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05th July 2012

The High Court looks at claims against Directors

A company director's duty to exercise reasonable care, skill and diligence is materially different from the duty owed by a professional to the person who engages him

The recent judgment of Mr Justice Ackenhead in Whessoe Oil and Gas Limited v Cleveland Bridge UK Limited and another [2012] EWHC 1788 (TCC) is a useful reminder that the contractual and statutory duties owed by a director to his company should not be assumed to be coextensive with the duties owed by a doctor, architect, lawyer or other professional, as independent contractors. The Courts expect a professional’s conduct to be tested by a body of relevant professional opinion, whereas the question of whether a director has discharged his duties to his employing company will be a matter of company and contract law applied to the facts and will not inevitably depend on the views of an expert.

That is not to say that an expert’s opinion will never be relevant in a case against a director. It may well be valuable to assist the Court on a particular matter of practice, technicality or quantum. However, as was the case in Whessoe Oil, the fact that a claim is not supported by the opinion of an expert does not mean that it will inevitably fail. The Court is competent to decide the merits of a case of breach of directors duties without always having to look to what an expert may say about the director’s conduct.

As Ackenhead J made clear however, the onus is on a company that is suing one of its directors to be very clear about the allegations it is making against him and to provide an adequate explanation of its case on liability, causation and quantum. If it doesn’t - a company is warned - the Court will not allow it to proceed.

For further information, please contact Dominic Hopkins on dominichopkins@hewitsons.com or on 01604 233233

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