Case 3: cable III – the day-to-day workers

loss by the employer would be direct and foreseeable. The nature of the contract, which he entered into with his workers, should not be a causal distinction. This will depend on a determination by the judge, but in our view the causal link is direct.

The main question mark in this fact pattern is perhaps the ‘certainty’ issue. The defendants (Acme) could argue that, as the workers were hired on a day-to-day basis, they could not prove with certainty that they would have been employed from one day to another. Cases involving day-to- day workers are very rare in France, and we have found no authority stating whether this defence would be effective or not. It is of course possible, though not necessarily probable, that they would have been terminated anyway even if there had been no cut-off of electricity, but here it might be appropriate to compensate them for the loss of the chance to work for their employer, especially since that chance might seem to have been quite high. The jurisprudence has already indemnified one who was physically injured for the loss of a chance to receive a professional promotion, even when that promotion seemed relatively uncertain.113 The same approach could be used to grant compensation to the day-to-day workers in Case 3.

Belgium

I. The workers could have a claim against Acme or its employee. However, it will not be very easy to recover the loss of two days’ pay since that damage results mainly from the employment contracts with Cato and Cato’s decision to lay them off.

II. The workers have a contractual relationship with Cato based on their employment contracts. The loss of two days’ pay is a damage resulting from these employment contracts. If the workers have suffered a damage resulting from a breach of contract, the claim shall be first directed towards the person with whom they have executed their contracts.

Therefore, the matter is first a case of contractual liability, more precisely, a matter regarding the breach of an employment contract.

Since there is no contract between the workers and Acme or its employee, the claim for damage initiated against them will rest on article 1382 and on article 1384 al. 3 CC.

113Civ. 2, 3 novembre 1971, D. 1972. 667. See also Crim., 7 juin 1990, Bull. Crim. no. 24 (horse raiser compensated for the loss of a chance to train a filly).

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Article 1382

Any act of a man which causes damage to another obliges him by whose fault it occurred to make reparation.

Article 1384

Each one is liable not only for the damage which he caused by his own act, but also for that which is caused by the act of persons for whom he is responsible, or by things which he has in his keeping.

[ . . .]

Masters and principals are liable for damage caused by their domestics and employees in the function for which they have been employed.

[ . . .]

The present case raises three issues. First, is the damage claimed by the workers (loss of two days’ pay) a recoverable damage? More precisely, is the damage claimed by the workers the violation of a legitimate interest?

It is obvious that in the present case, the workers had no legal right to be employed. At most, such a right could only be based on their employment contracts.

In Belgian tort law, however, the violation of a right is not required anymore. The violation of a legitimate interest is sufficient.114

If the workers can prove that they normally would have earned those two days’ pay, they should be considered as having a legitimate interest.

Secondly, to be recoverable, the damage should not have been already indemnified. Therefore, the claim of the workers shall be rejected if the workers have been already indemnified by their employer (Cato). But in such case, the employer would be subrogated to the rights of the workers.

Finally, Acme or its employee will be liable for that damage if the workers can prove that the damage has a causal link with the fault of Acme’s employee. In accordance with the case law of the Supreme Court, Acme and/or its employee will be liable only if the damage would not have occurred as it occurred if Acme’s employee had not cut the cable.

In the present case, it is not obvious that the workers will be able to prove that they would have certainly earned their two days’ pay if the electric cable had not been cut by Acme’s employee.

114R. O. Dalcq and G. Schamps, ‘La responsabilité délictuelle et quasi-délictuelle, examen de jurisprudence (1987–1993)’, (1995) 150 RCJB, 738.

Moreover, the Supreme Court has on several occasions stated that the causal link is interrupted when the damage claimed results from another autonomous obligation, such as one resulting from a statute or from a contract.115

Since the damage claimed by the plaintiffs in the present case results from the employment contract executed with Cato, the claim of the plaintiffs should be normally rejected.

Italy

I. The workers may have a slight possibility of recovering for their lost wages against Acme under article 2043 cc.

II. The loss of economic opportunity is one of the main categories in which pure economic damages are recoverable.

In Baroncini v. Enel, the Corte di Cassazione ruled that a worker may recover damages for the lost opportunity he incurred when he was barred from participating by an internal recruitment procedure.116 According to the Court, opportunities are a new absolute right, a valuable asset actually belonging to the plaintiff and therefore protected by article 2043 cc.

In Baroncini, however, the judges deemed that the right might be protected only when opportunities are over 50 per cent; yet, in several later decisions the Court changed its mind and admitted recovery for slighter chances of success.117

Aside from the loss of chance analysis, Italian case law focuses on the factual chain of causation. Courts opt for a very narrow view of causation: damages are recoverable only when they spring from a direct and immediate source.118 This interpretation, which is found in the doctrine and some court decisions,119 offers a more flexible tool to assess indirect and non-consequential damages.

115Cass., 17 janvier 1938, Pas., I, 8 and 11; Cass., 28 avril 1978, RCJB, 1979, p. 261; Cass., 26 septembre 1979, RGAR, 1982, no. 10431; Cass., 9 mars 1984, RCJB, 1986, p. 651; Cass., 15 mars 1985, Pas., I, 1985, 978; Cass., 28 juin 1984, Pas., 1984, I, 618; Cass., 18 avril 1988, Pas., 1988, I, 943; Cass., 4 octobre 1988, Pas, 1989, I, 118, 15 novembre 1991, I, 282.

116Cass. 19.12.1985, no. 6506, FI, 1986, I, 383 note by Princigalli.

117Cass. 29.4. 1993, no. 5026, in GI, 1993, I, 1, 2567, noted by A. M. Musy; Cass. 22.4.1993, no. 4725 in Dir. e Prat. Lav., 1993, 26, 1775; Cass. 13.6.1991, no. 6657 in MGC, 1991.

118See Cass. Civ., 21.10.1969, no. 3438, FI, 1970, I, 501; Cass. Civ., 2.1.1968, no. 253, FI, 1968, I, 2628.

119Cass. Civ. 10.10.1967, no. 239, FI, 1968, I, 1311.

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III. As frequently happens, scholars were ahead of courts in pushing for the recovery of damages in the case of lost opportunities.120 At present, a large majority of Italian legal scholarship is favourable to full recognition of these awards.121 However, some authors are calling for a sharper distinction between legally protected opportunities and nonrecoverable expectations.122

Spain

I.The workers could possibly obtain compensation for their damages. II. While accepting that in both Case 1 (‘Cable I – The Blackout’) and

Case 2 (‘Cable II – Factory Shutdown’) the damaged factories could obtain compensation from the roadworks company who initially cut the cable, under the Spanish legal system problems of causation would arise as to the workers’ lost wages.

The Supreme Court decision (First Chamber) of 30 May 1986 indicates that the injury suffered by Cato’s workers is in fact recoverable. There, an explosion occurred in the boiler of company A. As a result of this explosion, neighbouring factory B suffered damage to the extent that it was forced to halt production and lay off several employees. These employees sued company A for the difference between what they received as unemployment benefits and the salaries they would have received, had they continued their usual work in factory B. The Supreme Court awarded this compensation.

It should be noted, however, that in this Supreme Court decision the argument focused on whether company A’s fault in causing the accident could be proved or not. There is no doubt that once the boiler’s explosion was proven technically foreseeable and avoidable (i.e. there was fault), A was liable to B’s employees for lost wages. This Supreme Court decision is good evidence that our tort system recognizes the protection of credit rights (in personam) and not only absolute rights.123

120F. D. Busnelli, ‘Perdita di una chance e risarcimento del danno risarcibile’, FI, 1965, IV, 47; P. G. Monateri, Sintesi di informazione, RDC, 1986, II, 364.

121C. Salvi, Il danno extracontrattuale (Napoli, 1985); G. Visintini, ‘Risarcimento del danno’, RDC, 1983, I, 811; A. Di Majo, ‘Il problema del danno al patrimonio’, RCDP, 1984, 397.

122A. De Cupis, ‘Aspettativa legittima e risarcimento del danno’, GC, 1983, II, 104.

123F. Pantaleón ‘Comentario al artículo 1902’, in Comentario del Código Civil, vol. II (Ministero de Justicia–Civitas, Madrid, 1991) p. 1994.

Greece

I. The workers have no claim against the excavating employee nor against Acme, but they could perhaps still claim their salary from Cato, because their lay-off is probably invalid.

II. Liability of Acme and its excavator’s user: according to article 914 CC, Acme is not (even vicariously) liable to the workers, because there is no causal link between their loss and the cutting of the cable. This is certain, according to both criteria proposed for testing it (either foreseeability of the particular damage,124 or its inclusion in the interests protected by the infringed legal rule).125 Indeed, the lay-off of the workers hired on a day-to-day basis seems to be an unforeseeable effect of the destruction of a cable belonging to a third person. Thus, it is out of the protective purpose area of the legal rule that the tortfeasor has infringed by cutting the public cables. So it is not to be indemnified.

The same conclusion could be reached also e contrario from article 929 sub-para. 2 CC, which stipulates that in the case of bodily injury, compensation from the wrongdoer may also be sought (apart from the victim) only by persons entitled by the law (not by a contract) to claim services from the victim.126 The explanation of such a provision is simple: benefits provided by the law are foreseeable, because the law is already known and stable; benefits provided by a contract can be foreseen only by the parties, usually not by everyone. Thus, the workers do not have any claim against the employee or Acme.

Liability of Cato: the workers could perhaps still claim their wages from Cato, their employer, because when he hired them in the first place, he intended to keep them employed in order to keep his factory functioning. This fact is easily established from Cato’s own claim for compensation because of the stopping of his factory’s operation, which means

124AP 692/1990 NoB 40, 67; AP 1063/90; AP 979/92 ElD 35, 1044; K. Triantaphyllopoulos,

Law of Obligations (Athens, 1935), p. 184; G. Balis, Law of Obligations, General Part

(3rd edn, 1960), p. 100; A. Ligeropoulos (gen. ed.), Interpretation of the Civil Code

(A Commentary) (ErmAK): Law of Obligations vols. I–III (1949–1978), arts. 297–300 CC, no. 39; G. Fourkiotis, Greek Law of Obligations, General Part (1964), p. 318;

G.Michaélidès-Nouaros Law of Obligations (University lectures no daté) p. 31 etc.

125Commentary by M. Stathopoulos in A. Georgiades and M. Stathopoulos, Civil Code Article by Article Commentary, vols. I–IV (1978–1982) arts. 297–298, no. 67, 60–5;

P.Sourlas, Adaequanztheorie und Normzwecklehre bei der Begruendung der Haftung nach

§ 823 Abs. 1 BGB (1974) pp. 15 ff.

126See Commentry by Georgiades in A. Georgiades and Stathopoulos, Civil Code, art. 928, no. 6; EphAth 5411/1977 NoB 26, 737; EphAth 5773/1972 Arm 27, 171; EphAth 4117/1972 Arm 27, 91; EphAth 775/1960 NoB 8, 510.

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that his intention was to continue operation. Consequently, the day- to-day contract was simulated and concealed within it another hiring contract, on this occasion without any time clause. The simulated contract is invalid according to article 138, paragraph 1 CC, but the latent contract between Cato and the workers is valid according to article 138, paragraph 2 CC127 Thus, the workers cannot be laid off because of temporary damage, which prevented the employer from accepting their work (art. 656 CC).

England

I.The workers cannot recover any wages from Acme.

II. The workers’ action would have to lie in negligence, as there is no mention of any harmful intention of Acme against them.

The tort of interference with contractual relations is not available to them, as it clearly requires either an intention of such interference, or, at the very least, that the defendant’s conduct is directed towards interfering with another’s contractual relations (see Millar v. Bassey).128 Neither of these two is disclosed by the facts.

Liability under the tort of negligence is also excluded since the workers will not be able to establish:

(1)that they suffered damage recognized as recoverable by the law of negligence; loss of pay not connected with personal injury or illness is a pure economic loss clearly not so recognized: see the case of Burgess v. Florence Nightingale Hospital for Gentlewomen;129

(2)that the defendant owed them a duty of care (Donoghue v. Stevenson).130 No such duty is owed to third parties who, without being harmed in their person or physical property, suffer loss of earnings as a result of a negligent action: see, again, Burgess v. Florence Nightingale Hospital for Gentlewomen.

III. Both the issue of what damage is recognized as recoverable in the tort of negligence, and the issue of when there exists a duty of care not to cause harm, are now clearly issues to be decided on a case-by-case basis, on the grounds of what the courts consider to be ‘just, fair and reasonable’: Caparo v. Dickman,131 or, as Lord Denning put it in Spartan Steel v. Martin132 on grounds of legal policy. This creates uncertainty,

127The prevailing view in Greece bases this conclusion on the prohibition of contracts ‘in fraudem legis’ (see AP 344/1969, EED 28, 974; AP 48/1971 EED 36, 429.

but is thought to give the system the necessary flexibility to screen out economic loss claims that, in the opinion of the judiciary, make bad political, social and economic sense.133

Scotland

I.The workers would not be able to recover damages for their lost wages. II. Again, we may refer to Dynamco134 and the judgment of Lord Migdale who held that ‘[t]he law of Scotland has for over a hundred years refused to accept that a claim for financial loss which does not arise directly from damage to the claimant’s property can give rise to a legal claim for damages founded on negligence’.135 In this scenario, the workers are in the same situation as Cato and have suffered no damage to their property (or, indeed, their person). As a result, like him, they are unable to claim damages. The reasons for this are related to the question of proximity by way of remoteness and also policy. The attitude of the Scottish courts would be similar to that expressed by Lord Denning MR

in SCM (UK) Ltd. He said:

In actions of negligence, when the plaintiff has suffered no damage to his person or property, but has only sustained economic loss, the law does not usually permit him to recover that loss. The reason lies in public policy. It was first stated by Blackburn J in Cattle v. Stockton Waterworks Co,136 and has been repeated many times since. He gave this illustration: when a mine is flooded by negligence, thousands of men may be thrown out of work. None of them is injured, but each of them loses wages. Has each of them a cause of action? He thought not. So here I would ask: when an electric cable is damaged and many factories may be stopped from working, can each of them claim for its loss of profit? I think not. It is not sensible to saddle losses on this scale to one sole contractor. Very often such losses occur without anyone’s fault. A mine may be flooded, or a power failure may occur by mischance as well as by negligence. Where it is only mischance, everyone grumbles but puts up with it. No one dreams of bringing an action for damages. So also when it occurs by negligence. The risk should

133Full discussion of the policy of English law in cases of pure economic loss in E. K. Banakas, Civil Liability for Pure Economic Loss (Kluwer, The Hague, 1996), chs. 1 and 2; for a discussion of arguments in favour of elevating earning capacity to a protected status similar to that accorded to real property interests see E. K. Banakas, Tortious Liability for Pure Economic Loss: A Comparative Study, (Hellenic Institute of International and Foreign Law, Athens, 1989), pp. 150 ff.

134Dynamco Ltd v. Holland and Hannen and Cubitts (Scotland) Ltd 1972 SLT 38, 1971 SC 257.

1351972 SLT 38 at p. 39.

136(1875) LR 10 QB 453 at p. 457, [1874–80] All ER Rep 220 at p. 223.

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be borne by the whole community rather than on one pair of shoulders, i.e. on one contractor who may, or may not, be insured against the risk. There is not much logic in this, but still it is the law.137

The workers are in a contractual relationship with Cato, either a contract of employment or a contract for the hire of services, which is interfered with, albeit unintentionally, in the sense of their being unable to work for the two days. However, before Acme could be liable for damages under the delict of wrongful interference with the performance of a contract, they would have had to have acted with the intention of interfering with the contract and with knowledge of its existence.138 Neither factor is present here. Presumably there is an express term in the contract of employment between the men and Cato that the men may be laid off without pay; if not, they should bring an action against Cato. At common law an employer is in breach of contract if he lays off an employee without pay in the absence of an express term permitting this.139 Given that it is said the workers are hired on a day-to-day basis, presumably it is a term of the contract that work will not always be available and that the workers will only be employed when it is. If this is the case, the reason why Cato is unable to provide work for the workers should be totally irrelevant and were the workers to bring an action against Acme they would presumably be found to have no title or interest to sue.

III. As a result of the damage to the public utility’s property by Acme, the public utility is unable to fulfil its contract with Cato who suffers secondary economic loss by being forced to halt production. If Cato has a contractual obligation to provide work for the workers he cannot fulfil it, and the consequent loss could be described as ‘tertiary’ in relation to the negligent act. If, as a matter of policy, secondary economic loss is considered too remote or indirect then it can be understood that any loss even more remote or indirect will not be considered by the courts.

The Netherlands

I. The most likely scenario is that the workmen’s claim will be denied. Although this matter has not been decided yet by the Dutch Supreme

137[1971] 1 QB 337 at p. 344B.

138Torquay Hotel Co. Ltd v. Cousins [1969] 2 Ch 106, [1969] 1 All ER 522.

139Warburton v. Taff Vale Railway Co. (1902) 18 TLR 420, Hanley v. Pease & Partners [1915] 1 KB 698.

Court, most authors have expressed great reticence in allowing for such

a‘third-degree’ claim.140

II. Regarding this issue, the Civil Code leaves much open to debate. However, on the occasion of a related subject the Dutch legislature has shown some reservation, but has left possible further legal development open to debate in scholarly writing and judicial opinions.141

First, it is unlikely that Acme’s duty to excavate carefully purports to protect the interest of uninterrupted employment. If this observation is correct, then damaging the pipe is not unlawful vis-à-vis the employees of Cato.

Secondly, if one were to say – for argument’s sake – that the act itself was unlawful, then a similar obstacle would be found in the causality test. Supposing that employment by the day was common in Dutch society, consequently, it would have been foreseeable for the excavator that his negligence would result in the workers’ (temporary) unemployment. One’s inclination is to think that, in spite of the foreseeability of this loss, the Dutch judiciary would be most hesitant to allow for recovery, given the nature of the damage and the grounds for liability.

III. As mentioned earlier, most authors have expressed great reticence in allowing for such a ‘third-degree’ claim. Having said that, if one thinks about it rationally, the case for the workmen seems rather strong. If we consider that, as a regular employer, Cato would be able to claim the cost of wages (‘second-degree’ damage), it would seem unreasonable to deny the employees the same compensation (‘third-degree’ damage) for the sole reason of their being employed as day-labourers. This problem is similar to that of so-called verplaatste schade (‘shifted damage’), or damage par ricochet: damage that would normally have been suffered by the injured party is sometimes in fact suffered by a third party because of a special relationship between the injured and the third party. As long as the total amount in damages awarded to Cato and its employees does not exceed the amount that Cato would have been able to claim, had the company been obliged to continue to pay wages, I would personally see no objection to allowing the employees to claim compensation.142

140See the authors mentioned by R. A. Salomons, Schadevergoeding: zaakschade (Monografieën Nieuw BW no. B-38) (2nd edn, Deventer, 1993) at pp. 52–5.

141See Explanatory Memorandum on the act implementing a strict liability for the use of hazardous and noxious substances, Kamerstukken II 21 202, no. 3, pp. 18–19, as quoted by A. T. Bolt and J. Spier, De uitdijende reikwijdte van de aansprakelijkheid uit onrechtmatige daad (Handelingen NJV 1996–1) (1996) at p. 102.

142In any case, the floodgates argument would not be valid, for the total amount owed to injured employee and employer would not be more than the amount that would be owed to the employee alone.

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Germany

I. The workers have no claim against Acme. None of their absolute rights listed in § 823 (1) has been violated. In particular, their employment is not an absolute right but only a relative one since it arises from, and is limited to, their contract with Cato. Nor is there any contractual relationship between the workers and Acme that could conceivably give rise to a claim. This result is clear and undisputed.

II.It is a fundamental principle of German tort law that only the persons whose absolute rights have been violated have tort claims under

§823 (1). Others, i.e. third parties whose ‘absolute rights’ have not been affected, suffer only pure economic loss which is not compensable under this provision.143

There are only three exceptions, all provided for by the Civil Code itself: first, in case of death, the wrongdoer has to pay funeral expenses to those in charge of the funeral (§ 844 (1)). Second, he must compensate third parties for loss of support to the extent the victim had a statutory duty to support them (§ 843 (2)). Third, the tortfeasor must compensate third parties for the loss of services that the victim was statutorily obliged to render (§ 845). These exceptions are final and conclusive.144 Courts and scholars agree that they reflect the legislative intent to circumscribe third-party tort claims narrowly and have thus refused to recognize additional ones.145

III.The workers would still have claims against Cato if he had no right to terminate their employment. In that case, he would remain liable for their pay even though he had no use for their services (§§ 615, 293–296 BGB).146 If, however, the termination was legal and valid, Cato would not owe them anything, though the workers may have a right to unemployment insurance benefits.

Austria

I. The workers’ claim for compensation would be unsuccessful under Austrian law. Negligent interference in obligations is generally no basis for compensation claims, since ‘rights in personam’ are not generally protected against infringements by third parties. There is no doubt that

143RGZ 64, 344, at 345 (1906); BGHZ 7, 30 (1952); BGH NJW 1996, 2662.

144BGHZ 7, 30, at 33–4 (1952).

145J. Esser and H. L. Weyers, Schuldrecht Band II, Besonderer Teil (7th edn, 1990) s. 63

II 4 b; K. Larenz and C. W. Canaris, Lehrbuch des Schuldrechts (13th edn, 1994) s. 81 I 2 c.

146See M. Löwisch, Albeitsrecht, Rd.-Nr. 1003–10.

the Supreme Court would resort to the ‘indirect damage formula’ in a similar case.

II. Even if the halt in production which entails the workers’ dismissal is attributable to the gross negligence of the Acme employee, there is nonetheless no ‘direct’ violation of the worker’s property for which Acme must answer. Therefore, the Austrian Supreme Court would rule that the damage did not occur ‘in the direction of the assault, but was attributable to a side-effect which arose in a sphere of interest not protected by the provision aiming to prevent the assault’.

III. It may well be that under certain applicable rules of Austrian labour law, Cato may have the obligation to pay the salaries irrespective of whether he could actually employ the workers for the intended job. It would then be incumbent upon Cato to seek repayment by the tortfeasor.

His claim against Acme would have little chance of success, however, unless Cato was the owner of the cable (of which there is no indication in the facts) as well as the factory; or unless the contract between Acme and whoever commissioned the roadworks were to be classified as a ‘contract with protective effects to third persons’, and Cato would thus fall under that protective effect.

Portugal

I. There are no grounds whatsoever for the workers laid off by Cato to make any claim for compensation against Acme.

II. The workers have merely had an ‘expectation of fact’ frustrated, because they had no contractual right to be employed continuously.

If the unlawful act had caused a lasting impediment to normal work, the hypothesis of an infringement of the right to work might be applicable as a manifestation of the general personality right (protected as an absolute right), which is openly recognized in Portuguese law (art. 70 CC). But this hypothesis is not consistent with our case.

Sweden and Finland

I. The workers have absolutely no claim against Acme. They can in no way be seen as having personally suffered any property damage, and the ‘third party rule’ applies here strictly.

II. The difficulties encountered by Swedish law in providing compensation for loss of production in cable cases make it a fortiori unthinkable to admit a claim like this. A worker has no property right or other