Business Law and Liability
Discussion
I had posted this in the P&P but I have been advised that this may be the best location!
www.pistonheads.com/gassing/topic.asp?t=317715&f=141&h=0
I would appreciate any help at all,
Thanks in advance,
Bubba
www.pistonheads.com/gassing/topic.asp?t=317715&f=141&h=0
I would appreciate any help at all,
Thanks in advance,
Bubba
From the business law education I have which is to a reasonably high level, on the subject of legal action being taken against a director instead of a limited company, that would be a strange occurance.
My gut reaction that in the case of rights infringement is that if it is the Ltd Comp who has been the infringer then it should be the company who is sued as in any other dispute.
The only reason why government bodies are allowed to sue directors is that as you are aware they have failed to fulfil their responsibilites as a director - and thus to a certain extent can in some cases lose their 'limited liability' for example if debts are present.
However, I am not aware of a case made by another company -*a winning one anyway*- where the director was sued instead of the company.
My honest opinion and my gut reaction is that the reason why they seemingly have made this statement, as I guess the letter has come from them not a solicitor (?) is to inflate their position by scaring you. They will also be aware that as the director of the limited company, you could wind up tomorrow, limit your liability, and there would be no-one there to sue and even if there was, no money left to sue for!
That said, this is my gut reaction based on general theoretical business law and some knowledge of its application as I also run a business. In this situation I would certainly seek specilist legal advice straight away to limit the damage of the situation as such rights cases and their outcomes cost thousands, hundreds of thousands and cost millions, and are very difficult...
...which is exactly the reason why they wont do it if they can avoid it - and *may* not even have a valid case against you anyway - so all is not lost.
Just found these guys: www.reddie.co.uk/IP2.htm who I cannot say I have ever used before, but would seem like a good place to start.
Good luck and let us know how it goes.
My gut reaction that in the case of rights infringement is that if it is the Ltd Comp who has been the infringer then it should be the company who is sued as in any other dispute.
The only reason why government bodies are allowed to sue directors is that as you are aware they have failed to fulfil their responsibilites as a director - and thus to a certain extent can in some cases lose their 'limited liability' for example if debts are present.
However, I am not aware of a case made by another company -*a winning one anyway*- where the director was sued instead of the company.
My honest opinion and my gut reaction is that the reason why they seemingly have made this statement, as I guess the letter has come from them not a solicitor (?) is to inflate their position by scaring you. They will also be aware that as the director of the limited company, you could wind up tomorrow, limit your liability, and there would be no-one there to sue and even if there was, no money left to sue for!
That said, this is my gut reaction based on general theoretical business law and some knowledge of its application as I also run a business. In this situation I would certainly seek specilist legal advice straight away to limit the damage of the situation as such rights cases and their outcomes cost thousands, hundreds of thousands and cost millions, and are very difficult...
...which is exactly the reason why they wont do it if they can avoid it - and *may* not even have a valid case against you anyway - so all is not lost.
Just found these guys: www.reddie.co.uk/IP2.htm who I cannot say I have ever used before, but would seem like a good place to start.
Good luck and let us know how it goes.
Justin,
Thank you very much for your advice, I will reveal all once this matter is over providing there isn't a gagging order.
I suspected it was for scare tactics, I have trawled through old cases of similar matters and the only time directors have ever been personally implicated are in wrongful trading cases. This is a very different matter.
Altough I am very very aware how much specialist lawyers can cost (I have been quoted £1500 per hour) neither I nor the company have a pot to pi** in when it comes to that sort of money.
Bubba
Thank you very much for your advice, I will reveal all once this matter is over providing there isn't a gagging order.
I suspected it was for scare tactics, I have trawled through old cases of similar matters and the only time directors have ever been personally implicated are in wrongful trading cases. This is a very different matter.
Altough I am very very aware how much specialist lawyers can cost (I have been quoted £1500 per hour) neither I nor the company have a pot to pi** in when it comes to that sort of money.
Bubba
bigbubba said:
Justin,
Thank you very much for your advice, I will reveal all once this matter is over providing there isn't a gagging order.
I suspected it was for scare tactics, I have trawled through old cases of similar matters and the only time directors have ever been personally implicated are in wrongful trading cases. This is a very different matter.
Although I am very very aware how much specialist lawyers can cost (I have been quoted £1500 per hour) neither I nor the company have a pot to pi** in when it comes to that sort of money.
Bubba
Thank you very much for your advice, I will reveal all once this matter is over providing there isn't a gagging order.
I suspected it was for scare tactics, I have trawled through old cases of similar matters and the only time directors have ever been personally implicated are in wrongful trading cases. This is a very different matter.
Although I am very very aware how much specialist lawyers can cost (I have been quoted £1500 per hour) neither I nor the company have a pot to pi** in when it comes to that sort of money.
Bubba
This is probably why they are trying to scare you with personal liability, then this implies you have a personal risk, house, life savings etc.
It does sound very strange to me to be anything else.
There is also the fact that from what you say that you do not own a large company, ie not making millions a year, thus they probably realise that even if they did sue the company, what it would cost to sue would outweigh any return.
Without knowling more its difficult to speculate, but it may just be a tactic to get you to stop making whatever you are making/doing. If its music industry related I may have some prior knowledge but it is is to do with a physical product or design then it is way over my head as to whether they have a legitimate claim.
Being devils advocate though, there is this possibility - Most firms of lawyers will give a free appraisal of you case to see whether they will take it on. During this ask if it is possible that action will be taken out against you personally. If this is impossible, there is nothing stopping you continuing as you are and calling their bluff! There is a reasonable chance they are bluffing, and if they have the situation with the personal liability wrong it may even show that they have not even taken legal advice.
The other option is that what they really wanted to do was send a message that they want you to stop making what you are making, and confirmation that although you fel that you have done nothing wrong you will stop producing whatever you are producing that they think is an infringement.
The variables are how much you have to lose if you get wound up if the company is sued and you lose and also how much you are making from the product that they think is theirs. Feel free to email me if you want to not publicly talk in any more detail!
Justin,
The period of the alledged 'offence' was for a few months in 2005 and the activity was stopped by the defendents' own choice even before we were contacted by the lawyers.
I have had independant legal advice, I was told that catagorically there is no personal case to answer, I was just concerned that there may be some weird case law that has set a precedent so to speak.
I am just concerned that as the controlling director that any 'offence' that the company makes would somehow be my responsibility?
Bubba
The period of the alledged 'offence' was for a few months in 2005 and the activity was stopped by the defendents' own choice even before we were contacted by the lawyers.
I have had independant legal advice, I was told that catagorically there is no personal case to answer, I was just concerned that there may be some weird case law that has set a precedent so to speak.
I am just concerned that as the controlling director that any 'offence' that the company makes would somehow be my responsibility?
Bubba
bigbubba said:
I see what you are saying ZOD, but that is Austrailian Law, surely there will be differences in English Law.
Would it not shatter the ethos behind Limited Companies? Where would Companies House stand with the basis of the LTD. company ruling?
Bubba
English courts will look to other common law courts, particularly Commonwealth ones for precedents. This is a complex area and is supposed only to apply in a case in which the controlling mind is essentially abusing the corporate format to try to escape liability for personal actions. If you are not in that category, then you should be OK. I wouldn't want to be defending myself on this kind of issue.Would it not shatter the ethos behind Limited Companies? Where would Companies House stand with the basis of the LTD. company ruling?
Bubba
The 'offence' was commited in the company name, all monies were paid into a company bank account, no drawings were taken, as a result of poor trading the company made a profit that wasn't even taxable. This is the the scale of the dilema.
It can also be evidenced that reasonable steps were taken by the 'controlling mind' to trade without breaching the rights issue, but for reasons (that I can't discuss) beyond the companies control prevented this.
I appreciate that I really shouldn't be defending myself, however, if I can't afford legal representation then I have no other choice. I can only rely on my evidence to show that it was neither deliberate or indeed a personal decision.
Thanks for all of your input, I am really concerned about it, but I suppose that is their intention.
Bubba
It can also be evidenced that reasonable steps were taken by the 'controlling mind' to trade without breaching the rights issue, but for reasons (that I can't discuss) beyond the companies control prevented this.
I appreciate that I really shouldn't be defending myself, however, if I can't afford legal representation then I have no other choice. I can only rely on my evidence to show that it was neither deliberate or indeed a personal decision.
Thanks for all of your input, I am really concerned about it, but I suppose that is their intention.
Bubba
bigbubba said:
The 'offence' was commited in the company name, all monies were paid into a company bank account, no drawings were taken, as a result of poor trading the company made a profit that wasn't even taxable. This is the the scale of the dilema.
It can also be evidenced that reasonable steps were taken by the 'controlling mind' to trade without breaching the rights issue, but for reasons (that I can't discuss) beyond the companies control prevented this.
I appreciate that I really shouldn't be defending myself, however, if I can't afford legal representation then I have no other choice. I can only rely on my evidence to show that it was neither deliberate or indeed a personal decision.
Thanks for all of your input, I am really concerned about it, but I suppose that is their intention.
Bubba
Have you thought about having an initial consultation with a solicitor (it will have to be a good commercial firm) for an assessment of your case? They may be able to tell you whether it is hopeless (in which case, you would probably best settle) or whether you have a good defence, in which case, it might be worth the risk of paying for representation on the basis that the other side would probably have to pick up your costs if you win. It can also be evidenced that reasonable steps were taken by the 'controlling mind' to trade without breaching the rights issue, but for reasons (that I can't discuss) beyond the companies control prevented this.
I appreciate that I really shouldn't be defending myself, however, if I can't afford legal representation then I have no other choice. I can only rely on my evidence to show that it was neither deliberate or indeed a personal decision.
Thanks for all of your input, I am really concerned about it, but I suppose that is their intention.
Bubba
Losing because you cannot present your case properly, despite not being at fault, would be a very bad result. If the amount you stand to have to pay in the event of losing the case would banrupt you, then what do you have to lose in using a solicitor?
Have you checked that you are not eligible for Legal Aid?
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