You might be if you wilfully fail to comply with an injunction made against your company.
The recent case concerning The Lord Mayor and the Citizens of the City of Westminster v Addbins Limited and Others [2012] reaffirmed the potential for directors’ to incur individual personal liability for the unlawful acts of their companies.
Why Was a Director in Contempt?
In the Addbins case, the Court held two companies and a director liable for contempt for failing to uphold a High Court injunction in the companies’ name. The injunction had required the removal of 3,000 cigarette bins displaying unauthorised advertisements from buildings in the City of Westminster.
Concluding proceeding to a dispute that started in 2008, in June 2012 the High Court held that the companies were in violation of the Town and Country (Control of Advertisements) (England) Regulations 2007 for advertising without permission from the local planning authority. An injunction was granted against the companies ordering the removal of the bins within 14 days. After the 14 day period was not met, Westminster City Council issued proceedings for contempt of court.
Having observed that much more could have been done by the companies to ensure compliance with the injunction, the court found both the companies and the director in contempt. Each company was fined £2,000 and the director £1,000. In making its judgment the Court rejected several arguments: that the cigarette bins were installed for general public welfare at the Companies’ own costs; that the companies were unable to comply within the time limit and that non-compliance was unintentional.
The Emphasis of the Judgement in the Addbins Case
It is important to note from this ruling that the High Court played down any emphasis on the time available to carry out the injunction order in its complete terms. The court found that the companies could have made much more effort to comply with the order within the allocated time given their available resources.
In making a director liable for breach of the injunction which had not originally been served on him personally, it implied that the court believed there was a wilful breach of the order. The court believed that the director had not taken reasonable steps to ensure the companies complied with an order which he knew about.
Comment
Directors and businesses must be aware of the implications this ruling has for their liabilities. The High Court imposed a direct penalty on a director for his implicit involvement in contempt even though he was not a party to the injunction. Although no custodial sentence was imposed because the companies subsequently removed the bins prior to the final hearing, this case serves to highlight both the financial risks and the risks of prison where court orders are not complied with.
For more information about this case or about directors’ duties in general, please contact James Crichton via e-mail jcrichton@rollingsons.co.uk or by telephone on 0207 611 4848.
