Williams v Natural Life Health Foods Ltd [1998]

Court: House of Lords

Facts: Mr Williams and his partner sought to open a health food shop through a franchise with Natural Life Health Foods Ltd, relying on financial projections provided in a brochure. When the venture failed, Williams sued the company for negligence. After the company went into liquidation, Williams sought to hold the managing director, Mr Mistlin, personally liable, claiming Mistlin had assumed responsibility for the advice in the brochure.

Held: The House of Lords held that Mr Williams could not succeed in holding Mr Mistlin personally liable. The court found no direct or indirect assumption of responsibility by Mistlin towards Williams, and no reasonable reliance on the information provided. The principle of assumption of responsibility requires a specific relationship and personal responsibility, which were absent in this case.

Key Judicial Statement: Lord Steyn noted, "The principle of assumption of responsibility requires a special relationship and personal assumption of liability, coupled with reasonable reliance by the plaintiff. Mere reliance on the company’s information is insufficient to establish personal liability for a director."

💡LevelUpLaw: This case underscores the importance of proving a direct assumption of responsibility and reasonable reliance to hold company directors personally liable for negligent advice, reinforcing the separation between a company and its directors.