Pre-industrial risk and liability

3.3 Trespass on the case is said to be the forerunner of modern negligence law, yet when it arose in the Middle Ages, fault was not assessed according to the standard of the reasonable person – it “depended on societal perceptions of where the blame ought to be laid in any individual case”.³ In a societal system where the king was struggling to unify a country consisting of small communities with strong family and communal bonds, and in which the peasants were bound to supply the dominant elite with agricultural labour, the protection of civil order was of paramount importance. In deciding what constituted acceptable behaviour, emphasis was placed on the claimant’s loss and the community’s reaction to the interference that threatened to disturb the individual and social order. Little direct consideration was given to the moral elements of the wrongful act, because no objective criteria for determining conduct as good or bad had been developed, and the overwhelming influence of religion hindered the exploration of human behaviour.

3.4 The introduction of a loose-fault requirement through trespass on the case constituted the starting point for the expansion of the boundaries of liability, as the defendant’s liability turned on the judicial assessment of whether his conduct was wrongful in some way.4 This transformation enhanced the role of lawyers and the judiciary, and diminished the influence of juries. Lawyers realised that wrongfulness was fertile ground for exploitation. Service providers who were formerly immune from liability – goldsmiths, carpenters, ferry operators, doctors, and innkeepers – gradually assumed the roles that the murderer and footpad occupied in earlier eras. In what can arguably be called a late-medieval claims crisis, members of this new class of defendant faced numerous claims for failing to provide services they had undertaken for their clients.

3.5 In the aftermath of the Black Death, there was a dire need to control the quality of services provided by less competent professionals, as well as to contain the popular uprisings caused by the long-lasting economic recession; in the eyes of the courts, this was not simply a matter of addressing the complaints of an aggrieved traveller who was fleeced by an unscrupulous innkeeper, it was a matter of ensuring the recovery of a socioeconomic system reeling from the effects of the plague. By being permitted to hear cases of non-forcible consequential injuries through the action of trespass on the case, judges shaped social perceptions by defining standards of professional conduct. Such cases also allowed them to control the circumstances under which liability was imposed, with the aim of maintaining the economic and social order “in the wake of demographic catastrophe”.⁵

3.6 The human-centred ideas developed during the Renaissance, and the Enlightenment facilitated examination of human behaviour and contributed to the transition from the amoral standard of outcome liability to a moral theory of individual autonomy and fault-based liability. In this new era, the protection of individuals’ basic moral rights – autonomy, dignity, liberty, and personal integrity – and the freedom to act on one’s choices took priority over the pursuit of social order. This radical change put the focus on the nature of the defendant’s choices and the will of the individual rather than on the achieved outcome: “For an act to be imputable to an individual it must have been governed by the will of the actor; for it actually to be imputed there had to be a breach of duty”.⁶

3.7 In a society where once-infallible traditional beliefs were exposed to scientific reasoning and rationality, the duty-based concept of liability arguably took over the role played by superstition and the fear of God. In the Middle Ages, a mixed system of uncritical religious and magical beliefs gave people a false sense of control over the dangers of their world.7 These proved insufficient in a more modern society that required actual control of the misfortunes of life and assumed an individual was responsible for infringing on another’s rights. This moralistic system, which developed slowly from the philosophies of natural-law theorists and Immanuel Kant, had a two-edged function.

3.8 It encouraged individuals “to engage in economic relations with honesty and fairness and to use due care in avoiding injuries to others”;⁸ but at the same time it meant an individual was “answerable for all mischief proceeding from his neglect or his actions, unless they were of unavoidable necessity”.⁹ In a stream of cases in the eighteenth and early nineteenth centuries, a growing tendency to channel liability into the writ of trespass on the case was established.¹⁰ Given that this action had been associated with failure to exercise care, it followed that claimants in accident cases were required to prove not only injury and causation, but also absence of due care on the part of the defendant.

Risk, liability and the Industrial Revolution

3.9 The moralistic system was one of the pillars of the Industrial Revolution and served to subsidise the inexorable use of machinery, as well as to encourage entrepreneurial activity and risk-taking. In an environment of laissez-faire and increased personal injury litigation due to technological advances, the fault requirement was an intrinsic element of the “invisible hand” regulating a free market: economic expediency and difficulty proving fault due to the complexities of industrial organisations inevitably meant that: (i) losses should lie where they fell; and (ii) the cost of accidents should be borne by the individuals who were subjected to the risks of industrialisation for the sake of social progress. Individuals were prompted to become risk managers of their own lives and sever the links with the superstition-ridden past by attaining an objective standard of proper behaviour.¹¹

3.10 This beneficial environment effectively gave emergent industrial organisations – especially in the US and to a lesser extent in England – a carte blanche under modern standards to reap the benefits of a free market through a process of trial and error. Courts were not prepared to play the roles of risk managers by imposing safety standards, and a number of rules could not deal with the industrial complexities.¹²

3.11 In harmony with the individualistic ideas of the era, the liability of carriers for passengers’ injuries was based on fault. Carriers undertook to exercise all due and proper care, and to carry safely as far as reasonable care and foresight could attain that end.13 They did not warrant the safety of the vehicle, and therefore they were not liable for any inherent defect in the vehicle which could not reasonably be detected.¹⁴ Failure to take reasonable care amounted to negligence, and carriers were liable if injury was caused through negligence on their part, or on the part of their employees acting within the scope of their employment,¹⁵ or even on the part of any persons to whom they delegated any task connected with the carriage of passengers.¹⁶

3.12 In contrast, carriers of goods were responsible for the safety of goods from the time they accepted them until delivery, and they were strictly liable for their loss, delay, or damage from any cause whatsoever.¹⁷ They were, to all intents and purposes, insurers of the safe carriage of the goods they undertook to carry.¹⁸ Their liability was strict and subject to only four defences: (i) act of God;¹⁹ (ii) act of the Queen’s enemies;²⁰ (iii) inherent vice of the cargo;²¹ and (iv) fault of the consignor (in respect of the packaging or labelling of the cargo).²²

3.13 One might wonder why a higher degree of liability was imposed upon the carrier of goods than the carrier of passengers. Aside from the origins of liability for the carriage of cargo in the strict liability of the law of bailment, the different treatment was also justified by the different allocation of risks dictated by the atomistic view of the individual. Passengers shared the risks of transportation with the carrier, which in turn induced them to fend for themselves by exercising foresight and taking any necessary precautions. The courts and the law were not yet prepared to recognise the responsibilities of the organisations’ management and to establish a causative link between accidents and the failure to take safety measures. Instead, they concentrated upon the immediate cause of the accident by trying to link the human error of either the passenger or the employee with the injury. In a few sporadic cases, the courts looked beyond the visible causative factor, yet arguably these judgments represented a psychological reaction of juries to the pain and suffering of the injured, rather than a conscious decision to implement litigation-driven safety standards. At the end of 1845, only two passengers out of millions had secured jury awards as a consequence of accidental injury in railway cases.²³

3.14 With the carriage of goods, the consignor lost control over the goods at the moment of delivery to the carrier. Making the carrier an insurer of the goods transferred the risks of transportation to the person who was in the best position to safeguard their interests. It also relieved the consignor of having to prove fault in situations where the evidence lay with the carriers’ servants. In this way, the legal framework encouraged carriers to be more careful and fair in their business dealings, and at the same time appeared to be in sympathy with the interests of consignors for the sake of the wider distribution of industrial products.24

3.15 The growth of industry and commerce, alongside the much needed improvements in both road and railway infrastructure during the second half of the nineteenth century, facilitated the production and distribution of goods, yet they also significantly increased the probability of accidents. During this period the judicial and parliamentary development of various doctrines and exceptions forced organisations to realise for the first time that the risk of liability for personal injury had the potential to make an impact upon their operational and financial viability:²⁵ the Fatal Accidents Act (Lord Campbell’s Act) of 1846 bestowed a right of recovery upon the immediate family of the deceased;²⁶ the doctrine of res ipsa loquitur enabled the reversal of the burden of proof, requiring the defendant to demonstrate that reasonable care had been taken, provided that a presumption of negligence arose from the fact of an accident;²⁷ and contributory negligence did not constitute an absolute defence when the defendant had the last clear chance to prevent the accident.²⁸

3.16 At the end of the nineteenth century, a stream of judgments marked the beginning of an era that moved organisational safety to the centre of attention. Courts started imposing liability upon organisations for employees’ injuries caused by defective occupational safety systems²⁹ and also questioned the de facto immunity that transport companies enjoyed from liability for latent defects.³⁰ Furthermore, the tentative attempts of railway companies to manage the increasing risks of personal-injury litigation by inserting clauses exonerating them from liability for death and/or bodily injury in the contracts of carriage had not yet been successful.³¹

3.17 The increasing prevalence of complex corporate organisations and the desire of the working and middle classes to safeguard their rising living standards indicated that the time was ripe for change.³² The concept of individuality, with its reactive approach to misfortunes and its focus on self-interest, could not accommodate the pressing demands for protecting the social order and preventing the mishaps of life. Self-regulation and morality-induced standards of behaviour could not always operate in the public interest, according to Keynes, because “more often individuals acting separately to promote their own ends are too ignorant or too weak to attain even these”.³³ As health and safety risks increased in number, duration, and complexity, it seemed appropriate to rectify the inequalities of the free market and to remedy the bounded rationality that humans display. This was achieved by invoking the “visible hand” of government regulation and shifting the law away from controlling the individual to controlling his or her environment.

3.18 Although the justification for the governmental interference with economic and civil liberties was not articulated in this form, the conception that individuals were not the best judges of what promoted their welfare had an effect on legislative choices. In this way, a paternalistic ideology was established, which in turn increased the need for law and regulation. Once again, individuals were not “seen as responsible for their own fate”,34 and government acquired a legitimate role to play which involved reallocation of resources and management of safety risks. On the eve of the twentieth century, the adoption of a number of legislative instruments directly aimed at the improvement of working and economic conditions bears witness to the abandonment of a governmental “hands off” approach.³⁵

Post-industrial risk and liability: from persons to organisations

3.19 The concurrent evolution of statistics and probability calculus gave a crucial element of predictability to risks. As risk was identified by measuring the probability and consequences of events, it was considered a “reality that yields its secrets to scientific enquiry”³⁶ and was thus subject to measurement and control. Gradually, the personal approach to accidents proved unsatisfactory – as it focused upon individual errors – thus prohibiting a detailed analysis of mishaps, incidents, and near-misses. This approach was a hindrance to uncovering recurrent errors and establishing the reporting culture which today constitutes the cornerstone of effective risk management.³⁷ Instead of analysing where a breakdown had occurred in the system and trying to identify the immediate causes of an accident, attention was focused upon analysing why humans are fallible and investigating the organisational contribution to accidents:³⁸

3.20 In this paternalistic society, a notion of community responsibility was generated which invoked a conception of justice that encouraged “people to see others responsible for taking precautions against accidents and injuries”.40 In an environment where quantitative risk analysis replaced the “invisible hand” of God, accidents were regarded as abnormalities whose costs and associated responsibilities should be spread over the community:⁴¹.“Under the banner of risk reduction, a new blaming system has replaced the former combination of moralistic condemning the victim and opportunistic condemning the victim’s incompetence.”⁴²

3.21 The new system shifted the focus from moral standards to social ones whose formulation was open to changing policy considerations, making them more easily amenable to parliamentary and judicial control. As individual faults were more often than not regarded as organisational errors, large corporate organisations and/or their third-party liability insurers became the archetypal defendants. Although it is disputed whether the existence of liability insurance actually contributed to shaping standards of behaviour,⁴³ its emergence “deepened the pockets” of corporate actors in the public’s eyes and provided a financial safety net to insureds. Most importantly, the difficulty of investigating the state of mind of impersonal corporations put forward arguments in favour of setting social standards of behaviour by reference to objective economic terms. The seeds of enterprise liability were sown, and concepts such as economic deterrence, risk control, risk distribution, and cost-benefit analysis have been gaining prevalence since the beginning of the twentieth century.⁴⁴

The early years

3.22 Passengers’ expectations and the behaviour of air carriers have undergone a metamorphosis from the first commercial flights early in the twentieth century to the current era of mass transportation, reflecting largely the transition from an industrial society to a risk society. In the early days of aviation and until the introduction of jet aircraft, an idealistic element abounded. Air travel was a romantic experience limited to the upper echelons of society; it was adventurous, from both a social and technical standpoint, and it quickly developed a coterie of aviation enthusiasts.⁴⁵ Passengers voluntarily accepted aviation risks, and the physical discomfort they were experiencing during flights did not prevent them from participating in the trial-and-error learning process of the aviation industry.46 Air carriers started building a glamorous image, and “the flying experience of the first few years of the commercial airline industry not only met passengers’ expectations but often far exceeded them…. This is not to suggest that all service was necessarily better at that time, but that passengers’ demands, and to some extent their sense of entitlement, were not as high as they are today”.⁴⁷

3.23 Demonstrating an individualistic risk management approach in a rather paternalistic social environment early in the twentieth century, courts in the UK and the US applied ordinary rules of negligence to air carriers’ liability. Under English law, air carriers when transporting passengers were considered private carriers and their liability depended upon the proof of negligence. They were supposed to conduct themselves as a reasonably prudent and careful man would conduct himself in all circumstances, and to take such steps as are reasonably necessary to guard their passengers from such dangers as could reasonably have been anticipated.⁴⁸ At the same time under US law, carriers of passengers were prima facie held to be common carriers, which meant they had the duty to use the highest degree of care.⁴⁹ Yet courts eased the burden of duties imposed on common air carriers by transferring risks to passengers through the doctrine of assumption of risks and their initial reluctance to use the doctrine of res ipsa loquitur. This way they recognised the peculiarities of air transportation and the need to protect the infant industry.⁵⁰

3.24 Passengers were required to assume some of the risks of flying, and thus to subsidise an industry whose social benefits were believed to exceed its costs. Air carriers were expected to exercise control over their operations to the extent that first-generation technological knowledge enabled them. Wilbur Russ, writing in 1951, gave a practical example of the way courts in the US restricted the degree of care in order to match the technical developments of the industry: “When foreseeability of adverse weather was an issue in the earlier cases, the courts usually injected into their instructions a comment on the newness of air carriage. The obvious purpose was to call attention to the carrier’s inexperience with the atmosphere’s capricious behavior.”⁵¹

3.25 This way courts adopted a reactive risk management approach which practically permitted the industry to gather the safety information required to decrease its accident rates. Courts expressly refused to jeopardise the growth of air transportation by forcing carriers to internalise the costs of flying, indicating at the same time their trust in the future growth of the aviation system.⁵² This suggests that accidents were not necessarily viewed as a failure of the risk management programmes of carriers, but instead they were considered “misfortunes at the boundary of rational … systems”.53 In an era where the technology of flying was at a premature level, accidents were regarded as events beyond prediction and rational explanation, demonstrating thus a rather anachronistic belief in notions of luck and fate: “As a matter of common knowledge there are many accidents which may often occur without anyone’s fault…. In the present state of development of aviation, most courts consider that airplane crashes are to be placed in this category”.⁵⁴

The corporate years