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Corporate Attribution in Private Law (Hart Studies in Private Law)

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This issue had previously been looked at by the House of Lords in Stone & Rolls v Moore Stephens [2009] 1 AC 1391. That case concerned a claim by a company in liquidation against its auditors. The claim was for alleged negligence on the basis that the auditors had failed to detect and prevent wrongdoing by the company’s sole director, as a result of which, the company became liable to various defrauded banks. The majority of the House of Lords held that the claim failed on the basis that the fraud in that case should be attributed to the company. However, the reasoning behind this decision and the question of what principles may be derived from it has given rise to much debate. The general position is that knowledge and actions of a director will be attributed to the company, although questions of attribution are sensitive to the particular facts and this principle has been held not to apply in circumstances where what is in issue is the company’s knowledge of wrongdoing by a particular director. Where a company has been the victim of wrong-doing by its directors, or of which its directors had notice, then the wrong-doing, or knowledge, of the directors cannot be attributed to the company as a defence to a claim brought against the directors by the company’s liquidator, in the name of the company and on behalf of its creditors, for the loss suffered by the company as a result of the wrong-doing, even where the directors were the only directors and shareholders of the company, and even though the wrongdoing or knowledge of the directors may be attributed to the company in many other types of proceedings.’

Four Misconceptions about Charity Law in Singapore” [2012] Singapore Journal of Legal Studies 37-54 As a matter of English law, it is generally the case that a company will be responsible for the actions of its directors and, in many cases, its employees. In contract, this manifests itself through the rules of agency; in tort, through the doctrine of vicarious liability. Looking at key questions of how companies are held accountable under private law, this book presents a succinct and accessible framework for analysing and answering corporate attribution problems in private law. Two Kinds of Agency’ (2019) 93 Supreme Court Law Review 385-411 (reprinted as ‘Two Kinds of Agency’ in Jason Neyers, Andrew Botterell, Zoe Sinel (eds), Gerald Fridman and the Law of Obligations: Past, Present and Future (LexisNexis Canada, 2019))

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Proprietary Restitution’ in Elise Bant, Kit Barker, and Simone Degeling (eds), Unjust Enrichment and Restitution Handbook (Edward Elgar 2020) 476-97 (with T Liau). A claim was brought by liquidators against (amongst others) directors of the insolvent company alleging a conspiracy to defraud the company. The allegation was that there had been a carousel fraud relating to European Emissions Trading Scheme Allowances. The defendants applied to strike out the claim on the ground of ex turpi causa and in particular, it was argued that the knowledge of the directors should be attributed to the company. Minority protection doctrines: from equity and company law to strata title” [2011] Conveyancer and Property Lawyer 96-114

A similar question came before the Supreme Court in the case of Jetivia v Bilta [2015] UKSC 23. However, unlike Stone & Rolls, which involved a claim by the company against a third party, in Bilta the defendants were the alleged wrongdoers themselves. Birksian Themes and their Impact in England and Singapore: Three Points of Divergence’ [2021] Lloyd’s Maritime and Commercial Law Quarterly 350-379 (with T Liau). The Court of Appeal decided that the knowledge of directors in such circumstances should not be attributed to the company. It is notable that the Court of Appeal’s view was that such conclusion should apply irrespective of whether or not there was a ‘sole actor’ in control of the company and indeed earlier authorities had moved away from the position where the concept of ‘the directing mind and will’ was of principal significance in determining a question of attribution. Further, the Court of Appeal considered that the question of ex turpi causa was irrelevant to the present case. Resulting Trusts: A Victory for Unjust Enrichment?’ (2014) 73(3) Cambridge Law Journal 500-3 (with T Liau).The decision by the Supreme Court in relation to the appeal was unanimous and there appears to have been general agreement as to the above proposition, although there were four different judgments produced by the panel of seven Justices, each containing differing analysis and reasoning. For example, the majority considered that the purpose and scope of the defence of illegality should be left for another occasion, whereas Lords Toulson and Hodge (jointly) and Lord Sumption each give detailed and differing analyses of illegality. Lords Toulson and Hodge and Lord Sumption also differed as to the principles to be derived from the decision in Stone & Rolls. For his part, Lord Neuberger (with whom Lords Clarke and Carnwarth agreed), took the view that Stone & Rolls should no longer be treated as being of assistance and is to be confined to its own facts.

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