VIC Claim Against Former Employer by Client Also Addressed to Me

[Philjof]

I worked for a company as contractor from 2010 until May 2014. I have just been sent a letter from a solicitor acting on behalf of a client that I dealt with while working for the company. They are claiming in excess of $500 000 in losses/damages.

The letter is addressed to myself, the 2 company directors and the company. The demand at the end though is for the company to settle the claim within a specified timeframe.

What if any is my liability here and what action if any should I be taking to protect myself?

I should mention that I myself am most likely going to be making an application to VCAT against the company for amounts owed to me which they are refusing to pay.

Thanks.

 

[Rod]

What if any is my liability here and what action if any should I be taking to protect myself?

I'm not being facetious here, but you said the claim was for $500k. That means your potential liability is $500K.

Does your contractor contract terms with the company provide any protection for you?

Do you have professional indemnity insurance? If yes, read the fine print, you may need the insurance.

Does their client's claim have any merit? Or is it merely a way of trying to bluff you to drop your demand for payment?

Can't gauge the seriousness of the claim without all the details. If your case is good, a strongly worded letter back saying you refute all their demands/allegations and that you intend to defend all claims and if successful in defending against their claim then you intend applying to have all your costs in defending yourself be paid by them.

You also need to contact the company you contracted to find out what they intend doing.

 

[Sarah J]

Agree with Rod, you need to:

• Find out the merits of the client's claim
• Does the claim even relate to work that you did?
• Read your independent contracting agreement with the company very carefully
• Request a copy of the client's service agreement with the company, see if they have a right to sue the contractor under this agreement
• Find out what is the source (i.e. agreement, law etc) of their claim against you

Generally, if you caused the claim/damage/loss, then even if the client does not claim directly from you, if they claim against the Company and recovers the amount, the company can either join you to the action or take separate action against you to indemnify or contribute to their loss. So, find out if the claim is with merit, and how you are involved, first.

 

[Sophea]

I agree with Rod and Sarah, if you have any professional indemnity insurance or liability insurance I would read your policy and give them notice of the claim as soon as possible because if you take action without informing them first or getting their consent you may void your insurance or impair your right to claim under the policy.

Second, read all the paperwork you can get your hands on that relates to your contractual agreements with the Company and the Company's contract with the plaintiff (the person suing you).

It is quite normal in situations like this for lawyers to sue absolutely everyone that could potentially be involved in a matter so that they cover all bases. If sufficient evidence is produced to show that you had nothing to do with what they are claiming compensation for, then they will likely discontinue against you early. However if you are insured your insurer will probably engage their own lawyers to act on your behalf and they will try to get a discontinuance for you. Or if you do have some exposure they will try to reduce this as much as possible. You will probably have some excess to pay under any insurance policy.