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Greener Journals www.gjournals.org 9
Greener Journal of Business and Management Studies Vol. 1 (1), pp. 009-020, September 2011
Available online at http://www.gJournals.org/
@ 2011 Greener Journals
Full Length Research Paper
DIRECTORS' TORTIOUS LIABILITY:
A Study of Case in Hong Kong and England
CHEN Bing★ & LIU Shan∗
★
Lecturer of Law, School of law, Jilin University. L.L.B. 2002, Mphil, 2005, Zhongnan University of Economics & Law;
Ph.D.,2009, East China University of Political Science & Law. Visiting Scholar, 2008, University of Wisconsin-
Madison; Visiting Research Student, 2007-2008, City University of Hong Kong; Senior Research Assistant, 2009-
2010, Research Centre for Chinese & Comparative Law, City University of Hong Kong Email: chenbing@jlu.edu.cn
∗ Trainee Solicitor, Lee Chan Cheng Solicitors, BEng, 2007, Wuhan University; JD, 2009, PCLL, 2010, City University
of Hong Kong Email: samliu@leechancheng.com
Corresponding Author’s Email: chenbing@jlu.edu.cn
Abstract
The study investigates both of the Identification Approach and the Agency Approach, where
director’s personal tortious liability is explained by the director is the company itself or simply an
agent of the company. The research will primarily cover the jurisdiction of England.
The paper aims to i) review the modern development of director’s personal tortious liability for
acts committed in the course of operating the company; ii) examine two main conflicting approaches,
the Agency Approach and the Identification Approach, in relation to director’s tortious liability; iii)
evaluate the two aforementioned models in relation to the modern society with the reference to
recent case authorities. In conclusion, the authors explicitly support the proposition that the
director’s personal liability in tort should be determined in accordance with the general principles of
tort law based on the agency approach rather than any special principles shaped by company law
doctrines based on the identification approach which will limited the director’s liability.
Key words: Directors’ Tort; Identification Approach; Agency Approach; Assumption of Personal
Responsibility
Introduction
Under the current company principles limited liability,
shareholders’ liability is limited by shares, which means
shareholders are only liable to the extent of any unpaid
capital on the shares they have subscribed.1 Besides, it
has been long established since Salomon v. Salomon2
that a company is at law a different person from its
directors and shareholders, which is called the spate
legal entity principle. Therefore, a company can be
liable for its own acts, including torts, according to its
nature3. These two basic principles together form the
basis of the modern company law, and even the
financial system of the world. On the other hand, the
well-established tort law principles require the
wrongdoer to compensate for his or her misconduct in
order to do justice. The question arises on whether the
company or its director should be treated as the
wrongdoer when the tort is done by the company’s
director in the course of operating the company.
There two main approaches in explaining
director’s tortious liability: the Agency Approach and the
Identification Approach. The Identification Approach
suggests that, based on the limited liability and
separate legal entities principle, the director should be
treat as acting as the company itself when he or her is
acting in the course of the company’s business.
However, the Agency Approach alleged that the director
is only an agent of the company, which is a separate
entity, and therefore should be personally liable for his
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DIRECTORS' TORTIOUS LIABILITY
or her own wrongful acts. These two conflicting
approaches reflect the fundamental conflicts between
company law and tort law in deciding director’s tortious
liability. On one hand, tort law has long accepted that
an individual is responsible for his or her own tortious
acts; on the other hand, making directors liable in these
circumstances would arguably damage the doctrine of
separate entity and limited liability which are the
foundation of company law.4
Recently, various courts in different jurisdictions
have considered the issue of director’s personal tortious
liability and the courts have express their opinions to
the two competing approaches in these cases. In their
judgements, the judges have emphasised the need for
the basic company principles of limited liability and
separate legal entity to have primacy over tort law
principles in shielding directors from the personal
liability that might otherwise arise from a simple
application of tort law.5 At the same time, they also
recognised that there is a need to prevent company law
doctrines from being used in a way that overrides the
policy objectives of tort law in preventing tortious
conduct and in compensating tort victims.6 The courts
tried to balance these two considerations and set out a
general principle for this type of cases. However, since
these principles often contradict with each other and
almost all of the decisions made by various courts have
been heavily criticised by different academic
commentators, it seems that there is still no conclusive
and widely accepted principle has been laid down up to
now.
Two Main Approaches in Director’s Tortious
Liability
1. The Agency Approach
The Agency Approach recognises a director as the
agent of the company and their liability would be
assessed accordingly. Under the Agency Approach,
because the director is viewed as an agent of the
company, following agency law principles, the director
will be normally liable for all of the tortious acts
committed by him or her. In addition, the company as
principal would also be vicariously liable for the tort
committed by their director who is its agent.7 This
approach can be seen as a creature of the tort law
principle. In essence, the Agency Approach means the
court, in deciding director’s liability in tort, should
directly adopt the well-developed tort law principle for
individuals to the companies and its directors without
any alteration made by company law principles.8
Compared to the Identification Approach which
will be discussed later, the Agency Approach seems to
be a more preferable one in the recent case authorities.
In the recently case authority Williams v. Natural Life
Ltd.9, for instance, the House of Lords adopted the
Agency Approach. In Williams, the judgment mainly
concerns how to adopt the Hedley Byrne principle to the
current case, which is obvious a tort law principle,
rather than which approach, the Agency or Identification
Approach, is more suitable. Even though there is not
much discussion on this topic, the attitude of Lord Steyn,
who delivered the judgement for the House, to this
question is very obvious from his Lordship’s words that
“For the present purpose, his (a director’s) position is
the same as if he had sold his business to another
individual and agreed to act on his behalf. Thus the
issue in this case is not peculiar to companies. Whether
the principal is a company or a natural person,
someone acting on his behalf may incur personal
liability in torts as well as imposing vicarious or
attributed liability upon his principal.”10 Therefore, in the
eyes of his Lordship, the company should be treated as
the principal of the director.
2. The Identification Approach
The Identification Approach identifies a director as the
company itself; therefore, under this approach, it is
logical to say that the director’s act will also be
recognised as the company’s act. Based on this
approach, since it is the company, not the director who
has committed the tort, some courts have
consequentially concluded that such identification would
normally exempt the director from personal liability and
the company, instead of the director himself, should be
liable for tortious acts committed by its director.11
There are lots of cases authorities which adopts
the Identification Approach ever since the 1980s, but
the leading case Trevor Ivory Ltd v Anderson12 decided
by the Court of Appeal of New Zealand would certainly
be the most significant one among all of those cases.13
This case will be discussed in detail in the following part
of this paper, for the purpose of this part; it must note
that the Court of Appeal of New Zealand rejected the
Agency Approach in their judgment, as Hardie Boys J
stated in the judgment that “To describe a director as
the agent of the company can be deceptive.”14 Instead
of the Agency Approach, Hardie Boys J found that Lord
Reid’s judgment in Tesco Supermarkets Ltd v. Nattrass,
in which Lord Reid noted that “(a corporation) must act
through living persons…then the person who acts…is
acting as the company and his mind which directs his
act is the mind of the company” 15 would be more
appropriate in this case. By adopting Lord Reid’s idea in
Tesco Supermarkets Ltd to the case, Hardie Boys J.
concluded that “…in appropriate circumstances they
(directors) are to be identified with the company itself,
so that their acts are in truth the company’s acts.
Indeed I consider that the nature of corporate
Greener Journals www.gjournals.org 11
personality requires that this identification normally be
the basic premise…”16 Although the Honourable Judge
agreed that personal liability can still be imposed on a
director based on the “assumption of personal liability
test”,17 it can rightly be said that in most circumstances
the directors can escape their liability under this test.
Directors’ Personal Liability in Negligence
1. A Brief Discussion on the Leading Case
Authorities of Director’s Tortious Liability
Although there have been a large number of cases
which concerns the issue of director’s personal liability
in tort, this paper will mainly focus on four of them,
namely Trevor Ivory Ltd v. Anderson18, Williams v.
Natural Life Ltd.(Court of Appeal)19, Williams v. Natural
Life Ltd.(House of Lords)20 and MCA Records v. Charly
Records21. These four cases are the leading judgments
in this area of law thus they are likely to be adopted in
Hong Kong by the Hong Kong courts. Furthermore, the
courts held very different views in these cases and they
have expressed their reasons in detail for adopting such
views. Therefore, a discussion on these leading cases
will be valuable for the better understanding of the
arguments in the later part of this paper.
1.1 Trevor Ivory Ltd v. Anderson
Trevor Ivory decided by the Court of Appeal of New
Zealand is one of the most important case authorities of
the director’s personal liability in tort and it has been
considered by various courts in the later cases related
to director’s tortious liability. The facts of Trevor Ivory
can be summarised as follows: the appellant, Trevor
Ivory, was the major shareholder and managing director
of a Trevor Ivory Limited. The Trevor Ivory Limited was
in fact a so call “one man company” which provides
agricultural and horticultural supplies and advisory
service. The respondents were the owners of an
orchard on which there was a raspberry plantation. An
oral contract was entered into between the parties in
1983, in which the appellant agreed to provide
consultation service related to the raspberry in
consideration of an annual fee of $5,000. In fear of the
growth of couch grass, the respondents sought advice
from the appellant under the contract. The respondents
recommended an herbicide called “Roundup”. In
reliance on the advice, the respondents directed their
employees to spray the Roundup in the whole orchard
under the appellant’s instruction written in a letter.
However, Roundup is so powerful that it will also affect
the raspberry plants. In the later spring it was
discovered that the crop had been seriously affected
and ultimately the raspberries had to be dug out. The
Chen and Liu
respondents sued the Trevor Ivory Limited and the
appellant in both breach of contract and the tort of
negligence. In the first instance court, the trail Judge
allowed all the respondents’ claims in both contract and
tort and the appellant was held personally liable for the
negligence. The Trevor Ivory Limited and the appellant
appealed against the trail Judge’s finding of negligence
and the appellant’s personal liability. However, the
Court of Appeal of New Zealand dismissed the appeal
on all matters except the finding as to the personal
liability of the appellant.
In considering the appellant’s personal liability,
as aforesaid, the Court of Appeal of New Zealand
adopted the identification approach. In addition with
Hardie Boys J, Cooke P also stated that: “…in Tesco
Supermarket Ltd. v. Nattrass22, that a person may be
identififed with a corporation so as to be its embodiment
or directing mind and will, not merely its servant…The
present is a question of the third party type, and it
seems to be the Tesco doctrine assists in deciding
it…In my view the realistic interpretation is simply that
Mr. Ivory was identifying himself with his company, as if
he had read the Tesco case.”23
Although not expressly, it seems that the Court
choose the Identification Approach because of the
company law doctrine of limited liability. For example,
Cooke P has stated in his conclusion that “I commit
myself to the opinion that, when he formed his company,
Mr Ivory made it plain to all the world that limited liability
was intended.”24 The use of corporate veil in this
situation, in McGechan J’s opinion, is to avoid the high
risk in business under the protection of limited liability.25
Hence, it can be rightly to say, in Trevor Ivory, the
Court’s opinion is that limited liability in relation to
economic loss and duties of care were intended as
common facts of business.26 Since limited liability is
intended, the director should not be held personally
liable for his or her acts in the course of business
unless in some exceptional circumstances.
The issue then became in what circumstances
the director would be held personally liable. The
“assumption of responsibility” test was therefore created.
The test is, in Hardie Boys J’s words, “whether there
has been an assumption of responsibility, actual or
imputed.”27 According to this test, the directors would be
held personally liable only if they assumed the personal
responsibility by something "sufficiently special";
however, Cooke P also pointed out that “to attempt to
define in advance what might be sufficiently special
would be a contradiction in terms.”28 The Court has also
rejected to consider the issue within the tort principle in
Hedley Byrne29 in this case because Hedley Byrne was
not concerned with whether directors or shareholders or
employees of the company assumed any such personal
duty30 and therefore “it may indeed be drawing the long
bow to apply a Hedley Byrne approach so as to impose
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DIRECTORS' TORTIOUS LIABILITY
personal liability upon the managing director…”31 Finally,
the Court has concluded that the appellant did not
assume personal liability in this case, or even if he did,
this case is not so special that can justify imposing
personal liability on the appellant. Thus, the appeal was
allowed and the appellant was held not personally liable
for the tort.32
1.2 Williams v. Natural Life Ltd. (Court of Appeal
and House of Lords)
Some years after the decision of Trevor Ivory, the
Courts of United Kingdom was given a chance to
consider the same issue in Williams. The facts of
Williams are very similar to Trevor Ivory: The plaintiffs
decided to run a health food shop and approached the
first defendant company to get advice on the business.
The said company was established by the second
defendant, Mr. Mistlin, who is also the managing
director of the defendant company. In the brochure sent
by the defendant company to the plaintiff, Mr. Mistlin
and Mr. Padwick were described as having the
experience and expertise necessary to provide properly
reasoned advice on all matters necessary to the
establishment of a viable franchise business on behalf
of the defendant company. In reliance of the defendant
company’s words, the plaintiff signed a franchise
agreement with the defendant company for a ten-year
term. Financial projections prepared by Mr. Padwick
were given to the plaintiffs and these projections were
later been describe as “too optimistic”. Followed the
projections, the plaintiff opened their shop but later they
discovered that the projections had been substantially
overstated. Due to the negligent advice given by the
defendant company, the plaintiff suffered substantial
loss and the sued the defendant company claiming
damages in respect of the loss they had loss as a result
of the negligent financial projections and advice. Since
the defendant company was winding up at that time, the
plaintiffs joined Mr. Mistlin as the second defendant;
after the defendant company was dissolved, the
plaintiffs pursued their claim against Mr. Mistlin alone.
Even though this case has been appealed to
the House of Lord, the decision made by the Court of
Appeal of England is still a valuable one and worth
discussing. The Court of Appeal agreed with the New
Zealand Appellant Judges’ idea in Trevor Ivory that the
director should be protected by doctrine of limited
liability.33 The Court did not expressly agree with the
Identification Approach, however, it is obvious that the
Identification Approach was more preferable in its eyes
because holding the director be protected by the
doctrine of limited liability is in its essence contradict
with the Agency Approach. Although protected by the
doctrine of limited liability, the Court also agreed that in
some rarely circumstances the director should still be
held personally liable, otherwise the “representees
could set at naught the protection which limited liability
is designed to confer on those who incorporate their
business activities.” The situation in which a director will
be held personally liable is, in the words of Hirst LJ, that
“a company director is only to be held personally liable
for the company’s negligent misstatements if the
plaintiffs can establish some special circumstances
setting the case apart from the ordinary…”34 This test is
very similar to the “assumption of responsibility” test in
the Trevor Ivory case and even Hirst LJ agreed that
“…it is indeed in accordance with the principle laid
down in the Trevor Ivory case.”35 Applying the test to
the present case, their Lordships concluded that since
the advice given by Mr. Mistlin was based on the
personal experience gained before the company was
founded, there was sufficient special circumstance to
held Mr. Mistlin personally liable. Though Mr. Mistlin
was held liable, the Court did emphasise the directors
were generally protected by the doctrine of limited
liability by making a clarification that “…I have reached
this conclusion solely on the particular facts of this case,
and I do not think there is any risk of compromising the
general concept of limited liability.”36
The Court of Appeal of England’s decision in
Williams, however, was reversed unanimously by the
House of Lords.37 As aforementioned, the House of
Lords recognized directors as the agents of a
company38. Lord Steyn did not agreed with the idea in
Trevor Ivory that imposing personal liability of directors
would damage doctrine of limited liability because the
doctrine of limited liability is only concerned with the
limited liability of shareholders. 39 What matters in this
case, in Lord Steyn’s words, is “a company is a
separate entity, distinct from its directors, savants or
other agents.”40 Lord Steyn considered this claim was a
claim for pure economic loss in tort, hence, it should be
governed principle set out by Lord Goff’s in Henderson
v. Merrett Syndicates Ltd.41 which was an extended
Hedley Byrne principle. In His Lordship’s idea, directors
will not be liable for negligent advice given in the course
of operating their company, not because they occupy a
unique position or because the rules of company law
protect them, but simply because the crucial elements
of the relevant tort are not made out.42 To establish a
duty of care under the extended Hedley Byrne principle,
the plaintiff must prove the defendant has assumed
personal responsibility, and he had reasonably relied on
the defendant’s acts.43 Though “assumption of
responsibility” was again used by the House of Lords, it
has a different meaning from the same phrase used in
the Trevor Ivory and the Court of Appeal of England in
the same case. In Trevor Ivory, the “assumption of
responsibility” was used to protect the directors under
the doctrine of limited liability, however, in Williams, the
House of Lords used it simply because it was required
Greener Journals www.gjournals.org 13
by the well-established tort law principle. After a serious
consideration of the facts under the extended Hedley
Byrne doctrine, the claim was defeated since their
Lordships found that the defendant has never assumed
personal responsibility in this case, even if he did, the
claimant could not reasonably rely on the assumption
made by the defendant. 44 The Court of First Instance of
Hong Kong followed Williams in Wycombe Investment
Ltd. v. Edwin Leong Siu Hung45 which is a case related
to director’s personal tortious liability. Besides, it was
approved both by Court of Final Appeal of Hong Kong
in Yiu Chown Leung v. Chow Wai Lam William46 and
CAHK in Leung Yiu Chown & Others v. Chow Wai Lam
& Others47 and DC in Thomas Bovet v Selpro Tactical
Ltd48.
1.3 MCA Records v. Charly Records
In Williams, the House of Lords has expressed that this
case was not related to joint tortfeasor since the
plaintiffs had abandoned this cause of action in the
Court of Appeal and, even if they had not, it would
nevertheless be dismissed because to allow it “would
expose directors, officers and employees of companies
carrying on business as providers of services to a
plethora of new tort claims.” It was not so clear that
whether the Williams was applicable to joint tortfeasor
until the Court of Appeal of England delivered its
judgment in MCA Records v. Charly Records49 few
years later.
This case was about copyright. The defendant
company, Charly Records, was a company produced
re-issues of recordings. The fourth defendant was a
former director of CRL, a subsidiary company of the
Charly Records, and after resigning his directorship, he
remained as an employee of the company. Charly
Records had brought the copyrights of some recordings
from a person whom claimed to be the owner of them
and these records were produced by the company.
However, the copyrights were in fact own by the plaintiff
company and it had never authorised the said person to
sell them. The plaintiffs therefore start proceedings
against the Charly Records for breach of copy right.
Additionally, the plaintiffs also asserted that the fourth
defendant, a former director of a subsidiary company of
Charly Records, had personally authorised, procured
and directed and was personally liable for the
company’s acts as a joint tortfeasor. The fourth
defendant was held liable in the first instance, and he
appealed to the Court of Appeal of England.
In appeal, the fourth defendant alleged the trial
judge apply wrong principle of law in deciding his
liability in tort. Williams was submitted by the fourth
defendant and it was argued that this should be the
correct approach in relation to his case. 50 However, the
Court of Appeal of England rejected this argument.
Chen and Liu
Chadwick LJ had cited Lord Steyn’s words
aforementioned in page 15 and held that “In my view it
is impossible to read into that passage a general
proposition that a director can never be liable as a joint
tortfeasor with the company. The basis of Lord Steyn’s
rejection of joint liability in that case, as it seems to me,
is that Mr. Mistlin could not himself be liable to the
plaintiffs, whether jointly or severally, because he was
not party to the special relationship which had given rise
to an assumption of responsibility and upon which,
alone, liability could be founded.”51
Therefore, Williams was distinguished by the
Court. In the case, the Court expressly accepted the
view that directors can be liable pursuant to ordinary
principles of joint tortfeasance based on the general
tests of secondary liability that the director can be liable
where he intended, procured and shared a common
design that the tortious conduct should take place.52
Based on the principle, the Court concluded that a
director, acting no more than carry out his constitutional
role in the company would not be held liable as join
tortfeasor. However, the Court held that in the present
case, the fourth defendant had acted beyond his
constitutional role and hence should be held liable.
Again, the Agency Approach is more favourable to the
Court in this case because they treat the directors the
same as other people of the company. Additionally, this
case has now become part of the Hong Kong law
because it has already been adopted by the Court of
First Instance of Hong Kong in Yakult Honsha v.
Yakudo53 and Tai Shing v. Maersk54.
2. The Main Arguments of the Identification
Approach
By adopting the Agency Approach, both Williams
(House of Lords) and MCA Records been heavily
criticized by some jurists who in favour of company law.
In their opinion, the assumption of responsibility test in
Trevor Ivory in which the identification approach was
adopted is more preferable. Several reasons have been
raised by these jurists.
2.1 The Purpose of Company Law
Some scholars argued that the primary purpose of
company law is to modify the way general principles of
law, such as contract and tort, apply to individuals when
the corporate entity is interposed.55 By applying the
separate legal entity principle into tort law, the director
and his company should be treated as one in the
course of operating the company. The Trevor Ivory and
Williams (Court of Appeal) cases in which the director
was held to be the company itself are used to support
their arguments and alleged to be the correct approach.
Hence, the House of Lords was wrong to simply adopt
Greener Journals www.gjournals.org 14
DIRECTORS' TORTIOUS LIABILITY
the extended Hedley Byrne principle without the
modification by company law. R. Grantham even
alleged that “to refuse to accept that these general
principles are modified is not only to deny the primacy
inherent in the rules of company law, but in a sense it is
to deny the company’s very existence.”56 It is also
argued that the separate entity doctrine should lead to
directors escaping tortious liability when acting as the
company on the grounds that, to allow otherwise would
be “to deny the company any meaningful existence and
to frustrate the entire purposes for which the State
recognised the corporate form”.57 Furthermore, these
jurists insist that there is a hierarchy of principles
between company law principles and other general laws
principles, such as tort law, and company law is in the
top of the said hierarchy of laws; therefore, when there
is a conflict, company law principles should prevail.58
Such primacy is inherent in the very nature of company
law.59 As aforementioned, the essential issue in relation
to director’s tortious liability is the conflict between
company law doctrine and tort law principle. According
to this theory, the company law principles of separate
legal entity and limited liability should prevail in these
kind of cases, and the consequence of giving tort law
precedence would be effectively to strip away the
protection and purpose of a limited liability company.
Thus, in the context of liability of directors for tortious
conduct, the interposition of the rules of company law
would entail that although a director may in fact have
physically committed the tortious action, the director
may not be identified as the tortfeasor.61
2.2 The Extension of the Doctrine of Limited
Liability
It is suggested that the doctrine of limited liability should
also be extended to the directors in order to maximize
the utility of the corporate form and significantly
increase the creation of social wealth.62 By failing to
properly consider the company law principles and
holding that directors are treated as agents in the tort in
Williams, these jurists criticized that the House of Lords
has defeated the main purpose of company law.
Although one of the main functions of limited liability is
to protect shareholders, not directors, but there is no
reason why a century after the principle of separate
corporate personality established in Salomon, the
principle should not now be invoked as a matter of
policy to protect directors as well as shareholder.63 The
individuals in the business of giving advice should be
able to rely on the protection of the limited liability
company in the same way other people setting up
business can. Especially in closely held companies,
exposing directors to personal liability for all torts
negates the purpose of carrying on business using a
limited liability company.64 This is because the directors
of closely held companies are almost always
shareholders in the companies as well.65 In order to
promote business efficiency, the company law should
ensure those individuals are protected from being
imposed personal liability for the responsibility, and the
legal consequence of the tortious conduct or contractual
undertakings.66 Therefore, the House of Lords’ decision
in Williams will significantly extended the director’s
tortious liability in relation to torts committed by the
company which erodes the company principles and
thereby under mines the business efficiency of the
society.67 In addition, it has also been submitted that the
separate entity doctrine that a company is a legal entity
with its rights and liabilities different from its
shareholders and directors forms the very basis of
limited liability.68 Under separate entity doctrine,
immunity of tortious liability should be given to directors.
Therefore, limited liability is enjoyed by both directors
and shareholders in tort or at least should be extended
to directors.
2.3 Other Considerations
Finally, it is also submitted that apart from running
against the company law principles of separate legal
entity and limited liability, imposing personal duty of
care on director is considered to be unfair, unjust, or
even unreasonable if tort committed by the company
alone is to be diverted to its directors who are merely
the instrumentality used by the company.69 The
imposition of tortious liability on directors in the course
of operating the company would lead them to adopt a
sub-optimal strategy in management, namely to ‘under-
invest’ in risky ventures that might entail personal
liability.70 As a result of that, the directors of the
companies will be reluctantly to make investment on
some hazardous but important industries, such as
mining, in order to avoid their potential tortious
liabilities.71 The essential policy behind limited liability
is generally accepted to be the promotion of investment
in business and the encouragement of
entrepreneurship.72 Besides, limited liability can also be
justified from the economic perspective on the basis of
its efficiency and the availability of limited liability on
directors would reduce risk aversion, providing incentive
to venture. 73 Therefore, although the principle of limited
liability is not directly related to the directors’ liability74,
the consequence of imposing personal tortious liability
on directors will defeat the policy goals of limited liability,
especially when the director is the major or only
shareholder of the company.75 Furthermore, the
replacement of the status quo principle is likely to cause
substantial influence on rules that have been modelled
upon the principle, a matter that would cause profound
and far-reaching influence on the company law.76
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3. The Flaws of Identification Approach and Policy
Considerations in Favour of Agency Approach
Other jurists, however, argued that the courts of
England have adopted the right approach, namely the
Agency Approach, in both cases of Williams and the
MCA Records. A Large number of reasons have been
given by these scholars. Due to the length of this paper,
only the most important ones will be summarised and
discussed in the following.
3.1 Imposing Personal Liability on Directors Will Not
Affect the Company Law Doctrines
First of all, the jurists pointed out that the Agency
Approach adopted by Williams and MCA Records will
not affect the company law basis. As aforesaid, Lord
Steyn in his judgment has made it clear the doctrine of
limited liability is only related to shareholders, not to the
director; therefore, the directors’ personal liability in tort
is totally unrelated to this doctrine.77 Imposing personal
tortious liability to the director will not damage the
doctrine of limited liability in any event.
It is also a misconception that tortious liability of
directors will damage the doctrine of separate legal
entity. Lord Steyn in Williams has commented on this
misconception that “what matters is not the liability of
the shareholders of a company is limited, but that a
company is separate entity, distinct from its directors,
servants or other agents…Whether the principal is a
company or a natural person, someone acting on his
behalf may incur personal liability in tort as well as
imposing vicarious liability or attributed liability upon his
principal.”78
Although Lord Haffmann has once commented
in Meridian Global Unds Management Asia Ltd v.
Securities Commission in some rare situations the
some acts can be recognised as made by the company
itself and the courts should follow the following
instructions in deciding the question.79 First of all, his
Lordship pointed out that whether the acts can be
recognised as acts of the company depends on the
primary rules of attribution, as set out in the corporate
constitution or implied by company law. Secondly, acts
can be attributed to the company pursuant to general
rules of attribution under the law, such as principles of
vicarious liability and agency. Thirdly, there will be
situations where the above principles of attribution
might not be appropriate in determining how a particular
law applies to the company, and in such situations it
may be necessary for the court to fashion a special rule
of attribution to determine whether the act or state of
mind of a particular individual should be attributed to the
company for the purpose of that particular law.80 Some
scholar argued that, where the situation only relates to
the application of the second of the above category,
Chen and Liu
there can be no rooms for the operation of the concept
of a person acting as a corporate organ.81
While it is generally accepted that the broad of
directors of the company can be recognised as the
company itself, it is further argued that when individuals
are delegated authority from the board under the
corporate constitution to deal with the outside world in
the business of the company, they should be prima
facie be regard as the agent of the company because
this situation only relates to the application of the
second category of Lord Haffmann’s direction.82
Besides, the scholars pointed out that, even if there is a
hierarchy of laws that the company law principles
should be prevail, the individuals only commit the tort
thorough conducts carried out pursuant to such
delegated authority, then the ordinary principles of tort
law could be more relevant principles in determining
liabilities of the company as well as the individual.
Therefore, the arguments that the directors are acting
as the company itself is irrelevant here, and the
identification theory cannot be relied upon to override
the ordinary application of tort law principles in this
situation.83 Since it is clear now that personal liability of
a director in tort is not related to company law principles,
there can be see no reason why the company law
principles should apply in tort, and tortious liability of a
director can be determined without in any way
derogating from the hallowed principles of company
law.84
3. 2 The Principle of Limited Liability Should Not Be
Extended
Most of the scholars disagreed with the idea that the
doctrine of limited liability should be extended to the
directors. Under the general agency and tort law
principles, the agents and employees of a company
cannot escape personal liability for torts committed by
them,85 and the company may only vicarious liability for
the said tort under the principle of vicarious liability. 86
By extending this doctrine, the directors can escape
their personal tortious liability while the agents or
employees will still be personally liable. However, the
reasons mentioned above cannot justified the fact that
by extending the limited liability principle to the directors
the law will place more protection to one class of people
in the company, namely the directors, than the other
classes.87 Furthermore, comparing to the employees
and agents of a company, the directors are has more
power in the management of the company, in most
situations the employees and agents will only follow the
directions given by the directors. Therefore, if the
directors are protected from personal liability from the
acts committed by themselves while the employees
and agents has to bear the consequence by
themselves for following their misdirection, it will
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DIRECTORS' TORTIOUS LIABILITY
create a very unconscionable and unjust situation. As
Slade LJ stated in C. Evans & Sons Ltd v. Spritebrand
Ltd., “it would offend common sense if, on the
hypothetical facts postulated, the law of tort were to
treat the director of the company any more kindly than
the savant who took his orders from the directors.”88
Additionally, if the court allows extending the
limitation on liability to the directors, it will make that
directors act carelessly in the course of business
afterwards because the extension of limited liability on
directors would disrupt the equilibrium between risk and
responsibility.89 The imposition of personal liability on
director plays a pragmatic constrain on shareholders
who push for high risk investment.90 The financial crisis
happened this year is a good recent example. Before
the financial crisis, the personal liability of the directors
in banks and investment companies was protection by
contract; they can earn a huge amount of bonus in
accordance with the contract from the investment they
made. Therefore, they act negligently in the companies’
investments in order to gain more bonuses for
themselves and subsequently create the crisis.
However, none of these directors who made lots of
negligent investments is required to be responsible for
the loss cost, not only to the shareholders but also to
the whole society. Hence, it is obviously that, if all the
directors are protected from personal tortious liability,
the directors will act even more negligently in the
course of managing the company since greed is such a
human nature. It is not surprising that another financial
crisis will be caused and this one will certainly be even
more serious than all previous ones, including the Great
Depression. The view that extending limited liability to
directors will increase the society wealth is totally wrong
and imaginative. In fact, the wealth it can create, if any,
is only an illusion while its potential society costs can be
extremely high. Therefore, the imposition of tortious
liability on director would guarantee the quality required
of director, thereby reducing the chance of loss suffered
by investors. Apart from such, the right to recover
against negligent director also provides an alternate
route for recovery in cases where the employer has
insufficient insurance or assets, which is frequently
found in the case of one-person company.91 In
summary, the idea that limited liability should be
extended to the directors is totally wrong and should not
be even considered.
3.3 Policy Considerations for Director’s Personal
Liability
Lastly, it is also alleged that, there is no actual conflict
between the tort law principles and company law
doctrines, and thus from the perspective of principle
and policy, there is no need for special principles to limit
the tortious liability of directors.92 One of the basic
objectives of tort law is to force the wrongdoer to
compensate the innocent party who suffered damages
from the wrongdoer’s acts.93 In its essence, the liability
to make compensation in tort is found on fault, whether
or not involving intention to commit the tortious act or
some negligent act or mission.94 The “corrective
justice” which “require[s] those who without
justification harmed others by their conduct to put the
matter right”95 was seen as the foundation of tort law
which justified the compensation on the ground that it is
right to impose liability on the person who has caused
or was responsible for the wrong.96 Besides, the tort law
also contains an element of prevention in fault-based
liability by imposing liability on fraud conducts, with the
goal of eliminating or reducing the undesirable
behaviour.97
On the other hand, the policy objective of
company law, however, is to promote the investments
in business and to encourage the entrepreneurship.98
The company law principles, such as limited liability and
separate legal entity, are justified from the economic
perspective on the basis of promoting business
efficiency.99 The doctrine of limited liability, for
Easterbrook and Fischel, can significantly reduce the
agency costs of separation between investment and
management in public companies and therefore
promote the business efficiency.100 In addition, it is also
stated that limited liability can promote the securities
markets by making it more efficient and organised, and
it can also lower the transactional cost overall.101
Similarly, the concept of separate legal entity is the
base for the operation of the limited liability doctrine
which separate the company’s liability and the
shareholders’ as well as the director’s liability.102
As aforesaid, the imposition of personal liability
to the directors, although does not directly affect the
limited liability doctrine, may still in substance detract
from the policy goals of limited liability, because in
many situations, especially in one man company, the
director is also the major or only shareholder of the said
company. They argued that the limited liability can be
justified on the ground of voluntariness from the
contract made between the company and the innocent
party.103 However, it is also submitted that, in relation to
the director’s personal tortious liability, different
considerations should be given from the contractual
voluntary creditors.104 The scholars argued, unlike
contractual creditors whom are voluntary to make their
investment to the company hence voluntary to bear the
risk of their investment, the tortious creditors are
involuntarily involved in the wrongful act committed by
the company as well as the director.105 Therefore,
although the company can be liable for the loss caused
and to pay the damages, the doctrine of limited liability
of shareholders means that the tort victims are in fact
not compensated if the company does not have
Greener Journals www.gjournals.org 17
sufficient assets to satisfy the victims’ claims.106 As
aforementioned, these involuntary tortious creditors are
victims of the tortious acts of the company and its
directors, to let the directors escape from their personal
liability will in essence defeat the principles of corrective
justice because “the directors had made a profit from or
cause the harmful activities while need not to bear the
cost of the said activities, with the victims left to bear
the consequence themselves.”107 Undoubtedly, the
injustice caused by refusing to impose personal liability
to directors is so overwhelming that cannot be justified
by promoting business efficiency.108 Thus, it has been
suggested by various scholars that there should be
some scheme of unlimited liability for shareholders in
relation to tort liabilities.109 In this context, even if the
directors, who are also the major shareholders of the
company, are treated as the agent of the company and
imposed personal liabilities under the general principle
of agency law and tort law, it does not contrast with the
company doctrine of limited liability and separate legal
entities because the company law doctrines also permit
the shareholders to be liable for some tortious conducts
of the company in order to promote justice, which is the
ultimate goal of all laws. Hence, the arguments that
imposing personal liabilities to the directors will deny
the company any meaningful existence cannot be
stand.110 From the previous discussion it can be
concluded that, the company law doctrines are only
applicable to the contractual creditors but not to
involuntary tortious creditors. Stefan Lo has once
pointed out in Liability of Directors as Joint Tortfeasors
that “the company’s existence is not denied as the
company can still be liable in the circumstances, and
the company’s other functions and capacities as a
separate entity are maintained.”111 Also, the argument
that the policy base for company law is overwhelming
than any other laws are obvious wrong because none of
these policy considerations should defeat the most
basis of law that justice must be promoted. Even
Grantham agrees that “in time”, acceptance of the use
of the corporate form to carve out exceptions from
tortious liability of those acting for the company may “be
rejected as a false step”.112 It is generally agreed that,
even if he is right in all the points raised in the previous
part, this is “the time” he mentioned to impose personal
liability to the directors.113
Directors’ Personal Liability in Fraud
1. Standard Chartered Bank – The Leading
Authority in Director’s Liability in Fraud
Standard Chartered Bank v. Parkistan National
Shipping Corp (No. 2)114 is the present authority in this
area of law. The facts are straightforward. Mr. Mehra,
the managing director of Oakprime Ltd which is the
Chen and Liu
seller, contract to ship a cargo to a buyer in Vietnam.
Payment for the cargo was to be made by a letter of
credit issued by a Vietnamese bank in favour of the
seller but subject to a condition. However, the seller
failed to fulfil the said condition on time. The ship owner
and the seller’s agent agreed with Mr. Mehra to issue a
false document proving that the seller has fulfilled the
condition. The said document and some other
documents were present to the plaintiff bank with a
covering letter signed by Mr. Mehra confirming the truth
of these documents. Based on these documents, the
plaintiff authorised payment to the seller. However, the
plaintiff later discovered that the document has
been falsely made and therefore the Vietnamese
bank refused to pay for it. The plaintiff sued Mr. Mehra
and two other defendants for tort of deceit and
conspiracy, claiming for the loss occurred from the false
document.
In the Court of Appeal of England, the Court
held that they were bound to follow the House of Lords’
decision in Williams. By applying the “assumption of
personal liability” test in Williams, the Court refused to
impose personal liability to Mr. Mehra because the
Court concluded that, based on the facts they found, Mr.
Mehra had not assumed personal liability in his
fraudulent representations and those representations
are made on behalf of Oakprime Ltd. The plaintiff
appealed against this decision. The House of Lords
allowed the appeal and it was held that in intentional
tort cases a director is treated as an agent of the
company as well as in negligence, but the principles set
out in Williams are only applicable in negligence.115 This
case is decided merely on the ground of agency and
tort law116, whether the principal is a human being or a
company will not affect the court’s decision. A director
will be held personally liable whenever all the elements
in tort can be proved, a person cannot escape his
liability in intentional torts by relying on he is acting for
the company. Therefore, Mr. Mehra was held personally
liable since all the elements of the tort of deceit were
proven against him. This case was approved by the
Hong Kong District Court in Chopard Hong Kong Ltd. v.
Denis Armand Muller117. Similarly, when fraudulent acts
are involved, a company director can also be personally
liable as joint tortfeasor once it has been proved that he
had procured or induced the tortious acts to be done by
the company or he and the company had joined
together in concerted action to secure that those acts
were done.118
2. Justifications for Imposing Liability on Directors
in Fraud
Some jurists argue that exposing directors to personal
liability for all torts will heavily harm the doctrine of
limited liability in company law.119 In their opinion, as
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DIRECTORS' TORTIOUS LIABILITY
aforementioned, company law should prevail. The
correct approach should be Court of Appeal of New
Zealand in Trevor Ivory that “something special” is
required to bring the actions of director’s personal
tortious liability, the fact that the director has made
some fraudulent activities are irrelevant in deciding the
director’s personal liability.120 In the other words, these
jurists argues that the courts should adopt the same
principles in relation to directors personal tortious
liability despite the fact that in some cases deceitful
conduct made by the defendant are involved.
It is much easier to justify the courts’ decision in
intentional torts and joint tortfeasor than negligence.
First and the most important reason is that neither tort
law nor company law will never permit a company be
used as a device for people to escape personal
liability.121 The purpose of company law is to promote
socially beneficial entrepreneurial activities, rather
than to excuse the company directors from liability for
the deliberately harmful acts.122 In fact, these decisions
have never affected the doctrine of limited liability as
well as the doctrine of separate legal entity. Although
the director may also be a shareholder whose liability
should be limited based on the principle of limited
liability, however, as Lord Hoffmann stated in Standard
Chartered Bank, the director is liable “not because he
was a director but because he committed a fraud.”123 As
a shareholder, the director’s liability is limited; what he
really is personally liable for is the fraud he committed
personally. Therefore, based on the separate legal
entity doctrine, it is right to held the director personally
liable for his or her fraudulent conducts rather than
making the company liable, because these conducts
were all done by the director personally, rather than
done by the company.
Besides, it is unconscionable and unjust to treat
the director and employee different in personal liability
in tort. For the employees, they will be certainly held
personally liable for their intentional tortious act and
there is no justification to place the directors in a
different position. Otherwise richer people will have a
better position in law than the poor ones; the foundation
of our legal system that everyone is equal before law
will no longer exist. Therefore, for both reasons
discussed above, the courts’ decision in deliberate tort
and joint tortfeasor can be well justified; in my opinion,
the directors’ personal liability should be determined in
accordance with the tort law principle both in fraud and
joint tortfeasor.
Conclusion
After the above discussion, it seems that neither in the
tort of negligent nor in fraud that the arguments of
Identification Approach can be stand. The Identification
Approach has only considered the issue of director’s
tortious liability in the context of company law. Its
argument that imposing liability will damage or even
frustrate company law is based on the presumption that
company law should prevail in any conflicts of laws.
However, in the previous discussion it has been
showed that the issue is very complicated and many
considerations, such as the purpose of tort law, policies
and justice are involved. The basic presumption of the
Identification Approach, in my opinion, is plainly wrong
because there is no persuasive reasons have ever
been pointed out by those scholars who in favour of
Identification Approach while there are lots of reasons
against this idea. The Identification Approach is wrong
by trying to simplify the issue to only company law
related. Therefore, even if, but we do not agree,
imposing personal liability on directors may somehow
damage the company law principles, it is still the more
appropriate approach in the modern legal system
comparing to the other one because the law has to
balance interests of different groups of the society in
order to achieve justice for the whole society. On the
other hand, the Agency Approach has rightly
considered many relevant factors which Identification
Approach fails to consider. It is based on the general
goal of all laws that justice must be done which is a also
a more stable one compared to the Identification
Approach.
Besides, we also agree the idea that the
doctrine of limited liability should not be extended to
directors. The arguments that extending this doctrine to
the directors are against the social policies are very
persuasive to me. In fact, the rich people have already
had a better position in litigation because they can
afford the expense for hiring experienced counsels and
the costs for appeals. Thus, extend the principle to
those directors’ will only place the riches in an even
safer position which is against the basic policy that
everyone should be equal before law. Additionally,
extending the doctrine of limited liability involves a lot of
other matters except the current issue. It is very
possible that many unexpected issues will be raised if
the courts agree to extend it. Obviously it will lead to a
significant change of the company law and may bring in
some unpredictable results. The potential risk for
extending this doctrine is very high that it is not worth to
make such adventure. Hence, I would suggest that,
since the Agency Approach is a more preferable
approach to achieve justice for the reasons we gave,
and the judgment in Williams and MCA Records that
directors are the agents of the company and their
personal liability should be decided within the general
tort law principles are correct on in relation to the
director’s personal tortious liability.
The last but not least, we have to confess that
there are some limitations of the study. One of the great
Greener Journals www.gjournals.org 19
limitations of the research is to find a new angle in an
intense and sophisticated debate between these
academic giants. It is challenging to find originality out
of these extensively developed arguments within very
limited time. Another limitation for this research is that
the paper focuses so much on director’s tortious liability
in negligence so that director’s tortious liability in
fraudulent act cannot be fully discussed. Besides, the
courts of the United Kingdom, Canada and Australia
choose very different approaches in relation to
director’s tortious liability, however, due to time
limitation, this paper have to confine its research mainly
to the England which has been followed by the courts of
Hong Kong.
Based the abovementioned, it has been
suggested that the director’s personal liability in tort
should be determined in accordance with the general
principles of tort law based on the agency approach
rather than any special principles shaped by company
law doctrines based on the identification approach
which will limited the director’s liability. Arguably, this
suggestion is right as a matter of both principle and
policy considerations. The discussion above has
showed a strong reason that the basic principles of tort
law should not be defeated by the application of
company law doctrines. Besides, it has also been
pointed out imposing personal liability on directors will
never damage the basis of company law and the
existence of company. Therefore, the conclusion of this
independent research is that the personal tortious
liabilities of directors should entirely governed by tort
law that the director will be personally liable whenever
the requirements in these tests are fulfilled, and the
House of Lords has properly laid down the tests in this
area in both cases of Williams and Standard Chartered
Bank despite some minor inconsistencies.
References:
1 Paul Kwan (2006), Hong Kong Corporate Law. LexisNexis,
Hong Kong, p18
2 Salomon v Salomon & Co Ltd [1897] AC 22
3 Ibid
4 Andrew Willekes and Susan Watson (2001), Economic Loss
and Directors’ Negligence, Journal of Business Law,
3:220-221
5 Stefan H.C. Lo (2009), Liability of Directors as Joint
Tortfeasors, Journal of Business Law, 2:109-140.
6 Ibid, 111
7 Chris Noonan and Susan Watson (2004), Directors’ Tortious
Liability – Standard Chartered Bank and the Restoration
of Sanity, Journal of Business Law, 5: 539-548, 542.
8 Ibid, at pp:543-544.
9 Williams v. Natural Life Ltd. [1998] 1 W.L.R. 830
10 Ibid, at 835.
11 Supra 7, at 541.
12 Trevor Ivory Ltd v Anderson [1992] 2 NZLR 517
Chen and Liu
13 Supra 11.
14 Supra 12, at 526
15 Tesco Supermarkets Ltd v. Nattrass [1972] A.C. 153 at
170.
16 Supra 12, at 527.
17 Ibid.
18 Trevor Ivory Ltd v. Anderson [1992] 2 NZLR 517
19 Williams v. Natural Life Ltd. [1997] 1 BCLC 131
20 Williams v. Natural Life Ltd. [1998] 1 W.L.R. 830
21 MCA Records v. Charly Records [2003] 1 B.C.L.C. 93
22 Tesco Supermarkets Ltd v. Nattrass [1972] A.C. 153
23 Supra 12, at 520, 524.
24 Ibid.
25 Ibid, at 530.
26 Francis Reynolds (2003), Personal Liability of Company
Directors in Tort, Hong Kong Law Journal, 33: 59.
27 Supra 12, at 527.
28 Ibid.
29 Hedley Byrne v. Heller [1964] A.C. 465.
30 Supra 12, at 524.
31 Ibid, at 530 per McGechan J
32 Ibid, at 530, 524, 528, 532.
33 Supra 19, at 147-149.
34 Ibid, at 152
35 Ibid.
36 Ibid, at 154 per Hirst LJ
37 Supra 20.
38 Supra 20, at 835 per Lord Steyn
39 Supra 20, at 838 per Lord Steyn
40 Supra 38.
41 Henderson v. Merrett Syndicates Ltd., [1995] 2 A.C. 145.
42 Ross Grantham and Charles Rickett (1999), Directors’
Tortious Liability: Contract, Tort or Company Law? The
Modern .Law Review, 62:139.
43 Supra 20, at 837.
44 Supra 20, at 837-838.
45 Williams in Wycombe Investment Ltd. v. Edwin Leong Siu
Hung, [2005] HKEC 1101.
46 Yiu Chown Leung v. Chow Wai Lam William, [2005] 4
HKLRD 246, but it must be notice that this is not a case
related to director’s personal tortious liability.
47 Leung Yiu Chown & Others v. Chow Wai Lam & Others,
CACV 223/2003.
48 Thomas Bovet v Selpro Tactical Ltd, [2009] HKEC 1510.
49 Supra 21.
50 Supra 21, at 106.
51 Supra 21, at 114.
52 Supra 5, at 135.
53 Yakult Honsha v. Yakudo, [2004] 1 H.K.C. 630.
54 Tai Shing v. Maersk, [2007] 2 H.K.C. 23.
55 H L A Hart (1954), Definition and Theory in Jurisprudence,
Law Quarterly Review, 70: 53.
56 Supra 42.
57 Grantham (2001), Attributing Responsibility to Corporate
Entities, Company and Securities Law Journal, 19: 179.
59 Supra 42.
61 Ross Grantham (2007), The Limited Liability of Company
Director, Lloyd’s Maritime and Commercial Law
Quarterly, 362: 402.
62 Ibid.
63 Andrew Borrowdale (1998), Liability of Directors for Tort
Development in New Zealand, Journal of Business Law,
1: 98.
Greener Journals www.gjournals.org 20
DIRECTORS' TORTIOUS LIABILITY
64 Ross Grantham (1997), Company Directors and Tortious
Liability, The Cambridge Law Journal, 56: 259.
65 Supra 7, at 539.
66 Supra 42
67 Supra 42 and Supra 57.
68 Vanessa Stott (2008), Hong Kong Company Law 12th,
Longman Hong Kong Education, Hong Kong, p.2.
69 Supra 26, at 61.
70 Ross Grantham, The Limited Liability of Company
Directors, University of Queensland TC Beirne School of
Law Research Paper No.07-03, 20-22.
71 Supra 5, at 122.
72 N. Hawke (2000), Corporate Liability, Sweet & Maxwell,
London, p.114, p.117.
73 Supra 5, at 119.
74 Supra 71.
75 Supra 61, at 385.
76 Paul Spink and Stephen Chan (2003), The Hong Kong
Company Director‟s Duty of Skill and Care: A Standard
for the 21st Century? Hong Kong Law Journal, 33: 141.
77 Supra 4, at 222-223.
78 Supra 38.
79 Meridian Global Unds Management Asia Ltd v. Securities
Commission ,[1995] 2 A.C. 500 at506-508.
80 Supra 5, at 124-125.
81 Supra 5, at 125.
82 Supra 5, at 126.
83 Supra 7, at 545 and Smorgon v. Australia and New
Zealand Banking Group Ltd., (1976) C.L.R. 475 at 483
per Stephen J.
84 Supra 77.
85 E.g. Bennett v. Bayes (1860) 5 H. & N. 391 and Swift v.
Jewsbury and Goddard (1874) L.R. 9. Q. B. 301.
86 Supra 5, at 114.S
87 Supra 26, at 61.
88 C. Evans & Sons Ltd v. Spritebrand Ltd., [1985] 2 All E.R.
415 at 425.
89 Supra 61, at 365.
90 Supra 61, at 365-366.
91 Supra 87.
92 Supra 73.
93 Tony Honore (1999), Responsibility and Fault, Hart
Publishing, Oxford, pp69-70.
94 W.V.H. Rogers (2006), Winfield and Jolowicz on Tort 17th,
Sweet & Maxwell, London, p.71.
95 Supra 93, at 73-78.
96 Supra 5, at 120.
97 Supra 93, at 68.
98 Supra 72.
99 Supra 96.
100 Easterbrook and Fischel (1985), Limited Liability and the
Corporation, University of Chicago Law Review, 52: 92-
97.
101 P. Halpern, M. Trebilcock and S. Turnbull (1980), An
Economic Analysis of Limited Liability in Corporation Law,
Univeristy of Toronto Law Journal, 30: 117 and Supra
100, at 98-101.
102 Supra 5, at 121.
103 Supra 71.
104 H. Hansmann and R. Karaakman (1990-1991), Toward
Unlimited Shareholder Liability for Corporate Torts,,Yale
Law Journal, 100: 1879 and Supra 101, at 145-147.
105 Supra 71.
106 Ibid.
107 Supra 5, at 122-123.
108 Supra 5, at 123.
109 See, e.g. Hansmann and Kraakman (1990-1991),
Toward Unlimited Shareholder Liability for Corporate
Torts, Yale Law Journal, 100: 1879.
110 Supra 5, at 130.
111 Ibid.
112 Supra 57, at 180.
113 Supra 5, at 131.
114 Standard Chartered Bank v. Parkistan National Shipping
Corp, [2003] 1 A.C. 959.
115 Ibid, at 968 per Lord Hoffmann.
116 Supra 7, at 542-543
117 Chopard Hong Kong Ltd. v. Denis Armand Muller, DCCJ
2785/2007.
118 Supra 21,cited with approval by CFI in Guangzhou
Green –Enhan Bio-Engineering Co. Ltd. & Another v.
Green Power Health Products International Co. Ltd. &
Others [2005] HKEC 513.
119 Supra 116.
120 Supra 7, at 544.
121 Supra 114, at 973-974 per Lord Rodger.
122 Supra 7, at 543-545.
123 Supra 114, at 970.
