Cases - Bradford and Bingley plc v Hayes

Record details

Name

Bradford and Bingley plc v Hayes

Date

(2001)

Citation

(unreported)

Legislation

Contracts (Rights of Third Parties) Act 1999

Keywords

Negligence in valuations and surveys

Summary

The defendant was a director of a firm of valuers that practised as a limited company. The claimant lenders instructed the firm to carry out a mortgage valuation of a flat and the work was entrusted to the defendant, who did it negligently. It was held that, while the firm was clearly liable to the claimants for this negligence, the defendant could not be made personally liable, in the absence of clear evidence to show that he had assumed personal responsibility to the claimants for his work. The judge said that to impose liability would seriously undermine a fundamental principle of company law, namely that a company director is not normally liable for the actions of the company, since the company is a separate legal person.

The judge also appeared to be influenced by the fact that, unlike in Merrett v Babb, this action was brought by a commercial lender and not by a private purchaser. Moreover, the judge pointed out that the claimants here had a perfectly adequate legal remedy against the company itself.