Common-sense ruling sets precedent for Company Directors claiming against themselves

Brumder v Motornet Service & Repairs and Aviva Insurance (Court of Appeal 14 March 2013)   

The claimant was the proprietor (sole director and shareholder) of Motornet, a small workshop dealing in vehicle servicing and MOT inspection.  He was injured whilst at work because of a faulty hydraulic ramp.   

The ramp was faulty because it had not been properly maintained, which meant Motornet was in breach of its absolute duty to provide safe equipment under the Provision of Use of Work Equipment Regulations 1998.    

The claimant (director) sued Motornet, seeking damages for breach of statutory duty, even though he was himself entirely responsible for that breach through having (as sole director) failed to ensure the ramp was safe.   

At first instance, the judge dismissed the claim, holding that the claimant had been 100% contributorily negligent.  The Court of Appeal also dismissed the claim but for different reasons, namely that the breach of statutory duty was brought about by the claimant’s own breach of his duty as director under the Companies Act 2006; and, accordingly the claim fell foul of the common law principle that a person cannot derive any advantage from his own wrongdoing.    

Comment  - Attempts by sole directors to claim from their company’s liability policy in this fashion are surprisingly common and hitherto there has been no conclusive authority with which to rebut them.  This decision, therefore, comes as a welcome application of common sense.  As the Court observed: “To say you are liable to me for my own wrongdoing is neither good morals nor good law”.