Case Studies for Business Legal Expense Insurance

Identity Theft

A fake invoice is issued on behalf of your business entity, using your business logo and contact details. The intent is to have funds directed into an unauthorised bank account. A recipient of this invoice become suspicious when they receive additional invoices for non-payment, contacts the police who investigate your business. The insured contacts ARAG and a legal representative is appointed to negotiate and elevate any credit or business reputational damage.

Employment

ABC is a small business that employs 5 employees. Following repeated written warnings for tardiness and rude behaviour, ABC provides written notice of termination. The employee was upset and felt that he had been treated unfairly and pursued a wrongful dismissal claim against ABC. ABC had followed the Small Business Fair Dismissal Code, providing the employee with warnings before the termination. ARAG appointed lawyers to challenge the jurisdiction of the Fair Work Commission and negotiated the withdrawal of the claim. ABC had a nil excess. All legal costs were covered by ARAG.

Employee Protection

ABC has placed an advertisement on Seek looking for employees. A 75 year old sent in a CV and listed experience that was not relevant to the role. When the job applicant was advised they had been unsuccessful they brought a discrimination claim against ABC alleging age discrimination. ARAG appointed lawyers to defend the claim and the lawyers demonstrated the applicant was unsuccessful as his CV showed he did not have the necessary skills for the inherent requirements of the advertised position. All legal costs other than the excess were covered by ARAG.

Criminal Prosecution Defence

A worker was injured during the course of his employment when a contractor operating a forklift ran into the worker. The worker was hospitalised and the employer reported the incident to SafeWork. SafeWork undertook investigations. ARAG appointed lawyers to assist the business with SafeWork investigations including production of documents and interviews of employees. SafeWork determined not to prosecute the business and prosecuted the subcontractor for a breach of work health and safety legislation. ARAG paid all legal costs incurred in the investigation, as the insured had a nil excess.

Compliance & Regulation

Disciplinary proceedings were brought against a nurse arising from care the nurse provided to residents in an aged care facility. ARAG appointed lawyers to assist the nurse with the disciplinary proceedings and appear on behalf of the nurse during those proceedings. The regulator found the alleged shortcomings in treatment were not proven. ARAG paid the legal costs of the appointed lawyer, less the applicable excess, which was paid by the insured.

Property and goods

A Council owned land adjoining a business’ premises. A large pine tree was on Council land. The business had not insured its property. The tree roots caused damage to drains, footpaths and driveways on the business’ premises. The business wrote to Council claiming rectification costs and the Council declined to compensate ABC. ARAG appointed lawyers to bring a claim for damages in nuisance against the Council and after commencement of proceedings, the lawyers negotiated payment of compensation and a contribution towards legal costs. ARAG attended to the payment of the legal costs that were in excess of the contribution to legal costs recovered.

Tax Protection

ABC has been lodging its BAS statements and Tax returns regularly. The ATO has announced its intention to look at compliance in a number of industries including the industry that ABC operated in. The ATO randomly selected ABC for a tax audit. After preliminary inquiries the ATO advised ABC’s accountant that it intended to audit the BAS lodgements of ABC. ARAG appointed accountants to assist with the audit and demonstrate BAS has been appropriately accounted for. ARAG met all costs of the appointed accountant other than the excess which was paid by ABC to the appointed accountant.

Contract disputes

A business leased a telephone system, photocopiers and printers for 3 years from ABC but the equipment was defective and stopped working after 2 months. After complaining to ABC seeking to cancel the lease, asking for replacement equipment and asking for a refund, ABC refused all requests, kept issuing monthly invoices and threatened to commence debt recovery proceedings to recover unpaid lease payments. ARAG appoints lawyers to recover damages from ABC. After proceedings were commenced ABC agreed to pick up the equipment, refund all moneys paid to ABC and terminate the lease. The appointed lawyers secured contribution to legal costs from ABC and ARAG paid the balance of the costs incurred in the proceedings less the excess.

Tenancy disputes

ABC have taken out a lease on a commercial property to run their business operations. In the contract, they were given full access to the storage facilities that would be exclusive to ABC. After a few months the landlord advised he was subleasing some of the storage facilities and would not reduce the rental currently being charged. This created distress and disruption to the tenant’s operations and resulted in them having to lease new storage options off site. Despite trying to negotiate a resolution with the landlord the Insured contacted the ARAG Legal Information Helpline for some guidance. The event was covered under their policy and ARAG appointed lawyers to assist in proceedings to claim damages and terminate the current sub lease and obtain orders requiring the landlord to cease and desist any further action. The tenant received compensation and orders were made requiring the landlord to vacate the property. The tenant regained possession of the storage facility, under their original tenancy lease. ARAG paid the legal costs of the appointed representatives assisting the landlord in the proceedings.