Mandy SchembriBank of Valletta Review, No. 39, Spring 2009
THE RIGHT TO COMPENSATION IN THE
lMALTESE ECONOMY: REFERENCE TO
MALTESE CASE LAW
Mandy Schembri*
Abstract. The principle of redress and compensation in the case of
justified complaints is not commonly accepted in Maltese culture. The
attitude of Maltese people and public bodies in respect of the award
of redress is still marked by an explicit reluctance to accept
recommendations, especially for ex gratia payments. Promoting a
more positive attitude towards the upholding of fundamental rights
and the decisions to seek redress in the case of external effects proves
to be a stepping stone in facilitating the internalisation of external
effects, through the award of compensation, with the objective of
leading to a better use of resources. Indeed, an effective redress system
may serve to increase credibility in the eyes of citizens. It also contributes
towards a greater measure of democratic control and render Law
Courts even more responsive to the rights of citizens.
Introduction
Compensation is money awarded by the common law courts for civil
wrongs. Damages are compensatory in nature and these are awarded to a
plaintiff as compensation for the actual loss sustained by it as a result of
infringing activities by the defendant.
Compensation claims are nowadays common in many countries. Even
governments are demanding payments for damages due to the natural
wealth of the society they represent. A case in point is France’s recent 2007
claim from French oil giant ‘Total’ after being found responsible for the 1999
sinking of the Maltese-registered tanker ‘Erika’, which was considered to be
one of France’s worst environmental disasters. ‘Total’ was fined $556,000 by
a French court and told to pay a share of nearly $300m in damages to civil
parties, including the French state.
* Mandy Schembri is currently employed as an Investment and Compliance Officer at the
Compliance Department of Blevins Franks Financial Management Limited. She possesses an
Honours Degree in Bachelor of Commerce in Economics, from the University of Malta.
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The Right to Compensation in the Maltese Economy: The Maltese Case Law
In both contract and Tort Law, compensation is the court’s calculation of
what it would cost to put the plaintiff back into the position he/she would
have been in, but for the wrongdoing. In contract law this amounts to the
value that has been lost due to the breach of the contract. In tort law damages
are more difficult to assess but generally are taken to represent the pecuniary
or monetary value of what the plaintiff has lost in terms of damages to
property, personal injuries, and quality of life.
Under the law of compensation, in so far as money can do it, the plaintiff is
entitled to receive fair, just and reasonable compensation for all injuries and
losses, past and future, which are caused by the defendant’s infringing activity.
However, not just everyone is entitled to compensation. One must note the
importance of identifying and understanding the conditions that make one
liable for the actual compensation to be paid. The law imposes certain
conditions to govern the award of compensation in any case where liability
is proven. Thus, the plaintiff must prove (1) the nature and extent of each
particular loss or injury for which he/she seeks to recover damages and (2)
that the loss or injury in question was proximately caused by the defendant’s
engagement in an infringing activity. The court may not guess or speculate
as to the nature or extent of the plaintiff’s losses or injuries. Its decision must
be based on reasonable probabilities in light of the evidence presented in the
Courts of Law. Injuries and losses for which the plaintiff should be
compensated include those he/she suffered up to and including the time the
court deliberates, and those he/she is reasonably likely to suffer in the future
as a proximate result of the defendant’s infringing act. Once the plaintiff has
proved the nature and extent of his compensable injuries and losses, it
becomes the court’s job to determine what is fair, just and reasonable
compensation for those injuries and losses.
Simultaneously to being knowledgeable of the above conditions, in particular,
it is useful to decide within the national and international law context and
analyse the decisions whether to seek redress or not. This, in turn would have
an impact on the way in which people behave, either as producers or consumers.
But what possibilities for compensation entitlement currently exist in Malta?
The principle of redress and compensation in the case of justified complaints is not
commonly accepted in Maltese culture. The attitude of Maltese people and
public bodies with respect to the award of redress is still marked by an
explicit reluctance to accept recommendations, especially for ex gratia
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Mandy Schembri
payments. Furthermore, in the Laws of Malta there seems to be a lacuna
particularly when it comes to toxic torts such that the Maltese courts, due to
legal constraints, resort to other courts and tribunals for the award of
compensation payments, as identified in the analysis of Maltese case law
section of this paper.
Such scenarios where the law is practically missing occur because plaintiffs
are not interested in building legal norms; they simply hope to get their
grievance remedied, often by getting paid as much as possible. This paper
explores the possibilities of seeking redress for compensation and how
victims of any wrongdoings obtain compensation and damages for their
grievances once the courts or tribunals have decided they are competent to
make an award.
Moreover, the aim of this paper is to actually evaluate the possibility of
facilitating the internalisation of external effects through the award of
compensation with the objective of leading to a better use of resources.
The Compensation Principle
In the common law, the basic goal of most damage payments (the kind we
call compensatory damages) is to compensate the victim for his/her loss. It
is usually interpreted to mean, “make the victim as well off as he/she would
have been if the welfare-reducing incident had not taken place.”
However, does the common law notion of compensation fit well with the
economic notion? While in principle, the law embraces the idea of “making
the victim whole,” in practice the law does not always do so. In many cases,
the damages awarded are based on pecuniary losses (i.e. monetary losses),
rather than a judgment about how much money is truly necessary to make
the victim as well off as before. Pain and suffering damages partially fill the
gap, but not always or entirely.
This brings us to the notion of the well-established theory of the KaldorHicks efficiency, based on the idea of potential compensation. For a change
to constitute an improvement, it had to be that the “winners” improved their
situation enough that they could, in principle, compensate the “losers” so
they are just as well off as they would have been absent the change. Put
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The Right to Compensation in the Maltese Economy: The Maltese Case Law
differently, using Kaldor-Hicks efficiency, an outcome is more efficient if
those that are made better-off could in theory compensate those that are
made worse-off and lead to a Pareto optimal outcome. Thus, a more efficient
outcome can in fact leave some people worse-off.
Furthermore, Pareto efficiency (optimality), in which an outcome is more
efficient if at least one person is made better-off and nobody is made worseoff, is based on the idea of actual compensation. But in practice, it is almost
impossible to make any kind of change, such as an economic policy change,
without making someone at least slightly worse-off.
In practice, if a change made 1,000 people better-off and one worse-off, if the
1,000 people are benefited by mildly inconveniencing one person, a change is
probably justified. On the other hand, if the person dies, is severely injured, or
is exposed to dangerous chemicals, the citizens or elected officials cannot
weigh 1,000 against the one in such a case. In response to this dilemma,
economists have developed the Kaldor-Hicks compensation principle.
The key difference between the two efficiency principles is the question of
compensation. The Kaldor-Hicks approach does not require compensation
to be actually paid, but merely that the possibility for compensation exists,
and thus does not necessarily make each party better-off (or neutral). Pareto
efficiency does require making each party better-off (or at least no one
worse-off). Therefore, the common law’s compensation principle requires
actual compensation of the losers, whereas Kaldor-Hicks efficiency requires
only potential compensation.
Does this mean that the common law is actually aiming at something like
Pareto efficiency? The law only requires compensation in some cases specifically, in those cases where a liability rule (rather than a property rule)
is used. The real issue is one of providing incentives. Consider a rule of
liability that requires polluters to compensate those who suffer from pollution.
From a Kaldor-Hicks efficiency standpoint, we want the pollution to occur,
if and only if, the benefits from the pollution are greater than the costs it
imposes. If the benefits of his/her polluting activity are great enough, he/
she should be able to pay the damages and still be better-off. If he/she
cannot, then the polluting activity must not be worth it after all. Thus, the
requirement is that compensation is used to make sure that people bear the
full costs of their activities.
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Mandy Schembri
However, Coase Theorem states that if transaction costs are sufficiently low,
explicit damage payments may not be necessary. We could adopt a property
rule instead of a liability rule, and the polluter would still consider the
damage done by his activity as a forgone payment–a kind of opportunity
cost. And in many cases, that’s just what we do: trespass, car theft, and many
other activities are punished with property rules instead of liability rules. In
addition, we know that even under a liability rule, the plaintiff will still end
up worse-off (not “made whole”) because the court-set damage payment
may be too low. Seen from this perspective, the role of the compensation
principle is not to enforce the Pareto criterion, but to enforce the KaldorHicks criterion by ensuring that, in cases where holdout problems or public
good problems could deter private transactions from reaching efficient
outcomes, there is another legal means of making those transactions occur.
The process of internalisation of costs and benefits and therefore, the
compensation principle in the Maltese case law context is reviewed in the
next chapter. Analysis is carried out namely, in court decisions which affect
directly transactions costs; the stand made by Maltese courts with regard to
human rights infringement; and the award of compensatory payments to
persons or to relatives of persons who suffered any form of ‘discomfort’ as
well as lost their life in a wrongful manner.
Analysis of Maltese Case Law
A market solution to externalities needs to be supported at law. (Maltese
courts had failed to consider compensation in the past but now the position
has changed. Maltese case law is now conducive to economic efficiency, that
is, currently Maltese law upholds the principle that damages to third parties
have to be compensated). At present, Maltese courts acknowledge both
physical and moral damages and remedy financially for both. However, as
illustrated in this chapter, they could even resort to other courts and
tribunals, including international ones, to foresee compensation if the courts
are not in a position to award payment because of legal constraints. This is
clearly illustrated in the case for compensation to victims of Toxic torts.
Decisions in the area of compensation take time to adjust and they are part
of transaction costs. Court decisions could be effective in reducing these
transaction costs in time, enough to render viable the inclusion of externalities
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The Right to Compensation in the Maltese Economy: The Maltese Case Law
in producers’ and consumers’ decisions. Hence, by integrating such costs in
the form of compensation, actual or potential, the court would induce a
change in the parameters on which transactors decide. Compensation is
meant to translate former social costs into the private domain. So long as
these payments are made by private citizens or firms out of own resources
the incentive exists for a change in future behaviour and therefore, internalised
social costs would condition decision making. However, if compensation, or
better, the costs of negligence, are not borne out of own income but from
taxpayers’ money, it will generate negative external effects. Maltese courts
have clearly stated legal principles which could guide behaviour in the
future or which could speed up the resolve of a claim, thus making it
worthwhile for plaintiffs to seek redress and compensation. The contribution
made by Maltese case law to the process of internalisation of costs and
benefits is examined in this chapter.
Expropriation, Loss of Property Value and Compensation
According to Chapter 88 of the Laws of Malta; Land Acquisition (Public
Purposes) Ordinance enacted on 8th October 1935, Article 18 subarticle (1)
referring to building sites, “land shall be deemed to be a building site if it falls
within the limits of a building scheme or as indicated and approved for
development in a Structure Plan or subsidiary plan which has been adopted
for the time being in force under any law relating to planning.” Furthermore,
subarticle (2) states that “in determining the compensation due for a building
site, consideration shall be given to the use or development that can be made
thereof or thereon in accordance with the provisions of subarticle (1).” Thus
in the case ‘Alfred J. Baldacchino vs Enemalta Corporation’, 1993, the First
Hall of the Civil Court accepted the plaintiff’s claim and ordered Enemalta
Corporation to pay Alfred Baldacchino ¤1,281,155 (Lm550,000) as
compensation for the damages sustained to his bungalow, known as ‘IlMasgar’, when the government built the power station in Delimara. In 1993,
Mr. Alfred J. Baldacchino had sued the Commissioner of Lands, Enemalta
Corporation and the Director of Works for expropriation of his residential
property at Delimara. The court heard how Mr. Baldacchino owned land
measuring nearly 11,000 square metres in Delimara, on which he built his
house. Moreover, in April 1988, the government had declared that nearly
100,000 square metres of land in Delimara was needed to build the new
power station, the area of which included the land owned by Mr. Baldacchino.
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Mandy Schembri
Initially, Mr. Baldacchino was awarded ¤ 249,243 (Lm107,000) as
compensation for the expropriation of the said land but Mr. Baldacchino
saw this as too little and termed it as “inadequate”. He complained that as
a result of the development of the power station, he was not allowed to fully
enjoy his property as he did previously. Mr. Baldacchino complained that he
was subjected to a number of inconveniences when the power station was
being built and the situation got worse when the power station became fully
operational. He said the toxic fumes and the noisy turbines adversely
affected his quality of life and made living there an impossible task. During
the hearings into the compensation case, the court heard that, according to
a court expert, the value of the property amounted to ¤1,747,030 (Lm750,000),
had the power station not been built there. In view of the power station, the
price of the property went down to ¤465,875 (Lm200,000). A decree issued
by Judge Lino Farrugia Sacco showed the property to be valued at ¤489,168
(Lm210,000). As a consequence, the damages sustained by Mr. Baldacchino
when the power station was built close by to his house amounted to
¤1,281,155 (Lm550,000). The court said that the value of the property was the
principal criterion for establishing compensation in cases of expropriation.
In this case, the court was dealing with a dwelling house which had become
uninhabitable so the person who used to reside in this house was entitled,
as a minimum, to the value of the property. After taking into consideration
all these evaluations, the court, presided over by Mr. Justice Raymond Pace,
decided to award Mr. Baldacchino ¤1,281,155 (Lm550,000) in damages, that
is, the market value of the property ex ante the development of the building
site, less the market value of the property ex post the development (The
Independent, Malta, 2004).
Breach of Fundamental Rights and Compensation
Just a stone’s throw away from Mr. Alfred J. Baldacchino’s ‘Il-Masgar’ in
Delimara, limits of Marsaxlokk, was another well-known address, that is, Dom
Mintoff’s summer residence ‘L-Gharix’. The ex-Prime Minister Dom Mintoff
won compensation rights to the tune of ¤838,574 (Lm 360,000) to be forked out
by the Government and Enemalta Corporation after a Constitutional Court
hearing decided in favour of the plaintiffs, that is, the Mintoff family over a longdrawn out legal contest. Such a law suit was settled and adjudicated because the
Constitutional Court had recognised how the Mintoff family indeed suffered a
serious breach of its fundamental right to enjoy its own property.
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The Right to Compensation in the Maltese Economy: The Maltese Case Law
Nonetheless, the case for Mintoff’s compensation is subject to a lot of
controversy mainly because the ¤838,574 (Lm360,000) which the court has
awarded him will be lost to the public forever. If the compensation was paid
out of one’s pocket it could have been assumed that more attention would
have been made in carrying out duties in the future. However, when
compensation is paid from taxpayers’ funds, as was the case of Mintoff’s
compensation, nothing will be done to remedy the situation. This brings us
to the notion of the respondeat superior principle, (Latin: “let the master
answer”), which holds employers liable for torts committed by employees.
Therefore, in this case, if someone was identified as the decision-maker and
held liable for the torts, compensation money would have been forked out of
his/her own pocket. Furthermore, one should remember here that the
exaggerated compensation was not for an expropriated property as in Mr.
Alfred J. Baldacchino’s case. Neither was it for a property that was requisitioned.
Compensation here was offered because across the road a power station was
built causing an inconvenience. As Dr. Harry Vassallo said, “It is not acceptable
that the country should bear the cost for projects sited on the basis of political
obstinacy such as the Delimara Power Station as happened in the case of
compensation due to Mr. Dom Mintoff. Everybody down the line in the taking
of a decision ultra vires should be made to pay compensation personally if and
when it becomes due and such dues should not be forked out by taxpayers.”
Illegal Dismissal and Compensation
Chapter 452 of the Laws of Malta; (Employment and Industrial Relations
Act enacted on 27th December 2002), Part IV; ‘Protection Against
Discrimination Related to Employment,’ Article 26 subarticle (1) (a) and (b)
referring to discrimination and gender equality states: “it shall not be lawful
for any person: when advertising or offering employment or when advertising
opportunities for employment or when selecting applicants for employment,
to subject any applicants for employment or any class of applicants for
employment to discriminatory treatment and, in regard to employees
already in the employment of the employer, to subject any such employees
or any class of employees to discriminatory treatment, in regard to conditions
of employment”. In other words, it shall not be lawful for any person when
advertising or offering employment or in regard to employees already in
employment to discriminate on the basis of any distinction, exclusion or
restriction which is not justifiable in a democratic society including
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Mandy Schembri
discrimination on the basis of marital status, pregnancy or potential
pregnancy, sex, colour, disability, religious conviction, political opinion or
membership in a trade union. If a person alleges that the employer is in
breach of the foregoing, he/she may within four months of the alleged
breach, lodge a complaint to the Industrial Tribunal and seek redress. The
Tribunal shall hear such complaint and carry out any investigations as it
shall deem fit. An employer might be liable for acts of employees if an
adequate system for prevention or protection is not in place. This is in line
with the respondeat superior principle which creates an incentive for
employers to select capable employees and to oversee their activities, that is,
the culpa in eligendo principle.
Thus, in the verdict given by the Industrial Tribunal in the case of the teacher
Ms. Alessandra Theuma vs St. Edward’s College, November 2007, the ruling
was in favour of the claimant. The Industrial Tribunal ordered the school to
pay the teacher ¤5,823 (Lm2,500) in compensation for terminating her
employment illegally and did not consider employing her in another
teaching post she was competent to fill. Furthermore, the Tribunal ordered
that the plaintiff would not be given back the post. The former St. Edward’s
College teacher sought redress against the Board of Governors of the same
College after stating that her job was terminated in an unjust manner.
Toxic Torts and Compensation
From the late 1950s to the 1970s, many people in Malta were employed at the
Malta Shipyards to work on US registered navy and war ships. Little did
they know that these ships contained asbestos material particularly because
100 years ago, asbestos was seen as the exemplary building material. It was
found to be an excellent insulator; it was fireproof, and more importantly, it
was cheap and easy to use. Over the last century it is estimated that over 30
million tons of asbestos was utilized in the construction of factories, office
buildings, schools, shipyards and homes. It was used as fireproofing and
insulation on industrial equipment such as boilers and turbines, and placed
on millions of miles of piping. Even everyday items such as ironing boards,
dryers, toasters, and low-density insulation products contained this wonder
material. Asbestos-containing products were used to prevent the transfer of
heat from one place to another, or to keep heat out-to keep things coldotherwise known as thermal insulation. Nearly all insulation materials
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The Right to Compensation in the Maltese Economy: The Maltese Case Law
manufactured before 1975 or so did contain some asbestos. But shortly after
the turn of the 20th century, medical professionals began to see an emerging
trend between an unusually large number of deaths related to pulmonary
disease and lung diseases in areas that had asbestos mines and asbestos
fabrication industries. By 1940, scientific studies that suggested a link
between asbestos exposure and cancer had been published in medical
journals. In 1955, scientists confirmed what had long been suspected: an
unmistakable correlation between ingestion of asbestos fibres and the
development of certain forms of lung cancer; what we now know to be as
Mesothelioma.
Despite the growing body of evidence regarding the serious health problems
related to asbestos exposure, manufacturers and others continued to use it.
Even though the manufacturers were probably aware of the potential health
risks associated with asbestos exposure, they chose to ignore them and these
same companies also failed to use safer, alternative materials that were
being developed. The victims were workers who had no knowledge of the
possible health risks they faced and immediate family members of exposed
workers were also at risk if they were exposed to asbestos carried home on
the work clothing. According to the 2006 International Metal Workers
Federation Conference of Vienna, someone in the world, dies of asbestos
every 5 minutes. In Malta, there are more than 300 known and reported cases
of asbestos-related diseases mostly contracted while working at the Malta
Shipbuilding.
In Malta, there is a set of regulations which relates to asbestos exposure. This
is included in the Subsidiary Legislation 424.23 enacted on 15th December
2006; ‘Protection of Workers from the Risks Related to Exposure to Asbestos
at Work Regulations.’
The following cases mentioned in this paper, include citizens who sued U.S.
companies, which were the manufacturers of the particular asbestos product
that was used on their jobsite, and awarded compenstion by the U.S. Courts
of Law. Both cases tackled were of the ‘Living Mesothelioma’ form which
means that the claimants were suffering from severe Mesothelioma but were
still alive at the time of the filing of the claim. Such a complaint involves the
highest degree of finacial compensation possible. However, until
compensation is actually awarded most, if not to say all, of the first-hand
asbesostos victims die but their next of kins are still awarded compensation
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Mandy Schembri
for a ‘Living Mesothelioma.’ Furthermore, the major six companies which
were sued for compensation in the late 1950s to the 1970s include: Foster
Wheeler; Melrath; Eagle Picher; Johns Manville; IMO Delaval and; Babcock
& Willcox.
The first compensation case involves a victim who was found to be suffering
of severe Mesothelioma. The claimant notified General Workers’ Union
(GWU) of his medical condition due to asbestos exposure while working at
the Malta Drydocks, which in turn, the latter appointed a specialist from the
US who re-examined the individual. The US specialist confirmed the victim’s
condition and then sent the plaintiff’s medical report to Locks Law Firm
situated in Philadelphia, United States so as to sue the manufacturers of the
particular asbestos product that was used on the jobsite. The attorney
representing the claimant and responsible for the asbestos litigation was Dr.
Mitchell S. Cohen. The attorney presented evidence against the companies
Melrath, Johns Manville, Eagle Picher and IMO Delaval and negotiated
solutions in the judiciary process. Eventually, the claimant received a total
of $32,132 from Melrath and $12,825 from Johns Manville as compensation
for his exposure to asbestos which led to his Mesothelioma. Furthermore,
after his death his next of kin received $4,133 from Eagle Picher and $65,467
from IMO Delaval.
The second case of compensation also involves a victim who was found to
be suffering of severe Mesothelioma. After the claimant notified General
Workers’ Union (GWU) of his medical condition due to asbestos exposure
while working at the Malta Drydocks, the same procedure was applied such
that a complaint for the award of compensation was filed against Melrath,
Johns Manville, Eagle Picher and IMO Delaval. The attorney representing
the plaintiff was the same Dr. Mitchell S. Cohen from the Locks Law Firm.
The prosecution was for a ‘Living Mesothelioma’. However, during the
course of the judiciary process the plaintiff had died such that the
compensation for a ‘Living Mesothelioma’ was awarded to his wife. The
victim’s wife was awarded the sum of $24,663 from Melrath, $4,200 from
Johns Manville, $4,133 from Eagle Picher and $65,467 from IMO Delaval.
Implications and Conclusion
As a general rule, inefficiency in the allocation of resources arises whenever
decision-makers fail to take account of externalities, that is, all costs or all
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The Right to Compensation in the Maltese Economy: The Maltese Case Law
benefits relevant to society in making allocational choices. These involved in
project appraisal may use distributionally sensitive weights to evaluate the
gains and losses arising from a project. In practice, however, systematic use
of such weights in project appraisal or cost-benefit analysis is rare.
The main reason why systematic use of such weights is rarely used in a costbenefit analysis of a project, is because an externality, most of the time, is
very difficult to identify and analyse its effects. Therefore, how can a good
project appraisal be conducted if costs are not fully identified and analysed?
In fact, in situations where the externality nature itself may not be clear, such
as the cause of death or the reason behind it, then transactions costs would
probably be very high.
Moreover, where the number of persons involved is relatively large, then
transactions cost would also be very high. This would ultimately result in
market failure. In such cases, specific compensation mechanisms, whether
actually paid or not, will reduce tensions between protecting the vulnerable
and impede projects that produce these externalities.
Toxic tort litigation, for example, as illustrated in this paper, is a complicated
legal process. Because injuries caused by toxic torts often do not surface until
years, even decades, after exposure, such as in the case of Mesothelioma;
these cases can be difficult to prove. Plaintiffs must demonstrate that they
were exposed to the substance and that it caused the adverse effects and
injuries they now experience. This is difficult to do in itself, but when faced
with unethical corporations that destroy pertinent evidence, medical experts,
hired by defendants, who attest that there is no correlation between exposure
and injury, and defendants set out to prove that the plaintiffs are
hypochondriacs or insane, it can be become extremely harrowing. The law
and science will always be in conflict. One deals in proof, the other in
probability. The law does not allow uncertainty; science suspects all that is
certain. The law is the vehicle by which the victims obtain compensation;
science is the vehicle they must rely on to prove their claims. Fortunately for
victims, however, plaintiffs in toxic tort cases do not need to prove their
cases beyond reasonable doubt, as is needed in criminal cases. They instead
need to prove only that their claims are more likely to be true than not.
Compensation is meant to translate former social costs into the private
domain. So long as such payments are made by private citizens or firms out
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of own resources, the incentive exists for a change in future behaviour and
social costs, now internalised, would condition decision-making.
However, if the latter fails to occur, such as in the case of public officials, and
compensation is funded from taxpayers’ money, there will be no direct
pressure on the public officials to behave differently in future, and hence
rectify a system which has been generating negative external effects.
If the compensation is actually paid, so that nobody is worse-off and some
people are still better-off, then the Pareto criterion is satisfied. But if
compensation is not paid then the compensation principle is logically
equivalent to giving everybody equal weight and adding up gains and
losses. Any deviation from this, and there is no logical basis on which the
principle can be used as a decision rule. Furthermore, most economists
would in principle wish to deviate in favour of egalitarian weights.
The courts have an important role in such a process as they interpret the
legislators’ vision of how society works. This is such that they could initiate a
reconsideration of the framework within which judges have to operate in
reaching their decisions. In doing so, a court’s decision could affect future
behaviour and have important consequences in a country as well as
internationally.
However, there seems to be a trend for courts to hold people or companies
responsible for harm to others only when they are negligent. The standard for
determining negligence is generally “reasonable care.” In other words, the
amount of care a reasonable person would take. But such reasoning seems to be
vague. The negligence standard may have an appeal for intuitive reasons of
fairness, but I believe that a strict liability standard would be more efficient.
Under the negligence standard of “reasonable care,” businesses have to try to
pursue not the optimum level, but the level at which they think the court will
consider “reasonable.”
On the other hand, holding a business liable under a relatively strict standard
would force businesses to internalize all the costs of injuries. They would
ultimately choose something close to the optimal level of investment and then
pay for any injuries that did occur. This would decrease the amount of litigation,
since the business would have a large incentive to settle most claims when it
knew it would be forced to pay most claims.
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The Right to Compensation in the Maltese Economy: The Maltese Case Law
It is hoped that this paper promotes is to actually promote a more positive
attitude towards the upholding of fundamental rights and the decisions to
seek redress in the case of external effects and to encourage individuals,
firms as well as public bodies, to assume their responsibilities in instances
where undue inconvenience, hardship or distress has been caused.
Furthermore, this paper helps to promote the drawing up of a code of
practice regarding redress for proven maladministration and negligence, as
well as the promotion of an enactment of legislations which cover s persons
suffering from any ‘discomfort’ in seeking out award for financial
compensation. Indeed, an effective redress system serves to increase
credibility in the eyes of citizens, contribute towards a greater measure of
democratic control and render Law Courts even more responsive to the
rights of citizens.
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BRIGGS, P. (2001) Externalities. Department of Economics University of
Hawaii: Windward Community College.
BUSUTTIL, B. (2007) “St Edward’s College to Pay Former Teacher Lm2,500
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