The Law of Tort

A tort is a civil wrong (other than breach of contract) that causes harm to another person, giving the injured party the right to claim compensation. Negligence is the most important tort in business and professional life.

To succeed in a negligence claim, the claimant must prove four elements on the balance of probabilities:

1. The defendant owed the claimant a duty of care
2. The defendant breached that duty (fell below the required standard of care)
3. The breach caused the claimant's loss (causation — factual and legal)
4. The claimant suffered recoverable damage (the loss was not too remote)

If any element is not established, the claim fails.

The existence of a duty of care is established using the three-part test from Caparo Industries plc v Dickman [1990]. All three elements must be satisfied:

1. Foreseeability of damage: Was it reasonably foreseeable that the defendant's conduct could cause harm to the claimant? Would a reasonable person in the defendant's position have foreseen that their actions (or inaction) could cause damage?
2. Proximity of relationship: Was there a sufficiently close relationship between the parties? Proximity can be physical (neighbours), professional (auditor-client), temporal (closeness in time), or circumstantial (the defendant knew the claimant would be directly affected).
3. Fair, just, and reasonable: Is it fair, just, and reasonable to impose a duty of care in the circumstances? This is a policy consideration — the court considers whether imposing a duty would open the "floodgates" to excessive claims, interfere with other legal principles, or create an unjust burden.

Established duty categories: In many situations, the duty of care is already established by precedent and does not need to be proved afresh each time:

• Driver to other road users
• Employer to employees
• Manufacturer to consumers (Donoghue v Stevenson [1932] — the "neighbour principle")
• Doctor to patient
• Solicitor to client
• Occupier to visitors

The Caparo test is used for novel situations where no established category exists, or to determine the scope of an existing duty (particularly for economic loss — see professional negligence below).

Application to auditors (Caparo v Dickman itself): The House of Lords held that the auditor of a company's statutory accounts owes a duty of care to the shareholders as a body (collectively, for the purpose of exercising their class rights such as voting at general meetings), but NOT to individual shareholders making personal investment decisions, potential investors, or lenders who rely on the published accounts. The third element (fair, just, and reasonable) was not satisfied for these wider claimants because it would expose auditors to "liability in an indeterminate amount for an indeterminate time to an indeterminate class."

Once a duty of care is established, the claimant must show the defendant breached it — i.e., the defendant's conduct fell below the standard of care that a reasonable person in the defendant's position would have exercised.

The reasonable person test: The standard is objective — the court asks what a reasonable person would have done in the circumstances. It is not about what the specific defendant thought or intended. Specialist defendants (doctors, accountants, solicitors) are judged against the standard of a reasonably competent member of that profession (Bolam v Friern Hospital [1957]).

Factors in assessing breach:

• Likelihood of harm: The greater the probability of harm, the more precautions a reasonable person would take (Bolton v Stone [1951] — cricket ball unlikely to escape the ground = no breach)
• Severity of potential harm: If the potential injury is serious, more care is required (Paris v Stepney Borough Council [1951] — employer should have provided goggles to a one-eyed worker because the consequences of eye injury were more severe)
• Cost and practicability of precautions: A reasonable person balances the cost of taking precautions against the risk. Precautions need only be reasonable, not every conceivable measure (Latimer v AEC [1953] — closing the factory was not a reasonable precaution for a slippery floor; spreading sawdust was sufficient)
• Social utility of the defendant's activity: Some risk may be acceptable if the activity has social value (Watt v Hertfordshire County Council [1954] — fire engine rushing to an emergency justified some additional risk)

The claimant must prove that the defendant's breach caused their loss. There are two stages:

1. Factual causation — the "but for" test:

"But for" the defendant's breach, would the claimant have suffered the loss? If the loss would have occurred anyway regardless of the breach, causation is not established (Barnett v Chelsea & Kensington Hospital [1969] — a patient died of arsenic poisoning; even if the doctor had examined him, the patient would have died — factual causation not established).

2. Legal causation — remoteness of damage:

Even if the breach factually caused the loss, the defendant is only liable for losses that are not too remote. The test is from The Wagon Mound (No 1) [1961]:

The defendant is liable only for damage of a type that was reasonably foreseeable at the time of the breach. The defendant need not foresee the precise way the damage occurred or its extent — only the type of damage (Hughes v Lord Advocate [1963] — explosion and burns were foreseeable types of damage from leaving a manhole unguarded, even though the precise chain of events was unusual).

"Thin skull" rule: The defendant must take the claimant as they find them. If the claimant has a pre-existing condition that makes the injury worse than it would be for an average person, the defendant is liable for the full extent of the injury (Smith v Leech Brain [1962] — a burn on the lip triggered cancer in a pre-disposed worker; employer liable for the cancer, not just the burn).

Intervening acts (novus actus interveniens): A subsequent event may break the chain of causation if it is so significant that it becomes the real cause of the damage. Examples: a third party's deliberate act, the claimant's own unreasonable conduct, or a natural event. The intervening act must be unforeseeable to break the chain.

Even if the claimant establishes all four elements, the defendant may raise defences to reduce or eliminate liability:

1. Contributory negligence:

Under the Law Reform (Contributory Negligence) Act 1945, if the claimant's own negligence contributed to their loss, the court reduces the damages by the proportion the claimant was at fault. This is a partial defence — the claim succeeds but damages are reduced.

Example: A pedestrian steps into the road without looking and is hit by a speeding car. The pedestrian's damages may be reduced by, say, 25% to reflect their own contribution to the accident.

2. Volenti non fit injuria (consent / voluntary assumption of risk):

If the claimant voluntarily consented to the risk of harm with full knowledge of its nature and extent, the defendant is not liable. This is a complete defence — the claim fails entirely.

The defence is rarely successful in practice because the claimant must have had genuine freedom of choice (not just knowledge of the risk) and must have consented to the specific risk that materialised. It does NOT apply in employment relationships (employees cannot truly "consent" to risks created by their employer — they need their job).

3. Limitation:

Under the Limitation Act 1980, claims must be brought within specified time limits:

• Tort (general): 6 years from the date the damage occurred
• Personal injury: 3 years from the date of injury (or the date of knowledge, if later)
• Latent damage (negligence): 6 years from the date of damage, or 3 years from the date the claimant knew or should have known about the damage (whichever is later), subject to a longstop of 15 years from the breach (Latent Damage Act 1986)

If the limitation period expires, the claim is statute-barred — the defendant can raise limitation as a complete defence.

4. Illegality (ex turpi causa):

A claimant cannot recover damages if they were involved in illegal activity at the time the damage occurred. The court will not assist someone who was committing a crime.

Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] established that a duty of care can arise in respect of negligent misstatements causing pure economic loss (financial loss without physical injury or property damage). This is particularly important for professionals (accountants, solicitors, surveyors, financial advisors) whose advice, if negligent, may cause financial loss to those who rely on it.

Requirements for a Hedley Byrne duty of care:

1. There must be a special relationship between the parties — the defendant possesses special skill or knowledge and the claimant reasonably relies on that skill
2. The defendant made a statement or gave advice on which it was reasonable for the claimant to rely
3. The defendant knew or ought to have known that the claimant would rely on the statement for a particular purpose
4. The claimant did in fact rely on the statement and suffered loss as a result
5. The reliance was reasonable in the circumstances

Disclaimers: In Hedley Byrne itself, the bank had included a disclaimer ("without responsibility"), which protected it from liability. A disclaimer can negate the duty of care if it is reasonable (subject to UCTA 1977 — an exclusion of liability for negligence causing death or personal injury is void; for other loss, it must satisfy the reasonableness test).

Application to accountants:

• Caparo v Dickman [1990]: Narrowed the Hedley Byrne duty for statutory audits — the auditor owes a duty to shareholders as a body (not to individual investors or third parties making investment/lending decisions). This limits the auditor's exposure to negligent misstatement claims from the public at large.
• Specific reliance: An accountant may owe a Hedley Byrne duty to a specific third party if they know the report will be used by that party for a specific purpose — e.g., a report prepared for a named lender in connection with a specific loan application.
• Voluntary assumption of responsibility: The key underlying principle is whether the professional voluntarily assumed responsibility towards the claimant for the accuracy of the statement (Henderson v Merrett Syndicates [1995]).

Occupiers of premises owe duties to persons who enter those premises. Two statutes apply, depending on whether the entrant is a lawful visitor or a trespasser:

Occupiers' Liability Act 1957 (OLA 1957) — Lawful visitors:

• The occupier owes a duty of "common care" to ensure the visitor is reasonably safe for the purposes for which they are permitted to be on the premises
• A higher standard of care is owed to children (the occupier must be prepared for children to be less careful than adults — "allurement" doctrine)
• A lower standard applies to persons entering in the exercise of their calling (e.g., a window cleaner is expected to guard against risks associated with their trade)
• The occupier may discharge the duty by giving adequate warning of a danger (but the warning must be enough to enable the visitor to be reasonably safe)
• The duty can be excluded or restricted by agreement or notice (subject to UCTA 1977 — cannot exclude liability for death/personal injury caused by negligence)

Occupiers' Liability Act 1984 (OLA 1984) — Trespassers (non-visitors):

• The occupier owes a more limited duty — a duty to take reasonable care in respect of dangers on the premises, but only if:
  1. The occupier is aware of the danger (or has reasonable grounds to believe it exists)
  2. The occupier knows or has reasonable grounds to believe that the trespasser is in the vicinity of the danger
  3. The danger is one against which the occupier may reasonably be expected to offer some protection
• The duty under OLA 1984 is narrower than under OLA 1957 — the occupier is not expected to make premises safe for uninvited visitors, but must take reasonable steps if they know trespassers are likely to be at risk
• The duty can be discharged by giving adequate warning of the danger or taking steps to discourage entry

Vicarious liability makes an employer liable for the torts committed by their employees in the course of employment. It is a form of strict liability — the employer is liable even if they were not personally at fault.

Three conditions must be met:

1. The tortfeasor must be an employee (not an independent contractor). The traditional test is the "control" test — does the employer control what the worker does AND how they do it? Modern tests consider multiple factors: control, provision of equipment, financial risk, integration into the business, tax and NIC arrangements, and the overall picture. The distinction between employee and independent contractor is a question of fact.
2. The employee must have committed a tort (negligence, assault, fraud, etc.) — the employee is personally liable AND the employer is vicariously liable. Both can be sued.
3. The tort must have been committed "in the course of employment": The employer is liable if the employee was performing their duties or doing something reasonably incidental to their duties — even if they were doing it carelessly, improperly, or in an unauthorised manner. The employer is NOT liable for torts committed on a "frolic of their own" (completely outside the scope of employment). The test is whether the wrongful conduct was so closely connected with acts the employee was authorised to do that it can fairly and properly be regarded as done in the course of employment (Lister v Hesley Hall [2001]).

Rationale: The employer benefits from the employee's work and is best placed to: insure against the risk (employers' liability insurance is compulsory — Employers' Liability (Compulsory Insurance) Act 1969), control the employee's behaviour, and compensate the victim (the employer is more likely to have the resources to pay damages than the individual employee).

Independent contractors: The employer is generally NOT vicariously liable for the torts of independent contractors, because they do not control how the work is done. However, the employer may be personally liable if they: selected an incompetent contractor, failed to supervise non-delegable duties, or the work involved inherently hazardous activities.

An employer owes a personal, non-delegable duty of care to each employee to provide a safe system of work. This is a direct duty (not vicarious) — the employer is personally liable for their own negligence in failing to provide safe working conditions.

The four elements of the duty:

• Safe workplace: The physical premises must be reasonably safe — proper lighting, non-slip surfaces, secure structures, adequate ventilation, safe access and egress
• Safe plant and equipment: Machinery, tools, and equipment must be properly maintained, regularly inspected, and safe to use. Under the Employer's Liability (Defective Equipment) Act 1969, if an employee is injured by defective equipment, the employer is deemed to be negligent (even if the defect was the manufacturer's fault — the employer can claim contribution from the manufacturer)
• Safe system of work: Proper procedures, training, supervision, and safety protocols. Including: risk assessments, method statements, safety equipment (PPE), adequate rest breaks, and procedures for hazardous tasks
• Competent fellow employees: The employer must recruit, train, and supervise employees to ensure they are competent and do not create risks for colleagues

Employer's duty extends to: Providing adequate training, carrying out risk assessments (Health and Safety at Work etc. Act 1974), providing personal protective equipment (PPE) where needed, and considering the individual needs of employees (e.g., a worker with a disability may need additional safeguards — Paris v Stepney BC).

Compulsory insurance: Under the Employers' Liability (Compulsory Insurance) Act 1969, all employers must have insurance covering at least £5 million per claim for injury or disease to employees arising out of employment. Failure to insure is a criminal offence.