Deceitful director personally liable for £1m damages

A deceitful director who lied about her company’s ability to pay a supplier has been found personally liable for damages of £1m.

However, her former husband who was her fellow director, was not liable as he knew nothing about the disputed contract.

The woman and her former husband were equal shareholders in a company buying and selling commodities.

A supplier alleged that in 2012, the company had failed to pay for a consignment of sunflower oil. The company went into liquidation before the claim could be settled so the supplier sued the two directors directly for fraud to recover the £1m cost of the oil.

It claimed the woman director had lied about her company’s ability to pay for the cargo and had forged paperwork and emails. It said it would not have agreed the contract if she had not given those assurances.

The supplier argued that her former husband was also a director of the company and so was jointly liable.

The court pointed out that directors could be personally liable for damages if it could be shown they had acted fraudulently. It held that on the balance of probabilities, the woman had forged the documents and sent the relevant emails. She was therefore liable to cover the £1m cost of the oil.

The former husband was cleared of blame and responsibility for the loss. The judge was satisfied that he gave his evidence in a truthful manner and was not liable. There was no evidence that he set out with a common intention with his former wife to fabricate and concoct emails.

Please contact Sarah Liddiard if you would like more information about the issues raised in this article or any aspect of contracts and company law.