NEGLIGENCE

The possibility of being sued for negligence is an ever-present threat for the professional person. Of course, the professional person is not the only entity capable of being sued for negligence. In a professional context, negligence is often termed malpractice. In this article, we shall deal with negligence in general. The liability of professional persons for negligence follows the same general principles.

What is negligence? The law of negligence is part of the common law. There is no written Negligence Act. The law of negligence is similar in nearly all English-speaking countries. However, in the USA, there is a far greater tendency to find persons guilty of negligence that there is in other countries. The law of negligence has been developed by judges in a piecemeal fashion over the centuries. There have been a number of landmark decisions. The most important decision was the case of Donoghue v. Stevenson which was decided by the British House of Lords in 1932. The facts of this case were as follows. Mrs Donoghue went into a cafe in Paisley in Scotland with her friend. Her friend bought her a ginger-beer. When Mrs Donoghue had drank most of the contents, the decomposed body of a snail floated out of the bottle. She suffered shock and severe gastroenteritis. She sued the manufacturers of the ginger-beer. The manufacturers defended the case. Their ground of defence was that there was no contract between the manufacturers and Mrs Donoghue. There was, indeed, a contract of sale between the manufacturers and the seller of the beer. There was a similar contract between the seller of the beer and Mrs Donoghue's friend. But there was no direct contract of sale between the manufacturers and Mrs Donoghue. Consequently, the manufacturers claimed that they were not liable to Mrs Donoghue in any way and owed no duty of care to her and were not liable for any suffering caused to her. The House of Lords, however, decided differently. They held the manufacturers liable to pay compensation to Mrs Donoghue. They decided that it was not necessary that there be a direct contractual connection between the person who caused the damage and the person who suffered the damage.

Negligence is committed when there has been a failure to take proper care and loss results. Conduct is judged by the ordinary everyday standards of humanity. What would an ordinary careful person have done in the circumstances? There must be a duty of care in the circumstances and there must have been a breach of that duty of care. In general, anyone who has been negligent and has caused loss can be sued. Examples of people who have been sued for negligence are manufacturers, retailers, professional people, drivers of motor vehicles, occupiers of premises and even Governments. Virtually anybody can be sued if he/she has been negligent. Lord Atkins, in the leading case of Donoghue v. Stevenson mentioned above, had this to say about liability for negligence.

"...In English law there must be, and is, some general conception of relations giving rise to a duty of care of which the particular cases found in the book are instances. The liability for negligence...is no doubt based upon a general public sentiment of moral wrongdoing for which the defendant must pay. But acts or omissions which any moral code would censure cannot in a practical world be treated so as to give right to every person injured by them to demand relief. In this way rules of law arise which limit the range of complainants and the extent of their remedy."

"The rule that you are to love your neighbour becomes in law, you must not injure your neighbour. And the lawyer's question, Who is my neighbour?, receives a restricted reply. You must take care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour."

"Who then is my neighbour? The answer seems to be - persons who are so closely and directly affected by my act that I ought reasonably to have them in my contemplation as being affected when I am directing my mind to the acts or omissions which are called in question".

To sum up, negligence is committed when there has been a failure to take reasonable care to avoid acts or omissions which it can reasonably be foreseen will be likely to injure someone.

A professional person such as an doctor or surgeon will be judged by the standards common in his profession. If a mistake has been made and if an appropriately qualified and experienced person taking reasonable care would not have made the mistake, then the professional person will be liable in negligence. To establish what are reasonable standards in the profession, either plaintiff or defendant can call an eminent practitioner to give evidence in Court as an Expert (Witness). The Expert (Witness) can be asked whether, in his opinion, such and such acts would be good medical practice.

The following are examples of instances where a duty of care is implied.

Every employer is obliged to provide a safe system of work. It must minimise the risk of injury to employees. If the employer does not do so, he is liable in negligence. For example, if a hospital ward is not kept free of obstructions in the proper manner and an employee injures himself because of this, the employer will be liable. The same will be true if a patient injures himself.

An occupier of land or buildings is liable if someone comes onto the land or buildings and is injured because of the occupier's negligence. However, he will owe a lesser duty of care to trespassers than to persons he has invited onto the land or buildings. Nevertheless, some degree of care is owed to trespassers. An occupier cannot, for example, set up lethal electric fences or set mantraps etc.

Special care must be taken in all dealings with children. A reasonable person would recognise that children do not display the same sense of responsibility as adults and can more easily be injured. The law of negligence takes this into account.

Again, take the liability for animals. If a person keeps a wild animal in captivity, such as a crocodile, and it injures someone who is taking due care, the owner will be liable in negligence. Everybody knows that wild animals are dangerous. Also, if a person keeps a domestic animal which he knows from experience is savage and it injures someone, he will be liable in negligence. Suppose I keep a domestic dog which has never bitten anybody. One day, for some unknown and unpredictable reason, it bites someone. Am I liable in negligence? No. Why? Because the damage is too remote. A reasonable person could not have foreseen that the dog would bite someone. But suppose the same dog subsequently bites someone else. Am I liable in negligence? Yes! Why? Because a reasonable person would have known that the dog was vicious and likely to bite again. However, many States have now varied the foregoing principles with reference to dogs. They have embodied the law in Dog Acts etc.

WHO CAN SUE FOR NEGLIGENCE?

Firstly, it should be pointed out that there is usually a time limit within which to bring a legal action for negligence. Legal action must be commenced within a specified time, usually three years.

It would make life simpler if anybody who had suffered loss by the negligent acts of another could sue for compensation. But this is not the case. There must be what is termed "proximity". The concept of "proximity" is rather vague and is not fully settled at the present time. It means that there must be a sufficiently close connection between the person who committed the wrongful act and the person who suffered damage. "Proximity" has differing rules depending on the kind of damage suffered.

Where the loss suffered has been damage to person or property, then a wide category of persons can sue. It was seen in the case of Donoghue v. Stevenson above, that a member of the public, a consumer, could sue a manufacturer. It will be recalled that Mrs Donoghue suffered damage to her person in the form of sickness.

Where the loss suffered is an economic loss, then only a narrower category can sue. "Economic loss" does not involve damage to person or property. Often it involves negligence by professional firms such as auditors, accountants, solicitors etc. To enable a person who has suffered loss through such negligence to sue, there must be a closer degree of "proximity" here.

Let us take an example of economic loss. A firm of auditors is engaged to audit the financial statements of a public company. Before starting the audit, the directors of the company make known to the auditors that the audited financial statements will be produced to a bank so as to obtain a loan. The bank will be relying on the audited statements to make the loan. The auditors carry out their work negligently. They certify the company as being in good financial health when, in fact, it is bankrupt. The fact of its bankruptcy does not become apparent until some time later. In the meantime, immediately after the audit, the company takes the audited financial statements along to the bank and obtains a loan on the strength of them. A member of the public sees the published financial statements in the press and buys shares in the company as an investment. The company collapses shortly afterwards. The bank loses its money. The shareholder loses his investment. Can the company sue the auditors for negligence? Can the bank sue the auditors for negligence? Can the investor sue the auditors for negligence? The issue of "proximity" will be decided as follows. The auditors were , of course, aware of the company they were auditing at the time of the audit and knew it would suffer damage as a consequence of their negligence. There is sufficient "proximity" here. The company can sue. Likewise, the auditors were aware of the bank at the time of the audit and knew it would suffer loss as a consequence of their negligence. The bank can sue. The auditors were not aware of the particular member of the public at the time of the audit. He is in too remote a category. There is not sufficient "proximity" here. The disappointed investor cannot sue. It will be seen that the rules have a tendency to exclude the general public from the category that can sue.

WHO CAN BE SUED FOR NEGLIGENCE?

Subject to what has been said above, generally anybody who has been negligent and has caused damage can be sued. It should be emphasised that there need be no contractual relations between the person suffering the loss and the person committing the wrongful act. Complete strangers can be sued.

Employees as well as employers can be sued. There is no blanket exemption for employees, as is sometimes thought. However, an employer (as well as the employee) is liable for the negligence of an employee committed while carrying out his duties. But an employer will not be liable for the negligence of an employee if the act complained of has no relation to his duties as an employee. Only the employee is liable is such a case. But a person who suffers loss as a result of the negligence of any employee can sue either the employee or the employer. Generally, he sues the employer as the employer a) usually has more assets and b) the employer is usually insured. However, sometimes, it may be appropriate to sue the employee. Take the example of an incorporated auditing company that has been negligent. Assume the company has no assets and is not covered by insurance or its insurance cover is inadequate. In such a case,  it may be appropriate to sue both the negligent employee and the employer company. As a practical example, take the situation of an audit employee in a firm of auditors who comes across matters showing insolvency, fraud etc. Either deliberately or negligently, he fails to report the matter to his superior officer e.g. supervisor, manager, partner etc. He will be liable for any loss arising from his failure to act. A professional employee is much more likely to be sued successfully for negligence than a non-professional employee. It is obvious that employees cannot escape liability if they choose to work in a den of iniquity.

The same considerations would apply if the negligent entity had been a partnership. However,  a partnership has deeper pockets. It must be remembered that under partnership law, each individual partner, to the extent that the partnership assets are insufficient, is personally liable for all the debts of the partnership including debts arising from negligent acts.

From the above it can be seen that there can be an advantage in trading as a company.

As a rule, each employee of a company (including a director) is liable only for his/her own negligent acts and is not liable for the negligent acts of his/her co-workers. But in certain circumstances, an employee can be liable for the the negligent acts of his co-workers. This would be the case if the employee has assumed responsibility for the acts of his co-workers.

Take two contrasting examples. Example 1. Two medical practitioners practise under the structure of a limited company. In such a case, each is not liable for the negligent acts of the other. Example 2. An employee, a director of an incorporated accounting firm, assumes responsibility for directing, guiding and setting policy for a group of semi-skilled employees. He fails to carry out these duties and loss is caused to a client by the negligent act of one of the unsupervised employees. It so happens that the unsupervised employee is blameless in this particular situation. The loss would not have occurred if the director had carried out his duties. The director, as well as the company, will be liable to pay compensation to the client. The unskilled employee will not be liable to pay compensation.

Thus, it is obvious that forming a company does not provide blanket cover for employees (including directors) against the claims of creditors, as is sometimes imagined.

But, a partner in a partnership, as has been pointed out, is always fully liable for the negligent acts of his co-partners.

HOW MUCH COMPENSATION CAN BE RECOVERED?

The general scheme of things is that an amount equal to the monetary loss suffered can be recovered. In addition, in appropriate cases, an amount can be recovered for pain and suffering. The aggrieved person must compute his loss as best he can. For example, an injured employee can sue for medical expenses, pain and suffering, actual loss of earnings, expected loss of earnings, loss of limbs etc. However, not all damage caused by a wrongful act can be recovered. The general test is that only the damage that a reasonable person could have foreseen will be recoverable. The landmark case here concerned a ship moored in Sydney harbour. It negligently spilled some oil on the water. The oil floated across the harbour to a dock. Some welders were working on the dock. The floating oil was ignited by a spark from the welders and the dock burnt down. The dock owners sued the shipowners for the value of the dock. The Court found the shipowners not liable. A reasonable person could not have foreseen the damage that resulted. If one spilled oil on the water, one could expect that it would damage the foreshore and kill wildlife. One would not expect it to set a dock on fire!

In another instance, a cricketer hit a ball which shot over the boundary and onto an adjacent road and injured a passerby. The cricketer was found not guilty of negligence. Why? It was shown that in the previous 30 years, there were very few instances of a ball ever having been hit onto the road during a cricket-match. It was a pure fluke that this one had. A reasonably careful person would assume that it was highly improbable that a ball would go onto the road and hit a passerby.

Only the damage foreseeable and naturally flowing from the wrongful act will be recoverable. Readers who are accountants will readily perceive the analogy to standard costing

Often, a person who has suffered loss, has the option of suing a) under negligence, b) for breach of contract or c) under negligence and breach of contract. But, however he proceeds, he cannot recover more than 100% of his loss. As a general rule, the amount of compensation that he recovers will be the same whether he sues under negligence or breach of contract.

EPILOGUE

In practical terms, what standard of care should be expected? It is generally accepted that human error amounts to 1%. For example, if a human being is given a complicated set of instructions to carry out, it is extremely unlikely that he will carry them out flawlessly every time. From time he will slip and make the 1% statistical error. A computer, on the other hand, will carry out a complicated set of instructions flawlessly every time once it has been programmed properly. Again, take the example of a computer programmer. It is well recognised, understood and accepted that a computer programmer never gets his program right first time. He must go through his program and "debug" the errors that he knows he should not have made but has in fact made. It is obvious from this example that knowing the rules or procedures and failing to carry them out does not automatically imply culpability.

The cause(s) of a mistake or accident may be assigned to one or more of the following factors viz. a) lack of technical qualifications i.e. the person was never qualified to do the work, b) lack of experience i.e. the person had not carried out this job many times previously, c) lack of care i.e. the person was distracted, day-dreaming or affected by drugs, alcohol, sickness etc, d) lack of the required intelligence i.e. the person did not have the required intelligence for the job and e) human error i.e. the 1% statistical human error.

What standard should be applied to an ordinary mortal? Is it a) the flawless standard without provision for errors or b) the more practical standard allowing for the 1% statistical human error?
If we assume a), we are imposing a super-human standard which cannot be met in practice. We are putting in place a Punch-and-Judy regimen which will see Judy predictably and periodically beating Punch over the head. Looking at the problem from a slightly different perspective, it is obvious that he who holds himself out as being able to perform at a super-human level or being able to achieve super-human results, will without a doubt eventually be found guilty of negligence. There could be a lesson to be learnt here for certain professional groups e.g. obstetricians. U.S. courts tend to adopt this standard.
On the other hand, if we assume b) above, some thorny questions arise. When the 1% error is made, who bears the cost e.g. is it the professional who made the error or the client/patient? If we assume the client/patient should bear the cost, should it be the client/patient who actually suffered the loss or should the loss be spread over all the client/patients of the practitioner? Also when an error has been made, how can we ascertain whether the error is one of  the statistical 1% attributable to human frailty or whether it is in fact an error as the result of real negligence i.e. not taking the care usual in such situations or even resulting from the person not being properly qualified etc?

The courts, legislators and commentators have never squarely faced this question. Until they do, the law of negligence will be fuzzy.

There are are some who would assert that the answer to the problem is blowing in the wind.

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Copyright 1994.



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