Owner liability

[Readability5]

We operate a PA28 as a group. We have an agreement we've all signed which governs the way we operate the aircraft and how we collectively make decisions. The agreement was accepted by the bank for the purpose of gross coding our engine fund account, but in reality it probably has little or no standing in law.

We're not a limited company. Each of us are registered with the CAA as owners with one as the trustee.

Probably the same as hundreds of syndicates up and down the country.

Another syndicate at our airfield has recently sold a share to a businessman who had his lawyer cast an eye over the agreement. The feedback was that if one of our number had an accident which caused considerable fatalities over and above the insured sum (as death and personal injury cannot be limited or excluded by law) then the other registered owners of the syndicate (including the possibly now deceased pilots estate) would be liable.

Is organising ourselves as a limited company the answer? Presumably litigation would then be directed at the owning company rather than the owners and although we'd lose the engine fund we'd keep our houses.

Does anybody have any experience of this?

Cheers
R5

[gasax]

Technically that may be correct in terms of liability - but only if the pilot was not wholly responsible.

however light aircraft have not killed any third parties (excepting a certain probably criminal recent act) going back to some time in the 1960s. So dying due to lightning (or winning the lottery) is a more relevent threat.

[astir 8]

Also check the legalities for a ltd company in terms of annual auditing requirements etc. They can add up costwise and be a general pain additional to the simple joys of aviation

[mm_flynn]

Originally Posted by gasax

Technically that may be correct in terms of liability - but only if the pilot was not wholly responsible.

I believe the owner is strictly liable for injury and damage caused to persons on the ground. This liability exist regardless of the actions of the pilot (Civil Aviation Act). However, it is very rare for a small aircraft to do a significant amount of damage to people on the ground. A Ltd company provides a level of protection from this risk.

[bookworm]

The feedback was that if one of our number had an accident which caused considerable fatalities over and above the insured sum (as death and personal injury cannot be limited or excluded by law) then the other registered owners of the syndicate (including the possibly now deceased pilots estate) would be liable.

This is correct. The Civil Aviation Act 1982 establishes a strict liability of owners of an aircraft for damage that the aircraft does to persons and property on the ground.

76 (2) Subject to subsection (3) below, where material loss or damage is caused to any person or property on land or water by, or by a person in, or an article, animal or person falling from, an aircraft while in flight, taking off or landing, then unless the loss or damage was caused or contributed to by the negligence of the person by whom it was suffered, damages in respect of the loss or damage shall be recoverable without proof of negligence or intention or other cause of action, as if the loss or damage had been caused by the wilful act, neglect, or default of the owner of the aircraft.

Having a limited liability company own the aircraft avoids personal liability, except of course where personal negligence contributes in some way to the damage.

[Flap40]

light aircraft have not killed any third parties (excepting a certain probably criminal recent act) going back to some time in the 1960s

I seem to remember a walker being killed by a glider at the Long Mynd about 15 years ago and a photographer at Husbands Bosworth more recently.

[Fuji Abound]

Is organising ourselves as a limited company the answer?

The owners are liable for an accident on the ground. A limited company or a limited liability partnership may be an answer.

However you may need to ensure you are aware of the risk of a BIK and you may conclude a LLP has advantages.

[IO540]

I thought an LLP must be set up with a view to making a profit and that rules it out for a syndicate.

Basically, a limited company protects the other members from the actions of the member who was flying.

It does nothing to protect the pilot. AIUI. He will always be liable for damage. If he is the owner, he will be strictly liable for ground damage (though this is historically extremely rare) but he is liable to passengers only if negligence can be nailed on him. Maybe there is a way in which a ltd co. might protect the pilot at the time? I can't see it.

I had a big run-in with the Revenue over BIK and apart from learning that they are a bunch of crooks who randomly attack anybody who they think they can get a cheque out of, it transpired that if all pilots are part-owners (of the ltd co.) then BIK does not arise.

[Fuji Abound]

No, once established there is nothing to stop an LLP becoming a non profit organisation and although in theory an application could be made to wind up the LLP I cant imagine why a third party would ever do so.

It may even suite the partners to operate at a small profit.

[Miles Magister]

As stated above, find a good aviation lawyer and set up a Limited Liability Partnership.

Then you can sleep at night.

MM

[JUST-local]

What?

I am just wondering what decisions, or group decisions would make anyone else in a group liable in the event of an accident?

An accident is just that! How could the owner/s of an aircraft be liable?
A fault with the aircraft?
Given the new contractual arrangments with EASA Part M its fairly clear who is responsable for what, where, when and how. If you keep your end up of the contract you should be bullet proof!

A fault with the pilot?
All the usual stuff - Medical, Licence ,Class rating, currency, flying within the licence, rules of the air, weather etc. If all this is good the pilot/ estate should be bullet proof!

Anything else is an act of god or an ACCIDENT!

If you have the right people in your group you should be ok - good luck with it

[Fuji Abound]

I am just wondering what decisions, or group decisions would make anyone else in a group liable in the event of an accident?

The list is endless, if, fortunately, the occurence rare.

The group member responsible for insurance "overlooked" to renew. Another group member is involved in an accident during this uninsured period. The group member "overlooked" to check the documents before accepting the aircraft, or was assured by email the documents were in hand. I am sure you can invent plenty of scenarios.

Most groups never have an issue and when they do the insurance takes care of it. I am not going to exagerate the risk, but if things go really wrong the additional protection of a limited liability may be worthwhile.

[JUST-local]

I see flying without insurance! Yes you could well be hunted down for that one.

I was under the impression this group was having meetings and did things properly?

I think even as a Ltd company with no insurance you would still be in trouble, its the law to have it as I'm sure we all know by now. Any directors etc. of the company may well be in a worse position if they allowed this to happen.

JL.

[FREDAcheck]

So dying due to lightning (or winning the lottery) is a more relevent threat.

I lie awake at night worrying about dying due to winning the lottery.

[IO540]

Given the new contractual arrangments with EASA Part M its fairly clear who is responsable for what, where, when and how. If you keep your end up of the contract you should be bullet proof!

You need to wake up to the reality of much of UK GA maintenance.......... tick the boxes but do half the work. Part M will change nothing. It will always be up to the aircraft owner to make sure the maintenance required for safe flight is actually done.

[Readability5]

Some great advice - thank you.

I think we do run well as a group, and we have a number of check/balances such as all the relevant dates for insurance, annual etc set in the booking system and on the accounts spreadsheet distributed monthly. We've never missed a thing that would make the syndicate (or operator) liable for an accident.

We do a lot of things as a group which, if you were hiring, would be the responsibility of the pilot in command to check.

Which is exactly my point - if I do everything I can as a responsible owner and syndicate member, but am let down by a third party, be it maintenance organisation, a pilot flying irresponsibly or just plain accident, it seems unfair that I risk losing my house.

So the odds of this scenario may be many millions to 1, but I have to accept that if it does occur I may be responsible, even though I did everything right and wasn't in the aircraft and able to influence the events immediately leading up to the incident. Doesn't really seem fair, does it?

R5.

[Fuji Abound]

Doesn't really seem fair, does it?

Well, I dont know.

If you decide to run a company or a partnership or an aircraft together with others you accept collective responsibility and set in place checks and balances to ensure no single person acts alone on crucial matters. Love him, or hate him, it seems strange we all like to blame Sir Shred when he was but a single member of the Board, albeit the CEO. One wonders what the rest of the Board were doing?

However, you are unlikely to come unstuck if you have properly delegated your responsibility. If the maintenance organisation is qualified to do the work but an accident arises as a result of their neglect the liability will be theirs, albeit you may want to ask to see their liability insurance before you contract them to work on your aircraft.

Perhaps it doesnt seem fair when a member accepts command knowing his medical has lapsed; are we in greater danger by assuming some sort of collective responsibility for ensuring every pilot is "fit" to fly. These are inevitably the joys and pitfalls of group ownership and, as ever, the reasons you may want to wrap the excercise in a veil of limited liability - just in case.

[bookworm]

I am just wondering what decisions, or group decisions would make anyone else in a group liable in the event of an accident?

An accident is just that! How could the owner/s of an aircraft be liable?

No "decisions" are required. The law makes the owner liable, without fault on the owner's part.

So the odds of this scenario may be many millions to 1, but I have to accept that if it does occur I may be responsible, even though I did everything right and wasn't in the aircraft and able to influence the events immediately leading up to the incident. Doesn't really seem fair, does it?

I can't say I really disagree. The liability is often seen as a quid-pro-quo connected to the trespass/nuisance exemption just before it:

76. Liability of aircraft in respect of trespass, nuisance and surface damage. —
(1) No action shall lie in respect of trespass or in respect of nuisance, by reason only of the flight of an aircraft over any property at a height above the ground which, having regard to wind, weather and all the circumstances of the case is reasonable, or the ordinary incidents of such flight, so long as the provisions of any Air Navigation Order and of any orders under section 62 above have been duly complied with and there has been no breach of section 81 below.

So there ya go: You can annoy the hell out of people by buzzing around over their land to your heart's content with impunity, but if you drop onto their property you're responsible for any damage.