Tort, Insurance and Incoherence

AuthorJonathan Morgan
Publication Date01 May 2004
Tort, Insurance and Incoherence
Jonathan Morgan
Some commentatorshave doubted whether,as is generally believed, liability insurance has had a
signi¢cant expansionary e¡ect on the lawof tort.This article co ntends that the common assump-
tion is, indeed, correct, and the crucial in£uence of insurance is clearly seen in the recent cases of
Vo w l e s vEvans and Gwilliam vWestHerts NHS Trust. Once this has been acknowledged, the con-
sequent radical incoherence in the basis of tort law needs to be confronted.The argument here is
that only through faithful adherenceto principles of i ndividualresponsibil ityand corrective jus-
tice, inherent as these are within the structure of tort law, can we hope to preserve coherence in
the law of tort.
In an importantarticle in this Review in 1995, Professor JaneStapleton mounteda
strong defence of the traditional view that insurance (or insurability) should be
irrelevant to liability in tort.
In considering the distinctive aims and purposes of
tort law,she denied that compensation and loss-spreadingcan be said to form part
of those aims. A major reason being that the aim of ‘compensating injury’is pre-
sent and equally forceful in all cases, ie those where liability is imposed and
those where it is denied, and thus it cannot justify any particular pattern of
In this sense it is as banal and misleading to say that the‘function’or ‘purpose’of tort
is compensation as it is to say that the‘function’ or ‘purpose’ of a petrol station is to
dispense petrol: the question of interest is who is entitled to have the bene¢t dis-
pensed and why.
The dismissal of such ‘truncated justi¢cations’ as the basis for liability is entirely
correct, with respect, and the present author would agree that only a rationale
founded upon corrective justice can adequatelyexplain the institutionof tort law.
He must, however, take issue with another of Professor Stapletons claims.The
second strand of her argument was to deny a proposition which, one suspects,
most tortlawyers would assume tobe true, namely that the prevalence of liability
insurance has been instrumental in a massive expansion of liability in tort; yet
descriptive claims thatcourts routinelytake insurance intoaccount in shaping tort
liability were dismissed by Professor Stapleton as‘very weak’. Quite apart from
the possible authorityof any such communis opinio, herargument is in con£ict with
the empirical research in the ¢eld. Dewees, Du¡ and Trebilcock conclude from
their surveyof such evidence that imposition of liability, at least in motor accident
and medical negligence cases, is strongly in£uenced by the wish to compensate
Corpus Christi College, Cambridge,Modern Law Review Scholar,2003.Thanks to Professor Steve
Hedley, who should not be taken to agree with the author’s argument.
1 ‘Tort, Insurance and Ideology’ (1995) 58 MLR820.
2ibid 828 n 24.
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(2004) 67(3) MLR 384^401
via liability insurance.
Moreover, professed judicial reliance upon insurance
needs to be explained. Hence, Professor Stapleton maintains that in cases of inde-
terminate liability, the ‘real’reason for legal concern is in‘moral terms of the un-
fairness’ of such liability, and that judicial references to insurance are merely
shorthand for the indeterminacy problem, and therefore unnecessary.
Is there
not a danger here of begging the question? Might thecourts not view indetermi-
nate liabilityas (morally?) unfair justbecause it is uninsurable, as indeed Lord Oli-
ver stated in Caparo vDickman: indeterminate liability would ‘open up a limitless
vista of uninsurable risk for the professional man’.
Professor Stapleton also argues that most ofthe judicial references to insurance
are somewhat equivocal,at least as consistent with the judge merely observing
that the relevant liabilities canbe insured against as they are with the judge using
the insurability of the defendant as part of the reasons which convinced him to
impose liability on this particular occasion’.
To the extent that reliance on insur-
ance has been overt, it is noted that the cases typically involve Lord Denning.
While Professor Stapletondoes not quite sayso in as many words, the implication
is that the adoption of a novel approach by Lord Denning, and nobody else, is a
sign of heresy or unsoundness. To be fair to that extraordinary judge, he rather
cultivated the Quixotic image himself.Yet also, it should be remembered, his in-
novations often won through in the end.
However that maybe, it is u ndoubtedly
the case that two recent decisions of the Court of Appeal provide unequivocal
examples of insurance playing a central part in judicial reasoning ^ which cer-
tainly cannot be attributed to Lord Denning.
These cases will be discussedin the following sections. It is not to be supposed,
however,that they mark somewholesale reversal of judicialpolicy since Professor
Stapleton’s article. The change in the operation of the legal system, away from
corrective justice and individual responsibility towards compensation and loss
spreading, dates back to the early twentieth century. The courts today are the in-
heritors of a partial revolution in the law, which they are powerless either to re-
verse or to complete. Modern tort law is, at its heart, beset by £atly contradictory
values.What, if anything, can be doneto rescue the law from this state of incoher-
ence is no trivial problem, but in orderto address it, we must ¢rstof all acknowl-
edge the reality of the tension.
Vowles v Evans
InVo w l e s , the Court of Appeal held that the referee of an amateur rugby match
owedthe players a dutycarefully to enforce the rules of the game, so as to protect
3 D. N. Dewees, D. Du¡ and M. J. Trebilcock, Exploring the Domain of Accident Law:Taking the Facts
Seriously (NewYork:OUP,1996).
4 n 1 above830^831.
5 [1990] 2 AC 605,643.
7ibid 827 n 20.
8cfScruttons vMidland Silicones [1962] AC 446 and Contracts (Rights of Third Parties) Act 1999;
CandlervCra ne Christm as [1951] 2 KB 164 a nd Hedley Byrne vHeller[196 4] AC 465.
Jonathan Morgan
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