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Part  7 Limitations of liability

I.  The basic problem of excessive liability

5 / 141 Fear of excessive liability – as evidenced by the frequent invocation of the famous » floodgates argument « – has been an abiding concern of English tort law for centuries309. On occasion, it has been expressly relied upon by the courts as a reason for declining to recognise that a duty of care arises in particular circumstances – perhaps most notably in connection with psychiatric injuries310. Sceptics, however, argue that the force of the floodgates argument has been greatly exaggerated311.

5 / 142 Quite apart from the ad hoc reliance upon policy considerations to restrict the scope of the duty of care, the courts have a number of other concepts that may be employed in order to limit the scope of tortious liability. Though sometimes obscured by its extensive use of metaphor, the common law’s approach to the restriction of what would otherwise be excessive liability fits the pattern that one finds in most systems of supplementing the basic requirement of conditio sine qua non with additional limitations on liability, some ( but not all ) of which have traditionally been regarded as causal. The principal examples of such limitations in the common law are the principles of novus actus interveniens and remoteness of damage, which play a role that is functionally equivalent ( in broad terms ) to principles of adequacy in other systems312. The common law principles ( and, one suspects, principles of adequacy in other systems ) are broad-textured and allow the tribunal of fact considerable discretion in their application. They determine in some cases whether liability falls on a single tortfeasor or on two or more, and so reflect to some extent a legal system’s general orientation towards either individualised corrective justice ( as in the case of the common law, at least in England ) or the loss distribution which is accorded greater weight in some other systems.

309See eg Winterbottom v. Wright ( 1842 ) 10 Meeson & Welsby’s Exchequer Reports ( M & W ) 109, 115 per Alderson B. ( » if we go one step beyond that, there is no reason why we should not go fifty « ).

310See eg McLoughlin v. O’Brian [ 1983 ] AC 410, 421 f per Lord Wilberforce.

311See eg McLoughlin v. O’Brian [ 1983 ] AC 410, 442 per Lord Bridge.

312For general analysis, see J. Spier / O.A. Haazen, Comparative Conclusions on Causation, in: J. Spier ( ed ), Unification of Tort Law: Causation ( 2000 ) 127 ff, 130 ff.

II.  Interruption of the causal link

sion and not exclusively, of course ) on causal grounds. The metaphor of a » break « in causation indicates an intervention in the normal course of events. Hart and Honoré’s detailed and subtle analysis leads them to suggest that legal causation between a factual cause of an injury and the injury itself is liable to be negatived if the injury results from an intervention that is deliberate and itself intended to cause the harm, or constitutes an abnormal and unexpected occurrence or conjunction of events. As already noted, the thesis has been attacked on the basis it introduces policy considerations into what should be a purely factual concept316. Nevertheless, it has attracted a measure of judicial support in the English courts and been said to reflect » the individualist philosophy of the common law «317.

313Lamb v. Camden London Borough Council [ 1981 ] QB 625. Aliter in circumstances where D1 has a duty to control D2: see eg Home Office v. Dorset Yacht Co. Ltd. [ 1970 ] AC 1004 ( damage caused by escapees from young offenders’ institution ).

314Knightly v. Johns [ 1982 ] 1 WLR 349.

315See idem, Causation in the Law 2.

316No 5 / 95 above.

317Reeves v. Commissioner of Police for the Metropolis [ 2000 ] 1 AC 360, 368 per Lord Hoffmann.

III.  Remoteness of damage

5 / 145 By the rule established in the Privy Council’s Wagon Mound decision318, liability is further restricted to harm that is of a type that was the reasonably foreseeable consequence of the defendant’s tort. The most convincing justification for the limitation is the need to provide some mechanism – even if somewhat rough and ready – to keep liability within reasonable bounds, rather than any spurious equation of the issues of culpability and the extent of compensation by which foreseeability, as crucial to determining the former, is for that reason used as the test of the latter319. The limitation applies to most claims in tort, but not to claims based on intentional wrongdoing, in which the defendant may be liable for all losses directly flowing from the wrong320.

5 / 146 It is sometimes argued that the principle of remoteness of damage is simply a cover for the concealed policy choices of judges, but most commentators reject this, even though they are driven to accept that the traditional risk theory, which asks whether the risk of the type of harm in suit was reasonably foreseeable, leaves much to judicial discretion in determining the relevant risk. To render the process of determination more transparent, Stauch has persuasively suggested that, rather than define the risk in terms of what damage was sustained, as is traditional, we should do so in terms of how it occurred ( the » revised risk theory « ). His focus is on the set of causal conditions necessary for the occurrence of the injury, and in particular upon those conditions which, added to the defendant’s conduct, completed the relevant causal set. The question for the court is thus whether the possible completion of that causal set was a reason for regarding the defendant’s conduct as a breach of duty. If not, the injury is prima facie too remote. Stauch submits that his is capable of withstanding the accusation that determinations of remoteness are entirely subjective or policy-driven. He concedes, however, that it may be legitimate to depart from the standard test for reasons of policy ( eg in the » thin-skull « scenario ), so long as the circumstances in which this is permitted are regarded as exceptional and limited in scope321.

318Overseas Tankship ( UK ) Ltd. v. Morts Dock & Engineering Co. Ltd., The Wagon Mound [ 1961 ] AC 388.

319Fleming’s The Law of Torts 10 para 9.160.

320Smith New Court Securities Ltd. v. Citibank NA [ 1997 ] AC 254.

321M. Stauch, Risk and Remoteness of Damage in Negligence ( 2001 ) 64 MLR 191 [ K. Oliphant in: H. Koziol / B.C. Steininger ( eds ), European Tort Law 2001 ( 2002 ) 131, no 103 ].

IV.  The protective purpose of the rule infringed

sequences of the information being correct, but does not undertake to protect the purchaser from fluctuations in the market value of the property acquired, so cannot be liable to the extent that the purchaser’s loss on a transaction entered into on the basis of a negligent valuation was increased by a general fall in the property market325. Likewise, the scope of a doctor’s duty of care in performing a sterilisation operation is to protect the woman from becoming pregnant but not to preserve

322Gorris v. Scott ( 1874 ) LR 9 Exch 125. For a more recent example, see Fytche v. Wincanton Logistics plc [ 2004 ] UKHL 31, [ 2004 ] 4 All ER 221 ( steel-toe-capped boots adequate for the intended purpose of protecting against the falling heavy objects, even if they did not protect against frostbite ).

323Hartley v. Mayoh & Co. [ 1954 ] 1 QB 383.

324Knapp v. Railway Executive [ 1949 ] 2 All ER 508.

325South Australia Asset Management Corp. v. York Montague Ltd. [ 1997 ] AC 191.