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

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We look at the recent Supreme Court decision in Jetivia v Bilta [2015] UKSC 23 in relation to the question of in what circumstances will the knowledge of a director or officer of a company be attributed to the company itself. Minority protection doctrines: from equity and company law to strata title” [2011] Conveyancer and Property Lawyer 96-114

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)) 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. Rachel joined the LSE Law School as Assistant Professor in Sep 2022. She is a private lawyer whose main research expertise and interests span three broad areas: the law of unjust enrichment and restitution, trusts and commercial equity, and agency law. She also has a special interest in corporate attribution in private law, the subject-matter of her doctorate and first monograph, Corporate Attribution in Private Law (Hart Publishing 2022). Her work has been cited with approval by the Supreme Court of the United Kingdom and the Singapore Court of Appeal. Unjust Enrichment and Restitution in Singapore: Where Now and Where Next?’ [2013] Singapore Journal of Legal Studies 331-60 (with T Liau)Review of Andreas Televantos, Capitalism Before Corporations: The Morality of Business Associations and the Roots of Commercial Equity and Law (OUP 2020) (2022) 81 CLJ 202 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). There are many circumstances in which the court must determine whether the knowledge or actions of an officer should be attributed to the company and the question has arisen in several recent cases. 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.

Much of Rachel’s research is united by a central question: why, how, and when do people act for or on behalf of another in private law? In that vein, she is currently working on projects concerning the equitable doctrine of ‘fraud on a power’, powers of attorney, and termination of authority. Four Misconceptions about Charity Law in Singapore” [2012] Singapore Journal of Legal Studies 37-54 Proprietary Restitution’ in Elise Bant, Kit Barker, and Simone Degeling (eds), Unjust Enrichment and Restitution Handbook (Edward Elgar 2020) 476-97 (with T Liau). The Supreme Court dismissed the appellants’ appeal and upheld the Court of Appeal’s decision, holding that the directors’ knowledge could not be attributed to the company – the issue of attribution as between a company and its directors/employees is not the same as between the company and a third party. Lord Neuberger summarised the position as follows: 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.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. 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. 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. 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.’ The legal personality of management corporations in strata title developments in Singapore’ [2012] Conveyancer and Property Lawyer 75-79