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Veronika Odrobinová | March 21, 2023

Direct liability of a managing director (partner) of a limited liability company for damage caused to a third party

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With effect from 1 January 2014, according to the new article 2914 of the Civil Code[1], “whoever uses a representative, employee or other helper in the course of his activities shall compensate for the damage caused by him in the same way as if he had caused it himself”. However, if the other person has undertaken to carry out the activity independently, he or she is not considered an assistant. This section then goes on to provide that, in the event of negligent selection or inadequate supervision of the other person, the person who selected the other person shall be liable for the performance of his duty to indemnify.

The legal regulation in article 2914 of the CC is based on the fact that the person who benefits from the activity of the assistant should also bear the risks for his activity. Other reasons for this legislation include the presumption that the principal will usually be wealthier, i.e. the injured party is more likely to attain compensation for damage. The law also assumes that the principal person is in a position to better assess and prevent the risks associated with his or her activities, or the activities performed for him or her by the assistant.

The Supreme Court considered if the legislature intended to exclude the liability of the assistant altogether. On the one hand, no support for its exclusion can be found in the law. On the other hand, however, the wording of the relevant section, in particular the part of the first sentence saying “shall compensate for the damage caused by him in the same way as if he had caused it himself”, suggests the exclusive liability of the principal, i.e. that no one else is liable for the damage. Applying the language interpretation of article 2914, the Supreme Court held that both conclusions could be reached, i.e., the sole liability of the principal and the liability of the auxiliary for damage.

Finally, the Supreme Court summarized and determined that the current legislation does not preclude the victim claiming damages against the helper. The decisive factor in individual cases will be the degree of autonomy of the auxiliary in performing the activity for the principal, i.e. whether he performs the activity under the instructions or orders of the principal, under his appropriate control and in a subordinate position to him. If the helper has no or very little autonomy in the performance of the activity, only the principal will be liable for compensation. However, if the helper carries out the activity on his own behalf and under his own responsibility, he shall be liable for the damage himself. Should the principal, acting in his own name and under his own responsibility, choose this independent helper carelessly or should his supervision be inadequate, he shall be liable for the fulfilment of the helper’s indemnity obligation and the injured party may also apply to the principal for compensation.

In its earlier case law, the Supreme Court pointed out that according to the Labour Code, dependent work is work that is performed in a relationship of superiority of the employer and subordination of the employee, on behalf of the employer, according to the employer’s instructions, and the employee performs it personally for the employer. According to the Supreme Court, this statutory definition of dependent work clearly implies that the employee is bound to the employer, and if the employee did not deviate from this framework during the accident, the situation must be interpreted, in accordance with the wording of the first sentence of article 2914 of the Civil Code, in such a way that only the employer is liable for the damage as if it had been caused by the employer, even though the damage was caused by the personal activity of the employee whom the employer used for the activity.

In its decision 25 Cdo 1319/2022, the Supreme Court assessed the liability of an assistant for damage in the event of concurrent functions, i.e. in a situation, where the assistant is both an employee and the managing director (and sole shareholder) of the company. Defendant no. 1, as an employee, one of two managing directors and majority shareholder of the company, caused a traffic accident and thus damage to a third party, which occurred during his journey to work in a car operated by the company in question. In this case, the injured party brought an action for damages not only against the insurance company (defendant no. 2) but also against defendant 1.

Here, the defendant was not only an employee at the time of the accident, but was also a managing director and partner. It is therefore not possible to view the defendant solely as an employee in a subordinate dependent position since, as managing director and partner, he himself managed his own work activities and decided to undertake the business trip. Therefore, the defendant cannot be characterized as a helper within the sense of the first sentence of article 2914 CC, for which the employer is exclusively obliged to pay the injured party.

[1] Act No. 89/2012 Coll., Civil Code

Author: Veronika Odrobinová, Tomáš Přibyl