The tort liability of corporate participants

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Theses / Dissertations
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Thesis discipline
Degree name
Master of Laws
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Volume Title
Simpson, Mary-Anne

This thesis considers the alternative approaches taken by the courts in fixing tort liability upon corporate participants. The term 'corporate participant' primarily covers directors and shareholders but also, in this study, incorporates employees. The principal argument is that conventional analyses of liability rest upon familiar but ultimately unhelpful foundations, such as 'agency' and 'piercing the corporate veil'. Instead, this paper proposes applying the 'assumption of responsibility' test, which evolved in the law of torts, to corporate-tort issues, whether involving sole traders or corporate groups. A single unifying test directs and focuses the enquiry in a way that present formulations do not. The paper necessarily considers the historical origins of, and theoretical justifications for, limited liability. From these foundations, it seeks to evaluate the extent to which history should guide, or inhibit, the development of limited liability. Leading 'law and economics' treatments of limited liability are summarised, in order to evaluate the persuasiveness of the doctrine, and its present-day significance. Particular reference is made to the distinction between voluntary (contract) and involuntary (tort) creditors. A third category, that of the 'quasi-involuntary creditor', assumes significance when determining the existence of duties of care. The term may be applied to most cases where liability is sought to be fixed upon directors or shareholders; it covers those creditors whose tort injury arose during the course of a contractual relationship with the company. Such cases are best dealt with by assuming that the parties' bargain included that liability be limited. This presumption may be displaced by evidence which indicates that, on the contrary, the defendant had assumed a personal interest in the conduct of the plaintiff’s affairs. Reference to Canadian dicta and to European legislation affords a fruitful contrast to Commonwealth case-law on employee liability. Reform of employee tort liability is welcomed, as it would introduce further consistency into the treatment of corporate participants. The thesis concludes by specifying the types of conduct that will lead to directorial or shareholder liability.

Limited liability--New Zealand, Tort liability of corporations--New Zealand, Directors of corporations--Legal status, laws, etc.--New Zealand, Stockholders--Legal status, laws, etc.--New Zealand, Labor laws and legislation--New Zealand
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ANZSRC fields of research
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