Williams v Natural Life Health Foods Ltd [1998] 1 WLR 83

Court: House of Lords

Facts: Mr. Mistlin, managing director and principal shareholder of Natural Life Health Foods Ltd, was involved in producing a brochure used in negotiations with a franchisee, Williams. Williams sued both NL and Mistlin for misrepresentation in the brochure. The key issue was whether Mistlin could be personally liable for the alleged misrepresentation.

Issue: Can a director or shareholder be held personally liable for negligence or misrepresentation made in the course of their role, without having explicitly assumed personal responsibility?

Held: The House of Lords held that Mistlin could not be personally liable because he had not assumed personal responsibility towards Williams. Mistlin's actions were on behalf of the company, and there was no evidence that he had personally guaranteed the accuracy of the brochure’s representations.

Key Judicial Statement: Lord Steyn explained, "In order to establish personal liability under the principle of Hedley Byrne, there must have been an assumption of responsibility such as to create a special relationship with the director or employee himself."

💡Leveluplaw: Directors and shareholders are not personally liable for company actions unless they have explicitly assumed personal responsibility towards a claimant.