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  • Print publication year: 2016
  • Online publication date: February 2016

11 - Wrongs involving companies

from PART II - Accessory liability in private law

Summary

Introduction

Overview

A company, although a separate legal entity, can only operate through human actors. Both the company's mental state and its conduct and, therefore, its primary or accessory liability, can only be determined by reference to the state of mind and conduct of those actors. But equally, the same state of mind and conduct of those human actors can generate primary liability or accessory liability on their part. Whereas in a non-corporate scenario, there is a direct interaction between a human accessory and the person committing the primary wrong, in the corporate context there is an element of circularity: a director (‘D’) may be accessorily involved in the affairs of the corporate primary wrongdoer, PW Co, which in turn has only committed a wrong because of the acts of its employees and agents, perhaps including D himself or herself. When D pursues his or her objectives through the medium of a corporate vehicle (itself acting through its employees and agents), or a corporate group, an analysis in terms of accessory principles becomes complicated and, possibly, artificial. Legal analysis is sometimes also obscured by the metaphorical language of going behind, ‘piercing’ or ‘lifting’ the ‘corporate veil’.

This chapter considers some particular questions concerning accessory liability that arise in the corporate context because of the sui generis nature of the company/human actor relationship (although some of these questions also arise more generally for principals and agents). It does not attempt a comprehensive resolution of these questions, nor does it deal with the various statutory regulatory schemes; that would require a much more detailed treatment of company law and policy that is beyond the scope of this book. Instead, some particular problems are noted and some possible solutions suggested.

First, this chapter introduces and compares the general law tools of attribution and vicarious liability that are used to determine a company's liability [11.1.2]. Secondly, it considers the application of attribution principles to determine the accessory liability of companies (whether to primary wrongs committed by directors, other companies or third persons). Equitable accessory liability is used here to illustrate the application of attribution principles [11.2.2]. The third section of the chapter focuses upon D as accessory to his or her company's primary wrong [11.3].