Case Note: Apportionment of liability

How does the Court apportion liability in instances where there has been contributory negligence by both parties? The Queensland Supreme Court’s decision in Smith v Randall[1] is one which considered this in light of two drivers who were found guilty of contributory negligence.

The Facts

At around 5:00am on 21 January 2013, Mr Randall was driving his utility vehicle west along the Gore Highway, outside of Toowoomba. Mr Smith was travelling behind Mr Randall in a milk truck.

Mr Randall slowed his utility vehicle to about 10kilometres per hour and moved toward the central line of the road without indicating. Mr Smith thought that the utility vehicle ahead was either broken down, travelling slowly or completely stopped. Mr Smith attempted to overtake as Mr Randall turned right causing the two vehicles to collide and the utility vehicle to roll. Both drivers were injured in the accident.

Both Mr Randall and Mr Smith brought actions in negligence claiming damages for the injuries they sustained from the accident. AAI Limited (Suncorp Insurance) was the compulsory third party insurer of both vehicles.

Both drivers owed a duty of care to take reasonable care in the control of their respective vehicles so as to prevent harm to the other (at [61]). It was reasonably foreseeable that if precautions were not taken that serious harm to another road user could result.

Mr Smith’s liability

Mr Smith gave evidence that he did not slow down more because he thought Mr Randall was either broken down, travelling slowly or completely stopped. He also gave later evidence that he thought the utility vehicle was going to turn left and ‘apex the turn’ (at [12]). His Honour found this evidence unconvincing given that the vehicle had slowed to 10 kilometres an hour. Further Mr Smith knew that  drivers on those roads did not always indicate their intention to turn.

The Court found that a reasonable person would have decelerated after they had realised the utility vehicle was slowing down, regardless of the driver not indicating. Mr Smith’s failure to take these precautions meant that he had breached his duty.

Mr Randall’s liability

The Court also found Mr Randall’s evidence to be ‘completely unconvincing’ (at [27]). Mr Randall had failed to use an indicator before turning and if he had looked in his rear and side view mirrors he would have seen Mr Smith’s headlights approaching. He had therefore made a right turn when it was unsafe to do so. Mr Randall claimed that the truck ‘seemed to come out of nowhere.’ However this was a result of his failure to check the mirrors. In light of this his Honour found that Mr Randall had driven without due care and attention.

Mr Randall was also intoxicated at the time of the accident with a blood alcohol content of 0.058% taken at the scene of the accident. The Court held that his intoxication had contributed to his failure to use an indicator and to drive with due care and skill. Therefore pursuant to s 47 of the Civil Liability Act 2003 (Qld) Mr Randall fell within the presumption of contributory negligence. Mr Randall was unsuccessful in rebutting this presumption.

The Court found that a reasonable person would have used an indicator and kept a proper lookout for other vehicles. Mr Randall’s failure to take these necessary precautions meant that he had breached his duty.

Apportionment

The Court explained that apportionment of liability between the two parties involves a ‘comparison of both culpability, that is the degree of departure from the standard of care required of the driver, and of the relative importance of the acts of the parties in causing the damage (at [74]).’ On the one hand Mr Randall was vulnerable to injury by a following car who did not slow down or who attempted to overtake him. On the other hand, Mr Smith was vulnerable to injury if he collided with a vehicle who obstructed his path whilst he attempted to overtake it (at [76]). The Court was of the opinion that both parties had to a substantial degree departed from the standard of care required of them and thus there was no real difference in culpability. The Court therefore apportioned liability equally between Mr Smith and Mr Randall.

Lessons

Following vehicles (like Mr Smith), are usually in a better position than leading vehicles (like Mr Randall) to avoid collision because they have a better view of what is in front of them. On this basis it should have been more difficult for Mr Smith to prove that Mr Randall had been negligent. However Mr Randall’s intoxication played a significant role in diminishing his advantage of being the leading vehicle. Drivers should remember whether they are the leader or the follower, they owe the same duty of care to take reasonable care in the control of their vehicle so as to prevent harm to the other.

For more information regarding contributory negligence

Please contact our Business Development Team or call us on (07) 3252 0011 to book an appointment with one of our specialist No Win No Fee Brisbane Lawyers today.

Footnotes

[1] [2016] QSC 191.

Directors signing on behalf of Companies are not personally liable

The recent Supreme Court  case of Reozone Pty Ltd v  Rene Santoro [2016] NSWSC 1383 confirms that a Director will not automatically be personally liable for a company’s liabilities if the guarantee was signed with a qualification on behalf of the company.

Facts

• • Elite Plant Hire Pty Ltd (Elite) was in the business of renting vehicles, plant and machinery.

• • Rene Santoro (Santoro) signed a Loan Agreement from Sydney Trucks and Machinery (STM)for the supply of machinery and vehicles to Elite.

• • The Loan Agreement provided that Santoro granted a charge over all her present and future real “estate/property” to secure payment of money owed by Elite to STM.

• • Santoro’s signature appeared on the Loan Agreement above the words “Customer Signature” and “Accepted for and on behalf of the Company Name Rene Santoro Director ELITE PLANT HIRE PTY LTD”

• • Santoro ‘signature did not appear on the Loan Agreement in the space below the words “GUARANTOR: I Rene Santoro …secure payment by granting a charge over all real estate/property held now or in the future”

• • Elite went into liquidation and STM claimed that Santoro charged her real property with payment of debts owed by Elite to STM

Issue

The Court considered the question whether by her signature on the Loan Agreement Santore indicated to a reasonable person in the position of STM that  she granted a charge over her personal real property as security for Elite’s debts

Decision

1. 1. The Court considered a number of similar cases and found that the question is whether objectively a party has indicated that they accept personal liability by the placement of their signature on the relevant document. In this regard the document should be considered as a whole and the circumstances in which it came to be entered into.
   2. The Court found that Santoro did not sign the contract without qualification in the execution clause and the only signature on the document was expressly a signature on behalf of Elite.  In those circumstances it would be natural for the other party to assume, where a party signs with a qualification as agent for the company and not otherwise, the signatory is not accepting personal contractual liability.

Lessons for Directors

Directors should always qualify their signature on documents executed on behalf of a company and include the words “for and on behalf of XYZ Pty Ltd” to avoid any inference that they are accepting personal contractual liability.  However, the Courts will decide any dispute in this regard by considering the contract as a whole and also the circumstances in which it came to be entered into.

Changes to ATO Director Penalty Regime – Personal liability of Directors for Company debts

The personal liability of directors for company debts has been significantly changed by recent amendments to the Tax Administration Act 1953 (Cth).

Former ATO Director Penalty Regime

Under the previous ATO Director Penalty regime, directors would be held liable for a company’s unremitted PAYG withhold tax (i.e. the estimated income tax withheld from employee salaries and director fees) if the director did not comply with an ATO-issued Director Penalty Notice (“DPN”).  The former regime effectively allowed directors to avoid personal liability by placing the company into administration within 21 days of receipt of the DPN.

New ATO Director Penalty Regime

Some of the material changes to the director penalty regime include:

1. 1. Directors will be personally liable not only for company PAYG withholding tax but also for employee superannuation guarantee charges.
   2. Directors will not be able to avoid personal liability by placing a company into administration where the company has not lodged its necessary returns and the PAYG and/or superannuation debts are at least 3 months overdue.
   3. A new director will not be held personally liable for PAYG withholding tax and superannuation obligations within 30 days of commencement as a director.
   4. Where the company has not remitted PAYG withholding amounts in respect of fees or salary paid to a director or associate, the ATO can prevent the director or associate from claiming a PAYG credit on their personal tax returns and levy PAYG withholding non-compliance tax on the director or associate (i.e. effectively, requiring the director to personally pay the PAYG income tax that ought to have remitted to the ATO by the company).

The new director penalty regime applies to private companies (“Pty Ltd”) and public companies (“Ltd”), including not for profit companies limited by guarantee.  In addition, committee members of incorporated and unincorporated associations are also liable under the director penalty regime.  The new regime came into effect on 29 June 2012 and, taking a conservative approach, applies retrospectively.

Particularly for new directors it is important that during the first 30 days after their appointment they undertake rigorous due diligence of the company’s PAYG and superannuation records.  If the director is not satisfied with the outcome of those enquiries he or she ought to take independent advice immediately with a view to resigning.

For more information regarding the Personal Liability of Directors for Company Debts

Please contact our Business Development Team or call us on (07) 3252 0011 to book an appointment with one of our Commercial Lawyers today.