Chapter 5 Negligence Professional Liability and Insurance Copyright

Negligence Inadvertent, careless conduct that causes injury to another Ø Important area of tort

Negligence A - D Ø Ø Ø Essential Elements: A: A duty to exercise care B: Breach of the standard of care C: Causation – The act caused the injury D: Damages – Victim suffered a loss Copyright © 2008 Pearson Education Canada 3

Reasonable Person Test Reasonable person is a prudent person, in possession of all the facts, exercising care Ø l l Not the average person Not the perfect person Copyright © 2008 Pearson Education Canada 4

Is a Duty Owed? Ø Ø Reasonable Foreseeability Test If it would be apparent to a prudent person that the conduct was likely to cause injury - duty is owed. We owe a duty to anyone we can reasonably anticipate might be harmed by our conduct Is there any reason to reduce or eliminate this duty? (Anns case) Copyright © 2008 Pearson Education Canada 5

Case Summary Donoghue v Stevenson set several precedents in the law of negligence Ø l l l The test to determine the existence of a duty Product liability - manufacturer owes a duty to customer Privity of contract will not defeat an action for negligence in product liability cases Copyright © 2008 Pearson Education Canada 6

A - Duty of Care Misfeasance Ø l l Nonfeasance Ø l l Ø Ø An act that causes harm to another Court will provide remedy A failure to prevent an injury Courts reluctant to provide remedy If a person attempts to help there is a duty to exercise reasonable care Courts reluctant to provide remedy without special relationship Copyright © 2008 Pearson Education Canada 7

B – Breach of a Standard of Conduct What would a reasonable person have done in the circumstances? Ø Actions that fall below socially acceptable standards create liability for damages Ø Risk - The greater the risk of injury the higher the standard Ø Copyright © 2008 Pearson Education Canada 8

Liability of Children liable for their torts Ø l standard is that of a reasonable child of that age Parents not generally responsible for their children’s torts Ø l except where there is obvious failure to control, instruct or supervise or a statute imposed duty Copyright © 2008 Pearson Education Canada 9

C - Causation The injury must be a direct result of the careless conduct Ø But for test - but for the conduct of the plaintiff no injury would have resulted Ø Copyright © 2008 Pearson Education Canada 10

D – Damages Plaintiff must show injury to self or loss of property as a result of defendant’s negligence – Physical Causation Ø Remoteness Test Ø Whether the specific type of injury suffered was reasonably foreseeable Legal Causation Ø Copyright © 2008 Pearson Education Canada 11

Judicial Remedies Courts will compensate for: Ø l l Ø Mental disorder, but not simply mental distress Economic loss Court attempts to restore victim to original position Copyright © 2008 Pearson Education Canada 12

Defences Contributory negligence Ø l l Ø Plaintiff partially responsible for own loss Last clear chance doctrine Negligence Act now allows court to apportion responsibility Copyright © 2008 Pearson Education Canada 13

Defences/2 Ø Voluntarily assuming the risk l A person who volunteers to enter a

Special Situations Ø An occupier of property owes a duty to people who come onto the property as licensees l trespassers l invitees Ø The obligation is on the tenant not the landlord l Copyright © 2008 Pearson Education Canada 15

Special Situations/2 Ø Duties of Innkeepers l l l Safeguard property of guests Post appropriate section of Innkeepers Act Prevent guests from becoming intoxicated Copyright © 2008 Pearson Education Canada 16

Legislation Ø Statutes may impose obligations not found in common law Ø No-fault insurance Ø Statutory thresholds for claims Ø Duty of care to unborn child in Alberta Copyright © 2008 Pearson Education Canada 17

Question For Discussion Ø Ø Ø Social Host Liability The courts have found both commercial establishments and private hosts liable for injuries sustained by their guests when they have consumed alcohol on their premises. What is the standard of care expected of a social host and do you think the courts have gone too far in assessing this kind of liability? Copyright © 2008 Pearson Education Canada 18

Negligent Misstatement People who suffer economic loss because of a professional’s negligent statements may recover damages Ø Whether a duty was owed is determined by reasonable foreseeability test Ø This test has been modified by the Anns case Ø Copyright © 2008 Pearson Education Canada 19

Case for Discussion Haig v. Bamford Ø This case established the legal principle that: Liability is restricted to situations where the plaintiff knew or should have known that the information provided would be relied on by a limited group. Ø Is this restriction appropriate? Ø Copyright © 2008 Pearson Education Canada 20

Strict Liability when there is no fault Ø When a dangerous situation is created by an unusual use of property, the owner/occupier is liable for all damages when it escapes Ø E. g. , water, animals Ø Copyright © 2008 Pearson Education Canada 21

Vicarious Liability Ø A form of strict liability—or liability without fault Ø Imposed on employers when they are held liable for torts committed by employees during the course of their employment Copyright © 2008 Pearson Education Canada 22

Product Liability Manufacturers are liable for injuries caused by defective products Ø Plaintiff must establish that the manufacturer was negligent Ø Breach of manufacturer’s duty can be implied from circumstances Ø Manufacturers must warn of dangers associated with product Ø Copyright © 2008 Pearson Education Canada 23

Liability of Experts Professionals and experts held to a high standard Ø l l Require skills and abilities expected of a professional in that field Must exercise skill with degree of care expected from a reasonable person in that profession Inexperience does not excuse incompetence Common practice that is dangerous or careless is not an excuse. Copyright © 2008 Pearson Education Canada 24

Professional Liability Ø Duty often set out in contract l Ø But tort liability requires adherence to a reasonable standard of performance Courts may extend liability to parties outside of the contract Copyright © 2008 Pearson Education Canada 25

Negligence Ø Ø Standard of care expected of professionals Reasonable member of the profession Common practice may not measure up to reasonable standard Courts will examine the circumstances to determine if the conduct was reasonable Copyright © 2008 Pearson Education Canada 26

Case for Discussion Ø Ø Ø The Hercules Case In Haig v Bamford, the SCC determined that accountants owed a duty of care to those they knew would rely on the statements they prepared. In the Hercules case the SCC applied the Anns test and limited the range of liability to only those they knew would rely on the statements they prepared and who used them as intended. Copyright © 2008 Pearson Education Canada 27

Risk Avoidance Professionals should be aware of the standard of care expected of them Ø l Adapt practices to avoid risk Professionals owe a fiduciary duty to clients Ø l l l Must act with loyalty and good faith Must disclose pertinent information Must use extreme care with funds entrusted to them Copyright © 2008 Pearson Education Canada 28

Professional Insurance Often a condition of practice for professionals Ø l l l Protects against damages resulting from errors and omissions Premiums can be a significant business expense May cover legal costs when professional is sued Copyright © 2008 Pearson Education Canada 29

Professional Disciplinary Bodies Some exercise significant control over their members Ø l l l With membership required With power to levy penalties and suspend Activities regulated by administrative law Charter rights may apply Compliance with human rights legislation required Copyright © 2008 Pearson Education Canada 30

Insurance Provides compensation for Ø l l Ø damaged, lost, or stolen property death, illness or disability liability business interruption Purpose: to reduce the cost of loss by spreading the risk Copyright © 2008 Pearson Education Canada 31

Types of Insurance Liability - covers injuries caused by negligence of self or employees

Types of Insurance/2 Property - Primarily fire insurance Ø Coverage should correspond to actual value of the property Ø Otherwise owner may become co-insurer Ø Copyright © 2008 Pearson Education Canada 33

Types of Insurance/3 Business Interruption Insurance Ø An unforeseen event causes a business to cease operation for a time Ø Covers lost profits and expenses of bringing business back into operation Ø Copyright © 2008 Pearson Education Canada 34

Types of Insurance/4 Life - provides for dependants and/or business associates after death of insured Ø Health - medical and disability insurance Ø l l covers health care expenses provides income for disabled worker Copyright © 2008 Pearson Education Canada 35

Insurable Interest Insured must have personal stake or interest in whatever is being insured Ø Can only claim on the insurance to the extent of the value of that interest Ø Life insurance policies are for the amount stipulated in the contract Ø Copyright © 2008 Pearson Education Canada 36

Insurance Industry Ø Insurance agents – duty to insurance company Ø Insurance broker – independent business Ø Both have duty of good faith to customer Ø Adjusters – investigate on behalf of insurance companies Copyright © 2008 Pearson Education Canada 37

Insurance Contracts Ø Contra Preferentum Ø Utmost good faith Ø Subrogation Ø Salvage Copyright

Question for Discussion An insurance company can step into the shoes of the insured once it has paid out on the loss and pursue a claim against the person who caused the loss. No-fault insurance eliminates this possibility. Ø What are the benefits and limitations of no-fault insurance? Ø Copyright © 2008 Pearson Education Canada 39

Bonding A form of insurance that protects employers from the wrongful acts of their employees Ø l l fidelity bond - employer pays a fee to cover employee so that if he commits a wrong the victim will be compensated surety bond - provides assurance that the party to a contract will perform its part of the contract Copyright © 2008 Pearson Education Canada 40