(Majority) A director of a one man company himself could himself be liable for negligent advice outside his duties as a director where his personal character known to be relied upon. In order to fix a director with personal liability, it must be shown that he assumed personal responsibility for the negligent misstatement made on behalf of the company. Because of the importance of the status of limited liability, a company director is only to be held personally liable for the company’s negligent misstatements if there is established some special circumstance; and in the case of a director of a one-man company particular vigilance is needed, lest the protection of incorporation should be virtually nullified. But once such special circumstances are established, the fact of incorporation does not preclude the establishment of personal liability. The decision is one of fact and degree. Where representations are made negligently by a company so as to attract tortious liability under the principle of Hedley Byrne, the primary liability is that of the corporate representor. In the vast majority of cases it is also the sole liability. The law does, however, recognise a rare and restricted category of case in which a director will be personally liable for the negligent misstatement. The question to be asked is ‘do the circumstances, when viewed as a whole, involve an assumption by the director of personal responsibility for the impugned statement?’
Judges:
Hirst and Waite L.JJ, Sir Patrick Russell
Citations:
Times 09-Jan-1997, [1996] EWCA Civ 1110, [1997] 1 BCLC 131
Jurisdiction:
England and Wales
Citing:
Appeal from – Williams and Another v Natural Life Health Foods Ltd and Another QBD 18-Jan-1996
A company director can be liable for the negligent mis-statement of the company if he warrants his own personal skill. . .
Cited by:
Appeal from – Williams and Another v Natural Life Health Foods Ltd and Another HL 30-Apr-1998
A company director was not personally reliable in negligence for bad advice given by him as director unless it could clearly be shown that he had willingly accepted such personal responsibility. A special relationship involving an assumption of . .
Cited – Niru Battery Manufacturing Company, Bank Sepah Iran v Milestone Trading Limited CA 23-Oct-2003
The claimant had contracted to purchase lead from some of the defendants. There were delays in payment but when funds were made available they should have been repaid. An incorrect bill of lading was presented. The bill certified that the goods had . .
Lists of cited by and citing cases may be incomplete.
Company, Negligence
Updated: 03 November 2022; Ref: scu.140977