Legal terminology

The purpose of this module is to provide you with an understanding of and insight into the management of legal risk exposures.

The aim of this module is to provide you with the necessary information and activities to enable you to:

Every business is exposed to legal liability on a daily basis through the acts or omissions of its executives.  The exposure could either be to civil or to criminal liability.  This does not mean that executives are safeguarded against personal liability.  

Many of our statutes specifically provide for individual executive responsibility.  It is therefore essential that the risk is identified and managed.

Before we continue, let us discuss the legal terminology.

A person who fails to comply with provisions of either an Act or Regulation would be prosecuted by the State in a court.  The person would be known as the accused.  If the accused is convicted, he could be sentenced to a fine or imprisonment, or both.

In summary, the important elements of criminal liability are:

• It is always the State versus a person (or company).
• The trial is about whether the accused is guilty of the charges against him.
• The purpose of the trial is to punish the guilty person.

Criminal liability (i.e. offences) comes from 2 sources:

1. Legislation (statutes) e.g. the Occupational Health and Safety Act and Mine Health and Safety Act.
2. Common lawg. murder, homicide.

If the person’s negligence causes loss or injury to another person (third party) that other person could sue for compensation in a civil court.  The third party is then known as the plaintiff and the “negligent” person becomes the defendant.  

The court may order that the defendant compensate the plaintiff.  This is the basis of civil liability – no fines or imprisonment is involved.  In these civil cases, the State is generally not involved.  In summary, the important elements of civil liability are:

• It is always one private person versus another.
• The trial is about whether the defendant is liable (for negligence).
• The purpose of the trial is compensation to the plaintiff. 

Civil liability essentially has one source i.e. common law.  There are 3 main categories of civil common law liability:

1. Delict (where one person causes harm or damages to another)
2. Contract (where one person fails to honour the contract, causing the other person to suffer loss)
3. Unjust enrichment (where one person unintentionally gains something to which he is not entitled. The rightful owner would sue to get that something returned to him).

This is probably the most important legal concept of which managers must be aware.  It applies to them on a daily basis, by virtue of the fact that they have people under their control.  

The concept of vicarious liability evolved from the following doctrines:

An example of where this applied was where the supervisor failed to check that his workers were performing their job functions without carelessness, and the one careless worker lost his hand, the supervisor had to have one of his hands chopped off.

The master had to use his control over the slave to ensure the slave behaved like a reasonable person.  If the slave committed a crime, the master had failed to properly exercise his control.  This failure of control was as serious as the crime itself, and the master would take responsibility for the crime as if he had committed it himself.  

The “Actiones Noxales” concept has not changed much, and the manager today would generally be held potentially liable for the wrongdoings of his subordinates:  

• If an employee violates any provision of a statute, or commits a criminal common law offence, the manager could be held criminally.  

• If a third party suffered loss or damage due to the employee’s negligence, he could lodge a civil claim against the manager.  

In both cases, the manager takes on the liability as if he himself has committed the wrongdoing.  

This refers essentially to what must be established in order to win a case.  

In a criminal case, the State must prove that the accused person is guilty beyond reasonable doubt.  This is a fairly strict test to meet, (because of the potentially severe consequences to the accused).  

Sometimes however, the State is assisted by legal presumptions in its favour, which can be established merely by submitting documents.  It is then up to the accused person (defendant) to prove his innocence by proving that the documents are not valid.  Legislation provides for such presumptions in favour of the State.  

In a civil case, the plaintiff must prove his case on a balance of probabilities i.e. he must show that his version of the matter is more believable than the defendant’s.  This test is not as strict as that of a criminal case.

A summons is a formal document instructing the defendant to appear at a certain court on a certain date.  In a criminal trial, failure to do this is treated as contempt of court, which itself is a criminal offence, and can incur severe penalties.  

In a civil trial, failure to attend would result in judgement in default being awarded to the plaintiff.  The defendant would automatically be liable to pay the full compensation sought by the plaintiff.  

The charge sheet sets out the crimes or wrongdoings and the accused or defendant as the case might be is asked to plead guilty or not guilty to any, or to all the crimes or wrongdoings listed on the sheet.  These two documents are served together to the defendant.

The summons may allow the defendant the option of paying a fine, and thereby avoid a court case.  Although convenient, such a decision must be carefully considered as it carries serious implications.

The purpose of any trial whether civil or criminal is for the courts to determine whether the person facing the charges acted as a reasonable person, or whether this person was negligent in the circumstances, and must therefore be found guilty, or liable as the case may be.  For this purpose, the courts would apply the Reasonable Man Test, which holds as follows:

• Could the harm have been foreseen or predicted?
• Could steps have been taken to prevent this foreseen or predicted harm?
• Did the person take these steps?

It is irrelevant what the “liable” person himself foresaw.  The focus is on whether he conducted himself as a reasonable person would have in his circumstances.  If this common law approach was translated into industrial circumstances, i.e. the definition of reasonably practicable, the test would be:

• What was the seriousness of the possible harm?
• What were the chances of the harm occurring?
• What was the level of risk involved in taking precautions?
• What cost was involved in taking the precautions?
• What difficulty was involved in taking the precautions?

A company can require a person to sign an indemnity whereby the company contracts itself out from being liable for loss, damage or injury the signatory may suffer while being on the company premises.  Regarding indemnities the following must be remembered:

1. Indemnities cannot apply to statutory liabilitye. the duties for the health and safety of persons which are imposed by legislation such as Occupational Health and Safety Acts can never be contracted out of.
2. Indemnities can only limit liability against possible civil actions, and even then only to a limited extent. The common law provides that one cannot use indemnities to contract out of possible liability caused by gross negligence or wilful misconduct towards the person (signing the indemnity).
3. Points (1) and (2) apply, no matter what the wording of the indemnity provides for, and no matter that the person may have signed it.