What does gross negligence really mean
17 June 2022
In the recent decision in the proceedings between the Federal Republic of Nigeria (FRN) and JP Morgan Chase (JPMC) ([2022] EWHC 1447 (Comm)), where the FRN's factual case failed, detailed consideration was given to what is meant by gross negligence as distinct from plain negligence. Since many contractual terms involve an acceptance of liability only where gross negligence can be shown, this case is a useful reminder of what that test involves in practice.
The FRN accepted that it must show that JPMC was grossly negligent because of the applicable contractual terms – the relevant Depository Agreement .
Mrs. Justice Cockerill considered that gross negligence is necessarily fact sensitive. It was a "notoriously slippery" concept, requiring something more than negligence but it did not require dishonesty or bad faith and did not have any subjective mental element of appreciation of risk.
She referred to Mance J. comments in The Hellespont Ardent ([1997] 2 Lloyd’s Rep 547) that gross negligence was clearly intended to represent something more fundamental than failure to exercise proper skill and/or care constituting negligence and the concept was 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. More than negligence was required:
There was a clear distinction between gross and common negligence, and the authorities showed ordinary and gross negligence should not be equated to one another. The more modern authorities given as examples referred to:
- The relatively thin line between gross negligence and recklessness: “‘gross negligence’ is not the same as subjective recklessness, although it may come close to it” (Winnetka Trading Corporation v Julius Baer International Ltd, [2011] EWHC 2030 (Ch)).
- “The test of what is gross negligence can be characterised as "jaw-dropping" negligence. The test applied by the Royal Court, as explained above, was less colourful in language but to similar effect: serious or flagrant negligence, which can embrace serious disregard of or indifference to an obvious risk.” (Khuller v First International Trustees Limited [2020] GCA 051).
- That distinction was also reflected in the criminal authorities, one of which referred to the requirement for “a very high degree of negligence”, and the fact that the word reckless might be seen as the one that “most nearly covers the case" ( R v Sellu [2016] EWCA Crim 1716),
- Emphasis on going beyond serious mistakes into what might be termed exceptional badness was also seen in the recent civil cases.
Even a serious lapse is not likely to be enough to engage the concept of gross negligence. It involves moving beyond bad mistakes to mistakes which have a very serious and often a shocking or startling (cf. "jaw dropping") quality to them. The target was mistakes or defaults which are so serious that the word reckless may often come to mind, even if the test for recklessness is not met.
Commentary
The observations are a useful reminder of how high a bar gross negligence is – "jaw dropping", exceptionally bad and close to recklessness are strong words. The review of authorities which the Judge conducted shows a very real and very significant difference between gross and mere negligence.
Authors: David Capps and Nathan Willmott
