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judge adopted the principle of identification and stated the effect of incorporation is
to have the directors acting in two capacities in which directors may act and in
appropriate circumstances they are to be identified with the company itself. 133 In
order to held them personally liable, there must be clear evidence that the directors
are acting as agents or servants of the company. 134
The decision was later followed by the English case of Williams v Natural Life
Health Foods Ltd 135 although the House of Lords treated the matter within the
confinement of the law of torts instead of relying on the principles of company law
as in Ivory. 136 Lord Steyn pointed out the concept of limited liability could not be the
decisive consideration in making the decision although it is relevant. This is because
limited liability limits the shareholders‟ financial risk to the capital they subscribed
to the company and is not intended to provide immunity from tortuous liability to
directors or senior employees. 137
The requirement in Trevor Ivory has imposed a burden on the claimant to establish
special responsibility because of the doctrine of separate legal entity the presumption
is that directors do not intend to assume responsibility but intend it to be the
133 Trevor Ivory Ltd v Anderson[1992] 2 NZLR 517.
134 Hardie Boys J in Trevor Ivory Ltd v Anderson[1992] 2 NZLR 517, 527 stated “What does run
counter for the purposes and effect of incorporation is the failure to recognise the two capacities in
which directors may act; that in appropriate circumstances they are to be identified with company
itself, so that their acts are in truth the company‟s acts. Indeed, I consider that the nature of
corporate personality requires that this identification normally be the basic premise and that clear
evidence be needed to displace it with a finding that a director is not acting as the company but as
the company‟s agent or servant in a way that renders him personally liable.”
135 [1997] 1 BCLC 131.
136 For more discussions see Andrew Borrowdale and Mary-Anne Simpson “Directors Liability in
Tort Recent Development” (1995) C&SLJ 400; Farrar “The Personal Liability” above n131;
Grantham and Rickett above n126; Watson above n127 at 185-197 and articles referred therein.
137 Williams v Natural Life Health Foods Ltd [1997] 1 BCLC 131 at 834-835.
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