Sub-Standard Care, Treatment, or Surgery

Failed/Erroneous Diagnosis and Treatment

Failure to Treat and Erroneous Treatment

Sub-Standard Care, Treatment, or Surgery

Gross Negligence and Lack of " Informed Consent"

Unauthorized Treatment and Lack of " Informed Consent"

11 What defences are allowed to medical malpractice?

As malpractice is a form of negligence, defenses that are generally allowed against general claims of negligence are also viable against claims of malpractice. These might include the following defenses:

• The patient was also negligent and caused much of his or her own harm

• The patient failed to mitigate his or her own harm or damage, or made the harm or damage worse

• The patient gave an informed consent and therefore assumed the risk of any complication

or untoward effect

• The alleged harm or damage was an unavoidable " known risk" that occurs without negligence

• The patient failed to disclose important information to the doctor

• The patient's prognosis or condition was not worsened by the alleged negligence

• The patient engaged in some intervening or superceding conduct following the alleged malpractice that broke the chain of events linking the malpractice to the patient's damages or harm

12 Who is held liable under the legal theory of ‘premises’ liability’?

The legal theory of “premises liability" holds owners and occupiers of property legally responsible for accidents and injuries that occur on that property. The kinds of incidents that give rise to premises liability claims can range from a personal injury on a public sidewalk to an injury suffered on an amusement park ride.

The liability of owners and occupiers of property will vary depending on the legal rules and principles in place in the state where the premises liability injury occurred. In some states, the court will focus on the status of the injured visitor in determining the liability of the owner or occupier. In other states, the focus will be on the condition of the property and the activities of both the owner and visitor. (Note: an occupier or possessor of land, such as an apartment tenant, is treated in the same manner as a landowner in many situations.)

13 Will you describe the legal status of visitor, invitee, licensee, or trespasser?

In states that focus only on the status of the visitor to the property, there are generally four different labels that may apply: invitee, social guest, licensee, or trespasser. An invitee is someone who is invited onto the property of another, such as a customer in a store. This invitation usually implies that the property owner/possessor has taken reasonable steps to assure the safety of the premises. A licensee enters property for his own purpose, or as a social guest, and is present at the consent of the owner. Finally, a trespasser enters without any right whatsoever to do so. In the case of licensees and trespassers, there is no implied promise that reasonable care has been made to assure the safety of the property.

In many states that look to the legal status of the injured person, the trend is toward distinguishing only between those lawfully on the property (invitees, social guests, licensees) and those on the property illegally (trespassers).

14 What are the two statutes that govern the occupier’s liability in the UK?

Liability in this area is governed by two statutes. Where the plaintiff was a visitor to the premises, the Occupiers' Liability Act 1957 applies. Where the plaintiff was a trespasser, the Occupiers' Liability Act 1984 will be applied. The fact that the law is statute based means that attention must be paid to the wording of the relevant sections in answering questions.

A common factor in either action is the defendant, who will be the occupier of the premises. There is no statutory definition of occupier so it is necessary to turn to the common law. The term occupier is rather misleading, as it is the person who controls the premises, rather than the physical occupier, who is responsible.

1. Rights of way

Persons who lawfully exercise a private right of way are not treated as visitors and are therefore not covered by the 1957 Act. Such people are now covered by the Occupiers' Liability Act 1984 s l(l)(a) and will be owed a duty of care under that Act.

Persons exercising a public right of way are not treated as visitors. Neither are they covered by the 1984 Act, as s 1(7) of that Act specifically excludes them. Any duty owed to such a person would therefore have to be at common law. The owner of land over which a public right of way passes is under no liability for negligent nonfeasance towards members of the public using it.

2 Implied permission

A person who claims that he had implied permission to enter premises must prove that there was such permission.

There is implied permission for a person to enter premises and state their business to the occupier. If the occupier then asks them to leave, they must be allowed a reasonable time to leave, after which they will become trespassers. Reasonable force may then be used to eject them. This presumption can be rebutted by the occupier putting up a notice specifically excluding certain types of person, such as salesmen and politicians.

The occupier may place limitations on the permission to enter. A person who is allowed to enter one part of a building only will become a trespasser if he enters another part: 'When you invite a person into your house to use the stairs you do not invite him to slide down the bannisters. However, any usage incidental to that permitted will be covered. A person entering a public house will be allowed to enter the toilet.

15 What defences are raised by the occupier?

Defences

1 Volenti

A defence of volenti non fit injuria is provided by s 2(5). 'The common duty of care does not impose upon an occupier any obligation willingly accepted as his by the visitor.'

This defence is covered by the general principles of volenti. The plaintiff must act voluntarily, so any person who has no choice as to whether he enters premises is not volenti.

Knowledge of the danger does not amount to the defence.

2 Contributory negligence

This defence will apply in actions under the Act, and a visitor who has failed to use reasonable care for his own safety and that failure was a cause of his damage will have his damages reduced. Section 2(3) provides that in considering the common duty of care, the circumstances include the degree of care and want of care which would ordinarily be looked for in such a visitor.

3 Exclusion

Section 2(1) states:

An occupier of premises owes the same duty, the 'common duty of care' to all his visitors, except in so far as he is free to and does extend, restrict, modify or exclude his duty to any visitor or visitors by agreement or otherwise.

The reference to agreement or otherwise means that the duty can be excluded etc. by means of a contract term or by a notice communicated to the visitor. There are certain restrictions on the occupier's freedom to exclude etc.

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What is the basic way of attracting investment in companies limited by shares?

In companies limited by shares, the basic way of attracting investment is through the sale by the company of its shares. The initial shareholders must pay the company (in cash or other assets) for the shares issued to them; similarly when the company subsequently issues shares. In return, the shareholders become members of the company, and the amount contributed by shareholders to the company's resources is the ‘share capital’.

In its memorandum, a company must state its nominal capital. This is the face value of the total number of shares which the company has, at present, authorized itself to issue. The nominal (or ‘authorized’) capital may, for example, be £ 60 000, divided into 120000 shares of 50p each. This does not necessarily mean that all of these shares have been allotted and issued yet; only that the company may issue them. (Strictly, a share is ‘allotted’ when the applicant is informed that the company has accepted his bid for it, and ‘issued’ when the requisite entry is made in the register of members.)

What is the share capital? Can a share be issued at a discount? Can shares be transferred by the holder?

A fund representing the contributions given to the company by shareholders in return for their shares. These assets are intended to protect the interests of any creditors in the event of a limited company encountering financial difficulties, and there are rules under the Companies Act 1985 to ensure that this fund is not reduced unless it is absolutely necessary. Each share is assigned a nominal or par value to enable each holder to measure his interest in and liability to the company. In a company limited by shares (see Limited company) the liability of a shareholder is limited to the unpaid purchase price of the share. If a company is able to command a market price for a share that is above the nominal value assigned to it, the difference is said to represent a premium. The total number of shares and their nominal values must be stated in the capital clause of the memorandum of association and represents the company’s authorized share capital.

A share must not, however, be issued at a ‘discount’, at a price less than its nominal value.

Once issued, shares can be transferred by the holder. For example, if the business prospers, the shares may increase in real value, and a member may wish to sell his shares to someone else (at a profit to himself, not the company). The company’s capital is maintained; the shares are simply held by someone new.

What types of share can companies issue? What are the main differences between ordinary and preference shares?

Ordinary shares are the most common. They are entitled to a dividend, if and when the company declares one from profits (usually once or twice per year). They normally give rights to attend meetings, and carry one vote per share. Sometimes, shares are issued without voting rights, although they do still participate in dividends; holders do, therefore, have a return on their investment, but cannot directly limit the control by other shareholders over the company. If non-voting shares are issued in a listed public company, the Exchange will require that they be identified as non-voting when traded. Exceptionally, the articles may allow shares with multiple votes.

In Bushell v. Faith (1970), a director held one third of the ordinary shares. The articles, however, provided that on any resolution to remove that director, his shares should then carry three votes each. This was held valid, even though it defeated an attempt to sack him.

Preference shares are entitled to a fixed rate of dividend before anything becomes available for ordinary shareholders. However, even preference shares can only be paid out of profits: no profits, no dividend. Moreover, the preference only applies to dividends. Unless the articles provide otherwise, preference shareholders receive no preferential repayment of capital on a winding up. Normally, the articles give no voting rights to preference shareholders.

Can a company reduce its share capital?

Redeemable shares are an exception to the general rule that a company must not reduce its share capital, and they are mentioned again later under ‘capital maintenance’.

Can companies offer extra shares instead of a money dividend?

Scrip is a term used for ‘bonus’ shares issued to existing holders when certain reserve funds are turned into capital. It also describes extra shares which some companies offer to existing holders instead of a money dividend.

How can a private (public) company find buyers for its shares?

Private companies must not offer their shares for public sale. An attempt to do so would be a criminal offence by the directors. The articles of a private company sometimes give existing members the right to buy the shares of a member who leaves.

By the 1985 Act, section 89, for both public and private companies, if it is proposed to offer new shares for cash to specific buyers, the existing members must first be given pre-emption rights in proportion to their existing holdings. They must have at least 21 days’ notice, and this can give some protection to their existing rights in the company. This can, however, be excluded by the articles or by a special resolution. Alternatively, the articles may give pre-emption rights if shares are offered other than for cash, for example in exchange for other assets.

A private company must find buyers for its shares by private contracts with specific buyers, and there may be pre-emption rights. A public company has more possibil­ities. It may ‘place’ shares with specific buyers, usually with help from agents such as issuing houses, banks or stockbrokers. Sometimes the shares may be bought by the issuing house itself with a view to its finding specific buyers from itself. If the company wishes to offer the shares for public sale, it might seek to have its shares ‘listed’ or ‘quoted’ on a Stock Exchange.

How are shares in a public company paid for?

In a public company, if less than the statutory minimum amount is actually paid (one quarter of the nominal value and the whole of any premium), the share is still validly issued, but the buyer is liable to interest on the deficit. The company and officers responsible commit criminal offences. If shares are issued at a discount, similarly, they can still be valid, but the holders are liable to interest on any short-fall, and the issuers commit criminal offences.

If shares in a public company are to be paid for other than in money, the non-money consideration must be independently valued. A valuer’s report must be sent to the company, and a copy to the proposed buyer, less than six months before the allotment. Certain things must not be accepted by a public company in payment for its shares: any undertaking for the future which might be performed more than five years after the allotment; and a promise that any person will do work in the future. If such promises are accepted, the promisor remains bound by the promise, but must also pay the cash price of the shares.

What is a debenture? Distinguish between secured and unsecured debentures.

A document that acknowledges and contains the terms of a loan (usually to a company_. The loan may be unsecured (a naked debenture). More usually, however, the debenture will be subject to a charge and will contain the terms of the charge (e.g. the right to appoint a receiver or a crystallization event). Debentures may be issued to a single creditor or in a series to several creditors in order to raise finance for a company. In the case of the latter, a trust may be created and contained within the debenture in favour of such creditors. This enables the company to appoint a trustee for debenture holders to ensure that the financial activities of the company are managed in the interests of the group of creditors. Finance raised by the issue of debentures is known as loan capital. This is contrasted with share capital, the holders of which are company members.

Unsecured debentures

Debentures need not be secured by any charge on the company’s property. For example, in a very small company, a creditor such as the bank might seek a personal guarantee from a director or major shareholder, and this could be secured by a mortgage of the director’s own house. This, of course, is not a charge on the company’s assets. Moreover, if the house is jointly owned by husband and wife, the transaction might prove to be voidable by the spouse under the Barclays Bank v. O’Brien series of cases today. Therefore, some charge given by a company over its own assets will make lenders more likely to lend, particularly over a long term.

Debentures secured by a fixed charge

The company can declare a fixed charge on a specific item of its property. A mortgage of one of the company’s buildings is a debenture of this kind; so is a charge on a specific piece of machinery. A charge on the company’s present and future book debts may be fixed if it prevents the company from using the debts without the chargee’s consent.

What is a charge? How is it created?

An interest in company property created in favour of a creditor (e.g. as a debenture holder) to secure the amount owing. Most charges must be registered at the Companies Registry. A fixed charge is attached to specific assets (e.g. premises, plant and machinery) and while in force prevents the company from dealing freely with those assets without the consent of the lender. A floating charge does not immediately attach to any specific assets but “floats” over all the company’s assets until crystallization. Until this point the company is free to deal freely with such assets; this type of charge is suitable for circulating assets (e.g. cash, shock in trade), whose values must necessarily fluctuate. In the event of the company not paying the debt the creditor can secure the amount owing in accordance with the term of the charge. If the company goes into liquidation the order of repayment of debts laid down under the Insolvency Act 1986 is that fixed-charged holders are paid before floating-charge holders.

Distinguish between fixed and floating charges.

Debentures secured by a floating charge

A company can also give a lender a ‘floating’ charge, which is an equitable charge on some or all of the present and future property of the company.

1. It is a charge on a class of assets of a company, present and future.

2. This class is, in the ordinary course of the company’s business, changing from time to time.

3. By the charge it is contemplated that, until the charge holders take steps to enforce it, the company may carry on business in the normal way so far as concerns the assets charged.

The charge will normally relate, therefore, to assets which are changing constantly, such as the company's stock-in-trade. The company must be left free to deal with the assets as it pleases in the course of its business (contrast Re Keenan Ltd, above). The charge only becomes attached to any item if and when the charge ‘crystallizes’, whereupon it becomes a fixed charge on all current items which it covers. A charge crystallizes when:

(a) the company passes a voluntary winding-up resolution;

(b) the court petitions for winding-up;

(c) a receiver is appointed by the court;

(d) a receiver is appointed by creditors under any powers given by their debentures;

(e) anything else occurs which, under the terms of the debenture, will cause the charge to crystallize; for example, the company defaults in paying interest.

Floating charges can be advantageous both for the creditors and the debtor company, in that they give the creditor some security without inhibiting the activities of the company (unless one of the danger signals in the above List shows itself). For private traders and unincorporated associations, floating charges are rendered impracticable by the Bills of Sale Acts 1878 and 1882 (which do not apply to company borrowers).

However, a floating charge can have some weaknesses. For example, rapidly changing assets like stock-in-trade can quickly reduce in value as security. There can also be difficulties regarding priority of charges if the company is wound-up (see later).