I have posted elsewhere that I thought that it was the pilot who was liable when a small plane causes damage with the pilot at the controls and so it was I thought, irrelevant and unnecessary and needlessly expensive to put a small plane inside a limited liability company in the UK.
…but today I read this on the BBC New website
Claims had been lodged under section 76 of the Civil Aviation Act 1982.
This states that where material loss or damage is caused to any person or property on land, by an aircraft while in flight, the owners of that aircraft are strictly liable."
I read it here : Latest BBC New story re Clutha Helicopter Crash
I wonder if we have some lawyers here who can comment knowledgeably. I don’t fancy losing my house if I crash my plane and cause damage in excess of my insurance liability, if that excessive damage can be saved by putting my plane inside a limited liability company in the UK.
Does anyone know the truth of this?
Howard
What does Section 76 say?
Isn’t the liability on the pilot and the operator, jointly and severally?
Then it would hang on whether the owner was regarded as the “operator”.
This touches on the “EASA FCL attack on N-regs” debate and the “operator” wording in there. In that context, one proposal I read regarding the definition of an operator was whoever decides where the aircraft will or will not fly that day. So a purely “sleeping partner” aircraft owner would not be liable. Of course you know that there is no such thing as a sleeping partner Director because a Director has various liabilities whether he is sleeping or not.
I have never heard of an owner being liable solely due to the ownership, but that doesn’t count for very much 
Nothing to do with the operator. Apols for fomatting but don’t know how to fix it.
OK; it says “owner”.
This UK Civil Aviation Act clause has been looked at before many times. It is the reason why syndicates like running via a Ltd Co. It protects the other “owners” (shareholders) if one of them crashes the plane and the insurance doesn’t cover it (which could happen due to reasons beyond the syndicate’s control e.g. a void medical).
I recall @bookworm posting on this very topic somewhere, at least 10 years ago.
The BIK issue (caused by running a Ltd Co) is avoided by all owners being pilots. This is what HMRC told me, and appears to have been established elsewhere. It could also be avoided – it is often claimed – by using an LLP, but opinions differ on whether an LLP offers the same level of protection. I don’t know anything about LLPs but it has been said that while a Ltd Co doesn’t need to make a profit at all (or indeed be set up to make a profit) in order to provide the “corporate veil” protection, an LLP has a stricter test.
Peter wrote:
It could also be avoided – it is often claimed – by using an LLP
It isn’t claimed, it is a fact that there is no such thing as BIK for an LLP (although there the new rules add it for salaried partners which would not be the case here).
but opinions differ on whether an LLP offers the same level of protection. I don’t know anything about LLPs but it has been said that while a Ltd Co doesn’t need to make a profit at all (or indeed be set up to make a profit) in order to provide the “corporate veil” protection, an LLP has a stricter test.
This is often stated (particularly here) but I have never seen any evidence of this stricter test. What is always important is the the operator is the LLP or company. If it could be that the pilot is the operator in a personal capacity then anything could be overturned.
My view on all of this is have good insurance and the issue is largely moot. If the insurance covers the pilot and owner then I don’t think it matters.
You do like having swipes at EuroGA, Jason.
Not at all Peter, but you seem to be the main person claiming this. Please just provide some evidence beyond heresay.
Surely it is ok to disagree with you? That doesn’t constitute a swipe at the forum which is excellent. You do seem to take it personally though which is not my intention.
Isn’t standard practice to go after the aircraft manufacturers to get the big $$$? (Slightly tongue in cheek)
Section 76 also identifies:
The owner would not be liable if the pilot had been negligent.
The owner can be indemnified.
If the aircraft is leased-out for a period of more than 14 days and the pilot is not an employee of the owner the liability is transferred to the individual/party to which the aircraft is demised.
Isn’t standard practice to go after the aircraft manufacturers to get the big $$$?
It would probably not work in the UK or Europe generally, unless the mfg is clearly liable.
From some US examples I have seen actual (rather than headline) details of, what happens there is that you go after the big names and collect money from anyone who will give it to you to get you off their back. But the amounts paid are usually far less than the headline amounts e.g. $1M final settlement on a $100M “headline” case.
I assume airline pilots are indemnified by their employer, otherwise nobody with more than 2p to rub together would want to be an airline pilot.
My view on all of this is have good insurance and the issue is largely moot. If the insurance covers the pilot and owner then I don’t think it matters.
Since insurance is mandatory in Europe, the whole point of this discussion is who is liable if the insurance doesn’t pay out. And while aviation insurers are usually very good at paying out, there are loads of reasons which could result in a non-payout.
I have spoken to a loss adjuster about this and the usual reason is that the flight was not legal to start with e.g.
The first one could easily happen in a syndicate because you can’t control the legality of each member. I have known instructors who claimed they had licenses/ratings which they didn’t have. One claimed to have an ATPL but just had a BCPL and no IR. Another claimed to have an IR but it was lapsed. This was in the context of them renting my plane, so it could easily happen in a syndicate, especially if (as is often the case) the syndicate is keen to sell the share because it enables them to ditch a troublesome member
In a syndicate, usually the admin is left to one person, so the second is also possible. If e.g. the US trustee dies then the CofR is invalid and the plane is grounded. This actually happened to my trustee some years ago. His brother inherited the trust a few days later (just as he told me would happen, when I asked him, obviously before he died). They had a few hundred planes and all were in theory grounded, but I am sure 99% of them never found out. But all would have been uninsured for the few days.
Very interesting observations, @Dave_Phillips
It’s funny because UK passenger liability requires pilot negligence, while pilot negligence removes liability from the owner. So, post-crash, you could have not only the estates of the passengers trying like hell to prove pilot negligence but also the owner
I wonder how much this “proving negligence” features in some headline actions e.g. the Mull of Kintyre Chinook crash. I am sure the size of the payout is really driving these processes, not the “desire to get the truth” which is what the families always say on TV.
