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When are directors liable for their company’s acts?

02 December 2016 #Directors' Duties #Dispute Resolution


Companies have limited liability.  Does this mean that their directors can never be liable for the acts of the companies?  This was the question before the Court in Victoria Plum Limited -v- Victoria Plumbing Limited & Others. 

Victoria Plum (Plum) and Victoria Plumbing (Plumbing) (both online bathroom retailers) claimed and counterclaimed that the other had paid for advertising keywords in their respective names.  This had the effect that an internet search for Plum would lead to an advert for Plumbing and vice versa.   Plum alleged that this infringed its trademark and Pluming claimed passing off. 

The claim and counterclaim succeeded.  The interesting feature of the case from a director’s perspective is that Plum alleged that Plumbing’s MD and shareholder was jointly liable for Plumbing’s acts.  The claim against the MD failed and the Court issued a reminder of the three conditions that must be satisfied for a party to be jointly liable for the acts of another:

  • Assisting in the commission of an act;
  • Which is pursued to a common design;
  • And is or turns out to be tortious

The claim against the MD failed because his knowledge and involvement in the trademark infringement was at too high a level.  Simply taking responsibility for the overall actions of his staff and being aware of what they were doing did not mean that the MD assisted in the infringement or shared a common design. 

This case will be of comfort to directors and shows that the Court will be slow to erode the principles of limited liability. 

For further information about directors duties please contact us using the form on this page. We look forward to hearing from you.

Clarkslegal, specialist Director’s Duties lawyers in London, Reading and throughout the Thames Valley.
For further information about this or any other Director’s Duties matter please contact Clarkslegal's Director’s Duties team by email at contact@clarkslegal.com by telephone 020 7539 8000 (London office), 0118 958 5321 (Reading office) or by completing the form on this page.

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Stephen James

Stephen James
Partner

E: sjames@clarkslegal.com
T: 0118 953 3931
M: 07884 188 021

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