INTRODUCTION

The limitations statutes we are familiar with today are rooted in the limitation periods of 13th-century land-related actions in England. It was not until the Limitation Act 1623, however, that the notion was extended to non-land-related claims, including torts. Under that Act, limitation periods of two years for actions on the case for words, four years for actions of assault and false imprisonment and six years for most other actions were introduced. The law of limitations was left virtually undisturbed until Parliament enacted a single limitation period of six years under the Limitation Act 1939 from when the cause of action in tort and contract, but not on a specialty, accrued. Parliament intervened more frequently thereafter among other things to reduce the limitation period for personal injury claims to three years (under Law Reform (Limitation of Actions, etc) Act 1954); to introduce an alternative period which commenced, in personal injury actions, when ‘material facts‘ were known to the claimant (under the Limitation Act 1963); and to legislate for judicial discretion to set aside the ordinary time limit in personal injuries cases (under the Limitation Act 1975). The current principal piece of legislation on the subject, the Limitation Act 1980, entered into force on 1 May 1981 and applies in England and Wales only. As its Preamble notes, the statute is:‘An Act to consolidate the Limitation Acts 1939 to 1980̓. Important amendments have since been made to the Limitation Act 1980, for our purposes, by the Latent Damage Act 1986 (which is also limited in its application to England and Wales), the Consumer Protection Act 1987 (which applies across the UK), the Administration of Justice Act 1985 and the Defamation Act 1996 (which applies to the whole of the UK with the exception of Scotland).

Part I of the Limitation Act 1980 (secs 1– 27C) sets the ordinary time limits for different classes of action. However, the latter may qualify for extension or exclusion in accordance with provisions under Part II of the Act (secs 28– 33B). Miscellaneous and general provisions are contained in Part III (secs 35– 41). By virtue of sec 37 of the Limitation Act 1980, actions involving the Crown are generally dealt with in the same way as those between private subjects. .

INTRODUCTION

In the UK, as in perhaps all mature legal systems, compensation for victims of misfortune comes from a number of diff erent sources. Th e following may be regarded as the most important:

• – Social security

• – Private insurance

• – Tort law

• – A surprisingly wide variety of other compensation funds and schemes

The last-mentioned – the focus of this chapter – are created because of perceived gaps of cover in, or shortfalls in the compensation offered by, the other three sources. Each of the three suffers from its own specific limitations – affecting either the scope of cover provided or the amount of compensation paid.

Social security provides only a minimum level of support and compensation payments are targeted on needs, rather than losses. In general, only pecuniary rather than non-pecuniary needs are addressed. The benefits provided may be means tested.

The major limitation of private insurance, by contrast, is that it is voluntary, so the coverage it provides is incomplete. (In some contexts – for example, in respect of motor vehicles – third-party liability insurance is compulsory, but this is to ensure the effectiveness of the remedies granted by tort law, so the insurance here is not an independent source of compensation.) In practice, there are limits on what first-party (or loss) insurance will cover, especially because of the moral hazard problems that arise if insurance benefits are too attractive. For example, the benefits payable under income protection insurance in the event of unfitness to work will not replace the insured's full lost income for the remaining part of his or her working life but will likely be limited to a specified percentage of pre-disability earnings.

In considering the scope of the compensation provided in the UK by the law of tort, it should be noted in the first place that the system is predominantly fault-based. In comparison with other European countries, there is very little strict liability. Fault-based liability applies even in respect of road traffic accidents. In respect of work-related injuries and illnesses, there is no workers‘ compensation. The erstwhile system was abolished in 1948 on the theory that occupational injuries and illnesses should not be distinguished categorically from those arising in other contexts; instead, all should be brought within a universal social security system.

QUESTIONS

TRACING THE BORDERLINES

A. DISTINCTION BETWEEN TORT AND CONTRACT

1) Justification for Distinguishing Tort from Contract

a) Historical Distinction

The categories contract and tort are not to be found in the early common law. It was not until the end of the 17th century that they began to emerge and that the distinction between them came to have significance, initially for primarily procedural reasons. With the abolition of the old ‘forms of action’ in the mid-19th century, the question of classification had to be addressed more systematically and on the level of substance, and various theoretical analyses of the distinction between the two causes of action began to emerge.

b) Theories Justifying Continued Division

The classic justification, under the ‘will theory’, is that contractual duties are based on voluntary obligations: it is for the law to set out the prerequisites for the formation of a contract and to enforce it but it is for the parties to negotiate its substantive terms. Tortious obligations, on the other hand, are coercive: they are imposed by law and not on the basis of agreement between the parties.

In practice, however, the laissez-faire theory of contract is only true as a starting point. First, because terms may be implied into contracts by the courts or the legislature and some terms that have expressly been negotiated by the parties may be struck down. Indeed, entire agreements may be struck down on the grounds, inter alia, of illegality, incapacity, mistake, duress, misrepresentation, frustration and restraint of trade. Second, much judicial ingenuity is also expended on the interpretation of the parties’ agreement so as to avoid unjust consequences. As a result of the contra proferentem rule, for example, exemption clauses are construed strictly against the party who seeks to rely on them. Third, the classification of terms also allows courts some latitude for intervention. This is the case, for example, with ‘innominate terms’, intermediate terms that may transpire to be either conditions or warranties on the ex post application of the ‘consequences of the breach’ test.

A owns a business providing care and accommodation for old people. T is activity can only be pursued under licence from State agency B. After a site visit, B's official, C, erroneously concludes that A has been physically abusing persons in her care, and exercises his statutory power to revoke A's licence. A unsuccessfully seeks an injunction to keep the home open pending her appeal and consequently has to close her business. Her appeal can only be held four months later, and A's business suffers serious financial damage in the interim as it has to reimburse advance payments by former residents and loses the chance of a lucrative bulk contract with the local city council. The appeal authority finds that A had not been abusing persons in her care and that C was negligent (but not knowingly doing wrong) in forming the contrary opinion. A now seeks damages from B and/or C (and/or the State) for her financial losses. Would it make any difference if C was grossly negligent or reckless or actuated by malice? What if A might have been entitled to an injunction to keep the home pending appeal, but failed to seek one?

AUSTRIA

A can recover damages from B under the AHG for faulty conduct of C if B is a legal entity with own authoritative power. If B instead only executes functions of the federal state, however, A can still sue B, but only on the basis of §1 para 3 AHG which holds the authority that employed C solidarily liable with the entity whose authority B (and, for B, C) exercised. B would then have a recourse claim against the federal state, which would be the ultimate payor under the functional approach incorporated in the AHG.

Direct claims against C are excluded by law (§9 para 5 AHG). However, if B (or another public authority from whom B has the authority) is held liable vis-avis A, B (or the other payor) can seek recourse from C, but only if the latter had acted at least with gross negligence.

As far as the refund for the advance payments is concerned, such loss is recoverable even in the absence of qualified fault.

INTRODUCTION

OVERVIEW

In most respects, but not without exception, the State and its emanations are subject to the ‘rule of law’ which, as interpreted by the 19th-century constitutional historian AV Dicey, entails their equal subjection – in common with persons generally – to the ordinary law administered by the ordinary courts. The principle applies to every public body and every public official. Generally speaking, public bodies and public officials are therefore subject to the same tortious liabilities as private persons. They are not liable without more for causing damage in breach of their duties or in wrongful exercise of their powers. The circumstances must be such as to make out the elements of a recognised ‘tort’ or to trigger the obligation to provide just satisfaction for violation of the Human Rights Act 1998 (HRA). As regards liability in tort, the principles applied have for the most part been developed through judicial decision, though statute has also played a role – for example, in establishing additional liabilities and removing certain common law restrictions on liability. Fault is almost always required. In terms of practical significance, the three most important bases of claim against a public authority in tort are negligence, breach of statutory duty and misfeasance in public office.

Dicey's idea of equality before the law – though it holds good to a considerable extent – is subject to a number of exceptions: (a) there is one tort, misfeasance in public office, that applies only to public officials; (b) particular public officials (eg judges) benefit from a general immunity from tortious liability; (c) various conceptual devices restrict the tortious liability of other emanations of the State (justiciability, discretion, the policy sphere); (d) the courts tend to be more willing to negate a duty of care for reasons of public policy where a public defendant is involved; (e) punitive (or exemplary) damages may be awarded for ‘oppressive, arbitrary or unconstitutional action by the servants of the government’ in circumstances where no such award would be possible against a private person; and (f) the liability to compensate under the HRA is exclusive to public authorities. These points of distinction are elaborated further in the analysis below.

E, cycling on a winding public cycle path crossing private property, comes around a sharp bend, only to find that the path suddenly narrows and that there is a cyclist coming the other way. Neither cyclist is able to see the other until the last moment because of a wall at the side of the cycle path. To avoid a collision, E rides off the path onto rough ground, goes over a concealed hole, is thrown from her bike and suffers serious injuries. Previously, a warning that the cycle path narrows suddenly into one lane was painted on its surface just before the bend, but this had been covered by tarmac following repair works, and F, the responsible public authority, had failed to re-paint the warning notwithstanding the lapse of several months and its admitted knowledge that this section of the cycle path was potentially dangerous. It now defends its inaction on the basis of a drastic cut in its public funding, in consequence of which it resolved to defer all spending on cycle paths so as to concentrate on higher spending priorities. E sues F (and/or the State) for damages, alleging that F ought to have re-painted the warning and that she would have slowed down and avoided the accident if this had been done.

AUSTRIA

Austrian case law holds that the failure to erect mere warning signs are not acts of authority, but rather concern a private law duty of the road owner to safeguard traffic, as they do not order some kind of specific conduct of the road users, but merely inform them of dangers. Consequently, public authority liability under the AHG cannot arise. This does not necessarily leave victims uncompensated, however: they may still be indemnified under §1319a ABGB, which provides for a special liability of the keeper of a road, but only if he or his auxiliaries acted with at least gross negligence. If the road is owned and/or maintained by a public law entity, it may also be held liable under said provision for failure to maintain its roads or the signs erected upon them, but only with respect to its private law duties as a road owner (or keeper) and irrespective of any authority attributed to it.

Under fire from a dangerous armed robber, Police Officer P (employed by Police Authority Q) reasonably concludes that he must fire back in order to preserve his own life and the innocent bystanders around him, and lawfully does so. P's bullet hits another innocent party, R, who out of pure misfortune comes round the corner of the building where the armed robber is sheltering at precisely the wrong moment. A second bullet that P fires hits and damages a motor vehicle belonging to S. In the confusion, the armed robber makes off and is never traced. R and S seek damages from P and/or Q (and/or the State) for their gunshot injury and property damage respectively.

AUSTRIA

R and S are eligible to claim compensation from the federal state, which has to indemnify their losses according to the Polizeibefugnis-Entschädigungs gesetz (PolBEG), assuming that P used a firearm falling under the Waffen ge brauchs - gesetz. R's claim is reduced by whatever he can claim under the Verbrechensopfergesetz (VOG). To the extent R and S have first-party insurance cover for losses of the kind sustained, claims under the PolBEG are barred.

The facts do not imply that R or S in any way triggered the police action or contributed to their own losses in a blameworthy manner, either of which would exclude or at least reduce their claims.

R and S have to file a request for payment with the Federal Ministry of the Interior, which has to react to it within three months. In the absence of a response or if R and/or S are dissatisfied with the decision by the Ministry, they can pursue their claims in court.

While fault of P is not required for claims to arise under the PolBEG, if established, it may give rise to a competing entitlement for compensation under the AHG, in which case the request filed by the victims with the Federal Ministry of the Interior also counts as a filing with the Finanzprokuratur as required by the AHG, starting from the moment it receives the request forwarded by the Ministry of the Interior (§7 para 1 PolBEG). The prime advantage of such a faultbased claim under the AHG is the fact that the latter also extends to lost profit and non-pecuniary damage. Needless to say, the victims can only recover once.

CONTEXT

In the last decades, liability relating to public authorities (‘public authority liability’) has been one of the main focuses of development in and at the edges of tort law in Europe, with major reforms implemented or considered at national level, and a steady stream of major court decisions. During the same period, ‘Member State liability’ has also been recognised in the law of the EU, and the interplay of principles of national and EU law – and additionally the ‘just satisfaction’ jurisprudence of the European Court of Human Rights – evidently warrants close attention. It was against this backdrop that the European Group on Tort Law Group embarked on its investigation of public authority liability from a comparative perspective.

EXISTING STATE OF COMPARATIVE SCHOLARSHIP

Naturally, the importance of the topic means that several major comparative law studies have been undertaken in the area already. But the sheer pace of recent developments itself justifies the pursuit of further comparative research on the subject, and this was one of the considerations that led the European Group to embark on its own project on public authority liability. Irrespective of timing, it was also felt that what the Group would be able to produce would in any case have the potential to make a meaningful contribution to the existing literature. The Group's aspiration was to produce something more than merely a collection of conference papers and/or public lectures by embarking on a long-term and coordinated study that applied a common methodology to the description of public authority liability law in different jurisdictions, and sought to present information about each in a format that facilitates a point-by-point comparison between them. The resultant reports are contained in Part I of this book.

Further, it struck the Group as desirable to test and interrogate the information provided in these general accounts of public authority liability in different countries by inquiring into the application of the principles identified to concrete facts.

G is a State agency that has responsibility for licensing commercial pleasure boats to ensure their safety; possession of a licence is a condition for the use of such a boat for fee-paying passengers. G's inexperienced inspector, H, certifies the safety of a commercial pleasure boat owned by I, but has overlooked a defect in the structural soundness of the boat's hull that should have been apparent to an experienced inspector. I is unaware of and could not reasonably been expected to discover the defect. The boat consequently springs a leak while on water with passengers and sinks. I is trapped underwater for a period, and suffers brain damage from oxygen deprivation. One of his passengers, J, drowns.

I now seeks damages from G and/or H (and/or the State) for his loss of profit, the loss of his boat and his personal injury. J's dependants also seek damages from the same defendants. G wonders whether, if it is held liable, it would be able to recover an indemnity from H. Would it make any difference to this claim if H had been aware of the defect but took a bribe from I to certify the boat's safety anyway?

AUSTRIA

Both I and J's dependants can claim compensation from G if H was acting out of G's own authority, otherwise the prime – and ultimate – payor of compensation under the AHG is the entity from whom G derived its authority that was exercised by H. The licensing process seems to involve safety checks, which undoubtedly have the purpose of protecting the well-being of those aboard. The problems with the hull should have been identified in the course of the inspection and are therefore clearly within the scope of the licensing process. The lack of H's experience can of course not serve as a defence since the standard of care owed is defined by the expertise of a person duly performing such tasks in general. Direct actions against H are cut off by §9 para 5 AHG.

An abnormally high number of food poisoning cases are, on reasonable grounds, initially attributed by a minority of the government's scientific advisers to the consumption of unpasteurised cheese. The Minister for Food Safety, M, consequently exercises her statutory power to issue regulations relating to her area of responsibility and imposes an indefinite ban on the sale of cheese that has not been pasteurised. In doing so, she seeks to balance the possible risk to the public disclosed by the scientific evidence with the economic interests of producers of unpasteurised cheese. After a period of months, it emerges that the food poisoning outbreak was wholly unconnected with the consumption of unpasteurised cheese, but M delays for over a year before lifting the ban. M (and/or the State) is now sued by manufacturers of unpasteurised cheese who suffered loss because of the ban, including the spoilage of cheese that had been manufactured but could not be sold, the cost of hiring pasteurisation equipment for the duration of the ban, and loss of profit. It is alleged, first, that M acted improperly in imposing the ban and maintaining it for three months and, secondly, that she ought to have lifted it on the basis of the new evidence at the end of that period and only delayed lifting the ban through inefficiency. It is further argued that the manufacturers affected should receive compensation even if M did not act improperly.

AUSTRIA

If the lifting of the ban came too late, the State will be liable for M's omission to declare an end to the ban in a timely manner. If instead the prolongation of the ban was within M's discretion and the actual duration not entirely beyond reasonable interpretation of the law, courts may come to the opposite conclusion, as proceedings under the AHG are not meant to overturn executive (or judicial) decisions just because there would have been an alternative outcome possible within the range of justifiable deliberations. Liability under the AHG requires fault attributable to the State.

BELGIUM

This sixth case allows us to recall that the State may be held liable for adopting or not adopting regulations. First of all, liability may be incurred when a regulatory act violates a legal act or the Constitution (for example, a Royal Decree violating the constitutional principle of equality of citizens).

Project participants were asked to work on the basis of a questionnaire presented as a set of headings so as to provide a general framework for the reports in Part I (Public Authority Liability in Selected Jurisdictions) and then to provide analyses of a set of hypothetical cases in Part II (Case Studies). The design of the Part I questionnaire was intended to allow flexibility for individual contributions to focus on issues most important to their own systems, while also providing a common structure to facilitate comparative analysis. Supplementary guidance on filling in the questionnaire was supplied where it was felt to be useful and is reproduced below (words in square brackets and italics).

QUESTIONNAIRE

PART I: PUBLIC AUTHORITY LIABILITY IN SELECTED JURISDICTIONS

INTRODUCTION

OVERVIEW

[This section should introduce the key features of the law of public authority liability in the selected jurisdiction, including whether it falls under public law or private law, whether it involves the application of general principles or special rules, and whether such rules or principles are statutory or judge-made.]

HISTORICAL EVOLUTION

[This section should track historical trends in the system addressed (eg whether there has been a progressive extension or restriction of liability relating to public authorities over the course of time) and include an indication of the influence exerted by other systems – whether of national law or EU/ECHR law – on the law's evolution in this area.]

DEFINING THE PUBLIC SPHERE

[On which types of person and entity – and in respect of which type of activity and function – does public authority liability arise? Is a distinction drawn between acts or omissions by an official or entity that are of a public character and those that are of a private character (eg acta iure imperii versus acta iure gestionis)? Does liability relating to public authorities in the system addressed have a wider scope than the conception adopted here, ie liability arising out of the exercise of specifically public functions? Is the definition of ‘a public authority’ the same in national law as in EU law/under the ECHR? Does it embrace private entities performing public functions? Are the principles of public authority liability applied analogously to private activities run parallel to the activities of public authorities (eg private schools, universities or hospitals)? Address these questions in broad principled terms: illustrative examples may be provided in II.E and III.A below.]

Prosecutor P pursues a criminal prosecution against V in connection with a suspected murder. He makes an application to Judge J to remand V in custody pending his trial on grounds of the danger V poses to the public. Notwithstanding V's protestations of innocence, J grants the application. After a period of months in custody, V is brought before Judge K, who finds that the evidence against V is manifestly inadequate and dismisses the prosecution, saying that it should never have been brought. V seeks damages from P and/or J (and/or the State) for pecuniary and non-pecuniary losses occasioned by the prosecution. Does it make any difference whether P and/or J were negligent, grossly negligent, reckless or actuated by malice? What if P and/or J acted entirely properly but were misled by lies told by crucial witnesses? Or if their error was in interpreting the law (eg in treating a killing in the course of military action as a possible murder)?

AUSTRIA

The federal State can be held liable irrespective of fault for any harm caused to a person who was deprived of her liberty in the course of a criminal prosecution (§1 StEG). This is not only so if the arrest was illegal (eg because the statutory conditions were not fulfilled at that point in time), but even if all legal requirements for detention are initially given, but the suspect is subsequently acquitted upon trial. Therefore, V will be eligible to claim compensation under that statute in all variants of this hypothetical. The Strafrechtliches Entschädigungsgesetz (StEG) also provides for the proper basis of action if V claims that his constitutional rights as guaranteed by Art 5 European Convention on Human Rights (ECHR) and/or Art 7 Gesetz über den Schutz der persönlichen Freiheit (PersFrG) had been violated (as would probably be in the last variant posed).

Liability of the federal State under the StEG might be reduced or excluded if full compensation to V seems ‘inappropriate’ (§3 para 2 StEG) in light of the grounds for suspecting V at the time of his arrest or custody, or in light of the reasons for dismissing prosecution, which seems unlikely, though, in light of the facts given (‘manifestly inadequate’ evidence).

After a properly conducted risk assessment, X is licensed by municipal authority Y to store fireworks in a warehouse located in Y's municipal area. A large explosion occurs, the immediate trigger of which is unknown. The licence stipulates that only fireworks suitable for domestic use may be stored in the warehouse, but it later transpires that X breached the terms of its licence and also stored there a quantity of highly explosive fireworks intended for public displays; this greatly increases the size of the blast. The explosion damages neighbouring property, and injures X's employee, Z, and a bystander, W. Z, W and the neighbouring property owners seek damages from Y (and/or the State) on the basis of Y's failure to conduct adequate inspections to ensure only low-explosive fireworks suitable for domestic use were stored in the warehouse, notwithstanding its general obligations relating to public safety within its municipal area and its wide-ranging statutory powers to conduct inspections. X is insolvent and not worth suing. Would it make any difference if Y had received anonymous tip-off s that X was breaking the terms of its licence by storing high-explosive fireworks in the warehouse?

AUSTRIA

Y (presuming it was acting out of its own authority, otherwise at least ultimately the entity whose authority was exercised by Y) will be liable under the condition that the failure to properly inspect the facilities/fireworks was at least negligent under the circumstances. The fact that the alleged cause of the loss was a pure omission does not alter the outcome – passive conduct also suffices to trigger liability under the AHG.

The Supreme Court confirmed this in a case, for example, where a building authority should have required the installation of a handrail on a staircase and verify after ordering such an installation that it was actually applied. The authority was deemed liable to the surviving dependants of the victim who slipped on the staircase (at least in part) due to the lack of a handrail. The facts of another case are closer to the hypothetical inasmuch as it equally involves an explosion, though not of fireworks, but of a boiler which was not inspected properly as required by federal law.