May 16th, 2024 by James Goudie KC

It does not follow that because an act done by a company is treated as the company’s act, for which the company can be held liable, a director is immunised from liability.  There is no principle of law which exempts a director, acting in that capacity, from ordinary principles of liability for wrongful acts. However,  in LIFESTYLE EQUITIES v AHMED (2024) UKSC 17 the Supreme Court, addressing the key issue whether, when the wrong is one of strict liability, liability is also strict, or whether proof of knowledge or any other mental element is required, states that it is unjust to hold an individual whose act causes another person to commit a wrong jointly liable for the wrong as an accessory if the individual was acting in good faith and without knowledge of facts which made the act of the other person wrongful.  This point is not particular to company directors.  It does not depend on any special feature of their role.  There is no logical requirement that the knowledge or other mental state required for liability as an accessory must be the same as that required for primary liability; so that, if the primary liability is strict, liability as an accessory must also be strict.  That approach would be logical if inducing someone to commit a tort, or participating in a common design to do so, were simply another way of committing a tort.  But that is not so.  The correct approach is that a person who causes another person to do a wrongful act will only be jointly liable as an accessory for the wrong done if they have knowledge of the essential facts which make the act done wrongful.

Comments are closed.