Notes Of Cases: The Alter Ego of a Company
| DOI | http://doi.org/10.1111/j.1468-2230.1965.tb02910.x |
| Author | L. H. Leigh |
| Date | 01 September 1965 |
| Published date | 01 September 1965 |
NOTES
OF
CASES
THE
ALTER
EGO
OF
A
COMPANY
THE basis upon which personal acts and omissions are to be
ascribed to corporations is not infrequently obscure.
It
is trite
learning that civil responsibility could
in
general be imposed
respondeat superior.
The courts were thereby absolved from solving
the problem how an entity
“.
.
.
invisible, intangible and existing
only in contemplation of law could itself act wrongfully
or
negligently. Continental lawyers, lacking this easy solution, took
refuge in metaphysical constructions of the nature of the corporate
entity and its relationship to the humans who acted on its behalf.
From the concepts
so
created, practical solutions, albeit couched in
a language curious to the common lawyer, were formulated and
applied.2
To
the great Victorian, Lord Lindley, such concepts
represented
“.
.
.
metaphysical subtleties, both needless and
fallacious
’)
and English lawyers were glad to conc~r.~
Vicarious liability could not provide an adequate solution where
personal fault alone sufficed to found liability. The most prominent
of such provisions are found in sections
502
and
503
of the Merchant
Shipping Act,
1894.
Section
503,
for example, provides that the
owner of a ship shall not be liable to damages above a certain
amount where, without his actual fault
or
privity, certain types
of loss
or
damage are caused through the act
or
omission of any
person in the navigation
or
management of the ship.
If
either of
these sections were to apply to shipowners who happened to be
limited companies, the actions of some person
or
persons had to be
ascribed personally to the ~ompany.~ This step was taken in
Lennards Carrying Company
v.
Asiatic Petroleum Co. Ltd6
There
the ambit of inquiry was largely c~nventional.~
A
company is
generally governed by its board of directors.
It
could in some cases
be equally as fully represented by a managing director. The House
of Lords really went no further than this in analysing the control
structure of a limited company. In respect of the board’s actions
or
those of
a
managing director, the company, according to Lord
1
Trustees of Dartmouth College
v.
Woodward
(1819)
4
Wheat 636 at p. 659,
per
2
Hallis,
Corporate Personality,
p. 156
et seq.
3
In
Citizens Life Assurance Company
v.
Brown
[1904] A.C.
423
at p.
428.
4
See Fifoot,
Judge and Jurist in the Reign
of
Victoria,
Chap.
3.
5
The development
of
corporate criminal liability really represents
a
jodicial
inversion
of
the problem.
6
[1915] A.C. 705.
7
The term
“organ
”
had been used in
Gluckstein
v.
Barnes
[1900] A.C.
240
at p. 257,
per
Lord Robertson, to describe a relationship
not
aptly compre-
hended by the concepts
of
agency
or
trusteeship. See also
Automatic Self-
Cleansing Filter Syndicate
v.
Cunningham
[19oS]
2
Ch.
34.
Marshall C.J.
584
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