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BFA506 Business Law

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Question:

Sam Speed runs a business which provides a re-fuelling service for aircraft at the regional airport at Albury in New South Wales. Sam stores his fuel at a depot he owns in an underground tank. One day, Sam receives a tanker load of 10 000 litres of fuel from his supplier. The fuel is pumped into Sam’s underground tank, and Sam puts a dip-stick into the tank to check that the correct amount has been delivered. Unfortunately, Sam is distracted by a phone call, and forgets to screw the lid back onto the tank, with the result that dust enters the fuel during the night, contaminating it.

The next day, still unaware of what has happened, Sam refuels three light aircraft with the fuel. Each aircraft is owned by a different company, White Ltd, Blue Ltd and Green Ltd.

The aircraft owned by White Ltd takes off successfully, but about 2 km from the end of the runway the engine cuts out because of the fuel contamination and the aircraft, which is worth $ 1 million, crashes onto a road and is totally destroyed, although the pilot miraculously survives without any injury. 

The aircraft owned by White Ltd also destroys a Mercedes Benz car worth $ 75 000 owned by Ms Susan Swift, who usually never parks her car on that street but did so that day because the parking lot she uses was full.

Sam hears on the radio what happened to the aircraft owned by White Ltd, and that the pilot reported a problem with the fuel system to air traffic control moments before the crash. Fearing that the accident might have been due to contaminated fuel, Sam runs across to the aircraft owned by Blue Ltd, waving his arms to attract the attention of the pilot, who is just about to start his engine. Sam tells the pilot that there seems to be something wrong with the fuel and that it could damage the engine, and the pilot decides not to take off for Sydney.  There are no other aircraft able to fly to Sydney, and because the aircraft owned by Blue Ltd does not take off, one of the passengers, Ms Mary Harper, who is a maritime engineer, is unable to get to Sydney to certify that a cargo ship owned by Safmarine Ltd is seaworthy, with the result that Safmarine Ltd loses $ 250 000 in profit because its vessel cannot put to sea that day. 

After alerting the pilot of the Blue Ltd plane, Sam also runs to the aircraft owned by Green Ltd and gives him the same information about the fuel, but the pilot says “Look, mate, I understand what you are saying, but I don’t have time for this. I’m going to take off anyway.  I have to get to Melbourne by 10 am”, and with that the pilot closes his window and taxis towards the runway. As the pilot starts his take-off run, the aircraft’s engine cuts out, it swerves across the runway and suffers $ 200 000 worth of damage.

Accident reports confirm that the aircraft owned by White Ltd and Green Ltd crashed because their engines were damaged by the contaminated fuel. 

Advise Sam on what liabilities he may have to all potential plaintiffs who have suffered loss under the above facts.

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