In the recent case Brumder v Motornet [2013] EWCA Civ 195, the English Court of Appeal considered whether a company (and its insurers) can be liable to a sole director injured at work.
Facts
Mr Peter Brumder is the sole director and shareholder of Motornet Service and Repairs Limited ("the Company"). While working in the Company's workshop Mr Brumder's finger was severed by a hydraulic ramp. Mr Brumder raised an action for damages against the Company (and its insurers) on the basis that the Company was in breach of their statutory duty to maintain the hydraulic ramp in efficient working order.
Issues
The Company had breached their absolute statutory obligation to maintain equipment in efficient working order. Mr Brumder, as sole director and shareholder of the Company, was in breach of his obligation to exercise reasonable care to enable the Company to fulfil their obligations.
In those circumstances, the Court had to consider whether Mr Brumder, could bring a claim for damages against the Company, or whether the Company (and its insurers) could rely on the defence (established in Ginty v Belmont Building Supplies [1959]) that where a claimant's act is held to be the sole operative and effective cause of his injury, an action of damages will fail.
Decision
The Court dismissed Mr Brumder's claim and ruled that the Company could rely on the Ginty defence. They held that:
- As a director of the company, Mr Brumder should have been aware of his duties and responsibilities in relation to health and safety legislation.
- Mr Brumder was in breach of his duty as a director under the Companies Act 2006. He was therefore a wrongdoer and could not gain advantage from his own wrong.
- Any damages awarded to Mr Brumder could be argued by the Company to be recoverable from Mr Brumder due to his breach of duty.
- Relying on the Ginty defence did not involve lifting the corporate veil.
The full opinion can be read here.
Comment
The statutory obligation to maintain work equipment is an absolute duty. Sole directors and shareholders must take steps to ensure that they are fulfilling their statutory obligations.
Disclaimer
The material contained in this article is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.
