BROADFORM LIABILITY: WHAT EVERYONE SHOULD KNOW HENNIE VAN ECK JUSTIN MALHERBE 24 JULY 2015

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Edgar Randolph Greer
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2 BROADFORM LIABILITY: WHAT EVERYONE SHOULD KNOW HENNIE VAN ECK JUSTIN MALHERBE 24 JULY 2015

3 What is broadform liability? Broadform liability is essentially legal liability Loss or damage due to conduct of another Criminal liability (State vs XYZ) jail/fine Civil liability (A vs B) - damages/money i.e. Contractual liability e.g. breach of contract Delictual liability e.g. negligence, beach of duty Liability is mostly delictual 5 Requirements for a delictual claim - Act/omission - Wrongful - Fault (intention or negligence) - Damages - Causal link between act/omission and damages

4 Where could claims come from? Can your client be liable i.r.o? Contracts with third parties Any injury or damage sustained by third parties Damage caused by your client Examples: Public liability: e.g. slip and trip Product liability: e.g. failed product Wrongful arrest: e.g. municipal traffic officer Professional Indemnity e.g. medical practitioners, brokers Carriers liability: e.g. damaged goods Spread of Fire: e.g. veld fires What cover does your client need?

5 Elements of liability: Wrongfulness Will the potential conduct (act or omission) infringe a legally recognised interest or right of a third party? Test for wrongfulness The legal convictions of the community An objective test Based on reasonableness Balance opposing interests of insured and third party Brokers Don t need to be lawyers to assess this Should consider client s insurance needs against the above Use logical and practical considerations

6 Recent case: Wrongfulness Deacon v Planet Fitness Holdings [2015] (GP) Facts Gym member injured at exit turnstile No warning signs Court held Gym s failure to warn members not wrongful The turnstile is a regular feature of modern society Claim dismissed

7 Elements of liability: Fault Fault generally Intention or Negligence Strict liability - Statute (Consumer Protection Act) - Common law (dog bites) Disclaimers, notices and conditions of trading Can assist/limit your client s exposure Check your client s documentation

8 Discussion of fault: negligence Kruger v Coetzee Reasonable Man test Facts Farmer knew gate often left open by others He closed it when he reasonably could & complained to the authorities about it Car collided with his horse in road Court held Plaintiff did not prove reasonable steps required of farmer Claim dismissed Test for negligence confirmed 1. Would reasonable person in position of wrongdoer have foreseen conduct causing damage? 2. If so, could steps have been taken to prevent damage? 3. If yes to both questions = negligent

9 Who is the Reasonable Person? Fictional person: The average man/woman/client to be insured Not reckless or overcautious Aware of surroundings and dangers in activities Professionals/experts e.g drivers, doctors, lawyers, brokers - Did the professional/expert act with same skill and caution as reasonable members of profession? - In the same circumstances?

10 Recent case: Negligence Nicholls v Burbridge t/a Dulce Café [2015] Facts Slip and trip at Dulce coffee shop No substance proved to be on floor Court held Trial court dismissed claim negligence not proved Appeal court agreed - failed to discharge onus of proving negligence Opposing witness versions, equally credible Negligence not proved on balance of probabilities No claim But- brokers must advise property owners to take precautions

11 Elements of liability: Causation Factual causation but for test Legal causation Various theories Proximate cause Intervening causes? Can be very technical Consider logical and common sense issues in advising clients on what to insure against

12 Recent case: Causation Za v Smith and another [2015] (SCA) Facts Breadwinner fell down a snowy cliff in private reserve Loss of support claim by wife and children 4x4 trail to peak no warning of danger to visitors Husband went to edge, slipped, fell of cliff and died Court held - Discussed concepts of wrongfulness, negligence & causation - Failure to take steps to warn or prevent harm was wrongful - Expert evidence: measures to be taken to prevent - But for failure to implement measures, husband would not have died

13 Examples of liability claims

14 Negligent Attorneys Mlenzana v Goodrick and Franklin (2011) Facts - M sued attorney G for R G failed to lodge claim against RAF timeously Court held - G negligent - Did not take reasonable steps to obtain information required - Failed to exercise skill expected of average attorney - G liable

15 Negligent Property Owners Holm v Sonland Ontwikkeling (2010) Facts - Shopping complex has volleyball court on site next to dam - H kicked volleyball over fence, into dam - H dived in and broke his neck in shallow water - H paralysed for life - No warning signs not to dive into dam Court held - H 50% negligent - Complex 50% negligent

16 Medical negligence Distinction between malpractice and negligence What may constitute medical negligence? Failure to inform Failure to monitor Failure to instruct Failure to perform Reasonable medical practitioner test: belonging to the same branch of profession not expected to show highest degree of professional skill, only reasonable skill and care Reliance on experts Res ipsa loquitur do the facts speak for themselves?

17 Recent case: Medical Negligence Medi-Clinic Ltd v Vermeulen (2014) Facts - V contracted malaria, hospitalized, in ICU - V got bedsores which caused permanent nerve injuries - V paralysed, wheelchair bound, sued hospital Court held - Expert evidence compared: logical? - Hospital staff not negligent - Claim dismissed

18 Negligent Brokers Clients blame their broker if claims are rejected MY BROKER NEVER TOLD ME/SHOULD HAVE TOLD ME.. Broker is the insured s agent, acts on behalf of insured Has duty to exercise reasonable care and skill Expected of reasonable average member of profession

19 Negligent Brokers cont Durr v Absa Bank (1997) Facts - Mrs D 65 years old, asked advice with investments - Advisor recommended investment in Supreme - Supreme liquidated shortly after investment made Court held - Advisor did not investigate Supreme or its creditworthiness - Ignored warning signs - High returns and commission offered - A knew Mrs D relied on his advice - Broker liable

20 Conclusions Have a service level agreement with your client e.g. Record the client s duties to make full disclosure etc Limit your liability Know your client and the risks he is exposed to e.g. Visit his business Analyze his business i.r.o. risks to be insured Know your insurance products If you lack skills/expertise -- get help/refer Record your advice Use common sense and logic - to assess the client s insurance requirements - to protect yourself - the law expects nothing more Insure yourself!!

21 Disclaimer These slides set out general legal principles and are for information purposes only. The contents should not be deemed to be legal advice. We recommend that before you rely on the contents hereof you should obtain legal advice. For more information contact; Hennie Van Eck T E hve@jgs.co.za Justin Malherbe T E justinm@jgs.co.za

Professional Practice 544

March 27, 2017 Professional Practice 544 Tort Law and Insurance Michael J. Hanahan Schiff Hardin LLP 233 S. Wacker, Ste. 6600 Chicago, IL 60606 312-258-5701 mhanahan@schiffhardin.com Schiff Hardin LLP.