driving forces behind much of the stretching of the lawthat has occurred. But it is a very odd process, statisticallyspeaking. It always involves comparing a particular victim'sposition with that of others who are entitled to damages.But, for every one or two persons who recover damages,there are perhaps eight or nine others injured in accidentswho do not recover any damages, and probably ninetyothers who are disabled or incapacitated from other causeswho also do not obtain any damages. When comparisonsare drawn for the purposes of a particular case, why do wenot compare that case with others where the victims do notrecover damages, since the great majority do not?


If when we are faced with a particular case, we comparethe position of the plaintiff with those who are entitled torecover damages — the technique of selective comparisonadopted by counsel arguing cases for injured plaintiffs, orby those promoting a change in the law to give more vic-tims the right to claims damages — there will (it must besaid) be no logical stopping point at all. Surely everybodywho suffers from similar disabilities or incapacities ought tobe compensated in the same way. But if there is one thingwhich is clear about possible reform, it is that society couldnot afford to compensate everybody who suffers disabilitiesand incapacities by the levels of damages awarded in tortcases. One glance at the figures given for the extra costs ofthe armed services amendment to the Crown ProceedingsAct should be enough to show that. Quite what should bedone is a question I address in Chapter 8. What I am con-cerned to do here is to suggest that the kind of changeintroduced by the "reform" of the Crown Proceedings Actis the wrong way to proceed.

HAS THE STRETCHING GONE TOO FAR?

It may be argued that things are not really as bad as Ihave made out. After all, in many of the most extremecases I have referred to above, the claims have beenthrown out by the courts. They appear to be trying tohold the line. So is there really such cause for worry?The answer is yes, there is. For one thing, as I shall showlater, the whole system is built on such rotten founda-tions that even if we leave aside the more extreme andabsurd claims now sometimes being made, there is amplecause for concern. The basic stretching of the law hasalready taken place and is far too deeply rooted to beeradicated by the judges. We have already moved so farfrom the simple idea of a morally guilty person beingmade to pay damages to a morally innocent person for


his injuries, that the whole system is shot through withabsurdity and unreality.

But some of the signs of further stretching that have beendiscussed in this and the previous Chapter are even morealarming — and it may have been noticed how many of themare very recent indeed. Even though some of the worstclaims have been rejected by the courts, the very fact thatthese could be brought at all, often reaching the highestcourts, and sometimes succeeding in lower courts beforebeing rejected on appeal, is very worrying indeed. Many ofthese cases are brought under the legal aid system so the pub-he is paying the high legal costs involved for the plaintiff, andoften (where a public body is the defendant, as it frequentlyis these days) for the defendant too, where the claim eventu-ally fails. What is more, many of the cases discussed here,though ultimately rejected, show the law still on a knife edge- the cases have often been turned down by appeal courts,divided three judges to two, or by appeal courts overturninga lower judge who has allowed the claim. The fact thatlawyers feel these cases worth bringing suggests that there isa legal head of steam building up behind many of theseclaims, and it is known that other major cases are pending -such as those against fire authorities. Clearly, many lawyersfeel that if they go on hammering at the doors long enough,more claims will be allowed, however absurd and extremeand farfetched they may appear to some.

Moreover, as we have already noted, the great majorityof claims for damages never reach court but are settled byagreement in advance of a trial. When cases are settled inthis way claims may well have a real nuisance value andlead to substantial damages being agreed even though theylie at the very frontier of legal liability. Defendants may beadvised by their lawyers that no similar case has succeededbefore, but the climate of legal opinion and the continuouspressure to expand liability may persuade them that thereis a real risk of the case succeeding if it proceeds.


There is another worrying thing about the stretching ofthe law in these damages cases. The territory gained byplaintiffs' lawyers in cases they win is never (or hardly ever)given up; the arguments lost can be fought again and again,until some victories are permitted. In other words thefrontiers of legal liability are always being pushed back.Occasionally a reverse here or there means the frontier isstabilised in certain types of case, while lawyers turn theirattention to other cases, but it is very rare indeed for any ofthe territory so gained to be given up. There is only onemajor area of the law in which a significant retreat hasoccurred in modern times — the cases imposing liability onlocal authorities for negligent inspection of houses badlyconstructed by builders have been overruled. But the pres-sure for expansion of the law elsewhere is relentless. It istime to call a halt, and look back on what we have done.

4. WHO RECEIVES DAMAGES?

W E now need to ask who actually collects the damagespaid out as a result of trials and settlements? In the past fewchapters we have been discussing what the law provides,when injured people are entitled to damages. But beingentitled to damages in legal theory does not necessarilymean that you will get them in practice. There is a wholerange of factors which affects the question of who willreceive damages in practice. One of the most important ofthese factors is the existence of adequate (or better) alter-native ways of obtaining compensation, and we need tostart •with this.

Everybody knows that claiming damages is likely to betroublesome and possibly expensive, and certainly a long-winded process. Anybody who can claim compensationfor his losses or injuries from other sources is likely to doso, in preference to claiming damages, unless he can get agreat deal more money by claiming damages. Among otherthings this means that very few legal claims for damage toproperty (for example, damage caused by fire) are evermade or pursued. Since most property of any value isinsured, and since claiming against your own first partypolicy for property damage is relatively painless and quick,there is rarely any point in claiming damages for propertydamage. What is more, you can't generally get moremoney by claiming damages in this situation, because mostforms of first party insurance will pay you as much as youcan get by claiming damages.

It is true that insurance companies can, and sometimesdo, bring "subrogation" claims for the amounts they have

WHO RECEIVES DAMAGES? 97

paid out in property damage first party insurance, so thefact that the owner of the property can get his compensa-tion easily and quickly from his own insurer does not nec-essarily mean the end of any possible claims (subrogation isexplained more fully later, p. 131). But by and large thesesubrogation claims are rare compared to the amount ofproperty damage there is. Even insurance companies knowthat in the long run subrogation claims which they win willprobably be balanced out by subrogation claims that theylose. It is jokingly related that one insurance company,having paid off its first party insured, tried to make a sub-rogation claim against the party responsible for a fire, onlyto discover that he had a third party insurance policyagainst that liability — and they were the insurers under thatpolicy too! Since they couldn't very well sue themselves,they gave up that idea pretty quickly. So it is hardly sur-prising that claims for property damage don't figure verylargely in the statistics or the law books. And we can nowput them on one side as having very little statistical import-ance in the overall picture.

We shall also put aside here other claims which do notarise from personal injuries because there is very little sta-tistical information about them. Obviously, as we havenoted already, such claims may come from a variety ofsources — consumer claims, claims for breach of contract,claims for bad advice and so on. But we know little aboutthe overall incidence of such claims. We can also put onone side some of the more bizarre claims which have beenreported in the press in recent times, some of which havebeen referred to in earlier chapters, such as the claims fordamages for being badly educated by incompetent schools.Claims of this kind may well be worrying for manyreasons, but they still remain a small proportion of theclaims which are made every day and which fill the lawcourts and lawyers' coffers. The overwhelming proportionof these claims remain what they have been for about fifty

98 WHO RECEIVES DAMAGES?

years, namely claims for injuries received in road accidentsand in industrial accidents.

Even with these sorts of injuries many people will notmake claims because they have simpler and easier forms ofcompensation at hand. As we have seen, there are basicallythree components to a claim for damages for personalinjuries, (i) earnings losses, (2) medical and other healthcare expenses, and (3) damages for non-pecuniary loss, thatis for pain and suffering and loss of amenities. Now verylarge numbers of relatively minor injuries produce noearnings losses and no medical expenses either. The reasonwhy they produce no earnings losses is that large numbersof people in modern societies are anyhow not earners, butare housewives, or children, or students, or retired, orunemployed. Even among those who are earners, hugenumbers of employed people are paid wages or salaries forshort periods of sickness or injury — virtually anyone work-ing in public service employment has the right to somemonths of sick pay, and many even in private employmentwill be paid something (if not full wages) when they are offwork for short periods. Medical expenses are, of course, formost people taken care of by the NHS, so lots of peoplewho suffer minor injuries simply have no significant finan-cial losses to claim for at all. It is true that there remains thepossibility of claiming for their non-pecuniary loss, but it isevident that many possible claims of this kind are just notmade in minor cases.

There is some research on the reasons for this - probablyit is due to a combination of factors, chiefly ignorance ofthe possibility of being able to claim for non-pecuniarylosses at all, and a general reluctance to get involved withthe complications of the law when the major problem offinancial loss has already been taken care of. Sometimes,too, people actually blame themselves for their injuries, orat least they do not blame anyone else - it is only whenthey actually get to see solicitors and learn something about


the law that they start claiming that somebody else was atfault.

CLAIMS FOR PERSONAL INJURIES

In the Report of the Pearson Royal Commission publishedin 1978 it was estimated that in 1973 (the last year forwhich we have such serious estimates) about 250,000claims for damages for personal injury were made in theUK, of which about 215,000 were settled by some pay-ment either by agreement or after a trial. Very few of thecases went to trial — only about one percent of them,though that still amounted to about 2,000 trials which inour legal system is actually a lot of cases, and of course, theycost the public a lot of money in judicial time and salaries.In fact most trials in the High Court were at that time per-sonal injury trials. Still, the great mass of claims was settledin the way described in earlier chapters. Of this 215,000,almost ninety percent came from two sources only — roadaccidents and industrial accidents. Claims from a variety ofother sources - medical injuries, other transport accidents,defective products and so on — accounted for the remain-ing ten or twelve percent of the cases. There is no reasonto believe that very much has changed since 1973 thoughthe total number of claims has probably gone up. Theremay also have been some slight increase in the proportionof claims from sources other than road accidents and indus-trial accidents (especially perhaps medical claims) but this isunlikely to have affected the total proportions by morethan the odd percentage point here or there.

It must be stressed that of all the disabled or handicappedpeople in society, about ten percent suffer from birthdefects, about another ten percent have been injured inaccidents, and the remaining eighty percent are sufferingfrom illnesses and conditions of natural origin. Of the totalnumber, only a tiny minority obtain any damages at all —

100 WHO RECEIVES DAMAGES?

the figure was estimated twenty years ago by the PearsonRoyal Commission at about one and a half percent, andthere are no serious later estimates. The position is illus-trated in the following figure.

Accident cases(about 10%)

Damages payment cases(about 1.5%)

Birth defects(about 10%)

All other incapacities(about 80%)

Cases of incapacity and proportion getting damages

We will comment later on the fact that such a tinyminority of injured and disabled people recover any dam-ages at all (pp. 143 ff). Here we need to tackle anotherquestion. Why do such a high proportion of claims comefrom road accidents and industrial accidents? Of coursethese are two of the main sources of accidental injury, butthe accident statistics show that there are also very largenumbers of accidents which occur in other ways - in thehome for instance, and in other forms of transport besidesroad transport - and yet claims for these accidents are rel-atively rare. So too, many people suffer disabling condi-tions or diseases which may be attributable to someone'sfault — industrial diseases, industrial deafness, and so on -and yet these too give rise to very few claims. Why shouldthis be so?


The answer has little or nothing to do with justice, orwhich of the different possible groups of claimants mostdeserve or need financial assistance. It has far more to dowith the characteristics of the legal system. In order tomake a successful claim for damages, a number of hurdleshave to be surmounted. Some of these we have alreadyseen — you usually have to prove fault, and causationagainst the defendant. But there are a number of other fac-tors which are also in practice requirements of a successfulclaim. These are, in particular, (i) that the claim must beprovable, and (2) that the claim must be made againstsomeone capable of paying the damages. In the two par-ticular groups of accidents which give rise to most claims,road accidents and industrial accidents, these two practicalproblems are much more easily surmounted than in lots ofother cases.

ROAD ACCIDENTS

We need to say a little more about road accidents. So manyclaims come from road accidents because these are amongthe easiest claims to make and to prove. This is not, ofcourse, because those injured in road accidents deserve to becompensated more than those injured in other accidents —actually, as we have seen, a substantial proportion of theseclaimants are probably guilty of contributory negligence. Itarises from the fact that road accidents are public affairs,and are the subject of a well regulated and standard set ofpolice and other public procedures.

Road accidents involving injury must, by law, bereported to the police, and indeed in any serious case, thepolice are invariably called to the scene of the accident.They are trained to observe details, take statements andmake careful notes, all of which will help a plaintiff wholater wishes to claim damages. In the case of any seriousinjury, the parties affected will almost certainly be taken to

102 W H O RECEIVES DAMAGES?

a hospital casualty department. There they will encounterdoctors and other medical personnel who are also trainedin keeping careful records. All these are of the highestimportance to the possibility of a successful claim beingmade. They provide independent evidence of the way theaccident occurred, and the nature of the injuries suffered.

In addition to these factors, the law has made everyeffort to ensure that parties so injured will not be defeatedby the inability of those responsible to pay claims for dam-ages. Insurance against the risk of liability on the roads iscompulsory, and every effort is made to enforce that legalobligation. It is treated as a serious offence to drive a vehi-cle uninsured, and you cannot renew your car exciselicence unless you can produce your third party insurancecertificate. And to catch the few cases where drivers floutthe law, there is a special institution called the MotorInsurers' Bureau, set up by the insurance industry, underpressure from the government, to cover the liability. Ifanybody causes an accident on the road through his fault,and is not insured against that risk, the MIB (as it is usuallycalled) simply takes over the responsibility for handling theclaim just as though it were an insurance company, or itpasses the responsibility to another insurer more directlyinvolved, for example, a company which has insured theowner of a vehicle being driven without his permission.Still more special arrangements have had to be made for thecase of the "hit and run" driver because in that kind of case,where the driver cannot be identified at all, you couldn'teven begin to make a claim since you don't know who toclaim against. And you couldn't sue him since you can'tsue someone without first issuing a writ against him, andyou can't do that if you don't know who it is you want tosue. All these difficulties have been got over by specialarrangements with the MIB which accepts responsibilityfor these claims. The MIB draws its funds from the insur-ance industry, which in turn gets its income for these cases


from the compulsory insurance which everybody isrequired to buy. What this means is that the law-abidingmembers of the public who do buy their third party insur-ance are paying for the claims made against those whodon't.

Most people think these are very laudable arrangements- similar arrangements exist in many other countries, andin the UK they are the result of pressure by the govern-ment which has tried to make sure that road accident vic-tims with good claims in law do not in practice gouncompensated. But although the motives behind theseschemes may be laudable, it must be pointed out that theresult is to create a highly privileged class of accident vic-tims. Lots of other accident victims go uncompensated, lotsof victims with good theoretical legal rights to claim, gouncompensated. Is it not odd, for instance, that a childinjured as a passenger in an uninsured car by the negligentdriving of its own father can claim damages against theMIB, while a child injured at home by the negligence ofthat same father acting quite lawfully, cannot? Is it not per-haps also odd that every law-abiding driver has to pay hisshare of the claims made against the MIB, while he has noclaim against anyone if he unfortunately skids off the road,and hits a tree, and so injures himself even if the accidentwas not really his fault, but due (say) to unexpected blackice on the road?

INDUSTRIAL ACCIDENTS

The term "industrial accident" is here used in a broad senseto include all work-connected accidents, even thoughsome of them may occur in offices or even on building sitesrather than in industry itself. Like road accident victims,industrial accident victims are in many respects a privilegedgroup. Here too, special laws exist to protect the victimand to make sure they can make claims for damages


wherever there may be grounds for such claims. First, thereare special laws requiring employers to take all kinds ofprecautions against industrial accidents; then there are spe-cial laws requiring such accidents to be noted and reportsmade to the Health and Safety Executive; then there are (aswith road accidents) special insurance requirements, soemployers must insure against their liability to their work-ers (though there is no MIB for work accidents).

In addition to all these provisions, those injured in workaccidents often have the advantage of trade union assistancefor any claims they may wish to make. One of the lessknown, but most valuable services that many unions pro-vide to their members is to assist them to make claims forcompensation where appropriate. This assistance is some-times very generous, and may enable a claim to be made,or even litigated, without any fear of costs falling on theworker. Indeed, in some respects the unions may offerassistance which is actually more generous than that avail-able under legal aid. Some unions have made a speciality ofassisting their members for new kinds of claims; forinstance the Police Federation have spearheaded many ofthe modern claims for post-traumatic stress.

The result is once again that large numbers of workersinjured in industrial accidents do obtain damages, thoughit is still only a small proportion of the total number ofwork accidents which end with a successful claim.

We must now revert to our point about the practicaldifficulties of proof, because although claims arising out ofindustrial accidents may be relatively easy to prove, claimsarising from industrial diseases are far more difficult toprove. Although it is widely believed that many seriousdiseases (including many forms of cancer and lung diseases)have some association with various forms of industry it isexceptionally difficult to prove the facts needed to supporta claim. For one thing, these diseases often have very longlatency periods — the illness may not manifest itself for


twenty or thirty years after the exposure. By that time,memories have faded, work records will have disappeared,the industries or plants will have changed, managers willhave been replaced, and the facts needed to support a claimmay simply be unavailable. Then another difficulty arisesfrom the legal need to prove causation. This commonlyleads to a problem such as the following. The plaintiff is,say, suffering from bladder cancer. It is found that there is,on average, one bladder cancer case per 10,000 of popula-tion. Perhaps the factory where the plaintiff was workinghad three people suffering from bladder cancer in its work-force of 1,000. This is highly suggestive, but it is not nec-essarily proof, that the plaintiff's condition was caused bythe conditions at his place of work. The result of all thesefactors is that claims for industrial disease are much less easyto make and much less common than claims for industrialaccidents.

Workers' compensation

At one time, compensation for work-connected accidents(and some of the more common industrial diseases) wasprovided by a special system of workers' compensation. Inthe UK we had special workers' compensation lawsbetween 1897 and 1948 which gave a right to claim com-pensation to anyone who was injured in an accident "aris-ing out of and in the course of his employment." Thiscompensation was not nearly as generous as common lawdamages, but it was provided on a no-fault basis, so that allworkers injured in these kinds of accidents (or the depen-dants of those killed) could obtain compensation, and notjust those whose accidents were caused by provable fault.

Most countries of the world still have no-fault workers'compensation laws, but in the UK they have almost disap-peared. This has been the result of a rather strange piece ofhistory which deserves a few words. In 1948 the Labourgovernment introduced its new and very wide-ranging


National Insurance system which later came to be calledSocial Security. As part of this new system the formerworkers' compensation laws were in effect taken over bythe new social security system, and became known as theindustrial injury scheme. This was done because it was thenwidely thought that the workers' compensation system hadbecome too adversarial and too court-based, and the tradeunions wanted to remove it from the private insuranceindustry which at that time handled these claims, and trans-fer it to the state, which was thought perhaps likely to be a"softer touch". So there was a special system of state socialsecurity benefits under the industrial injury system, whichwas based on weekly payments, and of course thesebenefits were still provided on a no-fault basis.

But gradually over the years many of the special indus-trial injury benefits have been eroded. This has happenedpartly because governments, especially conservative gov-ernments, have been striving to cut the cost of the wholesocial security bill; and partly because it came to seem moredoubtful if there was any real reason for paying betterbenefits to those injured at work than to those injured inany other accident, or indeed, to those incapacitated forwork for other reasons altogether. In the world of socialsecurity the lawyer's distinctions between how accidentsare caused seems largely irrelevant. These distinctions areof no importance to claimants of benefits, or to those whodevise and administer the social security system — whatmatters to them is the degree of incapacity, not how itcame about.

So the differential between the benefits payable to thoseinjured at work and the benefits payable to other incapac-itated persons has gradually been narrowed, although it isstill true that anybody who is seriously and permanentlyaffected by an industrial injury (or some industrial diseases)may be entitled to a benefit for life which other victims ofaccident or disease do not get. The result is that the unions


now probably regret that workers' compensation lawswere ever taken over by the state. Had they remained aresponsibility of industry and private insurers, the govern-ment could have constantly increased the levels of benefitspayable, while leaving industry to pay the bill.

At the same time, as the idea of workers' compensationlaws has faded, actions for damages by injured workersagainst their employers have increased enormously, greatlyassisted by the change in the law in 1948 which enabledone worker to claim damages from his employers for thenegligence of a fellow-worker (see p. 75). All this has beena most retrograde development — the fault concept is welland truly back, the lottery is in full swing, more injuredworkers recover substantial damages, but most still getnothing more than bare social security benefits.

5. WHO PAYS?

THE GUILTY PARTIES DO NOT PAY

W E need now to look in a little more detail at a pointwhich we have already touched upon from time to time -who pays for these damages claims? Again, we concentratehere on personal injury claims. The first point, which hasalready been made, and no apology is needed for making itagain, is that in serious cases the wrongdoers never pay. Infact the only kind of case where the wrongdoers — the neg-ligent parties — commonly pay are in very minor road acci-dents -where a car is slightly damaged but no injuries arecaused. In these cases, reasonable motorists will often admittheir fault and pay out of their own pockets to save claim-ing against their insurance, with consequent loss of no-claims bonus.

But in more serious cases, and in virtually all injuryclaims, the parties guilty of negligence will not pay. In factsolicitors acting for a plaintiff will not usually bother toclaim against them. They will simply extract the name ofthe defendant's insurance company and address their claimstraight to the insurers. From then on, the whole proced-ure will be dealt with by the insurers on the defendant'sside, and the plaintiff's solicitor, on his side. The insurerswill decide whether to admit blame, whether to settle,how much to offer, how to fight the case if it goes to trial,what barrister to brief, whether to appeal if they lose, andso on, all without even troubling to consult the nominaldefendant — the negligent party, or strictly we should say,the allegedly negligent party. The late Professor Harry

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Street, a leading expert on tort law, used to recount howhe was once sued for injuries received in a minor road acci-dent. In the first court the claim was dismissed, andProfessor Street forgot all about it until he read in TheTimes some months later that the plaintiff had appealed andthe appeal court had allowed the appeal and awarded dam-ages against the professor, all without his knowledge! Ofcourse the case had been handled by his insurers through-out.

Insurers may even choose to settle a case against thewishes of the insured who might prefer to defend it. In therecent case of the bullied schoolboy, for instance, the insur-ance company chose to settle the claim with a substantialpayment against the wishes of the school authorities. Theteachers of the school thought the action should have beendefended, and (according to press reports) they were will-ing to give evidence that they had the problem of bullyingunder control, that the boy in question had never com-plained about bullying, and that they had seen no visiblesigns of serious bullying on the premises — in other words,that they had not been negligent. But third party insurancepolicies nearly always give the insurance company the soleright to decide whether a claim should be fought or settled,because the company has to pay the bill. So if this claim hadbeen fought and lost, the insurers would have had to paythe costs as well as the damages. They made a commercialjudgment that it was better for them to settle than to fight.

So damages are hardly ever paid by the people wholawyers call the "wrongdoers". Even in those rare caseswhere damages are awarded which are intended to bepunitive — as in some cases for wrongful arrest and the likeagainst police officers - they themselves will not pay thedamages. It is, indeed, rare for them even to be disciplinedby internal procedures in cases of this kind.

Some may think that, at least where damages areawarded against companies, the companies themselves are

no WHO PAYS?often seriously to blame and it is fair therefore that theyshould pay for their own faults. This is a very popularviewpoint, and we all tend to think of companies (andindeed other bodies like government departments or localauthorities) as entities. "They did this" we say, and "there-fore they should pay". Judges say it too, even in caseswhere the company is only vicariously liable for the negli-gence of its employees, and has not done anything negli-gent itself. But this is one of those areas where the popularviewpoint and the legal viewpoint both seem founded onmisconceptions. A company or a government departmentor other public body is an abstraction. It is real people notabstractions who commit acts of negligence. Generallyspeaking, the liability of a company involves no imputationat all against the company itself- it is just legally liable forthe negligence of its employees. Even where a companycan itself be considered in some sense to have been negli-gent, where it has, for instance, allowed a sort of negligentculture to grow up, where the whole company is pervadedwith the attitude that the public interest does not matter,that profits are their only concern, it is actual people whoare responsible for this culture. When lawyers say that acompany has itself been negligent, what they usually meanis that top management is responsible, but that does notalter the fact that the actual parties responsible do not payfor their faults. Who ever heard of top managers or direc-tors paying for the consequences of their negligence? Ifanybody in the company is disciplined at all for acts of neg-ligence it is unlikely to be the top managers or directors.

Paradoxically, there is actually one group of negligentpeople who do, in a peculiar sense, pay for their own neg-ligence, and these are accident victims themselves.Whenever an accident victim who makes a claim has hisdamages scaled down because of his own contributorynegligence he is paying, in a rather special sense, for hisown negligence. People do not insure against the effects of

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their own contributory negligence so they "pay" for itthemselves. If you are injured in an accident for which youare, say twenty-five percent to blame, and your full lossesare £10,000, you will obtain damages of £7,500 againstthe defendant which his insurer will pay; but you will losethe other £2,500, for which no insurer will pay. You willyourself "pay", at least in the sense that you have sufferedthis loss and cannot recover damages for it.

Some people will probably find this very unfair; indeed,those who really believe in the existing system ought tofind it unfair, because it does seem extraordinary that theonly people who really pay for their negligence are acci-dent victims. But, as we shall see later, accident victimswho do obtain some compensation are actually treated sovery generously by the law that it is hard to shed too manytears over those who have to pay for their own contribu-tory negligence.

THE PUBLIC PAYS

If the actual wrongdoers don't pay for the damages, whodoes? The answer that has been given already is that, in abroad sense, the whole public pays. That does not meanthat we should not care how the burden is actually distrib-uted. It is actually very much like taxation. All taxes are, inthe last resort, paid by the public, but of course the burdenof taxation is not evenly distributed over the population.Some pay more and some less, and the way in which theburden falls is a matter of enormous public interest anddebate. Again, we can see that the burden of paying dam-ages may in the first instance fall on one group, but in thelast analysis the burden may be passed onto another group.Let us look into this in a little more detail.

First, it is clear that businesses have to pay a large part ofthe cost of damages in the first instance. All large businessesinsure against this sort of liability, and indeed, it is legally

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compulsory for them to insure against their liability to paydamages to their own employees. So in a sense, the dam-ages will actually be paid by the insurance companies ratherthan the businesses themselves. But of course insurancecompanies have to collect premiums, and the business con-cerns who insure against this kind of risk have to providethese premiums. Where do they get the money from topay the premiums? The answer is that finding the moneyis just an overhead cost of the business, like the rent paidfor their premises, or the cost of heating the premises. Thebusiness has to charge us — its customers — enough moneyto cover its overheads, so some small part of what we payfor all the goods and services we buy in the market is actu-ally going to fund this kind of insurance, and ultimately topay the damages which the insurance companies have topay out. If the business is unable to pass on the whole costto its customers for competitive reasons then the share-holders (rather than, or as well as, the customers) will pay.So damages premiums are just like a bit more VAT leviedon businesses, and passed onto the public.

There is a simpler, more direct payment route, withregard to private motorists. As everybody knows, an ordin-ary motorist is legally obliged to insure against third partyrisks — he has to buy insurance to cover the risk of beingheld liable to pay damages through use of his car on theroad. So here again, the money is paid through insurancecompanies, but is levied in effect as a charge on themotorist. Since it is compulsory the resemblance to a tax isstronger still. (The first party component of a comprehen-sive motor insurance policy is different - that is voluntaryand not compulsory, see p. 121).

In other cases the route through which the moneymoves is even simpler, but the ultimate result is much thesame. For instance, whenever the government (or a gov-ernment department) is held liable to pay damages, there isno insurance because the central government never

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insures, but the money is just paid for out of taxes. So here,it is even more clear that the damages are just like any othergovernment expenditure which has to be paid from taxes.If the government wants to pay social security benefits, ithas to raise taxes to pay for the benefits, and if it is willingto pay damages, it has to do the same.

THE CONSEQUENCES OF RECOGNISING THAT THEPUBLIC PAYS

The fact that damages are ultimately paid for like this, bymembers of the public, is critically important for a numberof reasons. First, it means that sympathy for accident vic-tims comes with a price label attached if we want to doanything about it. Sympathy itself is cheap; but if we wantto translate that sympathy into more compensation orhigher damages, then we, the public, will have to paymore. Some people may be willing to do this; others, look-ing at the huge damages sometimes awarded for relativelyminor injuries, or in dubious circumstances, may feel lesssure. About twenty years ago, when there were constantdemands to improve the social security system and otherwelfare benefits of the state, it gradually was borne in onthe public that these improvements had to be paid for byhigher taxes, and since then the public reaction to thesedemands for higher expenditure has been more muted. Asimilar change does not yet seem to have taken place withregard to claims for damages. The public perception ofthese matters appears still to be that damages are somehowpaid by wrongdoers, negligent and blameworthy parties,and this perception fuels demands for more and higherdamages. It is time that the public understood that theythemselves are paying for these damages awards.

Similarly, with government departments and other pub-lic authorities. Lawyers, and members of the public too,faced with an act of negligence committed by officials of,

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say, the Home Office, are apt to say: "The Home Officehas been negligent, and the Home Office should jolly weDpay damages for its negligence." Unfortunately, the lawjust does not work like this. The Home Office is anabstraction, or if your prefer, a building in central London.Neither abstractions nor buildings are capable of payingdamages. If we actually spell out what happens in a case likethis, we must say: "Officials of the Home Office have beennegligent, so the public taxpayer should jolly well pay forit." This sounds a good deal less logical as well as lesssonorous. So also, if the real employer is a group of share-holders, as with a public company, then demanding thatthe company should pay means actually that the customersor shareholders of the business must pay.

Acknowledging these realities may not change the publicreaction very much. Many people would no doubt be pre-pared to go along with holding employers and public bod-ies liable for the misdeeds of their employees even thoughthe parties paying are not the guilty ones. In the case of pub-lic authorities and companies, most people probably feel thatthe extra amount that the public have to pay to cover thesedamages awards is too small to worry about. And as to com-pany shareholders, most people probably assume that allshareholders are wealthy, so there is not likely to be muchsympathy for anyone who protests that shareholders arebeing made to pay for the negligence of company employ-ees. All the same it is worth bearing in mind that about halfof all shares in public companies today are held by pensionfunds and insurance companies, many of whose beneficia-ries are actually widows and other dependants of those whohave paid for their pensions or life insurance. So, if it comesto a sympathy battle between the injured accident victimsand the companies, we should not automatically andinstinctively side with the accident victims.

Still, it must be conceded that most people will probablythink that companies and public bodies should pay for the

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misdeeds of their employees. Even so, the fact that themoney is really coming from the public is vitally importantfor two other reasons. One is that it makes nonsense of thewhole fault principle. Why should you only be entitled tocompensation if you are injured in a fault-caused accident,when the money is really coming from the public anyhow?Nobody would set up a social security or welfare pro-gramme which only compensated those injured throughthe fault of others. Once it is grasped that the public is pay-ing for the whole system, the basic structure of the system— the fault principle — becomes an absurdity. Rememberthat the identity of the person at fault is an irrelevance forpractical purposes, and in some cases, is not even known.The contest is between accident victims who seek com-pensation, and the public, which will pay it. What rele-vance does it have that the injury is or is not caused by thenegligence of some third party?

But the fault principle is not the only thing that becomesabsurd once we see how close the damages system is to atax or welfare system. It also becomes absurd to pay suchgenerous sums to those who are entitled to damages, andnothing at all to anybody else who suffers similar (or evenworse) misfortunes. The justification for the extremelygenerous way in which damages are assessed — full paymentfor all losses, past and future, no deductions, no limits,often duplicating other compensation receipts, damages fornon-pecuniary loss, and all the rest of it — is that someguilty person (as we have seen, lawyers call him the"wrongdoer") is to blame for the injuries, and should payin full for his fault. But once we see that he is not paying,and it is the the public who are paying, then this level ofpayments becomes, frankly, excessive. Just to take oneexample at this point, why should the public pay the hugeincome losses borne by the really wealthy - such as popsingers or tennis stars (see p. 9).

There is a third point of great importance which follows

n6 WHO PAYS?once we understand that the public pays the damages. Thisis that the public should surely have some say in how themoney is paid out, and how much is to be raised. Nobodylikes taxes, but at least they are levied by authority ofParliament, and the public does have a chance to voteevery few years for MPs who these days are expected to tellthe public something about their taxing intentions. Butdamages are levied by authority of the judges, they are notsubject to any parliamentary control or Treasury scrutiny,and neither the judges nor anybody else really knows thetotal amount being levied, whether it is going up or byhow much. Nor of course, does the public. The judges setthe benchmarks, and then the lawyers and insurance com-panies administer the system by settling most claims in thelight of these benchmarks.

There is rarely any informed public debate about thissystem. Do we really want to pay high damages to fault-injured victims (and only a few of those) and nothing at allto others? Should damages be increased or are they alreadytoo high? Even the government does not defend or repre-sent the interests of the public on these matters. While thegovernment is a powerful guard dog of the public treasury,and restrains increases in public expenditure because itknows that these mean higher taxes, the government seemsindifferent to proposals which mean higher insurance pre-miums to fund higher damages. Law reform proposalswhich have this effect are not properly scrutinised by thegovernment (nor by the Law Commission, which makesthem) and are indeed often treated as suitable measures forprivate members' bills in Parliament. Yet the public iseffectively compelled to pay the costs of the system, verymuch as it pays the costs of the social security system.Premium payers as much as taxpayers need somebody todefend their interests.

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THE INSURANCE COMPANIES

As we have seen, insurance companies pay most of thedamages awarded by courts or agreed in settlements. Theyalso of course pay compensation to those who insurethemselves against many ordinary risks of life. It is nownecessary to explain more fully the central role whichinsurance companies play in the damages system.

The first thing it is necessary to understand is that thereare two quite different kinds of insurance involved in thedamages system, taken as a whole. One is third party liab-ility insurance - which is just called liability insurance byinsurance companies — and the other has no special name,but to distinguish it from third party insurance it can becalled first party insurance.

Let us take first party insurance to start with. In this kindof insurance a person insures himself against a variety ofrisks. He may buy life insurance, which everyone is famil-iar with, although that tends to be rather different frommost other forms of insurance in that death is a certainty,not a risk. However, death in a particular way (eg in a planecrash) or death before a certain date, or premature death isa risk which people often want to insure against and caninsure against with life policies. Then there are first partyaccident policies of various kinds. When you buy compre-hensive insurance for your car, that part of the policywhich covers damage to your own car is a simple first partytype of insurance. It is your car, you pay the premium, andif the car is damaged, you claim the cost of repairs from theinsurance company. Nothing could be simpler or morestraightforward. Householders' policies are also largely firstparty policies — you insure your house against the risk offire, or the contents against the risk of burglary. Again, youpay the premiums and you collect the benefits of the pol-icy if the risk occurs.

First party accident insurance is very common indeed

n8 WHO PAYS?over property. Nearly all buildings are insured against fire,for instance. Not only is it a very sensible and prudentthing to have this form of insurance but when houses arebought on mortgage, the building society or other lenderwill insist that the house is insured. Most other valuableproperty is insured against damage or loss by theft, fire orother accident. Not all old bangers are comprehensivelyinsured, it is true, but most cars of any significant value areso insured, and most other kinds of valuable property -jewellery, silver, gold items, valuable paintings or objetsd'art, and so on - are also insured.

First party insurance is much less common in the case ofpersonal injury. It may seem strange, given that the mostvaluable property you have is probably your own earningcapacity, that it may not have occurred to you to insure itagainst the risk of injury. You would not really be to blamefor that, because this kind of insurance is simply uncom-mon, most people don't buy it, the insurance companieshave made little attempt to sell it until very recent times,and it is also rather expensive. What is more, many peopleprobably believe (quite mistakenly) that their motor insur-ance somehow covers them against the risk of injury in aroad accident, which is probably the most obvious risk ofaccidental injury that occurs to them. Until quite recently,most people have anyhow grown up with the idea that thewelfare state will look after them in the event of cata-strophic illness or injury, so they may well have thought itwas hardly their own responsibility to worry about theserisks. Furthermore, anybody who is a member of a goodcompany pension scheme, or a public service scheme(which after all covers many millions of civil servants,teachers, policemen, local government workers, nationalhealth workers and so on) is usually given some measure ofcoverage against prolonged and severe sickness. Manymembers of these schemes will be entitled to sick-pay oftenfor six months or more, and in cases of permanent injury,

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they will often be able to retire with enhanced pensionrights. These are all similar to first party insurance in theireffect, even though they may not technically amount toinsurance.

Some people do have various kinds of personal accidentinsurance, strictly so-called, though they are usually limitedin various ways. The best known are private medical insur-ance policies: if you are a "member" of BUPA you areactually insuring yourself against the risk of having to payfor certain defined medical or hospital costs. This is not thesame thing, of course, as insuring your income. That kindof personal accident policy — where you do insure yourincome, or a part of it - is usually known as permanenthealth insurance, and it is commonly taken out by self-employed professionals, such as lawyers, doctors, architectsand accountants. Heavy premiums have to be paid for thiskind of income-protection insurance.

First party insurance

We can identify seven key features of first party insurancewhich differentiate it from third party insurance. First,there is one fairly obvious point. In first party insurance theperson paying the premium is the person who stands toreceive the proceeds of the policy if the risk occurs. This isactually a crucial point, because it is one of the ways inwhich the economic system best ensures the efficiency ofthe marketplace. When people buy things for their ownbenefit they can ask whether the benefits are worth thecost, they can shop around to get the best deals, and so on.When someone else buys things for you, you can never besure the results will be so satisfactory.

Second, in first party insurance the premium variesaccording to the value of what is being insured. Obviouslyif you have a penthouse suite in Kensington it will cost youa great deal more in fire insurance than if you have a mod-est semi in Manchester. If you have a Rolls Royce your

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motor premium will be substantially higher than if youdrive a modest Ford. If you want to insure an income of£100,000 a year it will cost you a good deal more thaninsuring an income of £20,000 a year, and so on. Nobodyquestions the fairness of this; it seems so obvious that it goeswithout saying.

There is a third obvious point about first party insurance— generally speaking this kind of insurance pays regardlessof who is to blame for the loss or injury; indeed, often oneof the main points of this kind of insurance is to protect theinsured from the consequences of his own negligence. Allcomprehensive motor policies are designed to do that — wewould hardly buy this sort of insurance if we couldn't claimfor damage done in accidents for which we were ourselvesto blame. Similarly, life insurance and health insurance pol-icies don't refuse payment if the insured fails to take rea-sonable care for his health - by eating too much, forinstance, or failing to take exercise. Some first party pol-icies do include conditions which entitle the insurer torefuse payment in very extreme cases of fault on the part ofthe insured, and others may contain conditions (or demandincreased premiums) for extra risks which are thought tobe within the control of the insured; for instance life pol-icies may require higher premiums from smokers, or mayrefuse payment to anyone dying of alcoholic excesses. Andhouseholders' policies may these days require householdersto take reasonable precautions against burglary, or insist oninstallation of burglar alarms; holiday insurance policiesoften demand reasonable care of the belongings of theinsured, and so on. But these are usually special and limitedexclusions or conditions. In general, it remains true thatfirst party insurance is "no-fault" insurance.

There is a fourth point about first party insurance that isvery familiar. It rarely covers every penny of a possible loss.When we pay for our insurance policies we usually expectto cover part of the risks ourselves. Motor policies have

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excesses, and the no-claims bonus system makes it notworth while claiming for trivial losses even over and aboveany excess. Holiday insurance often contains exclusions forthe first £100 or the like. Permanent health insurancenearly always pays benefits only after a specified period,usually three or six months' incapacity for work, and thenusually only insures a proportion of the income lost. Thereason for this is that covering every penny of a loss byinsurance is usually too expensive; it is silly too, because itcosts a lot of money to administer claims for tiny sums, andin a reasonably affluent society many people can bear smalllosses themselves.

Fifth, first party insurance hardly ever offers benefits aswide in scope as can be obtained in a claim for damages.For instance, claims for pain and suffering and loss ofamenity are almost never covered by first party policies,though some limited accident policies like holiday insur-ance may offer specified sums for a few defined injuries -so much if you lose an arm or a leg, or are blinded, and soon. Property insurance is always, of course, just an indem-nity against the cost of buying a replacement, and oftendoes not even cover the cost of replacing old belongingswith new ones — though some policies do offer this uplift.Personal accident policies, health policies and so on, areusually designed just to cover real financial losses, medicalcosts or income losses.

Sixth, first-party insurance is optional. Whether you buyit, and how much you buy, is normally up to you. It isnever legally compulsory, though it is true that in the caseof householders' insurance the practical effect of a mort-gage may be to make it virtually compulsory so long as themortgage lasts.

Seventh, in first party insurance the maximum sums forwhich the insurance company is liable are either fixed inadvance, or are at least defined within reasonably fixedlimits. Insurers who cover the risk of fire on a house know

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roughly what the value of the house is; life insurance isusually for a fixed sum, and though these days there areoften with-profits policies the amount to be paid undersuch a policy is within the control of the insurance com-pany. Property insurance usually states the value of theproperty or at least states what the property is so that itsvalue can be assessed within defined limits.

Third party insurance

Third party insurance differs very substantially from firstparty insurance in all these ways. Let us first get clear whatexactly a third party policy is, and who is the mysteriousthird party referred to. A third party insurance policy is apolicy under which the insurance company agrees toindemnify you, the insured person, if you are sued or heldlegally liable for injuries or damage done to a third party.You are one party, the insurance company is the secondparty, and the person you injure who claims damagesagainst you is the third party. On the face of it, it is similarto ordinary first party insurance. You pay a premium toprotect yourself against a risk — namely the risk of beingsued. But in reality this kind of insurance differs greatlyfrom first party insurance, in all the above seven ways.

Many important kinds of insurance policy have boththird party elements and first party elements. A compre-hensive motor policy, for instance, is both a first party pol-icy (insofar it covers your own car against damage or theft)and a third party policy (insofar as it covers your potentialliability to pay damages to third parties). What is very oftennot appreciated, however, is that the first party componentonly covers your car, not you yourself. Nor does your thirdparty component cover injury to you yourself, because youare not a third party - you can't sue yourself under yourown policy. Your third party policy covers everybody inthe world except yourself. However, one of the quirks ofthe whole system is that though your policy doesn't cover

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you, you may be covered by somebody else's policy if youare injured through his fault. Just as your policy coverseverybody else, but not yourself, so everybody else's pol-icy covers everybody (including you) except the policy-holder himself.

We can now look into the differences between thirdparty and first party insurance. First, then, in third partyinsurance the person who actually gets the benefit of thepolicy is in reality the third party, not the insured person.The insured person is only nominally the beneficiary of thepolicy. In most cases he could not pay the damagesawarded against him if they were not paid by the insurancecompany so actually the policy is very little benefit to him.In practice the money is always paid direct by the insurancecompany to the third party (or his solicitor) and does noteven pass through the hands of the insured person. Amongother things this means that with third party insurance theinsured person does not choose the kinds of benefits hewants to insure against - he just buys the policy and paysfor it, but it is the law which settles how much is to be paidto the third party if he makes a claim.

Second, in third party policies the premiums do not varywith the value of what is being insured, in fact they can't,because what is being insured is a potential legal liability,and it is not possible to know in advance what that liabil-ity will be. Now this has very important results. As we sawbefore, it is the most natural thing in the world that theowner of a Rolls will pay more to insure it than the ownerof an old banger; but we can now see that this only appliesto the first party component of an insurance policy. So faras the third party component is concerned there is no spe-cial reason to charge the owner of the Rolls more. This alsogoes, perhaps even more importantly, for income losses. Ifyou have a first party permanent health policy insuringyour income against loss, the more you cover, the higherthe premium will be — obviously and fairly. But income

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loss is not covered by the first party component of roadtraffic policies, it is only covered by the third party com-ponent. That means that motorists do not pay premiumswhich vary with the incomes they may stand to lose. Thishas very dramatic consequences on the way the costs ofmotor insurance are borne. A person with a very highincome who is seriously injured in a road accident mayrecover enormous damages for his lost earnings, and if heis killed his dependants likewise can recover a very sub-stantial sum. But a person who earns much less will recovermuch less, and a pensioner (or an unemployed person)who is not earning at all, will recover nothing for his lostearnings — yet the premiums he pays for the third party ele-ment of his motor policy do not reflect this. He pays justas much for this element of his insurance as the highincome earner. There is no justice in this.

Next, third party insurance, unlike first party insurance,is almost entirely fault-based. This follows from its verynature. To claim under a third party policy you have toclaim damages against the insured party, but you can't usu-ally claim damages unless he was at fault. Now althoughthe fault system has been stretched almost to breakingpoint, it cannot be denied that in many cases an injuredperson still cannot obtain compensation because he mustbe able to prove that the injury occurred through someoneelse's fault as the law understands that term. Because mostroad accident injuries occur in collisions, in which bothparties are often partly to blame, this means that probablyhalf of all personal injury losses occurring on the roads aresimply not covered by insurance. The extraordinary resultis that, while most vehicle damage on the roads is coveredby first party insurance, a large proportion of personalinjury losses is not covered at all.

The position is even worse with regard to other acci-dents. It is, actually, much easier to prove fault in the caseof road accidents than in the case of most other accidents;

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and in addition to the need to prove fault, the need toprove causation also presents acute difficulty in many casessuch as where the plaintiff suffers a serious occupationaldisease which he says was the fault of his employer. Theupshot of this is that, in principle, third party insurance justcovers far fewer risks than first-party insurance. If youinsure your house against fire, you don't expect to receivecompensation only if the fire was caused by someone else'sfault - that would be a totally inadequate form of insur-ance; likewise with comprehensive motor insurance; like-wise with life insurance. In all these cases, first partyinsurance is in principle extensive in its coverage, and doesnot require proof of fault. Yet most personal injury cases dorequire proof of fault.

Having to prove fault not only greatly cuts down thecoverage and hence the utility of insurance, it also addsenormously to the cost. In most first party insuranceclaims, lawyers are quite unnecessary. You don't need alawyer to claim under a life insurance policy — it doesn'tneed a lawyer to prove the insured is dead. Nor do youusually need a lawyer to claim under comprehensive motorpolicies, or indeed any other first party insurance policy.But it is virtually impossible (or anyhow, very unwise) tomake a third party claim without the aid of a lawyer. Nowas we all know, lawyers do not come cheap. All profes-sional services are expensive, and lawyers perhaps morethan most. Third party insurance swallows up a hugeamount in legal and other administrative costs. In 1978 thePearson Royal Commission estimated that at that timesome X 2 0 0 million a year was paid out in damages in tortclaims, the vast bulk of which was paid under third partypolicies. The cost of making these payments was no lessthan XT75 million. In other words, for every pound paidin insurance premiums to cover third party claims, about53.3 pence goes to pay damages, and about 46.7 pence goesto pay the lawyers' fees and other costs. This monstrous

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expense is absolutely built into the present system, and can-not just be put down to lawyers' greed. If you need toprove fault, and you also need someone to explain whatdamages you can claim, then you will have to have alawyer. And if you have to have a lawyer someone mustpay his fees. What is more, if you have to have a lawyer theother side may have to have a lawyer too. Actually, inmany serious cases, a considerable additional part of thecost comes from the medical fees of the consultants andother expert witnesses needed to assess the extent of theinjuries, and what long-term effects they are likely to have.And these consultants' fees have to paid too, so it is facilejust to blame the lawyers' greed for these costs. It is thewhole system that is wrong and rotten, not the lawyerswho do their best for their clients within the existing rules.

The next distinction between first and third party insur-ance is that first party insurance rarely covers every pennyof a loss. Everybody is familiar with excesses and deduc-tions under insurance policies of various kinds. There aregood reasons for these excesses and deductions, which aredesigned to minimise the number of small claims. Minorclaims are disproportionately expensive to administer,because obviously any insurance company must check theclaim against the policy terms, whether the claim is for_£io, or ,£100 of even ^500. And if any correspondenceensues between the claimant and the company, it takes justas much time and money, whether the claim is for a verytrifling sum or a more substantial amount. So it makesgood sense to have deductions and excesses. It is in thelong term interest of consumers as clients of insurancecompanies to have them, otherwise they would certainlypay more for their policies. In fact some kinds of insurance,like motor insurance, offer as optional extras, ways of cut-ting down on the excesses, like insuring to protect yourno-claims bonus — of course there is nothing wrong withthis if clients are willing to pay the extra costs involved, as

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indeed some do, but many prefer to take the risk of minorexcesses and deduction rather than to pay extra premiumsfor this sort of protection.

Third party claims have no such deductions or excesses,because they arise from claims at law, claims to which theplaintiff has a legal right. If you cause some minor scratchesto your own car, you may decide it is not worth botheringabout having it repaired even if you are comprehensivelyinsured, (especially if the car is a few years old), because ofthe excess and possible loss of a no-claims bonus; but if youcan claim against some other person responsible, and henceagainst his insurance company, you will probably have theright to have your car resprayed at their expense. Of courseso long as we live under the present system you are enti-tled to do this, and nobody can blame you for claimingyour rights. But a different system would save us all moneyin the long run. Most of us would probably prefer a systemunder which (if we wanted to) we could pay less for ourinsurance, and put up with a few minor scratches to ourcars. Perhaps we would prefer to do that with regard toinjuries too. At present, the slightest injury entitles you tomake a claim — the bus driver starts up too soon as youboard a bus, and you fall, grazing a knee slightly, and per-haps tearing your tights. Write a letter of complaint to thebus company and you may find them (or their insurers)offering you a trifle in compensation for fear of a muchbigger claim. Or trip over a paving stone and write a com-plaint to the local council; the result may be the samealthough any injury may be totally trivial. Of course, we allhave to pay for these costs in the long run. Do we reallywant a system that entitles people to claim for every suchinjury? Isn't the inevitable result going to be to encouragepeople to bring groundless claims, to pad and inflate them,and hope to screw a hundred pounds out of the systemhere or there?

Much the same goes for the next distinction between

128 W H O PAYS?

first and third party claims. Third party claims cover amuch wider range of types of injury and "loss" if that termis appropriate. Damages for pain and suffering and loss ofamenity are the chief example of extra types of claimwhich can be brought under a third party policy, buthardly ever under a first party policy. Once again, it is we,the public, who pay for all these claims, thus inflating thecosts of our insurance premiums, and some of the taxes wepay, as well as the costs of many of the goods and serviceswe buy.

The sixth distinction between first and third party insur-ance, is that generally speaking first party insurance isoptional, while much third party insurance is compulsory.It is true that as a practical matter, you often don't have agreat deal of choice even with regard to first party insur-ance — as we have seen, you will have to insure your houseif you have a mortgage, you virtually have to buy first partyinsurance if you buy a package holiday, and your employermay compel you to join the company pension schemewhich may contain life insurance and other insurance-typebenefits. But even in these cases there is often some degreeof choice (for instance as to the amount of insurance youwant) and there remain other kinds of first party insurancewhich are truly optional. Comprehensive motor insuranceis entirely optional, permanent health insurance, andBUPA-type medical insurance are optional, householders'contents policies are optional, life insurance is generallyoptional, and so on.

Third party insurance is, however, often compulsory.And it is compulsory in two different ways. First, it is ofcourse compulsory in the way most of us are familiar withif we own a car - it is legally obligatory to buy insuranceagainst third party risks. But third party insurance is com-pulsory in quite a different sense too. It is compulsory inthe sense that you cannot choose whether to opt in or stayout of the existing law regarding claims for damages. You

WHO PAYS? 129

cannot, in other words, say: I will happily waive my claimto sue others if they injure me, in return for not being liableto be sued if I injure them. That may sound a very strangeidea at first, but if we had a choice, many of us might actu-ally prefer to "opt out" of the law of legal liability, and thenbuy first party insurance for our own protection, as far wefelt we needed it.

Some of us might find that quite a tempting idea. For astart, we could probably cut our insurance bills quite a lotby doing so. Then we could concentrate on protectingwhat we really want to protect, and perhaps not worryabout damages for trivial injuries, or pain and suffering andloss of amenities and so forth. Certainly, many of us wouldprobably prefer to insure ourselves on a no-fault basis.Those of us who are retired could stop paying premiumsto insure our incomes, since these will continue whetherwe are injured or not. . . . It is a dream world, of course,because we have no choice. We have to join the presentscheme or system, we have to pay the subscription, eventhough we don't like the rules, and think the subscriptionis much too high to be worth the benefits it brings us.

Finally, third party insurance is rather unpopular withinsurance companies, as compared with first party insur-ance, because they never know the maximum amountsthey will have to pay under third party policies. A thirdparty policy requires the insurance company to cover thewhole cost of any legal liability that may be imposed on theinsured person, and that falls within the terms of the pol-icy. If the judges decide to go mad, and double the level ofdamages to be awarded next year, the insurance companieswill still have to pay the whole lot, even though their pre-miums are inadequate to cover the increased liability.

In the case of claims for personal injury, road accidentsand the like, this is not actually a serious problem in theUK, because the levels of damages are well-known, do notusually change without adequate warning, and are anyhow

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quite low by the standards of insurance company activities.But even in personal injury cases the problems can be veryserious in America, where damages are much more unpre-dictable, and in other kinds of cases, the problem is seriouseven in the UK because of the size of possible claimsagainst accountants and solicitors, as well as in a variety ofother contexts.. The result is that in cases of this kind,insurance companies now write in maximum sums forwhich they will be liable in their policies. One of the wor-rying types of case where these maximum sums get writtenin are cases of massive oil pollution and the like, caused byspills from oil tankers. Hundreds of millions of pounds ofdamage can be done in these cases, and the insurance isoften inadequate to cover all the liabilities. Special arrange-ments may well be needed for cases of this kind which aretoo specialised to be addressed in this book.

So far we have been discussing the differences betweenfirst and third party insurance as though these were alwaysalternatives. Actually, there is often a great deal of duplica-tion in the insurance market, because many risks are cov-ered by third party and first party insurance as well. Takethe everyday case of a road accident which causes damageto your car, but does not injure anybody. The risk may becovered by your own comprehensive policy, but it is alsovery often covered by someone else's policy. Wheneverthe accident is the fault of somebody else driving on theroad, his third party policy should also cover the risk. Sothe risk is covered twice. Of course, as everybody knows,it is beneficial to you to claim against the other driverrather than against your own policy if you can; but it isonly beneficial because of the system under which we live.And the system brings in its wake increased cost. Supposein this simple collision, both cars are damaged, and supposeboth cars are comprehensively insured, and suppose bothdrivers are partly to blame. The result of this everyday typeof case is that each driver is entitled to claim part of the cost

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of repairing his car against the other driver, and part againsthis own insurance company. Each company may have topay part of the repair bill for each car — which could meanthat each company would have to check the bill, andensure that the repairing company is not charging excessivesums. Of course all this would be enormously wasteful, somany insurance companies have "knock for knock" agree-ments under which each company agrees to pay the fullrepair bill of its own insured person, and they eliminate thecross claims against the other drivers. Thus the third partyelement is eliminated, and the policies treated as thoughthey were solely first party policies — which goes todemonstrate among other things that insurance companiesprefer first party policies. Unfortunately, these knock forknock agreements are coming under great pressure frommarket forces for reasons too detailed to go into here, andsome of them are being or have been abandoned. This willunhappily lead to increased costs for motorists.

Now in the case of property damage the duplicationarising from the same risk being insured twice over nevermeans that the insured person can get the loss actually paidtwice over. If your comprehensively insured car is dam-aged by the fault of another driver, you can't claim fromyour own company and also from the other driver's com-pany. Or, more strictly speaking, you can claim from both,but you will have to repay your own company out of anymoney you get from the other driver's insurance company.So naturally, most people don't bother to claim from bothcompanies.

One peculiar, and sometimes very important, quirk ofthe system arises from the strange legal doctrine called sub-rogation, which we have encountered once or twicealready. If you claim against your insurance company first,and they pay you, then although there is no point in yourclaiming against the other party's insurer (because youwould only have to pay the money over to your company)

132 W H O PAYS?

your own company can make the claim in your name but ontheir own behalf. As lawyers put it, they are subrogated toyour rights, that is to say, having paid your claim, they takeover all the rights you had to claim against the third party.In some cases, large sums of money turn on this doctrine.Whenever property of any value is insured, and damagedor destroyed by the negligence of another person who isinsured (or is otherwise worth suing), the first party insur-ance company, having paid off the owner of the property,can then claim the amount from the negligent party, whowill in turn rely on his (third party) insurer to defend theclaim and pay the damages if he loses. In the Dorset Yachtcase, for instance, (above, p. 51) the plaintiffs' yacht was, asis usual and normal, insured, and the owners' insurancecompany paid for the damage. That insurance companywas responsible for launching the claim against the HomeOffice, which being a government department did notinsure, but met the claim itself. So, having received a pre-mium to cover the risk of damage to the yacht, the plain-tiffs' insurance company was nevertheless able to pass thecost onto the Home Office. But (as we have noted already)an action against the Home Office is really an actionagainst the taxpayer. We see then that the official title ofthe case, Dorset Yacht Co. v. Home Office, is actually a decep-tive misnomer. What the claim was really about waswhether yacht owners and yacht club members or taxpay-ers should cover the damage done to yachts in circum-stances of this sort. When this reality is understood, manypeople may revise their ideas about the justice of the claim.But the law conceals the reality in this kind of case. Judgesdecide these cases as though the contest really was betweenthe yacht company and the abstract entity known as theHome Office. Very often, subrogation claims are not onlybrought by an insurance company, but are also brought(effectively) against an insurance company. Because theHome Office, as a government department, does not

WHO PAYS? 133

insure, there was no third party policy in the Dorset Yachtcase, but if they had been insured against liability, thewhole action would have been fought between two insur-ance companies. These actions bring no benefit to thepublic at all, though they inevitably cost a great deal, andthere is a good case for total abolition of insurance compa-nies' rights of subrogation.

In the case of personal injury (as distinguished from prop-erty damage) claims, there is no subrogation and the law isdifferent. Here, any insurance policy you have yourself isdisregarded when you claim damages from the other partyand get it from his insurance company. That means that youdo get paid twice over in these cases. So, as we have previ-ously noted, any life insurance policy is disregarded in a fatalclaim, and any private pension rights you may have are dis-regarded if you claim damages for being unable to work.Naturally, once a person is injured in an accident, and goesto his solicitor to launch a claim, he will claim what the lawentitles him to, and nobody can blame him for doing so.But most of us would be a lot better off if these duplicatedclaims were not allowed. Take the problem of life insurancein particular. Lots of people have life insurance policies. Ifthey feel their families need protection, they can buy what-ever they feel they need and can afford. And if they workin a company or a public body which has a good pensionscheme, there will almost certainly be benefits payable towidows and dependent children if the employee is killed,or even if he dies through illness before reaching pension-able age. People who buy these life policies or who aremembers of pension schemes are, of course, paying forthese benefits one way or another. And they may well notneed any additional life insurance. But the third party insur-ance system forces them (in effect) to buy and to pay for thisadditional life insurance element. When you buy your thirdparty motor insurance policy you are paying for otherpeople's life insurance, should you kill them in an accident;

134 W H O PAYS?

and when they buy their policies, they are in turn payingfor your life insurance. So there is no escape — you have tohave this additional element of life insurance, and obviouslyyou have to pay extra for your third party policy because ofit. But of course it isn't anything like as useful to you asordinary life insurance, and you can't rely on it to justify nottaking out ordinary life insurance, because the third partylife insurance will only help if you are killed in a fault-caused accident, and then only if it occurs in a way coveredby the type of policy in question. So the upshot of thiscomplicated story, is that in personal injury cases, there is awasteful duplication of life insurance protection whicheverybody has to pay for.

The differences between first and third party insurancewhich have been summarised above should suggest thatfirst party insurance is, in most cases, infinitely preferable asthe way to cover the risks of most injuries and losses, atleast so far as they affect consumers, and often in other casestoo. It has a broader coverage, it is far cheaper to adminis-ter, it allows some degree of choice, it saves money for thebenefit of all by eliminating trivial and duplicated claims,and it imposes the cost of the premiums on those who havemore valuable things to insure. Yet so long as we are lum-bered with the present system of tort liability claims, we arecompelled to use third party insurance rather than (orsometimes in addition to) first party insurance to cover ourrisks. The present system is a mess.

WHO PAYS IN CONTRACTUAL CASES?

Contractual cases are generally outside the scope of thisbook, but we have seen that there are some claims for dam-ages for negligence which are classified as breaches of con-tract, and raise issues very similar (if not identical) to thosewhich arise in other negligence actions. It is worth addinga few words about these cases because it is possible to iden-

WHO PAYS? 135

tify who pays for these claims in contractual actions quiteprecisely, and also because they constitute a different groupfrom those who pay for other negligence actions.

Where liability for negligence arises in contractual cases,contracting parties are likely to insure against that liabilityjust as they do for other negligence actions. But whereas inordinary cases the cost of this insurance is likely to bepassed on to the general public as we have seen, in con-tractual cases, the cost is likely to be passed onto the verycustomers who are protected by the right to sue. Let usillustrate the point by looking at a case which came beforethe courts in 1995. The case concerned a holiday in Chinasold by a tour operator to the plaintiff's daughter. Variousexcursions and trips were organised by the tour operator aspart of the holiday, and on one such trip, where a party oftourists were being ferried across a lake, the speedboat car-rying them capsized because it was being negligentlydriven, and the plaintiff's daughter was tragically drowned.The plaintiff was held entitled to damages for her daugh-ter's death on the ground that the tour operator was liablefor the negligence of the operators of the ferry even thoughthese operators were not employed by the tour operators,but were independent contractors. Now it is plain that iftour operators are held liable for injuries and deaths occur-ring in this way either they will have to insure against therisks, if they do not already do so, or their premiums willgo up, if they do already do so. (This increase will not bebecause of the particular accident record of the tour oper-ator, but because the insurers will have learnt from thecourt's decision that they are being expected to cover awider risk than they had previously thought.) Naturally, ifthe tour operator's premiums go up, they will have tocharge more for the holidays they sell, and the customerswill pay more. Is that a good thing? The answer is no,because almost every holiday maker who buys a packageholiday is already covered by first party insurance. This

136 W H O PAYS?

means that the holiday maker will be paying for two lots ofinsurance, and even though he can sometimes claim twiceover for one loss, who wants that kind of insurance? So itis almost certain that holiday makers would be better offwithout this "right to sue" which they will be compelledto buy as a result of the court's decision whether they wantit or not, and whether they need it or not.

Take another illustration: photographers who take orsend their films for processing are sometimes indignant todiscover that their films have been accidentally lost ordestroyed by the film laboratories. The film processingcompanies usually offer to replace the films, but customersoften feel that this a wholly inadequate form of redress.Some years ago a family from Australia, on a holiday tripround the world, took scores of films for processing to theKodak laboratories where they were all unfortunately lost.The family threatened to sue Kodak, demanding thatKodak pay them the cost of having their holiday all overagain, so that they could take their films a second time. Theclaim was settled by Kodak who paid a very large sum tothe family, if not quite enough for them to have theirsecond holiday. In 1996 a scientist who had taken a singlefilm to Boots for processing, sued Boots for £30,000 dam-ages for its loss, claiming that the film had been taken in thearctic on a scientific expedition which it would cost thishuge sum to duplicate.1 Now if processing companies haveto pay large claims for damages like this, they willinevitably pass the cost on to their customers, so the resultmust be a substantial addition to the cost of film process-ing. Those whose films contain nothing more excitingthan photos of their children or the family dog will have topay extra so that those who holiday round the world, orwho travel on scientific expeditions to the arctic canreplace their valuable photos. (But if they are really so valu-

1 The Times, 10 December, 1996, p. 1.

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able, why don't the scientists take a few extra films to beon the safe side?)

Consumers are apt to sit on the sidelines cheering theseDavid v. Goliath battles, and thinking that the claimant isrepresenting consumer interests. Actually claims like thisare usually quite contrary to consumer interests, becauseconsumers will only end up paying more for their pur-chases. If these risks were covered by first party insurancerather than legal liability and third party insurance, thenthose who have specially valuable films to protect could beleft to buy special first party policies, while those who donot, could save themselves the extra expense. Ideally per-haps, the film processing companies should offer to arrangethis sort of insurance at a modest extra cost for those whowant it - rather as the Post Office offers you the choice, atan extra cost, of posting valuable packages by registeredmail or recorded delivery. This is obviously a more sens-ible procedure than making the Post Office liable for lostpackages as a matter of law, which could only lead to anavalanche of claims, and a consequent increase in postalcosts for everyone.

6. AN UNJUST AND

INEFFICIENT COMPENSATIONSYSTEM

IN this chapter we shall draw together some of the threadsand try to assess how well the present law works. So far aspersonal injuries are concerned, the whole legal-insuranceprocess amounts to a compensation system, but a systemwhich is unfair, and also exceedingly inefficient. But we willbegin with a broad question about the "blame culture" andask whether this is something contrary to the public interest.

THE LAW ENCOURAGES THE BLAME CULTURE

Many members of the public feel uneasy about the increas-ing spate of claims for damages, and one of the problemsthey are able to identify, without having any technicalknowledge of the law, is that it encourages people to blameothers for their misfortunes. This encouragement takes twodistinct forms. First, the public are encouraged to thinkthat others are responsible for taking the necessary precau-tions to prevent accidents or misfortunes occurring, andsecondly, they are also encouraged to think that it is theresponsibility of others to take the necessary financial steps(by insurance or otherwise) to safeguard them against losswhen these misfortunes strike. There can be no doubt thatthe legal system, as it operates today, is partly responsiblefor this. The legal system is helping to create a 'blame cul-ture" in which people have a strong financial incentive toblame others for loss or death or injury.

AN UNJUST AND INEFFICIENT SYSTEM 139

Some may argue that this is to put things the wrong wayround. The legal system, they may say, is simply respond-ing to public demands - if a blame culture has grown up,the law and the judges are not responsible for that, butmust indeed respond to it, by offering redress to those whoare able to show that others really are to blame for theirinjuries or losses. Of course, there is some truth in this too;the fact is that the law and the public culture or ideologyreact upon and influence each other. But it cannot bedenied that the law has played a major part in creating thepresent blame culture. In particular, the "stretching" oflegal liability in so many different ways which is itselflargely the product of the insurance system backing legalliability, has diverted attention from the need for first partyinsurance. It is, for instance, amazing and entirely un-acceptable, that the risk of damage to vehicles in road acci-dents is more extensively insured than the risk of personalinjury (above, p. 124).

Governments are particularly vulnerable to litigationwhen the "blame culture" gets out of hand. If the publicthinks — as some people seem to think — that ultimately thegovernment is responsible for everything that happens insociety, then the government (and other public bodies) areliable to get sued, whatever they do or fail to do. Take forinstance, the problem of advice which in modern times thegovernment is expected to provide on many public healthissues, from drugs to contraceptive pills, to how muchalcohol it is safe to drink and so on. Governments arealways under great pressure to give advice on these matters:the media, professing to act on behalf of the public,demand to be "told" if it is safe to eat beef or to use a par-ticular brand of contraceptive pill, and so on. If the gov-ernment refuses to give this advice, the media claim thatthe government is "concealing" information which thepublic are entitled to have. And the government can bethreatened with legal action for "failing to warn the public"

140 AN UNJUST AND INEFFICIENT SYSTEM

of dangers. So the government takes scientific advice andpasses it onto the public with its own recommendations. Ifthe advice turns out to be wrong the government is againliable to be sued — in fact legal action is now pending onthe advice over "safe beef.

Yet what has the government done wrong in these mat-ters? It does not compel people to eat beef or use particu-lar drugs or drink what the government says is a safe levelof alcohol. These are matters on which it might be thoughtthe public should make up their own minds, and acceptresponsibility for their own decisions. It is partly a result ofthe blame culture that the public think that the govern-ment should be responsible for what people eat or drinksimply by giving advice on these matters. Perhaps the gov-ernment's mistake is that instead of simply passing on therecommendations of its scientific advisers and advising thepublic to make up their own minds, it has framed its mes-sages to the public in terms of categorical advice or assur-ances about safety. But in a culture in which the public wasmore accustomed to accept responsibility for their owndecisions and behaviour, the government might be entitledto claim that all this should be so obvious as to go withoutsaying.

There are some signs today that the law and some of thejudges may have got out of phase with a changing publicmood. The blame culture appears closely related to much ofthe ideology and the culture that dominated the country inthe 1960s and 1970s. At that time it was common to blamethe government for most of the social ills the country suf-fered from. If only the government would spend moremoney on this or that - hospitals, schools, roads, pensions,the police, social security and the rest of it - the publicseemed to think, society's problems could be solved.Governments themselves often seemed to share this attitude.

In the last decade or two public attitudes to these ques-tions, and certainly government attitudes, appear to have

AN UNJUST AND INEFFICIENT SYSTEM 141changed pretty fundamentally. It is now insisted by thegovernment, and appears to be largely accepted by thepublic, that there are very real limits to what governmentscan do to solve all these social problems. In particular, anyreal attempt to solve them all by the government itselfwould involve an enormous increase in taxes, and anyhowmight not work for a variety of reasons.

Once this comes to be accepted, inevitably what will fol-low is a greater stress on the idea that individuals mustaccept responsibility for their own problems. If the statecannot pay generous enough pensions to enable retiredpeople to live in comfort, then people are going to have tolearn to save more for their own old age. And if they don'tdo that it will be increasingly accepted that they are them-selves to blame for their poverty in old age. Or again, if thestate cannot afford to pay for (say) all dental treatment forthe entire population, it must come to be increasinglyunderstood that people are responsible for paying for theirown dental treatment, and if they fail to look after theirteeth, it will be their fault, and nobody else's.

Now, although the public mood may have changed withregard to social security and the welfare state generally, thischange of mood does not yet appear to have affected theidea that claims for damages are something to be encour-aged in the belief that others will always be paying the billsfor these claims. The way in which MPs in 1987 flocked tosupport the private member's bill which allowed servicepersonnel to sue for damages (as discussed above on p. 89)illustrates how badly informed many politicians are onthese issues. In modern times it often seems that somejudges are also caught up in the culture which was perhapsdominant on these issues in the 1960s, and are inclined toallow people to blame others very readily for their injuriesor losses. We have already seen some vivid examples of thiskind of thing, such as the case of the widow of the navalairman who choked to death in a drunken stupor, and yet

i42 AN UNJUST AND INEFFICIENT SYSTEM

was able to persuade the Court of Appeal that he was onlypartly responsible for his own death, so she was able toobtain ^70,000 in damages (above, pp. 40-41). Judges areoften some twenty or thirty years behind the times when itcomes to the public mood and matters of ideology, but inthe past this has generally led to criticisms of the judges onthe ground that they are too conservative. Paradoxically,on this issue, it could be said that they are still too muchunder the influence of the vaguely left-wing welfare cul-ture of the 1960s, even though both major political partiesand the public itself have now moved away from it.

Yet the law of damages is closely related to the publicproblems of social security, pensions and so on. If the pub-lic comes to accept that it is their responsibility, as much asthat of the state, to ensure they have adequate pensionswhen they retire, perhaps they can also learn to accept thatit is their responsibility to insure themselves against the risksof injury and accident and so on. Few people would todayexpect to get an income for life - at the level they wouldhope to earn if they were working — when they are unableto work for any reason. It is, indeed, clear that we havealready moved into a new social era when people arealready realising that permanent jobs for life are not therefor the taking for every school-leaver or university gradu-ate. Many of these young people know full well that, outthere in the real world, there are many risks which willinfluence whether they will have a decent job and income.Redundancy and unemployment are familiar phenomenafor large numbers of people, and the fear of them perhapseven more familiar. In that kind of world, it will surelycome to seem more natural that a person should be respon-sible for insuring, or otherwise providing against, the riskof income loss through accidental injury, rather thanexpecting others to provide the insurance cover, throughthe legal system, for this sort of risk. If that happens it willcome to seem very strange if the law continues to make


such generous provision (even allowing for some "dis-counting", see p. 10) for damages for "lost" future earn-ings, for damages in fatal cases, and indeed, for the wholeidea that someone else should pay for our own insurancebenefits. Judges themselves may begin to change theirminds about what is just in these matters.

Some people may object that, although the blame culturemay sometimes go "over the top", we do actually need toblame people where they really are to blame. We may needto punish people who are seriously blameworthy, and evenwhere punishment is not justified, we may need to deterpeople from conduct which causes injury or accident. Thisis a point which we must not ignore, but the presentemphasis of the law is so much on the awarding of com-pensation to the accident victim, that it actually tends todistract attention from the need to punish or make account-able those who are genuinely responsible. Although the"blame culture" may lead to more claims being made, oncethe claims are made, the whole effort of the law is bent tosecuring monetary compensation for the victim and not topunishing the blameworthy parties. We will return to thequestion of punishment and deterrence in Chapter 7.

THE SYSTEM IS A LOTTERY

We turn now to discuss the fairness and justice of the lawinsofar as it operates as a compensation system for personalinjuries. How fair is the system? The answer is that the sys-tem is about as fair as a lottery. In fact it is not too much tosay that it is a lottery, a lottery by law. It is almost a matterof chance whether you can obtain damages for disabilitiesand injuries; it is almost a matter of chance who will paythem; it is almost a matter of chance how much you willget. Just look at the facts.

We have already seen that of all the disabled or handi-capped people in society about ten percent suffer from

H4 AN UNJUST AND INEFFICIENT SYSTEM

birth defects, about another ten percent have been injuredin accidents, and the remaining eighty percent are suffer-ing from illnesses and conditions of natural origin. Of thetotal number, only about one and a half percent apparentlyobtain any damages at all. How is this tiny group selectedfor preferential treatment?

Perhaps we should first say how they are not selected.They are not selected on the basis of need. Of course it can-not be denied that serious accident victims who obtainlarge damages often do need a good deal of money to covertheir basic living costs and other necessities. But a disabledor handicapped person who does not come by his injuriesin an accident may have similar needs, and that does notentitle him to damages. Some, of course, have more needthan others, depending on the nature of their handicaps, ontheir age, and on whether they have good family support,or need to look after themselves and pay for their own sup-port. These things do not decide whether you are entitledto get damages, either. Again, accident victims who canclaim damages are entitled to the cost of private hospital,medical and nursing care. Of course they won't get thesecosts unless treatment is needed. But this entitlement doesnot depend on proof that private treatment is needed.Other victims may have a greater need for private medicaltreatment for one reason or another, but that is irrelevant.

Nor does the entitlement to damages depend on how seri-ous your injuries or handicaps are. Obviously, injuries, ill-nesses, and handicaps vary enormously, from the trulyterrible paraplegic cases of completely bedridden patients,to the trivial scratches or bruises which many suffer inminor accidents, or relatively trivial handicaps arising fromnatural causes, such as a minor sight defect that is remedi-able with glasses. But whether you can claim damages doesnot depend on how serious your condition is. The systemis, of course, heavily biased in favour of accident victimsbecause, as we have already seen, it is much easier to prove


negligence in these cases, and it is also much easier to findan insured or solvent defendant. And because of this biasthere is a tendency to assume that the most seriously hand-icapped people are usually the ones who have been injuredin accidents. But this is not necessarily true. Even thoughmuch ordinary disease is no longer life-threatening, andmodern medical science can perform miracles with manypatients who would formerly have died, the fact is thatthere are still many terrible diseases and conditions whichleave people with appalling handicaps, for which doctorscan do little except alleviate pain. There are, for instance,the victims of birth defects like cerebral palsy (sometimesknown as spastics); there are the victims of multiple sclero-sis, and motor neurone disease, which are dreadful pro-gressive paralytic conditions for which there is no knowncure; there are sufferers from diabetes which can be con-trolled by daily injections of insulin, but which often leadsto serious complications in later life, frequently requiringamputations of limbs (and most limb amputations, it shouldbe noted stem from disease and not from accidents); thereare those suffering from spina bifida, another congenitalcondition but one which is not caused at birth but is dueto inherited characteristics. Many of these are very seriousconditions - and of course there are others too — which canbe heartbreaking in their effect. Many of them are far moreserious than injuries for which damages are often obtained.

Nor do your chances of obtaining damages depend onwhether the condition is permanent or temporary. After all,minor injuries, and short term sickness are part of thehuman condition - virtually everybody has such injuriesand illnesses at some time or another. The great majority,fortunately, prove short-lived and leave no permanent ill-effects behind them. But whether you can claim damagesor not does not depend on whether your illness or injuryis short- or long-lived, it does not depend on whether itleaves any ill-effects behind it. Even the most temporary


and trivial incapacity can legally justify a claim for damages,and though the damages will be modest in such a case,when all these claims are added up the total cost may beconsiderable. Of course most people won't make a claimfor trivial short-term injuries like this, but some do.

As advertising by lawyers grows, as the "blame culture"nourishes, and public awareness about these matters growswe can expect a greater "claims consciousness" as theAmericans call it, and more claims for minor and even triv-ial injuries. Already some people have discovered how easyit is, for instance, to make claims against the local council'shighway department if you trip over a protruding pavingstone on the pavement and graze your leg; and tradeunions often encourage their members to claim for veryminor industrial injuries.

Next, as we have also seen, your ability to claim damagesdoes not necessarily depend on how innocent a victim youare yourself. It is true that if you are wholly to blame foryour own injuries you won't be able to claim anything;(though if you are to blame for injuring your wife she maybe able to recover damages) but you can still obtain verysubstantial damages if you are partly or even mainly toblame. On the other hand, lots of the most innocent vic-tims of all — for instance children born with birth defects -cannot recover a penny.

Now that we have seen what your entitlement to claimdoes not depend upon, we can ask, what it does dependupon. We can answer this very shortly here because wehave already largely covered this point. What it doesdepend upon, is, first, whether your injuries or conditionare due to the fault of another person; secondly, whetheryou can prove this; and thirdly, whether the person who isto blame is insured against that liability or was acting as anemployee of a company or public authority when theinjury occurred.

There is often a considerable element of chance even


about these factors. For many disabled or handicappedpeople the effects of their disabilities are precisely the samehowever they were caused, and it is in one sense purechance whether they were caused by someone's fault ornot. Take, for instance, birth defects. As a disabled childgrows up, not of course remembering anything about theevents which caused its disabilities, it may seem the purestchance whether the child will be one of the very few whocan recover damages for them. We have seen, too, howinjuries which most people would call accidental can beblamed on someone else, and damages recovered againsthim, if he has through his fault just triggered off the eventswhich occurred, even though nobody could have foreseenthe result (see p. 46). Again, these results seem entirely for-tuitous.

There is certainly a huge element of chance over therequirement of proof. As we have seen (p. 104) this is oftenvery difficult or even impossible in many cases of industrialdiseases; but it is much easier in cases of accidents. This isjust luck. Even in cases of accident, it may be a matter ofsheer luck whether witnesses are available, and thereforewhether the cause of the accident can be proved. There isalso pure chance involved in family cases - whether aspouse or child can recover for injuries which are the faultof another family member will almost always depend onwhether the accident occurred on the road or elsewhere.

The second and third requirements of a successful dam-ages claim tend to mean that whether you can claim willalso very often (though not always) depend on whether theaccident occurred on the road or in your work or in someother way. If it occurred on the road or at work, yourchances of being able to get damages are much higher thanif the accident occurred elsewhere. These two require-ments are very much matters of chance, which have noth-ing to do with the guilt or blameworthiness of anyone else,or the innocence of the plaintiff.


Some of the mass claims we referred to in Chapter i raisethis lottery point in an acute form. There are, for instance,about 120,000 tobacco-related deaths annually in the UK. Itis obvious that if the families of all these victims receiveddamages at anything like the normal rates, (about £100,000),the total cost would be astronomical - of the order of £12billion annually. Clearly this is never going to happen -Parliament would change the law if it looked like happen-ing. So the lawyers handling these claims must be hoping andplanning to obtain damages for some of them rather than allof them. But which will be the lucky families? The answermust be that those who can hope to recover will be the oneswho can prove a case, for instance, because the victim alwayssmoked the same cigarettes, and suffered from a rare form ofcancer which was nearly always associated with tobacco.Other victims won't have any real chance of success.

The lottery element in the system extends not only towhether you can claim at all, but also to how much youwill get. Many people who are injured or suffer some seri-ous medical condition, can get financial assistance from thewelfare state in one form or another, so it must not beassumed that they will be left without resources altogetherif they fail to get any damages. But it is well known that thewelfare state is increasingly tending to become a bare safetynet to help those without any resources; people will lookin vain for generous handouts for social security or otherwelfare benefits for injury and disease. By contrast, thosewho can claim damages are given Rolls Royce treatment.Every penny of loss is carefully calculated by expert (andhighly paid) doctors, consultants and rehabilitation experts.Expected future losses are calculated too. Something extrafor pain and suffering and loss of amenities is thrown in.And (as we have noted above, p. 70) there is often a sub-stantial duplication in entitlements so those who recoverdamages (especially in fatal cases) are sometimes better offfinancially after the accident than before.


Even with the detailed calculation of damages, somematters are still largely governed by chance. The assessmentof future losses is, as we have seen, obviously a verydifficult problem in many serious cases. It must be decidedby the judge (or in a settlement) how the plaintiff's workprospects will be affected, whether he will be out of work,and for how long in the future this will continue.Naturally, despite all the care in the world, these estimateswill often prove quite wrong. In some cases the plaintiffwill be under-compensated because his work prospects willturn out to be worse than expected; in others he will beover-compensated because things will work out betterthan anticipated. When a judge decides, for instance, thata 35-year old plaintiff who has suffered post-traumaticshock will never work again, and awards him huge dam-ages to cover a life time's loss of earnings, one can onlywonder if this prediction will prove true. Indeed, if theprediction does not prove true there is a further lottery ele-ment in that the outcome may turn on chance timing. Ifthe plaintiff recovers before or very shortly after a decisionis reached, it may still be possible for the decision to beundone, and the damages reduced as happened in onemajor case in 1996 (see above p. 11). But if the recoveryonly starts a few months later this will not happen.

The basic lottery element is that, in one sense, it is almostpure chance whether an injured person ends up with dam-ages or only with social security benefits. At the time of thePearson Royal Commission Report in 1978 it was estimatedthat of all the money spent in compensating injured andhandicapped persons, including the damages payments, thesocial security costs, and the administration costs of thesesystems, the one and a half percent of victims who receiveddamages got about forty percent of the total; while theremaining ninety-eight and a half percent of victims had toshare out among themselves the other sixty percent. Doesanything further need to be said to demonstrate how unfair


the whole system is? Yet there are still people who believethat the levels of damages should be increased! Indeed, atthe time of writing the Law Commission was currendypreparing several Reports which were thought likely torecommend such increases.

If anyone suggests that, after all, there is nothing wrongwith a lottery, and that the national lottery is very popular,so why should the legal system not rely on the lottery idea,the answer will surely be apparent after a moment'sreflection. Taking part in an ordinary lottery is a voluntaryactivity; being injured or disabled, and therefore involvedin attempts to obtain compensation, is not. At the sametime, it would only be a slight exaggeration to say that itwould be no more unfair if all the available money at pres-ent paid out to victims of accident and disability were dis-tributed by random selection like the lottery winnings. Itwould certainly be a great deal cheaper.

Who pays for all these damages depends almost as muchon chance as who receives the money. It is true that in asense we all pay, as this book has shown; but the propor-tions in which we pay are very varied, and seem to havevery little relation to the risks we create, the amount westand to obtain in damages if we are injured, or any otherrational criteria. High earners pay no more than low earn-ers, or the unemployed, but obtain far more if they areinjured. Shareholders in companies held responsible formajor disasters may end up suffering substantial losses, butare no more guilty of wrongdoing than anybody else. Localauthority taxpayers may find themselves sharing a part of abill for damages awarded against their authority for thenegligence of an official over whose conduct they had nocontrol. And so on. It is like taxation, but worse.

THE SYSTEM IS INEFFICIENT

Sometimes justice has to be sacrificed to efficiency. It isoften expensive to design a really just system of laws, and


we may have to do with second-best in some areas becauseof the cost. But the compensation system that we havetoday is not only unjust, it is very inefficient too. Thisinefficiency takes two main forms — the system takes toolong and it costs too much.

Delays

First, too many claims take far too long to process. This isnot due to delays caused by log-jams in the courts. As wehave seen, only about one percent of these cases are evertried; but the ones that are settled also take far too long. Inserious cases, claims often take six or seven years to settle,some cases take even ten or eleven years - in other wordslonger than the Second World War. About half the claimstake more than a year to settle. People who work the sys-tem, like solicitors and insurance companies, get used tothese delays, and so tend to test the speed at which claimsshould be dealt with by what they are accustomed to. Butother kinds of insurance claims — first party claims in par-ticular — don't take nearly so long to handle. Life insurancepayments are usually made within weeks; comprehensivemotor claims are usually dealt with as soon as arrangementshave been completed for the damage to be repaired;householders are often agreeably surprised at the speedwith which insurers can deal with a major disaster. Whyshould it take so long to handle injury claims?

There are several reasons. One is that claims like this aremade under the third party insurance system. The insurancecompany is not dealing with its own client, but with astranger. It knows nothing about him, and owes him noth-ing for customer loyalty. So insurers may be dubious orsceptical about such claims, at any rate in the first instance.

Another reason, which affects serious cases, is that untilthe plaintiff's medical condition stabilises it is impossibleeven to try to assess what damages should be agreed. Butthis reason in turn depends on an unstated assumption -


namely that the damages must be awarded in a single lumpsum. That being so, of course, it is often necessary to waituntil the medical condition has stabilised, which may takeyears in a bad case. If damages were paid in periodicalinstalments, week by week as losses occur, the first pay-ments could often be made very quickly. As we have notedbefore (p. 14) it is now sometimes possible to get some-thing paid on account, by way of an interim award, butthese awards are far from being routine.

A third reason why it often takes so long to process thesethird party claims is because of the need to prove thatsomeone was legally responsible for the damage or injury.This is a much more complicated question than usuallyarises in first party insurance claims, because of the need toprove fault. As we have seen at some length, in straightfor-ward cases fault may be a simple matter, though even whensimple in law, the facts need to be proved — or at least theremust be evidence to support them, in the form of state-ments from witnesses, documentary evidence and so on.Gathering this evidence may well take time even in simplecases, and whenever more complex issues arise, of fact orof law, things obviously become a great deal more difficultand time-consuming.

The upshot of all these factors is that long delays in theprocessing of these claims are absolutely standard, all overthe world. Nor is it any use thinking that tinkering withjudicial reform is going to make much difference sinceprobably ninety-nine percent of the claims never go to trialanyhow. What might make a difference is converting thepresent insurance system from a third party system into afirst party system, and eliminating the need to prove fault.We return to that possibility in Chapter 8.

Cost

We have already mentioned how costly the third party per-sonal injury system is to operate. The Royal Commission

AN UNJUST AND INEFFICIENT SYSTEM 153estimates (which were given above (p. 125)) were thatsomething like ^200 million were paid in damages, at anadministrative cost of £175 million, during the years 1971-1976 (the figures are at 1977 price levels). There are no up-to-date figures showing what the total cost is today but itcannot be much (if at all) short of two billion pounds annu-ally, of which a little over one billion is being actually paidout in damages, at a cost of a little under one billion inexpenses. Bear in mind that these costs are being borne byus — the public —just as certainly as we bear the burden oftaxation for (say) the social security system.

These figures may not seem so huge when set against theenormous cost of the whole social security system, whichtoday runs at something like eighty billion pounds a year.But they certainly are very large figures in themselves; andwhat is more the costs of administration of the damagessystem are far higher than the costs of administration of thesocial security budget. Most social security benefits are dis-bursed at a cost to the public of around ten to twelve per-cent of the sums paid out. If the sums paid out as damagescould be disbursed in this same way the public would saveperhaps £700 million a year. Because public bodies aregenerally and widely believed to be far less efficient thanprivate ones, this may seem surprising at first sight. But it isthe natural result of the complexities of the damages systemwhich account for the extra costs of administration just asmuch as they account for the delays in the processing ofclaims. When you have to employ lawyers to handle theseclaims, costs are going to be high.

In this connection, it is worth remembering that at thetime of the amendment to the Crown Proceedings Act in1987, which allowed service personnel to sue for damagesfor injuries, it was estimated by the Ministry of Defencethat they would need to employ twenty-four extra lawyersto handle these claims (see p. 90). If the Ministry had toemploy twenty-four lawyers to defend the claims they

AN UNJUST AND INEFFICIENT SYSTEM

e x p e c t e d to b e m a d e against t h e m , t h e n it is reasonable to

assume that the s e rv i ce plaintiffs w o u l d also h a v e had to

e m p l o y the e q u i v a l e n t o f t w e n t y - f o u r l a w y e r s to m a k e the

c la ims . S o this o n e apparen t ly m i n o r a m e n d m e n t to the

l a w — this l i t t le e x t e n s i o n o f the r ight to c l a im damages -

w a s e x p e c t e d t o p r o v i d e w o r k for f o r t y - e i g h t n e w l awyers !

O n e w o n d e r s h o w m a n y n e w l a w y e r s are b e i n g e m p l o y e d

as a resul t o f all the " s t r e t c h i n g " o f the l a w desc r ibed in

C h a p t e r s 2 and 3! I n d e e d , t o say " o n e w o n d e r s " is strictly

c o r r e c t , b e c a u s e there is n o w a y o f k n o w i n g h o w m u c h

this costs . A s w e h a v e p o i n t e d o u t already, these changes in

the l a w are m a d e b y the j u d g e s w i t h o u t any est imate o f the

ex t ra cos t t o the p u b l i c o f w h a t t h e y are d o i n g . Perhaps

T r e a s u r y sc ru t iny o f pub l i c e x p e n d i t u r e is no t such a bad

t h i n g after all, i f i t p ro tec t s the p u b l i c f r o m wastefu l e x p e n

di ture o f this k i n d .

H O W H A V E WE G O T I N T O THIS MESS?

In o n e sense it d o e s n ' t ma t t e r h o w w e h a v e g o t i n to the

p resen t mess . I f it is a mess — an unjust and ineff ic ient mess,

as has b e e n d e m o n s t r a t e d — t h e n the i m p o r t a n t ques t ion is

w h a t s h o u l d w e d o a b o u t it, a n d that q u e s t i o n is addressed

in C h a p t e r 8. B u t s o m e p e o p l e m a y b e scept ical abou t

these c la ims . T h e y m a y th ink this b o o k exaggera tes , o r is

b iased . T h e y m a y t h i n k it is imposs ib l e that th ings can be

as b a d as sugges t ed h e r e . T h e y may , in part icular , w o n d e r

h o w i f this a c c o u n t is accura te , th ings c o u l d h a v e g o t so

b a d w i t h o u t a n y t h i n g b e i n g d o n e a b o u t it. T h i s sec t ion is

addressed m a i n l y to those w h o m a y ask t hemse lves , h o w

h a v e w e g o t i n t o this mess?

T h e a n s w e r p r o b a b l y lies in a n u m b e r o f different fac

tors , n o n e o f t h e m par t icu lar ly discredi table to the legal

s y s t e m o r those w h o ope ra t e it. T h e a n s w e r d o e s not He in

s o m e g igan t i c l ega l consp i racy . T h e sys tem has no t b e e n

d e v i s e d b y l a w y e r s to l ine thei r p o c k e t s , still less b y the


judges to line the pockets of their former colleagues.Actually the system has hardly been devised by anyone - ithas just tended to develop bit by bit, from some verysimple ideas, as we saw in Chapter 1, starting from the basicpoint that if somebody injures you through his fault heshould compensate you. Most of those who operate thesystem are convinced that it is basically a just system whichenables injured people to recover damages with their assist-ance against others who have committed wrongs againstthem. They do their best for their clients within the rules.

Nor does the answer lie to any great degree in the greedof those who may sometimes appear to be falling overthemselves to claim damages. Perhaps the system doesencourage this kind of response; certainly, when there is alot of publicity about strange claims and large settlementsor verdicts for apparently undeserving plaintiffs, manyothers may feel tempted to try their luck with the system,even though they would not otherwise have done so. Theworse the system gets, the greater this problem willbecome. And it is also true that the system encouragesinjury victims to exaggerate their symptoms, whether con-sciously or unconsciously. But at present most people whoclaim damages are probably not motivated primarily bygreed. They may have needs, or they may have grievances.If they go to solicitors to advise them they tend to getcaught up in a system they do not understand. Solicitorsassume that complainants who come to them seek what thelaw offers them - the right to damages. And once themachinery of the law creaks into action, it tends to followa predestined groove. So we should not blame the peoplewho operate the system or (in general) the people who takeadvantage of it to claim what they are entitled to. The realtrouble lies elsewhere.

What has gone wrong is probably due to five main fac-tors. The first is the resolute refusal of the judges and thelegal system to face the fact that the wrongdoers who are


actually responsible for the injuries that get compensated,do not themselves pay the damages. But even this is notdue to any blinkered refusal to face reality. It actually orig-inated in a rule of procedure in the days when civil actionswere tried by juries that the plaintiff was not allowed toment ion the fact that the defendant was insured. The pur-pose of excluding the insurance element from considera-tion was originally to make sure that juries were not biasedagainst the defendants. Judges thought that juries wouldtoo readily sympathise with injured plaintiffs if they knewthat insurers were going to pay the damages Paradoxically,this book has argued that excluding the insurance factorfrom consideration has in the long run powerfully assistedthe stretching of liability, rather than the reverse. N o w thatjudges try these cases they know perfectly well that thedamages are going to be paid by insurers anyway, even ifthe details are concealed from them, so they have no fearthat awarding large damages will bankrupt some poordefendant w h o has just made a mistake. At the same time,refusing to discuss insurance has meant that every actionfor damages appears to be a contest between an innocentplaintiff and a negligent wrongdoer. In such a contest,sympathy will always be with the plaintiff.

A second factor, closely related to the first, has surely beenthe powerful tendency which most people have, and whichlawyers and judges share, to treat groups of people as enti-ties capable of being held responsible for the wrongdoing ofany one of them. The huge growth of the principle of vic-arious liability, and the modern treatment of public institu-tions, has surely followed on from this. It is so easy to call agroup " they" and say that if a member of a company or apublic official does something wrong, " they" should becalled to account and pay damages, that few of us stop to askif this form of reasoning is really justified.

The third factor which explains the way the law hasspread is surely the process of selective comparison which

AN UNJUST AND INEFFICIENT SYSTEM 157we referred to previously (p. 91). Whenever counsel isarguing a new type of case on behalf of a plaintiff, and isseeking to persuade the judges to "stretch" the law a little,he compares the instant case with the closest one to it, inwhich damages have previously been awarded. The wholesystem of precedent encourages this procedure. Judges arereadily persuaded that the difference between the presentcase and the last one is too small to have any real weight,so the law is stretched - again and again and again, as wesaw in Chapters 2 and 3. Defending counsel rarely have thesame success in persuading judges that the instant caseshould be better compared with other cases in which nodamages have been awarded — possibly for the simplereason that most of these other cases never get to court atall, and do not therefore constitute precedents.

Precisely the same thing seems to happen even whenreform of the law is considered. The Law Commission, forexample, has recently published a consultation paper aboutdamages in personal injury cases. In this paper theCommission spends many pages learnedly comparing theway damages are assessed in many other countries with theway damages are assessed in England, but nowhere doesthe Commission look into its own backyard in England tocompare the way damages are assessed with the sort ofcompensation made available to those unable to obtaindamages at all. An afternoon spent with the clients of alocal authority social services department or occupationaltherapy department will quickly reveal many victims ofinjury and disability who receive no damages and areassisted out of very meagre budgets indeed. These cases getlittle publicity compared to cases which end up in the HighCourt, so it is the latter which are always chosen for pur-poses of comparison and which the public get to hearabout.

A fourth factor is the growth of paternalism and theblame culture, which among other things has led many of


us to attribute blame for injuries and accidents and losses toothers, when we ourselves are perhaps responsible for whathas happened, or at least could have insured against therisks. When people start, in all seriousness, suggesting thatinsurance companies are responsible for advising theirclients how to spend the money that is due to them underpension plans, and should be liable to them if they fail togive them this advice (see p. 49), we can see how far pater-nalism and the blame culture have got.

Closely associated with this fourth factor is a fifth. Thelaw has been so taken up with developing a satisfactory sys-tem of third party insurance to cover the liabilities whichit is busy imposing on defendants, that lawyers have failedto notice that it is just as possible and often much easier, foraccident victims to cover themselves by their own firstparty insurance policies. Too often, legal argument (and wemay add, legal education) has proceeded on the assumptionthat if an injured plaintiff fails to obtain damages, he will beleft penniless. Had lawyers appreciated earlier that alterna-tive methods of compensation are often available to acci-dent victims, the whole development of liability rulesmight have been different. Indeed it is surely not too muchto say that the huge growth of legal liability for personalinjuries has itself powerfully inhibited the development offirst party insurance against injury risks — even though thatwould be a much better way for these risks to be covered.

There may be other factors too, but enough has beensaid to show that the mess we are in today is not the resultof one simple explanation. Social and legal problems likethis often grow up almost accidentally, over long periods oftime, which is what has happened here. But the system isa mess for all that.

7. DOES THE SYSTEM HAVE

NON-COMPENSATORYBENEFITS?

IN the last chapter we suggested that the present law isunjust and inefficient as a compensation system. We nowneed to ask whether it may nevertheless have value inother ways. One of the surprising things about the presentlaw is that the judges insist it is only designed as a com-pensation system, but the moment anyone proposes that itshould be abolished and replaced by a better compensationsystem, then it is argued that, after all, the system has valueas a deterrent or for other similar purposes. We shall nowsubject this claim to scrutiny.

PUNISHMENT AND DETERRENCE

Punishment

We have seen that the judges insist that the purpose of aclaim for damages is compensation and not punishment. Sothe way in which the damages are calculated has all to dowith what the plaintiff has lost or suffered, and has nothingto do with how badly the defendant has behaved. Providedthat the basic threshold of negligence is passed the plaintiffrecovers in full — the damages are not increased where thedefendant has behaved very badly, nor are they reducedbecause the defendant was trying his best and only just fellbelow the law's requirements. There are some exceptionsto this principle, where punitive or exemplary damages canbe awarded, and these damages are avowedly fixed at a

160 DOES THE SYSTEM HAVE BENEFITS?

higher level in order to punish and deter; as we have noted,claims against the police for wrongful arrest and similarclaims, may fall into this category. But punitive damagescannot be recovered in most ordinary actions for damagesfor injuries received in accidents.

It seems very likely that the public perception of the pur-poses of claims for damages differs on this point from the lawas laid down by the judges. To go by media comments,many people seem to feel that damages ought to be awardedas a form of punishment for wrongdoing, and they oftenappear to be outraged by what appear to be low awards ofdamages where a plaintiff has not suffered substantial losses,or where the damages are fixed at the relatively low figureof ^7,500 in cases of bereavement. Many lawyers wouldinsist that this public attitude tends to confuse the two ques-tions of punishment and compensation, and that there aregood reasons for keeping them separate. For instance, thecriminal law does not usually punish mere carelessness, butonly intentional wrongdoing. Carelessness on the roads is anexception to this, and a driver can be prosecuted for drivingwithout due care, but there are many other accidents whichcan occur in situations not constituting a crime at all. Mostpeople would probably find it unreasonable for the criminallaw to be invoked where accidents occur due to minor actsof carelessness - but civil liability does exist in many suchcases. Then again, where there is some uncertainty aboutwhat happened, the criminal law requires proof beyond rea-sonable doubt, because it is a very serious matter to con-demn a person as a criminal, and perhaps jail him for severalyears, and it would be unacceptable to do that unless we feelquite sure that he is guilty. But in the civil law, where pun-ishment is not in question, a lower standard of proof prevails- it is only necessary to show that the complainant's story ismore probable than not. This is called proof on the balanceof probabilities and it may be of special importance wherean accident has occurred, but witnesses are few.

DOES THE SYSTEM HAVE BENEFITS? 161

Now that we have seen how damages are actually paidin most compensation cases, we can appreciate anothervery important reason for not using these cases as opportu-nities to punish the defendant. For we have seen that theactual wrongdoer hardly ever pays the damages. So theaward of damages is not going to punish him anyhow. Hemay even be dead, but damages can still be awarded againsthis estate, and paid by his third party insurer. Even whendamages are awarded against a company, and we think thecompany is somehow to blame as a corporate entity, thedamages are still not going to hurt the actual peopleresponsible. We have also seen the absurd way in whichthis fact is disregarded when heavy punitive damages areawarded against the police for a bad case of wrongful arrest,and once again the damages are paid by the public and notthe actual officers responsible.

So we need to be careful when we think about the fair-ness or justice of the law in civil liability cases — it is point-less to urge that compensation should be paid becausesomeone has done something wrong, and he deserves to bepunished. One reason why the law of civil liability has gotso out of control is probably because of public desires forvengeance against those thought to be responsible for seri-ous accidents and injuries. This desire for vengeance mayor may not be a good thing, but it is misdirected when itleads to demands for more compensation in more cases.

Unfortunately, the present system may also mislead thepublic into believing that when a substantial award ofdamages is being made, justice has been done against thewrongdoer. In other words, the public desire forvengeance may not only lead to demands for too muchcompensation, it may also lead to a real neglect of proced-ures for the punishment of people who should be pun-ished. Precisely because the whole emphasis of the law ison compensation, it seems to distract attention from thepossibility of actually punishing the guilty parties. Too


often, cases of negligence occur in which some individu-als, whether they are themselves defendants, or (more usu-ally) employees or officials of a company or public body,appear to have been very seriously at fault — yet nothing isdone to punish them. Only in the most extreme cases ofgross negligence, for instance, are manslaughter chargesever brought in the case of a fatal accident. Only in the caseof road accidents is it common practice to prosecute forlesser offences such as careless driving or reckless driving.In fact the criminal law does not have any general offenceof carelessly or even recklessly endangering the life orsafety of others, an omission which can only be explainedby the mistaken belief that such cases can be taken care ofby the law of civil liability. Such an offence is needed.

Deterrence

If the law is not designed to punish, is it of any value as adeterrent? Some people think it is. They believe that com-panies and public bodies can be deterred from committingnegligent acts if they are threatened with liability for dam-ages. There may be some areas of activity where the law ofnegligence has a minor deterrent effect, but in general, itseems unlikely that much of value would be lost if it weregot rid of.

Certainly we can dismiss the idea that the law of negli-gence is a useful deterrent in the case of road accidents.Drivers on the road are already faced with a battery ofcriminal sanctions if they drive carelessly or dangerously.They can be fined or in extreme cases jailed. They can losetheir licences. They can also be injured themselves if theydrive badly. If all these things don't deter many peoplefrom bad driving it is absurd to think that they will bedeterred by the thought that their insurance companiesmay have to pay a damages claim.

This does not necessarily prove that companies and pub-he bodies cannot be deterred by the threat of legal liability,


but at least in the case of personal injuries, it seems proba-ble that there are already plenty of other reasons why anysensible company or public body will wish to avoid care-lessly injuring its workers, or the public. Quite apart fromthe sheer inhumanity of deliberately taking risks with lifeor limb, most companies will find themselves subject tofinancial penalties (and the ensuing bad publicity) for caus-ing such injuries. There are so many safety regulations pro-tecting workers from industrial injury that it must be rarefor an injury to occur without the breach of a regulationsomewhere. Any such breach makes companies liable to befined, although it is true that prosecutions are frequentlynot brought for simple accidents unless there was indeedsome gross fault somewhere. Then again, any sensiblecompany knows that accidents cause other financial lossesquite apart from legal liability — indeed, there is researchsuggesting that these other losses are likely to exceed anydamages payable. These losses stem from the disruptionproduced in any organisation by an accident — conveyorbelts may need to be stopped in a factory, mining shaftsclosed in a mine, even offices may need temporary closurein the event of a serious accident. All these things will costmoney and no well-run company will lightly run the riskof such losses even if they cynically disregard the safety oftheir workforce or members of the public.

Besides, as we have already seen at some length, evencompanies don't actually pay damages in most cases. It isthe insurers who pay. But then — some people have sug-gested — the insurer may charge higher premiums for thosewho have bad accident records, so in this way, even insur-ance does not prevent legal liability from having a deter-rent value in the long run. This is an interesting andingenious suggestion, but detailed research does not bear itout. The subject is quite complicated, but the essentialpoint is that insurers cannot and do not vary premiumsvery much according to accident record. It is too complex,


and too unreliable statistically. You can't assume that acompany which had two or three accidents one year (whenthe industry average is only one accident per year) is neces-sarily a badly run company which is likely to have moreaccidents than the average next year. It may just be a statis-tical quirk — when you deal in large numbers, as insurersalways do, statistical quirks are themselves of quite frequentoccurrence, and have to be recognised for what they are.

There is another problem about relying on the law ofdamages as a deterrent — nobody is ever quite sure that itmay not over deter in some situations. For instance, if doc-tors get paranoid about the threat of being sued (as manyAmerican doctors are) a tendency develops for the doctorsto practise what the Americans have christened "defensivemedicine". That means that the doctors start ordering ahuge number of tests and X-rays on their patients, whichare not medically justified, but which may protect the doc-tors if somebody later sues them. Now these tests andX-rays may not only be wasteful (it has been estimated thatover one billion dollars annually is spent on unnecessaryX-rays in America), they may actually carry some risks forthe patients. Exposing a patient to an X-ray increases by atiny amount the risk of certain cancers. Obviously if a fewmillion unnecessary X-rays are being taken every year, it islikely that a few unnecessary cancers are going to develop.But nobody can sue for that because it will never beknown who are the cancer patients who owe their cancersto unnecessary X-rays. In this way, liability for negligencecan actually cause more harm than it prevents. (If anybodysuggests that there is an inconsistency between the argu-ment in this paragraph and the previous argument suggest-ing that liability does not deter at all in most cases, it mustbe remembered that damages are vastly higher in America,and that consequently some insurance premiums — such asthose paid by many doctors — are simply enormous byEnglish standards; what is more these premiums do vary or

DOES THE SYSTEM HAVE BENEFITS? 165can vary according to the doctor's record. This does notyet happen in England.)

The fear of a kind of over-deterrence has influenced thejudges in England in some cases where they have refusedto hold some public bodies liable, such as in cases where ithas been alleged that the police are responsible for a mur-der because they failed to arrest the murderer. In cases likethis, liability for negligence might lead the police authori-ties to deploy their limited resources to try to minimise therisk of being sued, possibly against their better judgment,and against the public interest. This is a good reason for notimposing liability in these cases, and some of these judicialdecisions are therefore to be welcomed.

On the whole, then, it seems doubtful if liability for neg-ligence operates as a useful deterrence, and little would belost by getting rid of it. There may be a few activities wherespecial considerations arise, and these may need specialtreatment if the law is to be substantially revised. But theproblem does not appear to be an extensive one.

ECONOMIC CONSIDERATIONS

In the past thirty years a huge literature has been spawnedin America by a completely new "school" of law-and-economics scholars. This literature began with study of theaccident-deterrence problem, and is therefore of someimportance to us. What these scholars argued was some-what complex and refined, though the basic idea is notreally too difficult to grasp. This basic idea is that makingpeople pay for the accidents they cause is not so much adeterrent to particular accidents, but is a way of persuadingthem to spend the appropriate levels of money on safety.

Suppose, for instance, a company is held liable forinjuries caused by negligence on the roads, we cannotexpect that this will do much to deter particular accidents.But we can perhaps expect that road haulage companies, or


bus companies, will take more trouble over the selectionand training of their drivers and the maintenance of theirvehicles. Suppose a very large company finds itself regu-larly paying out a million pounds in damages for road acci-dents every year. They have an economic incentive tospend a lot of money in trying to reduce that figure.Suppose they can reduce their liability to half a millionpounds a year by spending .£200,000 on driver training andbetter maintenance. Clearly if they can do that, they willsave overall -£300,000 a year — and at the same time reducethe number of accidents. The theory is sometimes calledthe theory of "economic deterrence" or "market deter-rence" to distinguish it from the simpler idea of deterrenceby more direct means.

Some people will have a rooted objection to this kind ofargument because they will feel that nobody should beallowed to weigh safety against cost considerations.Business activities (they may feel) should be as safe as theycan be humanly made, not as safe as companies can afford.This is a widely held viewpoint but it is simply wrong.Safety and risk is always a relative matter. There is neversuch a thing as absolute safety. There are lots of accidentswhich could be prevented in society if we were preparedto pay the price. We could abolish all road accidentsovernight by forbidding all motor traffic, for instance.There is no doubt that this solution would work but wedon't do it because it would cost far too much - not just interms of pounds, but in terms of what we should have togive up. And the same is true of all activities in whichhumans engage.

So the question always becomes, how much should bespent on safety, and the answer of these law-and-economicstheorists is that companies should be left to make their owndecisions about levels of safety expenditures, but they mustrealise that if they spend too little it will cost them more inthe end because of the damages they will have to pay.


The theory depends for its soundness on the assumptionthat accidents have a "true" or "real" cost, and that dam-ages represent that true cost. If this is not the case thencompanies who have to pay damages may be paying toolittle or too much, and either way the incentive to investin the right levels of safety precautions will be distorted.

This book is not the place for any detailed assessment ofthe value of this theory. All that we need to say is that it hasvery little utility in the real world for a host of reasons.First, as we have emphasised over and over again, compa-nies (like individuals) do not pay the damages in thesecases; they are paid by insurers. The theorists respond withthe argument we have already noted, that insurers can varytheir premiums to suit the track record of individualinsured parties. But this too we have seen is a very theor-etical argument. It is in practice just not true that mostcompanies will find their premiums significantly alteredbecause of their accident record. Only with very largecompanies does this happen to any real degree. Eighty per-cent of companies are probably too small to be individuallyrated by insurers, who just lump most clients into groups,and assess them accordingly.

Then there is another problem about the assumptionthat companies are motivated by long-term financialcalculations of the kind presupposed by this theory.Companies should perhaps be so motivated, but companiesare run by real live managers and directors who may bemotivated by other more short-term considerations. Lotsof the serious liabilities encountered in the modern world(industrial diseases, pollution and so on) have long latencyperiods, that is to say, the companies whose activities mayinvolve liabilities of this kind may be free from any prob-lem for twenty or thirty years — so the current managerscan expect to be retired or to have moved on long beforethen. So if it is just economic considerations which motiv-ate them, then they are unlikely to worry about these long


term liabilities, although the company as an entity will haveto face the liabilities eventually.

Another reason why this theory need not be taken tooseriously is that practically all activities which have someinjury potential are regulated in all sorts of ways in themodern world. Licensing, testing, inspections, supervision,and criminal prosecution are all alternative methods of try-ing to control the levels of safety that a society may insistupon. So long as this array of controls remains in place ithardly matters whether a company operates under somekind of economic deterrence. What is more, there aremany activities in which a company's reputation (andhence profits) are far more likely to motivate its behaviourthan its legal liabilities. A food company, for instance,which sells tainted meat and causes an outbreak of E-coli,may well be liable to pay damages to its customers who aremade ill, but it can hardly be supposed that food compa-nies would not do their utmost to avoid this kind of thingeven if they were not liable to pay these damages. So longas the public health authorities have the power to investi-gate, and if necessary, close down businesses who are caus-ing such an outbreak, the liability to pay damages seemscompletely unnecessary as a deterrent, or even as an eco-nomic incentive.

We are left at the end with a residual argument whichneeds perhaps to be borne in mind. This argument basicallyis that activities of different kinds should not be subsidisedby other activities but should bear their own costs. Wherepossible, road transport should bear the cost of road trafficaccidents; railway transport should bear the cost of railwayaccidents; air traffic should bear the cost of aircraft acci-dents; shipping transport should bear the cost of shippingaccidents; and so on. If we can structure our compensationlaws to achieve this result, by all means let us do so, but thetheory is too impractical to justify distorting our personalinjury compensation system in order to try to meet it.


These economic arguments may have more weight in cer-tain kinds of property damage cases, (for example, in ship-ping accidents) and in that context we may need to keepthem in mind.

PUBLIC ACCOUNTABILITY

It is sometimes urged that the right to bring an action fordamages is a useful way of making large institutions, pub-lic or even private, more publicly accountable for theirbehaviour. Suppose a child goes into hospital for a minoroperation or some, apparently not very serious, disease. Ifthe child suddenly dies, the parents will be greatly shocked,and suffer severe anguish. They may also find that it is hardto discover exactly what has happened, why the deathoccurred, and all their inquiries may be fobbed off. If thathappens, they may take comfort from the fact that bybringing an action for damages they may be able to bringthe issues into the open and force the hospital authoritiesto come to court and give evidence, where their barristercan cross-examine them and try to get at the truth. In thisway the action for damages may serve a sort of inquisitor-ial purpose - the purpose may not be so much to obtaincompensation but to ask questions and get answers.

Or again, take a case which has been much discussed inthe media while these pages were being written, the claimfor damages for bullying at school which was apparentlysettled by a payment of £30,000 in damages. Some peoplemay feel dubious about the idea that such a huge sumshould be paid in compensation for mere bullying (thoughI have pointed out earlier that the settlement must havebeen based on the assumption that the victim was severelytraumatized and hence unable to work for some time inconsequence); but others may think that the ability toclaim damages in this way has served a useful purpose bybringing the issue to public attention. One newspaper,

i7o DOES THE SYSTEM HAVE BENEFITS?

indeed, has proclaimed that the case has put bullying at thetop of the agenda for schools.

There is something in these claims that a legal action canhave a useful function as a sort of inquiry mechanism insome cases. But unfortunately the action for damages isvery ill-suited for this purpose, and in general probablydoes more harm than good. For one thing, as we haverepeatedly stressed, the purpose of a claim for damages iscompensatory. The law is geared to that purpose in a vari-ety of ways. For instance, suppose that there is indeedreason for public disquiet over the behaviour of some pub-lic body like a hospital, as in the hypothetical exampleabove. There may well be a real public need for an openinquiry into what has happened, to allay public anxieties,but if someone issues a writ claiming damages against thehospital, a public inquiry is quite probably the last thingthat will happen. First, everyone will clam up even morethan before because the insurers (if any, or the lawyers, ifnone) will instruct the hospital staff not to talk about theissues at all. Secondly, if there really is anything discred-itable the hospital wishes to conceal it will certainly makea substantial offer to settle the case. Because of the rulesabout costs discussed in Chapter i, (above, p. 23) thismeans that the complainant can only reject the offer andproceed with his lawsuit if he is willing to run the risk of ahuge bill for costs at the end. And even if he is so willing,where he is on legal aid, the legal aid authorities will prob-ably withdraw their financial assistance. The case will notthen proceed at all. In other words, precisely because themain purpose of the law is to compensate the injured, apublic inquiry which it may be in the public interest tohold, will not actually be held. The fact that Pan-AmericanAirways (or its insurers) has settled most of the claims of thevictims of the Lockerbie air disaster is perhaps illustrative.These claims were, apparently, based on the suggestion thatPan-Am had prior knowledge of a possible bomb threat


which it chose to ignore. One might have thought it wasin the public interest that the facts about this allegationshould have been fully and publicly investigated — after allthe scientific causes of an air crash are always investigated bypublic agencies. But the facts about the alleged priorknowledge have never been publicly investigated, and tothis day the world does not know the whole truth aboutthe allegations. Settling the damages claims has disposed ofthe allegations.

But even in cases where a trial does go ahead, althoughit is undeniable that in some cases this may lead to a usefulpublic airing of important issues, there are other respects inwhich this is quite an inappropriate setting for this kind ofinquiry. In a claim for damages the whole focus of atten-tion is on the plaintiff's complaint, and on the reasonable-ness of the defendant's conduct as regards that particularplaintiff. But it is often impossible to judge the reasonable-ness of that conduct except in a wider context whichwould require the court to embark on a far broaderinquiry. Take the case of the school-bullying claim, men-tioned above. As already said, some people think this caseserved a useful purpose in putting bullying at the top of theagenda for schools, even though this case was settled andno trial was held. But anyhow, why should bullying be atthe top of the agenda? Schools have many problems ontheir agenda — dilapidated buildings, class sizes, the qualityof the teaching, the need for new equipment like comput-ers, school truancy, examination results, and so on. The listis endless, and head teachers, school governors and localeducation authorities are responsible for adopting a bal-anced approach to these problems, and deciding whichshould be at the top of the agenda, and which should havea lower priority. If a parent or a child can put bullying atthe top of the agenda by issuing a writ claiming damages,he is in effect jumping the queue; we are allowing him,rather than the proper authorities, to decide what should


be at the top of the agenda. So this is not necessarily sucha good idea after all.

In many really serious cases where disasters haveoccurred or especially terrible events have taken place,public inquiries are held, but they are ordered by ministersor the government, or sometimes by local authorities, andtheir job is to ascertain the facts and make recommenda-tions. These inquiries are often held by judges or seniorbarristers and closely resemble trials for damages — exceptthat their purpose is not to award damages to anybody.They are actually much better instruments than actions fordamages for these purposes. All the same, it cannot bedenied that in some cases there is a need for a procedurewhich an individual citizen can use, to demand an inquiryabout some problem, or some event, and if there is no rightto sue, a weapon will be lost which, if not the most suit-able, still does have some use in certain contexts. Theanswer to this problem must lie elsewhere. Perhaps it liesin a Freedom of Information Act which enables the citizento get at information controlled by public agencies. Orperhaps it should be made possible for citizens to initiate aninquiry in certain cases, of their own motion; or, (in thecase of schools) the answer may lie in greater use ofOmbudsmen. There are already many Ombudsmen whoare able to inquire into individual grievances againstpublic bodies like hospitals (such as the National HealthOmbudsman) and their inquiries cost the complainantnothing. Perhaps we also need Ombudsmen for schools.Perhaps local councillors should be more aware of theirrole as representatives of their electors (like MPs) and holdlocal "surgeries" at which public issues can be raised. Thisbook is not designed to suggest reforms to the whole polit-ical system so the matter cannot be pursued here. All thatneeds to be said here is that the problem is not best dealtwith by litigation.

8. WHAT CAN WE DO

ABOUT IT?

THIS book has covered a wide range of different kinds ofclaims for damages, and if there is one overall message thatcomes through, it is that the whole system of legal liabilityneeds a good hard look. Unfortunately, there is reallynobody capable of giving it the look it needs. The maindifficulty is that the subject is far too important to beentrusted solely to lawyers, but nobody else understands itwell enough to be able to propose the deep-rooted reformsreally required. The one body which might have been ableto do this job - the Law Commission - is far too closelywedded to the system and its underlying value structure, tobe able to bring to bear the independent scrutiny the sys-tem needs. In the long run the only solution to thedifficulty must lie in educating the public to understandmore fully the nature of the system we live under, and whopays its costs. Perhaps lawyers too need educating, becausethough they may understand the nuts and bolts of the sys-tem, they do not see it in full perspective. In particular,lawyers know very little about cases where legal claims arenot normally made.

But readers of this book may feel they are entitled tosomething more concrete in the way of suggestions forimprovement, and the remainder of this chapter will there-fore take up this challenge. It is divided into three parts. Inthe first part a few proposals are made which extend overmuch of the field of civil liability. In the second and thirdparts the emphasis will be on actions for damages for

174 WHAT CAN WE DO ABOUT IT?

various kinds of personal injuries, including claims arisingfrom fatal accidents.

A NEW LOOK AT THE WHOLE SYSTEM OF CIVIL

LIABILITY

Obviously, in a book of this nature, we can only make afew tentative suggestions about such an extensive subject asreforming the whole system of civil liability, but a numberof salient points do emerge from the first seven chapters inthis book.

First, the law must reflect the fact that in the great major-ity of cases damages are not paid by individual wrongdoersbut by insurance companies or other large bodies. Theconsequences of this need to be faced. For one thing indi-vidual wrongdoers get off too lightly at present. The law ofdamages makes no serious effort to punish those who areguilty of causing serious injury or loss to others - and bythose who are guilty, I mean the actual, responsible parties,not employers or public bodies or insurance companies.While nobody would want to institute witch-hunts againstthose who are guilty of nothing more than minor acts ofcarelessness, far too many people get away with muchmore serious wrongdoing for which they are neither pun-ished by the law nor even disciplined by their employers,or their professional bodies. A new criminal offence ofrecklessly endangering members of the public needs to becreated, which should operate across the board and not justdeal with driving offences. The disciplining of employeesand professionals guilty of really serious fault, gross care-lessness or recklessness, also need to be taken much moreseriously, whether the consequences are physical injury ormerely financial or other losses.

Next, the law of vicarious and corporate and publicresponsibility needs to be comprehensively reviewed.Punitive damages should be abolished in cases of vicarious

WHAT CAN WE DO ABOUT IT? 175

liability - it is contrary to all principle to punish one per-son for the misdeeds of another, and it serves no usefulpurpose to do so. Even ordinary civil liability for compen-satory damages needs to be given a long hard look wherethe defendant is a corporation or a public body. Every kindof claim for damages should be scrutinised to see if it arisesfrom circumstances where it is more appropriate for theplaintiff or the defendant to cover the risk by insurance.Certainly, liability for causing property damage by firecould be abolished in the case of insured property, whichis another way of saying that the doctrine of subrogationshould be abolished in these cases, and possibly in otherstoo. This is one reform which could at a single blow sim-plify the law, and save the public money as well.

Liability for personal injury is dealt with more fully againbelow, so the main question to be considered here is howfar corporations or public bodies should be held civillyliable for economic losses and new forms of injury or losswhich do not fall into the traditional categories of personalinjury or property damage. An inquiry of this kind cannotbe limited to the law of negligence, but must take intoaccount the law of contract as well. To pursue this in anydetail would take us into areas well beyond the scope ofthis book, but we have seen examples of cases (such as theclaims of photographers for loss of their films, above,p. 136) where the present law permits claims to be madewhich are contrary to the general interests of consumers.These sorts of claims should also be abolished, though abo-lition should be combined with new facilities for protec-tion of the consumer by insurance, as already suggested(P- 137)-

The liability of accountants and other professionals forunlimited sums in cases of financial loss should also be abol-ished. As this proposal is unlikely to command generalagreement, a reasonable holding reform would be to limitthe liability of such firms to some overall figure likely to be


within the current limits of their insurance cover.Certainly, if nothing is done about this type of liability itcan only be a matter of time before a large firm of accoun-tants is bankrupted and completely broken up by someenormous legal claim. That will lead to some serious gov-ernment inquiry and the law will then be changed. Butwouldn ' t it be more sensible for once to introduce a reformbefore a major failure of the system actually occurs?

Over and beyond these specific proposals it is highlydesirable to shift the law away from the strongly paternal-ist ideology which has influenced it for some decades. Aswe have seen, paternalism underlies much of the blameculture; it encourages people to see others as responsiblefor taking precautions against accidents and injuries, andalso as responsible for protecting them by insurance orother means, when misfortune does strike. The messagessent by this sort of paternalist ideology are little short of dis-astrous, and are closely linked to the culture of the welfarestate in its heyday — the idea that the state would be respon-sible for caring for its citizens "from the cradle to thegrave". It may well be, in fact, that it is the gradual collapseof this welfare state ideal which is driving so much of thelitigation process today. People who have grown upbelieving that the state would always look after them, nomatter what misfortunes should strike, are now driven tofind someone to sue, when they discover that the state willnot and cannot deliver on this expectation. Litigation isclearly no real solution to these problems from society'sviewpoint, though it may be a solution for a small numberof successful plaintiffs. The only real solution to theseproblems in the long run is the spread of more first partyinsurance.

Even where paternalism is genuinely necessary, becausesociety is taking on itself the care of those who are unableto care for themselves, because they are (for instance) chil-dren in care, or mental patients, we need to be extremely


careful to distinguish between our desire to render assist-ance to those who need it, and any duty to pay compensa-tion where we fail. In this respect the law is at present onthe right track, though under challenge in the EuropeanCourt of Human Rights.

PERSONAL INJURIES: SOME DEAD ENDS

We turn now to consider possible reforms to the system ofcompensation for personal injuries and fatal accidents, andthis must be done at somewhat greater length, bothbecause of its intrinsic importance, and because the subjecthas been very much debated for many years and in manycountries.

We have seen that most damage awards are paid by insur-ance companies, and that it is insurance companies whoactually handle and administer virtually the whole system.Of course they do this under the supervision of the courts,and anybody who thinks he is getting an unfair deal froman insurer can try "appealing", as it were, to the courts.Although some public bodies, like the central government(the Crown) and perhaps also a very few private bodies donot insure, this does not alter the general position.

Now this means that the system we have is in reality aninsurance system, and we need to treat it as such. If youhave an insurance policy and you find that it does not affordyou the sort of coverage you would like, and costs toomuch, the natural reaction is that you should change yourinsurance policy for one with wider coverage and lowercosts. So also if society as a whole finds that the insurancesystem it has offers too limited a coverage and costs toomuch, society needs to change its insurance system.

Let us first try to recap briefly about this insurancesystem which we can treat as the equivalent of an actualpolicy. The "policy" or system gives you cover against therisks of being injured (or it gives your dependants cover if


you are killed) in an accident which can be proved to besomeone else's fault. If you are covered, then the benefitsare very generous indeed; and although they may be wel-comed in serious cases, they are, frankly, often over-gener-ous in minor ones. Do you really want insurance coverageagainst the risk of a few scratches and minor abrasions andwould you still want it if you had to pay separately for it?So, some of the benefits may be too large, but on the otherhand, the coverage is minuscule compared to the ordinaryrisks of life. Virtually no coverage for illness, or death fromnatural causes; practically no coverage for birth defectswhich may affect your children, and even in the case ofaccidental injury the coverage is very limited. Coverage forroad accidents is fairly good, but even then only extends toabout a quarter of road accident victims, or a little more.But taking all accidents into consideration, the coverage ishopelessly inadequate. If you are an accident victim yourchances of recovering damages are less than one in ten; andif you are disabled from other causes, perhaps only one ortwo in a hundred. For this fragmented and limited cover-age you pay a pretty stiff premium in the form of a thirdparty motor premium plus a levy on all the goods and ser-vices you buy. This policy is just not good enough. If youhad an insurance broker and asked him to find you a pol-icy to cover you against the risk of accident or injury, andthis was the best he could come up with, you would hardlybelieve him.

So what can we do about it? We will first explore someproposals which turn out to be dead ends, and will then goon to outline some more promising proposals.

First possible reform: cover everybody with damages levels ofcompensation

Since compensation for those who are covered by the pres-ent "policy" or system looks fine, indeed very generous,perhaps the first solution that may come to mind is simply


to extend this coverage to all accident victims and all vic-tims of handicaps and disabilities arising from naturalcauses. Alas, it only takes a moment's study of the figuresto show that this solution is totally impossible. Given ourrough estimate that about one billion pounds is today spenton damages, plus another £800 million on administeringthe system, and given that all this largesse goes on only oneand a half percent of all injured or handicapped people, itis easy to see that extending the system to everybodywould result in a compensation bill in the region of £66billion a year, plus administrative costs. Even though thecosts would be greatly reduced (proportionately speaking)because they would be much lower in a universal scheme,they could hardly be much less than ten or twelve percentof the sums disbursed - say a total round figure of £75 bil-lion annually for compensation and administrative costs.That figure is close to the total cost of the entire socialsecurity budget today, and is not far short of a quarter of allgovernment expenditure. So a compensation system of thiskind would involve an immense increase in taxation, andwould also pre-empt probably all future increases on othergovernment services like schools, the NHS, law and orderand so on, for generations to come. Plainly this is just nota serious proposition.

But if there is no possibility of handing out tort levels ofdamages to all handicapped and injured victims, continu-ous "stretching" of the tort system is pretty pointless. Aswe saw earlier (p. 32) it just amounts to squeezing one ortwo percent more victims into the privileged class whoreceive the bonanza of damages, while leaving less and lessmoney available for all the others.

Second possible reform: leave the present compensation systemalone but gradually increase benefits for others

This is, roughly speaking, the policy which was adopted inthe 1960s and 1970s. Damages levels were not reduced


(indeed they may have increased) but other victims of injuryand disability were offered gradually improved benefitsunder the social security system and the other benefits of thewelfare state. In some respects these benefits began tobecome quite valuable, especially for long-term and per-manent incapacities. Although the social security system hasnever handed out huge lump sums like the law of damages,pensions payable over a life time can actually have a consid-erable total value; and some of the benefits of the welfarestate (such as pensions payable for permanent and severeindustrial injuries) do actually have a real value not far shortof the levels of damages in certain cases. So this was a policyof levelling-up, as it were, though for the reasons givenabove, it was always clear that the levelling up could notpossibly continue until some sort of parity was achieved.

Unfortunately, even the levelling-up has ceased inrecent years. Social security spending has stopped rising sosteeply as it was doing twenty years ago, and indeed, for thelast few years it has actually fallen. The government is con-stantly struggling to whittle down the social security bud-get which already consumes something like a quarter of alltaxes, and there seems no likelihood that even the electionof a Labour Government will make a great deal of differ-ence. Indeed, there are many signs that future governmentswill try to persuade the public to take on themselves theresponsibility for insuring against more and more of therisks covered by social security at present. Furthermore,damages awards appear to be increasing too, so the gapbetween the compensation awarded to the privileged fewand the unlucky many is today probably wider than ever,and likely to widen still further. So there seems no futurein this kind of reform.

Third possible reform: a national accident compensation plan

During the 1960s great interest was aroused throughout theworld by the bold and dramatic Woodhouse Report in


New Zealand. In 1967 Mr Justice Woodhouse proposed ina detailed and highly persuasive report that all liability fordamages for accidental personal injuries should be abol-ished; and should be replaced by a national accident com-pensation scheme. Under this scheme a State Board wouldbasically take over the job of insuring everyone against per-sonal injury caused by any kind of accident. The compen-sation offered was nothing like as generous as the damagesawarded in legal suits, but it was not niggardly either.Every person who lost earnings was to receive approxi-mately 80 per cent of his losses in compensation (up to apre-set ceiling), and some other pecuniary losses could alsobe covered, especially in very serious cases, such as pay-ments to adapt a home to make it suitable for a disabledperson, or even to adapt a car for the same purpose.Medical expenses were also to be covered. There would beno compensation for pain and suffering though the Reportdid not wholly rule out some small payments for loss ofamenities in very serious cases.

The most remarkable thing about the Report was its esti-mate that all these benefits could be provided at a costwhich barely exceeded the existing cost of the compensa-tion paid under the damages system. It could be funded rel-atively easily by levies on motorists, replacing the existingthird party premiums, and levies on employers, replacingthe amounts they already paid for employers' liabilityinsurance.

After many years of detailed discussion and furtherdebate a version of the Woodhouse scheme was imple-mented by the New Zealand Parliament in 1972. This far-reaching reform was hailed by many as showing the wayahead for the UK, and pressure mounted for the appoint-ment of a Royal Commission to inquire into the problemin this country. After the thalidomide tragedy in whichhundreds of grossly disabled and deformed babies wereborn to mothers who had been prescribed the drug


thalidomide, and the public discovered that many claimsfor damages on behalf of these babies were still unsettledten years after the events, a Royal Commission was even-tually set up under Lord Pearson. This Royal Commission,however, did not follow the path blazed by Mr JusticeWoodhouse. It produced hundreds of minor recommen-dations, but could not agree on abolition of the action fordamages, nor indeed was it agreed on any basic idea orphilosophy which could have underpinned its own rec-ommendations. It did produce a mass of facts and statistics(which have been extensively used and quoted in thisbook) but eventually the Report was largely discarded.Although there are many academic lawyers who stillbelieve that a national accident compensation scheme is theanswer to the problem, any such scheme looks todayincreasingly unlikely. This kind of reform is consideredfurther in the next section for reasons which will becomeapparent.

Fourth possible reform: an all-embracing national compensationplan

Although the Woodhouse Report and the ensuing NewZealand legislation did have many attractions, there wereniggling doubts. One major doubt concerned the fact thatthe Report and the legislation did nothing for the victimsof birth defects or handicaps and disabilities arising fromnatural causes. So in a sense the Report greatly enlarged thenumber of the privileged beneficiaries, but still did nottackle the underlying inequity. A man who seriouslyinjured himself falling off a ladder while painting his housecould now get compensation, (which he still cannot do inBritain) but a man who had his leg removed by a surgeonbecause it was diseased could not. Mr Justice Woodhousehimself had made it clear that he saw no reason why theprinciples he had laid down should not be extended to alldisabilities and handicaps, and in 1972 he was invited by


the newly-elected Australian Labor government to cometo Australia and head a small committee to produce rec-ommendations for that country. (The present writer, whowas at that time teaching at the Australian NationalUniversity, was a member of this committee but leftAustralia before the Report was presented.)

The Australian Woodhouse committee produced a two-part set of recommendations. The first part was broadlysimilar to the New Zealand proposals; but the second partwas an even more far-reaching set of proposals to extendthe accident scheme, with some modifications, to all dis-abilities and handicaps and birth defects arising fromnatural causes. This gigantic social welfare scheme was esti-mated to cost something like four times as much as thebasic accident compensation scheme, which though apretty massive expenditure, was not by any means animpossible one for a modern state. But neither part of theAustralian committee proposals was ever implemented.Detailed inquiries before the Australian parliament draggedon for some years, eventually the Labor government felland was replaced by a much more conservative govern-ment, and the proposals were shelved.

Despite their Utopian qualities, the Woodhouse schemesno longer seem as attractive as they were twenty years ago.Both involve massive bureaucratic extensions of the wel-fare state of a kind which have gone out of fashion withgovernments and electorates. And they have gone out offashion not just because of normal swings of public opin-ion, but because experience of similar bureaucraticschemes has been uniformly unsatisfactory in the modernworld. They have proved unsatisfactory for a number ofreasons. First, their cost estimates nearly always prove tohave been too optimistic, as indeed has happened in NewZealand where their legislation has recently been cut downpartly for reasons of cost. This is often because inadequateallowance is made for the way that generous compensation


schemes actually alter human behaviour. Those who areentitled to accident sick pay of eighty percent of their nor-mal pay will often feel that they are almost as well off rest-ing at home after an accident than getting back to work.Pre-legislation data about the length of time that workerstake off after certain kinds of injury may thus prove unre-liable after such a scheme is introduced. A second problemis that massive new schemes of this kind invariably throwup anomalies and inconsistencies of treatment whichrequire amendment; the tendency then is to make amend-ments which are still more favourable to the victims, andadd further to costs. A third problem is that schemes of thiskind often prove too rigid. They involve imposing thesame solution on many different problems, the samebenefits to people in many different situations. In shortthey lack the flexibility of market solutions.

A fourth problem, especially with truly enormous socialschemes like the second part of the Woodhouse Australiancommittee proposals, is that they do seem to have an effectnot unlike that of the "blame culture". While they may notactually encourage the public to blame others for their mis-fortunes, they certainly encourage the public to think thatit is someone else's responsibility to pick up the pieces aftera misfortune has occurred. These are of course politicallycontroversial questions, and it is not possible to assess themfully in a book like this; but undoubtedly the current moodin most Western countries is hostile to the idea that itshould always be the job of government to sort things outwhen they go wrong.

It is also easy to see how every step taken by the govern-ment along these lines leads inexorably to demands for thenext step. The Woodhouse accidents scheme leads todemands for a Woodhouse sickness and disease scheme. Butwhere does this process stop? If all accidental deaths are tobe covered by a national compensation scheme, are alldeaths from disease to be so covered too? That means that


the state would take over a substantial part of the life insur-ance industry. Do we really want that? Or again, if thosewho are widowed by accidental deaths are to receive gen-erous compensation benefits, what about deserted wives?Aren't they treated today as in the same social category, withthe same needs, as widows? And if deserted wives, whatabout single mothers? Or single fathers? Plainly, compensa-tion schemes cannot take on board the state's entire socialpolicy. That would be a case of the tail wagging the dog.

The Woodhouse schemes were visionary and coura-geous plans; but it seems unlikely that reform along theselines is really the answer to the problems of the twenty-firstcentury. The one thing of lasting importance that emergesfrom the Woodhouse Reports is the demonstration that theexisting system of damages for personal injuries is unfairand inefficient and can be abolished. Despite some scalingdown of the New Zealand legislation, as noted above, theone thing that New Zealand has not turned its back uponsince introducing its national compensation scheme is thedecision to get rid of the damages action in its entirety.

THE WAY AHEAD: ROAD ACCIDENTS

In this and the final section some proposals are outlinedwhich would go a long way to providing a more modernand rational system of compensation for accidents andinjuries. We will start with road accidents.

Some countries, and many of the separate states orprovinces in the US, Australia and Canada have alreadyestablished special no-fault road accident compensationschemes. These vary widely, but they are all designed tocompensate those injured in road accidents without theneed to prove fault, and are based on the first party insur-ance principle. Coverage is therefore universal, or almostso (there are sometimes exclusions for people like "fleeingfelons" or drunken drivers). Usually these schemes offer


reasonable compensation for earnings losses and medicalexpenses, but nothing for pain and suffering. Sometimesthey completely replace claims for damages; sometimesthey offer benefits without depriving the victim of theright to sue, though in that case they all require deduction(or repayment) of the no-fault benefits from the damagesrecovered; in some American states the right to sue is onlyleft intact for serious injuries. Sometimes the insurance ishandled by private insurers in the same way that they han-dle the vehicle comprehensive insurance system; in otherplaces the personal injury insurance is placed in the handsof a state board or authority of some kind.

Practically any one of these no-fault schemes would bebetter than what we currently have though by far the mostsuccessful schemes are those which completely abolish theright to sue for damages. They are cheaper to operate andprovide much wider coverage; they are generally able tostart paying compensation for earnings losses on a weeklyor monthly basis much sooner than the present damagessystem. The costs do not fall on governments, but are eas-ily met from levies on drivers (replacing existing third partypremiums). The adversary relationship between the victimand the other party's insurer is eliminated and replaced bya relationship either with a first party insurer, or with a stateauthority which is not a money-making institution.

A road accident no-fault scheme, run by the privateinsurance industry, would actually be perfectly easy tointroduce in this country. Because of the existing thirdparty system, which is well known, and rigorouslyenforced, it would be quite straightforward to abolish legalliability for damages for accidents arising on the road, andsimply replace it with a claim against your own insurer. (Toinsure universal coverage for road accidents it would benecessary to provide, as many schemes abroad already pro-vide, that passengers and pedestrians, if not covered bytheir own policies, would be covered by the insurance


over the vehicle involved in the accident.) Claims wouldgenerally be made in the same way you claim for damageto your vehicle under a comprehensive policy. If you suf-fer an injury with a consequent loss of earnings, the insur-ance company would doubtless require certificates fromyour doctor that you are unable to work, and a simple formfrom the employer giving your normal earnings, andweekly benefit payments could then be made very rapidly.There seems every likelihood that a scheme of this kindwould cost no more than the existing system, with all itsabsurdities and inefficiencies and inadequate coverage,because of the huge savings that can be made on legal andadministrative expenses by a no-fault scheme, and theelimination of payments for minor pain and sufferingclaims. Detailed research studies of several American no-fault schemes have confirmed this fact.

There might be theoretical arguments in favour of mak-ing such a new kind of insurance entirely voluntary, but toomany people would probably end up without any cover ifthat were done. For purely pragmatic reasons, therefore, itwould probably be necessary to make this kind of insurancecompulsory, just like third party insurance, but there wouldstill be very great advantages about switching to a first partyinsurance scheme. For one thing, it would be possible tolimit the compulsory element of the policy, while allowingfor optional extra coverage at additional premiums.Consider for instance, the size of the income-loss whichshould be covered by a first-party policy. There seems noreason at all why this should not be set at a fairly modestlevel - say ^250 Per week — so long as the insured has theoption to extend the cover to much higher limits if hewants, and is prepared to pay the extra premium involved.At present, of course, the third party liability system meansthat there is no limit to the income loss which is recover-able if negligence is provable - so pop singers or tennis starsmay be entitled to several million pounds for a few years'


income loss (see p. 9), all of which naturally has to comefrom the sums paid by people whose income is very muchlower. In a first party system, there is absolutely no reasonto insist that everybody should insure against a high incomeloss if he doesn't have, and is unlikely ever to have, a highincome. Indeed, for some people — pensioners, for instance— there is no very obvious reason why they should be com-pelled to insure against income loss at all. To make them doso would simply perpetuate one of the unfairnesses of theexisting system. Similarly, motorists should be able tochoose whether they want life insurance benefits under afirst party policy. Many who have adequate life insurance ofa more conventional kind would feel there was no point inbuying extra life insurance to cover road accidents. Somemotorists have no dependants and would not see any pointin having life insurance at all. Others may choose to buysubstantial life cover as an optional extra. Why should theyall be compelled to buy it, as the third party system effec-tively compels them to do?

Other additional items of extra cover could no doubt bemade available if there appears to be a market demand forthem. If people really want some cover for non-pecuniaryloss, for instance, insurers could doubtless offer this as anoptional extra, but again there seems no reason why any-body should be forced to buy it. Possibly, though, someelement of "catastrophe" cover should be compulsory —that is where truly appalling injuries are suffered in an acci-dent which renders the victim a complete paraplegic orsomething of that kind. In cases like this there is evidentlysome real point to a particularly special level of coverregardless of financial loss.

THE WAY AHEAD: OTHER ACCIDENTS AND INJURIES

If a no-fault road accident scheme of this kind were estab-lished, what should be done about other accidents and


injuries, and disabilities from other causes? It would not beso easy to replace the right to sue with first party insurancein any other kind of case, because we do not have such awidespread and readily understood kind of insurance, likethe motor insurance system, which could simply be trans-formed into a first party system. It is true that there are lim-ited fields, like workers' compensation or medicalmisadventures where special schemes could be established,and indeed have been established in some countries. Butthere would even then remain many accidents, like thoseoccurring in the home, or in playing sports, or even inschools, which are uncovered by any no-fault schemes, andwould remain subject to all the vagaries and inefficienciesof the action for damages.

There is only one really effective solution to this prob-lem. The action for damages for personal injuries shouldsimply be abolished, and first-party insurance should be leftto the free market. This proposal may seem at first sightlittle short of revolutionary, but closer examination showsthat it is a perfectly natural development of current trends.

For a start, it should not be assumed that the action fordamages for personal injuries is in any sense a real corner-stone of our legal system. This type of legal liability is actu-ally of quite recent origin in the history of modern legalsystems. In fact it is little more than a century old, and itsrise closely parallels the rise of third party liability insur-ance. In other words this kind of legal action, as a routinemeasure for income-loss coverage, has simply grown up inthe modern world where insurance itself has become moreand more common. Unfortunately, the law got onto thewrong track from the very outset, developing and encour-aging third party insurance instead of first party insurance.So to abolish the action for damages for personal injuriestoday would only be to put the law back onto the rightlines from which it diverged a hundred years ago. Manycountries have already abolished the action for damages for


special kinds of injuries, such as road accidents and work-ers' compensation injuries. There is no evidence that thiscauses any sense of grievance or public outrage, providedthat some kind of adequate alternative insurance system isput in its place.

Nor is the detailed critique offered in this book againstthe action for damages for personal injuries at all new. Allthese criticisms have been made time and again in the pastthirty years, never more effectively than in the WoodhouseReports. The only thing that has really changed since thoseReports is that the state compensation systems proposed asreplacements for the action for damages now seem hope-lessly dated. The criticisms of the action for damages itselfare still entirely valid. It is natural, therefore, to suggesttoday that abolition should be followed by a replacementmore in accord with current and likely future trends. Andthere seems no doubt — whatever the complexion of futuregovernments — that the trend in these matters is going tobe to require people to assume more and more responsib-ility for insuring themselves against the risks of life.

What is more, if the case for abolition of the present sys-tem is once agreed to be made out, the only really practi-cal alternative today (except for road accidents) seems to beto leave the matter largely to the free market. If we don'tdo this, we shall probably end up with a whole collectionof special compensation schemes, one for road accidents,one for workers' compensation, one perhaps for medicalinjuries, one for sporting injuries and so on. The compen-sation payable for all these kinds of injuries will doubtlessdiffer from case to case, with just as many anomalies andabsurdities as we have today. Only if we allow people thefree choice to make their own decisions as to what kind ofinsurance they want, will these variations become accept-able.

Of course a transitional period of several years would beneeded before such a change could be implemented, and


in the interim it would be necessary for the insuranceindustry, with pressure from the government, to come upwith some sensible proposals for first-party insuranceschemes to be established which would cover most of theordinary forms of accident. People would in this way beencouraged to insure themselves and their families againstthese risks. No doubt this would not just be done on anindividual policy basis - groups of people would beencouraged to take out policies together. For example,schools should take out policies to cover their childrenagainst sporting injuries on a no-fault basis (actually this isalready beginning). Employers and trade unions should beencouraged to co-operate in taking out policies to coverthe workers against industrial accidents. Homeowners'insurance policies should cover people against accidents inthe home on a no-fault basis. Pregnant women should beencouraged to insure against the risk of having a disabledbaby. And so on. Nobody can really predict how thiswould all work out because we have never really had a freemarket in this way, operating in a framework where thereis no legal liability to damages. Once this kind of liabilitygoes, and therefore third party insurance goes too, theinsurance industry will surely come up with all kinds ofnew proposals for first party policies.

The most difficult problems undoubtedly centre rounddisabilities arising from natural diseases and conditions. Thepublic simply are not used to insuring against these risks,yet to leave them uninsured means that nothing would bedone, for instance, for the little girl who lost her legs as aresult of meningitis, one of the stories with which webegan this book. Somehow, some kind of insurance pro-tection against these risks needs to be built into any newsystem — certainly the insurance industry needs to thinkhard about ways of advertising the desirability of of this sortof insurance protection; perhaps also the governmentshould encourage people to take out insurance when their


children are born, by offering to pay part of the cost. Theproblem is not easy, and ideas may need to be co-ordinatedbetween the insurance industry, and the social services andsocial security agencies. But the basic point must be thegradual encouragement of first-party insurance by moreand more people, with the state simply acting as a fall-backprotection for those who have no insurance of their own.

There would be enormous advantages in this course.First, we should get rid of all the wasteful legal and admin-istrative costs associated with claims for damages and thirdparty insurance. The taxpayer will gain as much as the pre-mium payer, because the Lord Chancellor will suddenlyfind he does not need so many judges, and the costs of legalaid will also be cut. And the government itself will nolonger have to pay damages for personal injury and will beable to get rid of (or redeploy) many of the lawyers it cur-rently employs to handle these cases. (Although lawyerswill bitterly oppose these proposals, it is unlikely that thedemand for legal services will fall very much in the longrun — the additional demands being put on lawyers by ourmembership of the European Union is such that lawyersare likely to be in short supply for a generation.)

Secondly, it will vastly improve the coverage whichmost people have against a large variety of risks. Instead ofbeing offered a small, often a minuscule, chance of recov-ering enormous damages for some injuries, people willhave a much better chance of obtaining reasonable com-pensation for all, or anyhow, most injuries. What is more,the compensation will be obtainable on a much fairer basisthan the present lottery - broadly, you will get what youchoose to pay for.

Third, this reform would begin the job of getting rid ofthe artificial distinctions embodied in the present law andpractice between accidental injuries and disabilities fromother causes. Although this would not come anywherenear the wildly ambitious Australian Woodhouse proposal


to cover all disabilities and sickness in the same way (moreor less) as accidents, it would gradually begin the process ofgetting people to think about insuring themselves againstdisabilities which arise from non-accidental causes.

Fourth, the shift to a free market in insurance wouldintroduce a great deal of consumer choice in an area whereit is significantly absent today — as we have seen, it couldenable people to decide what level of income they want toinsure, whether they want life insurance and so on. For thisreason, also, it will distribute more equitably the burden ofmany accidents, where at present the third party systemfavours the more highly paid and discriminates against thelow-paid, the unemployed and the retired. It means thatthe right people would be paying for the insurance coverfor their own possible income losses.

Sixthly, it will get rid of the adversarial process whichcan be especially troublesome in the case of claims againsthospitals.

Some may object that this idea is all very well for thosewho can afford to insure themselves, but what about thosewho can't? But the answer to this is that almost everybodywill actually save more money by abolishing the presentsystem than they will need to pay for their new first partyinsurance. The poorest people, especially, will actually saveon their motor insurance policies, which should becomesubstantially cheaper for those on low incomes, or for thepensioners who don't need income-loss protection or lifeinsurance cover. And even those who don't have cars willsave on the price of goods and services, as businesses willno longer have to pay huge premiums to cover the risk ofdamages claims. Of course some state social security safetynet will still be needed for those who are not otherwisecovered at all.

This would indeed be a reform worth striving for.

INDEX

accountants:economic loss claims against 64—5liability, review of 175—6

advertisements:clients, for 28litigation, encouraging 28—9

ambulance chasing:practice of 28-9

annuity:damages paid as 16

anxiety neurosis:claim for 5 5

armed forces:claims against, selective comparison

91-3damages paid by, cost of 90, 153—4immunity from action 89

loss of 90liability 78war, claim for damages in 91

asbestos:risks of 3 5

assault:intentional tort, as 7

assumption of risk:defence of 44

bad advice:judgment and opinion, as matter of 49

birth:injury in course of 53

birth defects:damages, recovery of 147victims of 145-6

blame culture:causation, and 47—50encouragement of 138-43governments, vulnerability to litigation

139-40growth in 157-8judges, attitude of 141-2

justified 143limits to government action 140-1national compensation plan, effect of

184own problems, individual reluctance

to accept responsibility for 141breach of contract:

damages for 6person paying 134—7

negligence, similarity to 63buildings:

badly built, liability for 82-3, 95

carelessness:liability for 174

causation:blame culture 47—50effects of action, tracing 45egg-shell skull rule 45-7omissions, rules for 50-2stretching rules of 45—52ultimate loss, of 47

chemicals:risks of 3 5

child:compensation for loss of 19—21

child abuse:failure to protect from 54—5local authorities, liability of 84

civil law:standard of proof 160

claims assessors:practices of 29

claims negotiators:practices of 29

companies:negligence of n o

economic considerations of 165-9payment of damages by 109-10

compensation:activities bearing own costs 168

196 INDEX

compensation (cont.):damages levels, coverage with 178—9disincentive effects 12—13fairness or justice of 161-2loss of child, for 10-21national accident plan, proposal for

180-2

national plan, proposal for 182-5road accident no-fault schemes 185-8special schemes 190—1system of:

cost of 152-4delays 151—2deterrence, not 162—5development of 155inefficiency of 150-4insurance companies, administration

by 177lottery, as 143-50mess, in 154-8non-compensatory benefits 159—72punishment, not 159-62reforms 177—85

consumers:third party insurance, payment for 137

contingent fee:ambulance chasing 28American system 27similar cases, bringing 29—30undesirable results of 27—8

contributory negligence:concept of 3 8damages, apportionment of 38—40payment by victim for 110-11road accidents, in 41unfairness of 39

corporate liability:review of law 174

cosmetic injury:claim for 54

Crown Prosecution Service:claim against on abandonment of

prosecution 55

damages:abolition of action for 189-93actions for 2American cases, in 17amount, lottery as to 148—9annuity, as 16assessment, rules for 66benefits, offsetting 69-70

businesses paving cost of 111-12calculation of 148—9claims consciousness 146contractual cases, in 134—7contributory negligence, apportion-

ment for 38—40cost of assessing 71cumulative elements of 18disincentive effects 12-13encouragement to claim 155entitlement to claim, factors in 146—7exemplary 159extent of 8—21injury cases:

financial losses 9-14non-pecuniary losses 14-18

interest on 67law of torts, under 1—2law, stretching 32levels of 2life insurance in addition to 70-1loss of amenity 14lump sum, payment in 13maximum awards 67need to sue for 22non-pecuniary losses, for 67non-personal injury claims 97one of several defendants, recovery

from 42—3pain and suffering, for 14payment where no negligence found

37permanent or temporary injury,

depending on 145person paying:

companies 109—10contractual cases, in 134-7contributory negligence, in case of

1IO-IIguilty parties, not 108-11insurance companies 117-34

see also insurance; insurancecompanies

insurers 108-9proportions 150public, burden on m—13wrongdoers, not 155-6,161

persons receiving:practice, in 96tiny minority, as 100

present system of entitlement 2public accountability 169—72

INDEX 197

public, paid by:burden of m - 1 3consequences of recognising 113—16lack of scrutiny 116no-fault principle, and 115public debate, lack of 116tax or welfare system, as 115

public perceptions of claims 160punitive 159, 174-5relative, for nursing by 67-8remarriage of widows, ignoring 70responsibility for paying 21-2selective comparison of claims 91-3,

156-7seriousness of injuries or handicaps,

not depending on 144settlement of claims 22-5social security problems, link with 142stretching 66-71sympathy, stretching effect of 36-8system of:

cost of 152—4delays 151-2development of 15 5inefficiency of 150—4lottery, as 143-50mess, in 154-8

tax or welfare system, as 115true cost of accidents, representing

167types of injury for which claimed

52-65wrongdoer, care by 68

dangerous goods:damages for 6

defective goods:damages for 6-7

defendants:choice of in suing 41—2construction of case against 43recovery of damages from 42-3

deterrence:compensation system not being

162-5economic 166market 166

disabilities:accidental injuries, distinctions 192natural diseases and conditions, arising

from 191reasons for 1sources of 99, 143-4

disabled persons:needs of 144rehabilitation 11

drugs:campaigns arising from use of 30-1

earnings:loss of, recovery for 9—13

economic loss:claims for 62-5pure 62

education:decent, claim for failure to provide 55

egg-shell skull:rule 45-7

emotional shock:claims for 56-7

employer:actions against 74-8 see also vicarious

liability

false imprisonment:intentional tort, as 7

fatal cases:child, compensation for loss of 19—21,

56classes of 18—19dependants, claims by 19trauma, claim for 21

fault:damages for injury by 3-4stretching concept of 33—8

government:damages paid by, source of 112—13

handicapped persons:needs of 144sources of disability 1, 99, 143—4

harassment:intentional tort, as 7

health authority:payment of damages by, effect of 81

highways:authorities, responsibility of 83-4failure to repair, liability for 51-2

industrial accidents:increase in claims 107meaning 103privileged victims of 103proof, requirement of 147

198 INDEX

industrial accidents (cont.):proportion of injury cases stemming

from ioorequirement to take precautions

against 104trade union assistance for victims 104workers' compensation 105—7

industrial diseases:proof of claims 104—5, J47

industrial injuries:erosion of benefits 106safety regulations, breach of 163

injury cases:consultation paper 157cosmetic injury 54damages and compensation, distribu-

tion of 149entitlement to claim, factors in 146-7financial losses 9—14forms of compensation for 98incapability of working after 11-12industrial accidents see industrial

accidentslocation of accident, relevance of 147loss of amenity 14mass claims 148medical costs 13minor 98non-pecuniary losses 14—18number of claims 99pain and suffering 14physical injury, claim for 52plaintiff, blame on 38—45practical factors 101proof, requirement of 147really serious injury, damages for 10-11recovery of damages for, stretching

52-65rehabilitation 11response to injury 11—12road accidents see road accidentssettlement of claims 99shortened expectation of life 16social costs 13sources of 99subrogation, lack of 13 3tariff 15unemployed people, claims by 98

insurance:ability to pay for 193bad accident record, effect of 163—4excess 120—1

first party:accidents, covering 158amount of premium 119—20every penny of loss, not covering

120-1, 126

free market for 189-93key features of 119life insurance benefits 188maximum sums under 121-2meaning 117no fault, being 120optional nature of 121own negligence, protecting against

120

person paying premium for 119personal injury, for 118property, for 118right to sue, replacing 189scope of 121third party distinguished 117,

122-30

types of 117holidays, for 135—6householders'policies 117knock for knock 131life 117, 133-4

damages, in addition u> 70-1medical 119motor 117motoring cases, in 4personal accident 119property, duplication of 131subrogation see subrogationsystem 177-8third party:

amount of claims under 129—30amount of loss covered 126-7beneficiary of 123compulsory, being 128-9costs, amount spent on 125—6deductions and excesses, not subject

to 127fault-based, being 124-5first party distinguished 117,122-30income loss, no limit to 187—8insurance companies, unpopularity

with 129meaning 122opting out of 129premiums 123-4risks covered 125scope of 128

INDEX 199

third party and first party elements122, 130-1

types of 117insurance companies:

actions between 13 3compensation system, administering

177damages, payment of 21, 117pensions plans, responsibility in selling

49premiums, collecting 112settlement of claims 22—4, 109subrogation by 96-̂ 7, 131-3

law:blame culture, encouragement of

138-43stretching of 32

defendant not solely to blame,where 38-45

over-stretching 93-5law of torts:

damages under 1-2legal action:

inquiry mechanism, as 170legal aid:

cost of 26entitlement to 26

liability:civil, new look at system of 174-7expansion of concept of 38extent of 8-21frontiers, pushing back 95hard look, requiring 173injury cases

financial losses 9—14non-pecumary losses 14—18

issue of 8stretching of 139

Lockerbie air disaster:settlement of claims 170-1

medical expenses:NHS, met by 98

medical procedures:campaigns arising from use of 30-1

medicine:defensive 164

mental injury:claims for 56-62employment prospects, predictions as

to 61

foreseeability 57Hillsborough stadium disaster,

stemming from 57, 59police, suffered by 59—60, 62recognisable psychiatric illness or

condition 57-8, 60rescuers, suffered by 59risk of HIV, on 58-9

Motor Insurers' Bureau:claims against 102

motorists:compulsory insurance 102, 112

national accident compensation plan:proposal for 180-2

national compensation plan:proposal for 182-5

negligence:assumption of risk, defence of 44being wise after the event 34—5causation rules, stretching of 45-52

see also causationchoice of defendants 41-2circumstances of case, looking at 5degrees of blame worthiness 5deterrent, law not being 162—5economic considerations 165-9economic loss 62—5egg-shell skull rule 45—7foresecability 5illness contracted due to 53law of 3—6mistake, making 33—4moral fault, not 33omissions, rules for 50—2person sued:

deceased wrongdoer, estate of 73-4employer 74-8 see also vicarious

liabilitypublic authorities 78-93 see also

public authoritiesspouse 72—3

professional person, of 3 3public accountability 169-72pure accident distinguished 46-7reasonable care 4-5several defendants, by 41—2stretching concept of 33-8subsequent events or knowledge, in

light of 34-5types of injury for which claimed

52-65

2 0 0 INDEX

nervous shock:claims for 56-̂ 7

no win no fee:basis for taking cases 27similar cases, bringing 29—30undesirable results of 27—8

Ombudsmen:inquiries by 172

omissions:causation rules 50-2highway, to repair 51-2public authorities, by 86

Parole Board:liability of 86

partners:vicarious liability 77

paternalism:growth in 157—8ideology of 176

pensions:bad advice, responsibility for 49wrongly sold 48—9

personal injury see injury casesphotographs:

loss of film, liability for 136police:

failures, responsibility for 84—6negligence, liability for 85payment of damages by, effect of 81

post-traumatic stress:damages for 2, 18incapability of working after nlabel of 61

progressive conditions:victims of 145

property:damages to, claims for 96-̂ 7

public accountabilitynegligence action as means of 169—72

public authorities:badly built houses, liability for 82-3,

95cases against 80child abuse, responsibility for

preventing 84Crown Proceedings Act, effect of

78-9damages against payment of 80-1

source of 113—14failures, responsibility for 88

highways, responsibility for 83-4liability

review of 174-5stretching 78—93

litigation of claims against 88—9losses or injuries caused by, protection

of public against 87omissions by 86payment of damages by n oPost Office 78private business distinguished 79public responsibility, and 87

public inquiries:disasters, into 172

punishment:compensation system not being

159-62

recklessness:liability for 174

redundancy:responsibility for insuring against 142

referee:action against 43

reputation:finding of negligence, effect of 36-7

rescuers:mental injury suffered by 59

road accidents:child, caused by 43compensation claims, as source of 41compensation for 4compulsory insurance for 187

effect of 102contributory negligence in 41extra cover for 187—8insurance system 178no-fault compensation schemes 185-8privileged victims of 103proof of claims 101proportion of injury cases stemming

from 100prosecutions 162reporting, requirement of 101—2universal coverage for 186-7

safety:cost, weighed against 166

settlement of claims:bargaining process 22-3hospitals, by 24—5majority of cases, in 94

INDEX 2 0 1

personal injury cases 99pressure for 23solicitor's advice on 2$typical cases, in 24wishes of insured, against 109

shareholders:negligence of company employees,

paying for 114social security:

benefits, entitlement to 1change of public attitude to 141cost of system 153damages, benefits offset against 69—70increase of benefits 179-80long-term invalidity benefit 61payment for improvements to 113

solicitors:economic loss claims against 64-5liability, review of 175—6

spouses:action against 72—3

standard of proof:civil proceedings, in 160

sterilisation:failed, damages for child born as result

of 54strict liability:

claims 6—7subrogation:

abolition of doctrine 175claims 96—7doctrine of 131-3personal injury cases, law in 133

suicide:attempted, liability for 51

sympathy:price label on 113stretching effect of 36-8

teacher:action against 43

tobacco companies:assumption of risk, defence of 44—5litigation against 30, 148

tort:intentional 7-8law of, damages under 1-2negligence see negligence

tortfeasor:deceased, action against estate of 73-4

tour operators:contractors, liability for 135payment for insurance of 13 5-6

unemployment:responsibility for insuring against

142

vicarious liability:accidents and injuries, claims for 75course of employment, expansion of

concept 76doctrine of 74effect of 74employee:

definition of 75not exonerating 77

intentional torts 7-8forbidden acts, for 76growth in 156negligence of employee, for 75partners, of 77review of law 174

welfare state:gradual collapse of 176safety net of 148

workers' compensation:system of 105—7

wrongful arrest:damages for 81

A man slips on a dance floor and breaks his leg — he recovers over £10,000 in damages; a child has both legs amputated as a result of meningitis — she cannot obtain damages from anybody. Professor Patrick Atiyah starts his searching critique of the present law and practice relating to damages with this simple contrast. Why does the law distinguish in this way between cases of this kind? Hie lawis ostensible justification for awarding damages in the first case but not the second is that the manis injury was the fault of someone else (in this case the owners of the dance hall), while the unfortunate girlis meningitis was not anybodyis fault, but just bad luck. This justification, plausible at first sight, wears very thin indeed as the authoris indictment of the law gets under way.

The authoris treatment if designed to demonstrate the injustice and unfairness of the law to the ordinary reader, and he equally dearly explains the various possible options for reform, including his own dramatic and challenging proposal to abolish actions for damages for injuries and replace them with a new eno-fauhi road Occident scheme, and, so far as concerns other injuries, with individual or group insurance policies taken out in the free market.

There has long been a need for a book which exposes the cosy complacency of the English system for awarding damages. There is no one better qualified to write it than Patrick Atiyah, a former Professor of English Law at Oxford University. In a long and prolific career he taught and studied at universities throughout the world. His list of publications includes many popular books on English law and textbooks for law students, the best known of which are his Law and Modern Society, An Introduction to the Law of Contract and Sale of Goods.

This is an imaginative and fascinating book. It ruthlessly traces the expansionist tendencies

of our wasteful modern tort system and puts forward important, constructive proposals

for reform.

THE RIGHT HONOURABLE THE LORD STEYN

ISBN 1-901362-06-X

I S B N i - R 0 1 3 h S - D h - X

£7.99 9 I I 7 8 1 9 0 1 " 3 6 2 0 6 0 I I >

Documents

THE DAMAGES LOTTERY - USP€¦ · Legal aid and 'no win, no fee' cases 2 6 2. HOW THE LAW HAS BEEN STRETCHE 3D 2 Stretching the concept o f fault 33 Stretching the law where the defendant