Date: Mon, 22 Oct 2007 21:55

From: Robert Stevens

Subject: Johnston v NEI

OK, I think I am obliged to give a longer answer. I apologise if any if this is repetitive.

There is a perfectly good claim for breach of contract here. By contrast, there is no claim at all for a tort.

To quote Lord Scott:

Damage is the gist of a negligence action in tort but damage does not have to be shown in order to establish a cause of action for breach of contract. All that is necessary is to prove the breach. The amount of damages recoverable, once the breach of contract has been proved, is subject to well known rules established by the leading cases and, applying these rules, it might be well arguable that the breach of a contractual duty to provide a safe working environment for employees, an environment where reasonable precautions had been taken to avoid their exposure to injurious asbestos dust, would justify an award of contractual damages to compensate the employees for subjecting them to the risk of contracting in the future a life-threatening asbestos related disease. Damages for breach of contract should, in principle, compensate the victim for being deprived of the contractual benefit to which he was entitled.

Now the increased risk of suffering a disease at some point in the future is a real current loss. Purchasers of lottery tickets are buying something of current value, a future prospect. Having an increased risk of a subsequent injury is a real loss, capable of being given a current value. Damages for breach of contract are supposed to put the claimant in the position he would have been in if the breach had not occurred. So, the argument goes, damages should be assessed by placing a value on the increased risk now being run of the future disease. That it is a real loss can be tested by asking what each of us would be prepared to pay not to be exposed. The calculation would be based upon the loss which would be suffered if the disease occurred, reduced according to current probability.

An analogy may be drawn with economic loss. We don't have a general free standing right not to suffer economic loss, whether intentionally or negligently inflicted (Ken you'll just have to accept that I can't give lengthy footnote citation references for propositions like this on a discussion list). Where such loss is consequent upon a wrong, such as a breach of contract, or defamation, or the negligent damage of property, it can be recovered.

Similarly, although we don't have a general free standing right not to suffer the increased risk of suffering a disease, where this is consequential upon the suffering of a wrong, here a breach of contract, it should be recoverable. Hoffmann, for example, assumes it is actionable where consequential upon personal injuries.

The argument against would have to be along the lines that there are no cases allowing for recovery for increased risks in this way. Chaplin v Hicks for example is a lost chance case, it doesn't concern future risks. Lord Scott it seems to me is saying it should be argued. Further, it can be argued that the lucky claimant who doesn't eventually full ill gets a 'windfall'. I am not too bothered about this, just as long as we don't allow those who do suffer the disease, but have already claimed for its increased risk, to return and claim further damages.

For the loss caused by distress, you'd have to argue for a further extension of Farley v Skinner. I'd suggest that the 'no recovery for distress' rule makes sense in the context of commercial contracts. Their purpose is to generate wealth, non-financial losses are outside the scope of the duties undertaken: they are too remote. Outside of the commercial context the exclusionary rule is harder to justify. By refusing a claim for foreseeable distress we are not placing the innocent party back in the nearest position so far as money can do it. Canadian developments are useful here.

It should be stressed however that a bad argument for rejecting claims for these heads of loss would take the form "you cannot sue in tort for negligence therefore you cannot sue for breach of contract". It was this sort of argument Michael was trying to make when he drew upon McFarlane. The claimants in Johnston couldn't even get in the door by arguing for a tort. The only wrong in play was the claim for breach of contract. So, just as if I am sacked, I will have a claim in contract for my consequential economic loss but no claim based upon a tort; if I am exposed by my employer to asbestos I may have a claim for consequential loss (e.g. diagnosis costs) but no claim based upon a tort.

Showing that I have suffered a loss because of someone else's negligence is not enough. I need to show a right which has been violated. Here that right was that contained in the contract.

Even if you reject these arguments on the facts of Johnston itself, the fact remains that the employee's contractual right to a safe system of work is observably different from the rights he has against persons generally. They arise from the contract. That is why the wrong was actionable without proof of loss. The arguments based upon a breach of contract should, at a minimum, have been put.

(In addition to the five reasons for differentiating the breach of contract claim from the claim based upon a tort that I gave in response to Michael's post, the incidental rules applicable to the claims also differ (see jurisdiction and choice of law where claims by employees are not treated as within the tort rules – e.g. Rome Convention art 6, Brussels Regulation art 18).)

Of course, if you think that the law of torts is all about (unarticulated) policy concerns much of the above will seem like pedantry to you, as would the distinction between wrongs actionable per se and wrongs requiring proof of consequential loss. For those with a Realist outlook, their Lordship made the policy choice not to allow recovery in Johnston and changing the label on the bottle from tort to contract should make no difference. I do not accept that perspective as being the correct one.

Robert

<<<< Previous Message  ~  Index  ~  Next Message >>>>>