Fan Bingbing is an employee, sole shareholder, and director of an environmental company called Blackspot Pty Ltd (Blackspot). The company cleans up black spots in the environment left behind by mining companies that failed to properly remediate their sites when they were finished. In the past Fan was an employee of another company that did similar environmental protection work called Yellowscope Pty Ltd (Yellowscope). Yellowscope, however, began laying-off staff and instead outsourcing its project work to independent contractors. To take advantage of this change Fan cleverly set up Blackspot but continued to do work for Yellowscope using the same working procedures and methods she was already familiar with. While working on a project for Yellowscope, Fan received a nasty gash across her face which required many stitches. She, therefore, sued Yellowscope for negligence because it was their procedures and methods she was using.

Is Yellowscope liable for Fan’s back injury? Can Blackspot be held partially liable for Fan ’s injury? Can Blackspot avoid liability on the grounds that Fan is sole shareholder and director of the company? Is it possible that Blackspot could be held 100% liable for Fan’s injury and if so, on what grounds?