English law has traditionally been unable and unwilling to draw a distinction between "gross negligence" and "ordinary negligence" and in that sense "gross negligence" does not exist in English law. The courts will, however, interpret contractual provisions referring to gross negligence. A recent case, Camarata Property Inc v Credit Suisse Securities (Europe) Ltd (2011) ("Camarata") has again considered the issue and reinforces the view that it is what the parties mean by the use of the term which is important.
No English law concept
Historically, English law does not recognise gross negligence as a legal concept. A series of cases in the ninetenth century concluded that there was no clear distinction between negligence and gross negligence such that gross negligence could exist as a separate concept.
In Hinton v Dibber (1842), Lord Denman noted that "It may well be doubted whether between gross negligence and negligence merely, any intelligible distinction exists". Lord Cranworth in Wilson v Brett (1843) stated that "gross negligence is negligence with a vituperative epithet". The defendants were arguing in appeal that the judge should have directed the jury that simple negligence was not enough to find against the defendant; rather, the plaintiffs had to prove "gross or culpable negligence". This was rejected on the basis that there is no difference between negligence and gross negligence.
More recently, there has been a cautious move towards recognition of varying degrees of negligence. In Armitage v Nurse (1998), Lord Millet stated that English law "has always drawn a sharp distinction between negligence, however gross, on the one hand and fraud, bad faith and wilful misconduct on the other. The doctrine of the common law is that; 'Gross negligence may be evidence of mala fides but it is not the same thing' see Goodman v Harvey (1836) 4 A &E 870...But while we regard the difference between fraud on the one hand and mere negligence, however gross, on the other as a difference in kind, we regard the difference between negligence and gross negligence as merely one of degree." The court did not go on to define gross negligence or attempt to make any differentiation.
It should be noted that the above authorities (which are examples of a prevailing view) are all obiter dicta. The courts were not asked to consider the exact definition of "gross negligence". When asked to do so in the context of an agreement between commercial parties, the court has been more flexible.
"Gross negligence" in a commercial context
In a commercial context, parties will often use the term "gross negligence" as an exception to exclusion/indemnity clauses with or without including in the contract a definition of gross negligence. It tends to be used to represent something more than simple negligence. There is authority in the context of commercial agreements to recognise gross negligence as "representing something more fundamental than failure to exercise proper skill and/or care constituting negligence".
There is some evidence to suggest that English courts might accept this. In Red Sea Tankers Ltd v Papachristidis (1997), the Commercial Court gave some credence to the above commercial understanding of "gross negligence" in an English legal context. The court considered the definition of "gross negligence" as an exception to a limitation of liability clause in a technical advisory agreement; the case rested on whether the claimants could prove the defendants had been "grossly negligent". Importantly, the technical advisory agreement, which contained the exclusion clause, was governed by New York law. During his assessment of the precise definition of gross negligence to be applied to the actions of the defendants, Mance J cited and used numerous New York authorities. However, he stated in his judgement that: "Whether one looks to the authorities decided and the principles identified in the context of New York public policy or to the simple meaning of the words without attributing to them any special meaning under New York law at all, the concepts of "gross negligence" here appears to me to embrace serious negligence amounting to reckless disregard, without any necessary implication of consciousness of the high degree of risk or the likely consequences of the conduct on the part of the person acting or omitting to act."
Crucially, he goes on to apply it to an English context: "If the matter is viewed according to purely English principles of construction, I would reach the same conclusion. Gross negligence is clearly intended to represent something more fundamental than failure to exercise proper skill and/or care constituting negligence. But as a matter of ordinary language and general impression, the concept of gross negligence is capable of embracing not only conduct undertaken with actual appreciation of the risks involved but also serious disregard of or indifference to an obvious risk."
The Camarata case relates to a contract for investment advisory services with Credit Suisse Securities (Europe) Ltd ("Credit Suisse") and advice given under the contract in the context of investments issued by Lehman Brothers which were not sold by the client despite concerns in the market over Lehman post JP Morgan Chase's acquisition of Bear Stearns. The client claimed that it had been advised negligently and that whilst the advisory agreement might have appeared to exclude liability for "mere negligence" it did not do so because it carved out from the exclusion "gross negligence" and there was no concept of "gross negligence" separate from "mere negligence" in English law. In this case, as in many of the others cited above, the question of the meaning of "gross negligence" was not strictly relevant to the result of the case because it was concluded that Credit Suisse had not been negligent. However, as Credit Suisse submitted that it would have been liable under its terms of business only if there had been "gross negligence" Andrew Smith J considered the issue. He referred to Armitage v Nurse (see above) and the view that the difference between "mere negligence" and "gross negligence" is one of degree not kind and therefore is not easy to define or describe with precision. However, he then restated the Red Sea Tankers position. Simply because there is no concept of gross negligence in English law does not mean that the standard English law principles of construction of contracts should be overridden.
"The relevant question, however, is not whether generally gross negligence is a familiar concept in English civil law, but the meaning of the expression in these paragraphs of the Terms and Conditions. I cannot accept that the parties intended it to connote mere negligence: in paragraph 1.2 and also in paragraph 1.3 both the expression "gross negligence" and the expression "negligence" were used, and some distinction between them was clearly intended...... I therefore accept that, as a matter of interpretation, paragraphs 1.1 and 1.2 provide that, in order to establish liability, Camerata have to show more than mere negligence on the part of [Credit Suisse]"
The Camarata case is helpful in that it restates the position in the Red Sea Tankers case, but in the context of a contract governed by English law. (As noted above, in the Red Sea Tankers case, the contract which contained the exculpatory clause was governed not by English law but by New York law.) It should be noted that Andrew Smith J seems to attach some weight in his analysis to the fact that the relevant clause in the Credit Suisse contract referred to both negligence and "gross negligence". This clarified that the parties must have intended there to be some difference between the two concepts. So, whilst the use of the term "gross negligence" in an English law contract is not "wrong" because the term is not one defined by English law, what it does mean is still not clear to English courts. Whilst there are authorities which give support for a definition of "gross negligence" as representing "something more fundamental than failure to exercise proper skill and/or care constituting negligence, capable of embracing not only conduct undertaken with actual appreciation of the risks involved, but also serious disregard of or indifference to an obvious risk", there are further authorities which suggest that the addition of the word "gross" adds nothing.