Lennard's Carrying Co Ltd v Asiatic Petroleum Co Ltd [1915] AC 705
Citation:Lennard's Carrying Co Ltd v Asiatic Petroleum Co Ltd [1915] AC 705.
Link to case on Canada University website.
Rule of thumb:Can you sue a company for the actions of directors? What happens if an engineer does not do all the proper checks on movable property and it causes damage? The Court in this case affirmed the principle of the directors being ‘controlling mind’ of the company. They confirmed that even although the directors are considered to be the ‘agents’ of the company, meaning that agency law largely regulates how they carry out their duties as a director, this does not make them separately liable from the company. If the directors carry out wrongdoing then people are supposed to sue the company rather than the directors as individuals. This case also affirmed the general principle of law that engineers are generally expected to do all the standard industry checks on the ‘worthiness’ of property to operate properly for a reasonable period.
Background facts:
The facts of this case were that the director of a company did not do proper checks on the ship’s boiler which ultimately led to the ship catching fire and sinking. Asiatic Petroleum had cargo on board and sued the company for the director’s negligence.
Judgment:
This Court confirmed that not doing the proper checks on the boiler was negligence and it also confirmed that the company was vicariously liable for the negligence of directors, not just employees.
Ratio-decidendi:
‘a corporation is an abstraction. It has no mind of its own any more than it has a body of its own; its active and directing will must consequently be sought in the person of somebody who for some purposes may be called an agent, but who is really the directing mind and will of the corporation, the very ego and centre of the personality of the corporation. .... It must be upon the true construction of that section in such a case as the present one that the fault or privity is the fault or privity of somebody who is not merely a servant or agent for whom the company is liable upon the footing respondeat superior, but somebody for whom the company is liable because his action is the very action of the company itself. It is not enough that the fault should be the fault of a servant in order to exonerate the owner, the fault must also be one which is not the fault of the owner, or a fault to which the owner is privy; and I take the view that when anybody sets up that section to excuse himself from the normal consequences of the maxim respondeat superior the burden lies upon him to do so... ...whatever is not known about Mr. Lennard's position, this is known for certain, Mr. Lennard took the active part in the management of this ship on behalf of the owners, and Mr. Lennard, as I have said, was registered as the person designated for this purpose in the ship's register. Mr. Lennard therefore was the natural person to come on behalf of the owners and give full evidence not only about the events of which I have spoken, and which related to the seaworthiness of the ship, but about his own position and as to whether or not he was the life and soul of the company. For if Mr. Lennard was the directing mind of the company, then his action must, unless a corporation is not to be liable at all, have been an action which was the action of the company itself...’’, Viscount Haldane
Warning: This is not professional legal advice. This is not professional legal education advice. Please obtain professional guidance before embarking on any legal course of action. This is just an interpretation of a Judgment by persons of legal insight & varying levels of legal specialism, experience & expertise. Please read the Judgment yourself and form your own interpretation of it with professional assistance.