What Is Corporate Derivative Liability?

what is corporate derivative liability
Speeding can result in significant fine and the loss of businesses.

What Is Corporate derivative liability?

CASE STUDY: SAPOL vs The Trustee for FURLER FAMILY TRUST

Companies are being reminded to take speed restrictions seriously, following the SA State Government increased penalties, for heavy vehicles travelling on the South-Eastern Freeway

7th September 2019
Background

  • The company in question used small mini buses to carry out sight seeing tours, which were not understood by the company to be classified as Heavy Vehicles.
  • The bus was driven by a company employee, and it was accepted at the time of the offence that the mini bus was under the signposted speed limit for cars and light vehicles.
  • The mini bus driver was caught travelling at 73 kilometers an hour thinking his bus fell under the 4.5 tonne threshold, meaning he could travel up to 90 km/h.
    In May 2019 the State Government introduced increased penalties for heavy vehicles travelling on the South-Eastern Freeway, after recommendations by the South Australian Coroner after horrific incidents in which out of control heavy vehicles had claimed innocent lives.

Following an offence and expiation notice issued to the Furler Family Trust, and confirmation by the managing director to confirm the actual fine with the fines call center. It was confirmed that the fine was indeed $26,096, simply because the business could not confirm the driver of the vehicle in question on the day of the offence. If the driver is nominated the fine for the driver would normally be $1,036 plus six demerit points and an automatic six-month license disqualification for a first offence.

The businesses managing director, Mr Coull said “(My) employee thought he was doing 17km under the speed limit and he normally drives a slightly smaller bus that isn’t subject to this new law. Of course, as a small family business owner we value our employees, and also feel in-part responsible for not making sure he (employed driver) knew the new legislation.”

The businesses managing director, Mr Coull went on further to state that “The other issue is we would need to find and train a new guide which is very time consuming and costly.”

What does this mean?

A $26,096 fine is a serious fine for any business to accept responsibility for and often we find that the clients which engage MAEZ are potentially facing court action as a result of a driver or operator within their Supply Chain.

Training can be inexpensive and MAEZ Safety Training has been rolled out inexpensively to many businesses and hundreds of employees digitally, in the confines of the employees own home or place of work to offer flexibility. MAEZ training has helped change the culture of organizations to reduce the legal liability and reduce pressure on the Supply Chains to enforce a training regime that reduces our client’s legal liability.

MAEZ has also helped dozens of businesses address risks found through Gap Analysis that would have exposed the businesses to serious financial penalties, easily exceeding a fine of $26K. Considering the financial cost of a Gap Analysis for any one of our clients, it is a far cry from a $26K fine or the legal liability of any one of the three hundred and forty one Heavy Vehicle National Law Penalties, which can easily exceed $100K for any business with transport task or a business that influences any transport task.

MAEZ has helped dozens of businesses identify and remove risks from their business, by helping those businesses understand the risks they pose under the Heavy Vehicle National Law, by virtue of their actions or inactions within their business operations.

Corporate derivative liability is where an Executive knew or ought reasonably to have known of the conduct constituting an offence, or that there was a substantial risk that the offence would be committed.

The owners of the Fleurieu tourist company within this article, should have known about the risks within their organisation and allowed suitable budget and resources to prevent such an issue from arising as a result of one of their truck drivers speeding.

MAEZ training would have prevented the ‘unknown’ in this case and allowed the business to fully understand its risks, giving the business the opportunity to reduce its liability under the act.

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