Meridian Global Funds Management Asia Ltd v Securities Commission | |
---|---|
Court | Judicial Committee of the Privy Council |
Decided | 26 May 1995 |
Citation(s) | [1995] UKPC 5, [1995] BCC 942, [1995] 3 All ER 918, [1995] UKPC 5, [1995] 3 WLR 413, [1995] 2 BCLC 116, [1995] 2 AC 500 |
Court membership | |
Judge(s) sitting | |
Case opinions | |
Lord Hoffman | |
Keywords | |
Derivative claim |
Meridian Global Funds Management Asia Ltd v Securities Commission [1995] UKPC 5 is a New Zealand company law case, also relevant for United Kingdom company law, decided by the privy council. The common-law principles will have influence in jurisdictions with similar laws.
Meridian was part of a syndicate bidding to take over NZ company, Euro National Corp Ltd. Mr Koo and Mr Ng, working for Meridian, bought 49% of Euro's shares. But Meridian failed to disclose to the Securities Commission of New Zealand that they had become a 'substantial security holder' of over 5% because Koo and Ng wanted to hide the transaction from their superiors. The Commission imposed fines against Koo, Ng and the Meridian. The company argued it was not liable because it had not known about it.
Heron J held Meridian knew it was a substantial property holder, because as employees the knowledge of Koo and Ng was attributable to the company. The NZ Court of Appeal held that Koo's knowledge should be attributable because he was the 'directing mind and will' of the company. Meridian argued that was only the board, not Koo.
Lord Hoffmann for the Privy Council advised that 'there would be little sense in deeming such a persona ficta to exist unless there were also rules to tell one what acts were to count as acts of the company. It is therefore a necessary part of corporate personality that there should be rules by which acts are attributed to the company. These may be called 'the rules of attribution'. There can be rules in the constitution or rules implied (e.g. shareholders acting unanimously are the company, Multinational Gas ). Otherwise, the principles of agency apply, and the company acts through its servants and agents.
9. These primary rules of attribution are obviously not enough to enable a company to go out into the world and do business. Not every act on behalf of the company could be expected to be the subject of a resolution of the board or a unanimous decision of the shareholders. The company therefore builds upon the primary rules of attribution by using general rules of attribution which are equally available to natural persons, namely, the principles of agency. It will appoint servants and agents whose acts, by a combination of the general principles of agency and the company's primary rules of attribution, count as the acts of the company. And having done so, it will also make itself subject to the general rules by which liability for the acts of others can be attributed to natural persons, such as estoppel or ostensible authority in contract and vicarious liability in tort.
10. It is worth pausing at this stage to make what may seem an obvious point. Any statement about what a company has or has not done, or can or cannot do, is necessarily a reference to the rules of attribution (primary and general) as they apply to that company. Judges sometimes say that a company "as such" cannot do anything; it must act by servants or agents. This may seem an unexceptionable, even banal remark. And of course the meaning is usually perfectly clear. But a reference to a company "as such" might suggest that there is something out there called the company of which one can meaningfully say that it can or cannot do something. There is in fact no such thing as the company as such, no ding an sich, only the applicable rules. To say that a company cannot do something means only that there is no one whose doing of that act would, under the applicable rules of attribution, count as an act of the company.
11. The company's primary rules of attribution together with the general principles of agency, vicarious liability and so forth are usually sufficient to enable one to determine its rights and obligations. In exceptional cases, however, they will not provide an answer. This will be the case when a rule of law, either expressly or by implication, excludes attribution on the basis of the general principles of agency or vicarious liability. For example, a rule may be stated in language primarily applicable to a natural person and require some act or state of mind on the part of that person "himself", as opposed to his servants or agents. This is generally true of rules of the criminal law, which ordinarily impose liability only for the actus reus and mens rea of the defendant himself. How is such a rule to be applied to a company?
12. One possibility is that the court may come to the conclusion that the rule was not intended to apply to companies at all; for example, a law which created an offence for which the only penalty was community service. Another possibility is that the court might interpret the law as meaning that it could apply to a company only on the basis of its primary rules of attribution, i.e. if the act giving rise to liability was specifically authorised by a resolution of the board or a unanimous agreement of the shareholders. But there will be many cases in which neither of these solutions is satisfactory; in which the court considers that the law was intended to apply to companies and that, although it excludes ordinary vicarious liability, insistence on the primary rules of attribution would in practice defeat that intention. In such a case, the court must fashion a special rule of attribution for the particular substantive rule. This is always a matter of interpretation: given that it was intended to apply to a company, how was it intended to apply? Whose act (or knowledge, or state of mind) was for this purpose intended to count as the act etc. of the company? One finds the answer to this question by applying the usual canons of interpretation, taking into account the language of the rule (if it is a statute) and its content and policy.
[...]
23. ...the fact that a company’s employee is authorised to drive a lorry does not in itself lead to the conclusion that if he kills someone by reckless driving, the company will be guilty of manslaughter. There is no inconsistency. Each is an example of an attribution rule for a particular purpose, tailored as it always must be to the terms and policies of the substantive rule...
Respondeat superior is a doctrine that a party is responsible for acts of his agents. For example, in the United States, there are circumstances when an employer is liable for acts of employees performed within the course of their employment. This rule is also called the master-servant rule, recognized in both common law and civil law jurisdictions.
Corporate law is the body of law governing the rights, relations, and conduct of persons, companies, organizations and businesses. The term refers to the legal practice of law relating to corporations, or to the theory of corporations. Corporate law often describes the law relating to matters which derive directly from the life-cycle of a corporation. It thus encompasses the formation, funding, governance, and death of a corporation.
Ultra vires is a Latin phrase used in law to describe an act that requires legal authority but is done without it. Its opposite, an act done under proper authority, is intra vires. Acts that are intra vires may equivalently be termed "valid", and those that are ultra vires termed "invalid".
In law, liable means "responsible or answerable in law; legally obligated". Legal liability concerns both civil law and criminal law and can arise from various areas of law, such as contracts, torts, taxes, or fines given by government agencies. The claimant is the one who seeks to establish, or prove, liability.
Vicarious liability is a form of a strict, secondary liability that arises under the common law doctrine of agency, respondeat superior, the responsibility of the superior for the acts of their subordinate or, in a broader sense, the responsibility of any third party that had the "right, ability or duty to control" the activities of a violator. It can be distinguished from contributory liability, another form of secondary liability, which is rooted in the tort theory of enterprise liability because, unlike contributory infringement, knowledge is not an element of vicarious liability. The law has developed the view that some relationships by their nature require the person who engages others to accept responsibility for the wrongdoing of those others. The most important such relationship for practical purposes is that of employer and employee.
Piercing the corporate veil or lifting the corporate veil is a legal decision to treat the rights or duties of a corporation as the rights or liabilities of its shareholders. Usually a corporation is treated as a separate legal person, which is solely responsible for the debts it incurs and the sole beneficiary of the credit it is owed. Common law countries usually uphold this principle of separate personhood, but in exceptional situations may "pierce" or "lift" the corporate veil.
Secondary liability, or indirect infringement, arises when a party materially contributes to, facilitates, induces, or is otherwise responsible for directly infringing acts carried out by another party. The US has statutorily codified secondary liability rules for trademarks and patents, but for matters relating to copyright, this has solely been a product of case law developments. In other words, courts, rather than Congress, have been the primary developers of theories and policies concerning secondary liability.
Salomon v A Salomon & Co Ltd[1896] UKHL 1, [1897] AC 22 is a landmark UK company law case. The effect of the House of Lords' unanimous ruling was to uphold firmly the doctrine of corporate personality, as set out in the Companies Act 1862, so that creditors of an insolvent company could not sue the company's shareholders for payment of outstanding debts.
In law, the principle of imputation or attribution underpins the concept that ignorantia juris non excusat—ignorance of the law does not excuse. All laws are published and available for study in all developed states. The said imputation might also be termed "fair notice." The content of the law is imputed to all persons who are within the jurisdiction, no matter how transiently.
A civil conspiracy is a form of conspiracy involving an agreement between two or more parties to deprive a third party of legal rights or deceive a third party to obtain an illegal objective. A form of collusion, a conspiracy may also refer to a group of people who make an agreement to form a partnership in which each member becomes the agent or partner of every other member and engage in planning or agreeing to commit some act. It is not necessary that the conspirators be involved in all stages of planning or be aware of all details. Any voluntary agreement and some overt act by one conspirator in furtherance of the plan are the main elements necessary to prove a conspiracy.
A Himalaya clause is a contractual provision expressed to be for the benefit of a third party who is not a party to the contract. Although theoretically applicable to any form of contract, most of the jurisprudence relating to Himalaya clauses relate to maritime matters, and exclusion clauses in bills of lading for the benefit of employees, crew, and agents, stevedores in particular.
The United Kingdom company law regulates corporations formed under the Companies Act 2006. Also governed by the Insolvency Act 1986, the UK Corporate Governance Code, European Union Directives and court cases, the company is the primary legal vehicle to organise and run business. Tracing their modern history to the late Industrial Revolution, public companies now employ more people and generate more of wealth in the United Kingdom economy than any other form of organisation. The United Kingdom was the first country to draft modern corporation statutes, where through a simple registration procedure any investors could incorporate, limit liability to their commercial creditors in the event of business insolvency, and where management was delegated to a centralised board of directors. An influential model within Europe, the Commonwealth and as an international standard setter, UK law has always given people broad freedom to design the internal company rules, so long as the mandatory minimum rights of investors under its legislation are complied with.
Vicarious liability in English law is a doctrine of English tort law that imposes strict liability on employers for the wrongdoings of their employees. Generally, an employer will be held liable for any tort committed while an employee is conducting their duties. This liability has expanded in recent years following the decision in Lister v Hesley Hall Ltd to better cover intentional torts, such as sexual assault and deceit. Historically, it was held that most intentional wrongdoings were not in the course of ordinary employment, but recent case law suggests that where an action is closely connected with an employee's duties, an employer can be found vicariously liable. The leading case is now the Supreme Court decision in Catholic Child Welfare Society v Institute of the Brothers of the Christian Schools, which emphasised the concept of "enterprise risk".
Lister v Hesley Hall Ltd [2001] UKHL 22 is an English tort law case, creating a new precedent for finding where an employer is vicariously liable for the torts of their employees. Prior to this decision, it had been found that sexual abuse by employees of others could not be seen as in the course of their employment, precluding recovery from the employer. The majority of the House of Lords however overruled the Court of Appeal, and these earlier decisions, establishing that the "relative closeness" connecting the tort and the nature of an individual's employment established liability.
Stone & Rolls Ltd v Moore Stephens[2009] UKHL 39 is a leading case relevant for UK company law and the law on fraud and ex turpi causa non oritur actio. The House of Lords decided by a majority of three to two that where the director and sole shareholder of a closely held private company deceived the auditors with fraud carried out on all creditors, subsequently the creditors of the insolvent company would be barred from suing the auditors for negligence from the shoes of the company. The Lords reasoned that where the company was only identifiable with one person, the fraud of that person would be attributable to the company, and the "company" could not rely on its own illegal fraud when bringing a claim for negligence against any auditors. It was the last case to be argued before the House of Lords.
Attribution of liability to United Kingdom companies involves the rules of contract, agency, capacity, tort and crime as they relate to UK company law. They establish under what circumstances a company may be sued for the actions of its directors, employees and other agents.
The law of agency in South Africa regulates the performance of a juristic act on behalf or in the name of one person by another, who is authorised by the principal to act, with the result that a legal tie arises between the principal and a third party, which creates, alters or discharges legal relations between the principal and a third party. Kerr states that, in legal contexts, the word "agent" is most commonly used of a person whose activities are concerned with the formation, variation or termination of contractual obligations, and that agency has a corresponding meaning. It is the agent's position as the principal's authorised representative in affecting the principal's legal relations with third parties that is the essence of agency.
Multinational Gas and Petrochemical Co v Multinational Gas and Petrochemical Services Ltd [1983] Ch 258 is a leading United Kingdom company law case relating to directors' liability. The case is the principal authority for the proposition that a company cannot make any claim against a director for breach of duty if the acts of the director have been ratified by the members of the company.
Akamai Technologies, Inc. v. Limelight Networks, Inc., 797 F.3d 1020, is a 2015 en banc decision of the United States Court of Appeals for the Federal Circuit, on remand from a 2014 decision of the U.S. Supreme Court reversing a previous Federal Circuit decision in the case. This is the most recent in a string of decisions in the case that concern the proper legal standard for determining patent infringement liability when multiple actors are involved in carrying out the claimed infringement of a method patent and no single accused infringer has performed all of the steps. In the 2015 remand decision, the Federal Circuit expanded the scope of vicarious liability in such cases, holding that one actor could be held liable for the acts of another actor "when an alleged infringer conditions participation in an activity or receipt of a benefit upon performance of a step or steps of a patented method and establishes the manner or timing of that performance." In addition, the court held that where multiple "actors form a joint enterprise, all can be charged with the acts of the other[s], rendering each liable for the steps performed by the other[s] as if each is a single actor."
Byrne v Ireland[1972] IR 241 is an Irish Supreme Court case where the court held that the State was not immune from tortious liability and thus abolished the immunity of the State in tort. Therefore, the State could be sued for the actions of its servants. This case also determined that the Attorney General was the appropriate party to represent the State in these tort cases.