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The Pamphlet Collection of Sir Robert Stout: Volume 84


page 15


To the facts stated in this case, it is to be added, that Colonel Grouraud ceased to be a Director of the Consolidated Company on the 11th August, 1881, and that Bigelow continued until the 18th February, 1884.

Under these Articles of Association, it is clear that the Directors had power to bind the Company by a compromise of the action which was brought on the 20th May, 1882, and that power was none the less exercisable by reason of the fact that one of the defendants was a Director of the Company.

Upon the facts stated, the Directors, other than Bigelow, are not charged with any malâ fides in the compromise which they made; and on the contrary, there existed in the relations between the United Company and the Consolidated Company reasons which, to the Board of the latter Company, may well have seemed to render it expedient to compromise the action for a much less sum than they might have expected to obtain if they had prosecuted it.

The facts, in my opinion, certainly do not go beyond charging the Board with a mistake of judgment. Directors cannot be rendered personally liable for a mistake of judgment, unless their mistake is so gross as that they can be accused of what is commonly called crassa negligentia. There is a passage in Lord Hatherley's judgment in Overend, Gurney & Co., and Gibb (L.R. 5 H.L. 494), which is instructive upon this. In my opinion, the Directors, other than Bigelow, could not upon these facts be rendered liable for making the compromise which they made.

As regards Bigelow himself, I do not know whether at the date of the compromise he was a Director of the United page 16 Company, as well as of the Consolidated Company, I think he is entitled to say that under Article 90 it was for the Directors of the Consolidated Company, other than himself, to decide as to what was most to the interests of the Consolidated Company, in the matter of a compromise in which he was himself an interested party. But I can conceive that upon certain facts he might be liable for breach of duty, as for instance, if he deceived the Company, of which he was a Director, by using the position of Director of the United Company, to induce that Company to put forward an untenable contention, with a view to drawing the Consolidated Company into a compromise beneficial to himself. But no such facts are alleged. Upon the materials before me, I do not think that any of the Directors of the Consolidated Company could be rendered liable.

(Signed) H. Bueton Buckley.

18, Old Square, Lincoln's Inn,