Aggravated, Exemplary and Restitutionary ... - Law Commission

(iii) Joint and several liability is distinguishable, and more clearly ‘unfair’
1.222 So far we have assumed that vicarious liability is prima facie ‘unfair’ to employers;
we have then suggested that this unfairness could be tolerated to the extent that,
by recognising vicarious liability to punitive damages, the aims of punitive damages
are furthered, rather than frustrated. We now seek to deny that there is, on closer
examination, anything intolerably unfair about vicarious liability in respect of
punitive damages. Our argument is that ‘joint and several liability’ and ‘vicarious
liability’ are distinguishable in two important ways which indicate that the
‘unfairness’ that we have identified in the former does not so clearly exist in the
latter case.
1.223 The first difference is that an employee forms part of the employer’s enterprise
and that that enterprise generally ‘profits’ from his or her employment. In most
cases there will be no similar relationship between joint and several tortfeasors.
This element of ‘benefit’ to the employer is one justification which has been
offered for vicarious liability to compensatory damages. This justification is
founded on a moral imperative that one who derives a benefit - in particular a
financial profit - from certain acts, should also bear the risk of loss therefrom. Jane
Stapleton has recently offered a more sophisticated formulation of this argument,
which she terms “moral enterprise liability”. 767
Such an argument does not appear
to be any less applicable to vicarious liability in respect of punitive damages than to
vicarious liability in respect of compensatory damages. Moreover, as Jane
Stapleton observes, this argument does successfully explain key features of the
doctrine of vicarious liability within the civil law. In particular, it explains the
restriction of the liability of employers to liability for the acts of their ‘employees’
within ‘the course of their employment’. Current tests used to determine whether
a person is an ‘employee’ or an ‘independent contractor’ have at their core the
question “who has the chance of gain and bears the risk of loss?” - or in a slightly
different form, “is he or she in business on his or her own account?” 768
The
‘course of employment’ criterion also generally restricts the scope of liability of
employers to those cases in which the employee is acting for the employer.
a ‘deliberate and outrageous disregard of the plaintiff’s rights’. To hold an employer
vicariously liable assumes that facts can be proved to exist which would sustain the primary
liability of the employee which is to be attributed to the employer by means of the doctrine
of vicarious liability. The plaintiff will usually be able to prove that his or her rights have
been invaded in some way, by an employee of the employer; however, it may be more
difficult to prove that this disregard was ‘deliberate and outrageous’, given that this will
depend, to a significant extent, on what was the state of mind of the defendant. This can
clearly only be a matter of inference. On particular facts it might be difficult to infer that
the really culpable sort of state of mind, which is needed before an award of punitive
damages is justified, did exist. But a person’s state of mind is always a matter of (more or
less problematic) inference from ‘external’ facts.
767 J Stapleton, Product Liability (1994) pp 190-191, and more generally Ch 8. This
rationalisation is distinct from well-established theories of enterprise liability which rest on
economic arguments. General discussion of economic theories of this sort in relation to
vicarious liability can be found in, inter alia, P S Atiyah, Vicarious Liability in the Law of Torts
(1967) pp 22-27.
768 See, in particular: Ready Mixed Concrete (South East) Ltd v Minister of Pensions & National
Insurance [1968] 2 QB 497; Market Investigations Ltd v Minister of Social Security [1968] 2
QB 173; Lee Tin Sang v Chung Chi-Keung [1990] 2 AC 374 (PC).
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