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the act of the company itself. 126 On the other hand, directors can also be perceived as
agents of the corporation and could be held liable for tortious action. 127 Case laws
have developed with three types of tests to deal with director‟s liability in torts; the
„direct or procure‟ test 128 , „make the tort his/her own‟ 129 test and the „assumption of
responsibility‟ 130 test. 131 The personal liability of directors is valuable if the company
is insolvent or could not meet its liability because it provides an alternative avenue
for creditors to recoup their losses.
In the New Zealand case of Trevor Ivory Ltd v Anderson, 132 the court held the
director of a „one man‟ company was not liable even though the company itself was
liable for the negligent advice given to the plaintiff. The basis of the decision was
that the director had not assumed any special responsibility towards the plaintiff. The
126 H L Bolton & Co v TJ Graham & Sons [1957] QB 159; see Ross Grantham and Charles Rickett
“Directors‟ Tortious Liability: Contract, Tort or Company Law?” (1999) MLR 133 at 133; the
doctrines of company law such separate legal entity and limited liability have been accepted as
constraints to the imposition of personal liability on directors.
127 See Susan Watson “Corporate Liability for Criminal and Civil Wrongs” in John Farrar (Ed.)
Companies and Securities Law (Brookers Ltd, Wellington, 2008) 153 at191; the view that directors
in New Zealand are agents of the company and therefore liable for tortious act under the agency
principle has been seen as negating the principle of limited liability, especially in a closely-held
company where the director is also the shareholder; see also Ross Grantham and Charles Rickett
above n126 at 135.
128 Rainham Chemical Works Ltd (in liq) v Belvedere Fish Guano Co Ltd [1921] 2 AC 465; directors
were held not to be liable in their capacity as directors because they have not expressly directed the
tortuous act; the decision was followed in Performing Right Society Ltd v Ciryl Theatrical
Syndicate, Ltd [1924] 1 KB 1; Wah Tat Bank Ltd v Chan [1975] AC 507; Microsoft Corporation v
Auschina Polaris Pty Ltd [1996-7] 142 ALR 111.
129 White Horse Distillers Ltd v Gregson Associates Ltd (1984) RPC 61, in order for the director to be
liable for tort committed by the company, it is not sufficient that to show he commits or directs the
act but also it must be shown that he must do so deliberately or recklessly to make the act his own;
King v Milpurrurru (1996) 136 ALR 327.
130 Trevor Ivory Ltd v Anderson[1992] 2 NZLR 517; Williams v Natural Life Health Foods Ltd[1997]
1 BCLC 131.
131 John Farrar “The Personal Liability of Directors for Corporate Torts” (1997) 9 Bond LR 102 at
103 [“The Personal Liability”].
132 [1992] 2 NZLR 517.
216