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Brumder v Motornet Services & Repairs Ltd & Another, Court of Appeal, 14 March 2013

6 September 2013
The issues

Boyle v Kodak – employer liability – contributory negligence – claim by sole director and share holder of company against company – Provision & Use of Work Equipment Regulations

The facts

The claimant was the sole director and share holder of the defendant company which specialised in servicing vehicles. On 8 November 2008 the claimant was trying to climb down to ground level from a raised hydraulic ramp in the companies workshop after the compressor in the ramp mechanism failed. As he did so, his left ring finger was severed and could not subsequently be re-attached. The claimant had been helping Mr Lewis, an employee who ran the workshop for the company. Mr Lewis needed assistance and the claimant offered to help. The cause of the failure was that the reset button in the compressor had triggered as the result of a failed fuse. The claimant had set up the company in January 2006 with another director. That director had left the company in 2008. Before that director left, both directors had joint responsibility for health & safety. The running of the workshop was delegated to Mr Lewis but not the running of the company. Mr Lewis was not involved in health & safety responsibilities. The claimant had said that he was not aware of health & safety regulations and did not carry out a risk assessment. He said that he did not think it was necessary for him to familiarise himself with the regulations because he thought that was Mr Lewis’ responsibility.

The judge found that the process in relation to health & safety within the workshop was reactive rather than proactive. Maintenance of the ramp and compressor was reactive. No regular inspections or servicing was carried out of the ramp. The judge refused to lift the corporate veil and did not accept that this was a case where he should disregard the fact that the company was a separate entity and dismissed the claim because the claimant was its director and it was his fault. He found the defendant company in breach of its obligations under the Provision & Use of Work Equipment Regulations regulation 5 to ensure that work equipment was maintained in sufficient working order and in good repair. However, he found that the claimant had had the responsibility for the breach of regulations and therefore made a finding of 100% contributory negligence and dismissed the claim. The claimant appealed.

The decision

It was common ground following Anderson v Newham CFE that the finding of 100% contributory negligence was wrong in principle. Nonetheless the defendant employer had a defence where the claimant’s damage resulted from his own fault. See Ginty v Belmont Building Suppliers Ltd and Boyle v Kodak. The court had taken a strict approach to the availability of the defence. The burden is on the employer to prove that he did all he could to ensure compliance with the duty. Only if the employer does, will he have a defence against the injured employee whose act or omission put him in breach of the regulation. This case was different from both Ginty & Boyle in that in those cases the employer and the employee were in breach of duty under the same regulations. In this case the duty under regulation 5 of the 1998 regulations lay only on the company and not on the claimant. This was not an essential element however. Although most of the cases were ones in which both employer and employee were under the same statutory duty, there were examples of an employer escaping liability where the duty the employee had breached was different from and in some sense independent of the duty the employer has breached (See Sherman v Nymboida Collieries Pty Ltd 1963).

If a director/claimant was not in breach of a relevant duty to the company the company could not invoke the Ginty / Boyle v Kodak defence. The most likely candidate for a relevant duty was the claimant’s duty to the company to exercise reasonable care, skill & diligence in relation to the company’s statutory obligations. That duty is now contained in section 174 of the Companies Act 2006. Where the director/claimant paid no attention whatsoever to health & safety issues, and abrogated his responsibilities as owner and director of the company, he would be in breach of his duty as a director under Section 174 (2) (a) of the 2006 Act. The claimant was therefore a wrongdoer and it was a principle of the common law that a person could not derive advantage from his own wrong. As a general rule, remedy for breach of a director’s duty of care, was compensation for the company by the director’s negligence. This in principal would be the damages payable to the injured party. There was no policy reason precluding such a recovery. For these reasons, the company was entitled to rely on the Ginty/Boyle defence. There was therefore no need to consider apportionment. Claim dismissed and respondent’s notice upheld.

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