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Public liability is part of the law of tort which focuses on civil wrongs. An applicant (the injured party) usually sues the respondent (the owner or occupier) under common law based on negligence and/or damages. Claims are usually successful when it can be shown that the owner/occupier was responsible for an injury, therefore they breached their duty of care.
The duty of care is very complex, but in basic terms it is the standard by which one would expect to be treated whilst one is in the care of another.
Once a breach of duty of care has been established, an action brought in a common law court would most likely be successful. Based on the injuries and the losses of the applicant the court would award a financial compensation package.
In Asia, the law has not developed to the same extent, although the law does recognise negligence. Most professionals[who?] are predicting this development to occur rapidly and within the next ten years.
The law of insurance and public liability
In the course of managing any property, you are obliged to comply with laws and statutes administered by government and municipal bodies. These bodies impose various liabilities of which the property owner/manager should be aware.
The most common examples of statute liability are in areas where you are required by law to effect insurance, e.g. workers' compensation and motor vehicle compulsory third party.
Property, hotel and operations managers should become familiar with the various types of contracts involved in commercial and retail activities. These cover a wide field but the more significant contracts are:
- the head lease or the management agreements
- tenancy and casual leasing agreements
- contracts with independent contractors for cleaning, lift and escalator maintenance, air conditioning and fire protection maintenance, etc.
The major contractual liability from an insurance viewpoint is undoubtedly found in head lease and management agreements. These require the manager or head lessee to fully maintain, repair and replace the property, if damaged, until expiration of the agreement or lease.
Furthermore, the contracts usually require an indemnity to the owner against liabilities imposed upon the business for injuries and property damage arising out of the use, occupation or management of the property.
Every contract contains covenants imposing responsibilities on one or other of the parties. These should be carefully examined to ensure they are not unduly onerous
Degrees of duty of care
Owner/occupiers are required to provide a certain level of care. The duty of care is not the same for all people. It is dependent on a number of issues. To assist in establishing the duty of care required it is more clear to divide into groups the individuals who your premises and for what reasons. If we take an example of a large shopping complex the following groups of individuals would attract different levels of care.
These are people who by some form you have invited into your complex. This invitation can be through marketing and advertising, or it can be implied simply because you are a shopping complex or hotel. The greatest duty of care is owed to invitees who, in the case of shopping centres and hotels, are mainly customers, contractors and sub contractors. They are there because of the invitation you extend to them. The duty of care owed to them is relatively simple.
You must take reasonable care to ensure the premises are safe. They in turn must take reasonable care for their own safety.
If however an invitee spends money for a service, i.e. forms a contract with you, your duty of care is increased. An example of this could be a games arcade where the invitee pays for a ride on a motorcycle game. If as a result of playing this game the invitee is electrocuted, you have breached your duty of care and will most likely be found to be liable for any damages.
If, however, the reason for the electrocution was not due to your negligence but a product defect, and you have done all that is reasonably expected of an arcade owner to detect and fix this defect, you may proceed to sue the supplier of the game. This is because, the supplier also owns a duty of care to the arcade owner as well as a contractual duty to provide safe, functioning equipment.
These are people who enter premises with the permission of the occupier but, unlike invitees, do so without any economic advantage to the occupier. They come in the hope of doing business with you or your tenants and include such people as salesmen, commercial travellers, etc. The duty of care owed to licensees are not quite as extreme as in the case of the invitees.
These are classified as people who intrude onto property without permission. The degree of care owed to trespassers, although slight, nevertheless exists particularly in situations where a source of danger is deliberately created or where small children are involved. An example would be where live wires were left exposed after the centre had closed. If some children entered the premises for some reason, despite that reason, if they were injured the owner of the centre would be liable.
Types of claims
The most common types of claims fall into a small number of categories:
- slips, trips and falls—these make up the majority of claims;
- stress and anxiety, due to hold ups, elevator malfunction, etc.; and
- falling objects, i.e. striking against or struck by an object
In the event a third party articulates or formulates a demand or application of damage against you, public liability insurance will cover the cost of the claim (McMahon, et al. 2011).