Topic
Commercial & Corporate law for Accounts
Instructions
What happens if a company employee who is also a shareholder and/or a director is
negligent at work? Can a company be liable to its own shareholders under tort law?
Explain with reference to relevant cases. (10 marks)
B) Can a company be guilty of a crime? If so, what principles will the court take into
account as to whether it is the Company or individual actors within the company who
are guilty? (10 marks)
Answer Preview
In the case of Trevor Ivory Ltd v Anderson (1992) 2 NZLR517,526-7, Hardie Boys J pointed out that the verity that exists is that a company tort that occurs via the omission or act of an executive does not essentially necessitate that he or she is principally legally responsible and the corporation is only legally responsible vicariously. The Justice further stated that before, a director can be personally held responsible the existence of the duty of care has to be determined. In Rainham Chemical Works Ltd v Belvedere Fish Guano Co Ltd (1921)2AC 465 a business that assembled volatile materials was found to be legally responsible for the harm that was caused in the neighboring property, due to an explosion. Two of the corporation directors were held legally responsible as dwellers, but not legally responsible as executives due to the fact that they had not particularly requested for the tortious actions. Lord Buckmaster stated in case an organization is created for the express aim of doing illegal acts, the directors, as well as the corporation, are legally responsible for the consequence, nonetheless, there was adequate evidence to establish liability under Rainham Chemical.
Word Count: 1600