Calthorpe v. Trechmann. Macleay v. Tait [1905] UKHL 581 (15 December 1905)

Calthorpe v. Trechmann. Macleay v. Tait [1905] UKHL 581 (15 December 1905)

To recover damages for non-disclosure under section 38 of the Companies Act 1867, a plaintiff must prove that, had the omitted contract been disclosed, he would not have taken shares and that he suffered actual damage as a result. In this case, the plaintiffs failed to prove that the omission caused their loss, and the directors were protected by the waiver clause as the omission was an honest mistake.

Citation
[1905] UKHL 581
Parties
Appellant: Calthorpe; Respondent: Trechmann; Appellant: Macleay; Respondent: Tait
Jurisdiction
United Kingdom
Judgment Date
15 December 1905
Procedural Posture
Civil Appeal / Appeal From Court of Appeal to House of Lords
Outcome
appeals allowed; actions dismissed
Legal Topics
Liability of Directors, Fraudulent Prospectus, Non Disclosure, Damages for Misrepresentation, Waiver Clause, Companies Act 1867 Section 38
Company Law Tort Law Liability of Directors Fraudulent Prospectus Non Disclosure Damages for Misrepresentation Waiver Clause Companies Act 1867 Section 38

Case Brief

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Parties

Calthorpe

Appellant

Trechmann

Respondent

Macleay

Appellant

Tait

Respondent

Procedural Posture

Civil Appeal / Appeal From Court of Appeal to House of Lords

Legal Issues

  1. 1 Whether omission of a contract from a company prospectus under Companies Act 1867 section 38 constitutes actionable fraud against directors
  2. 2 Whether proof of damage and causation is required for recovery of damages under section 38
  3. 3 Whether a waiver clause protects directors from liability for innocent non-disclosure

Ratio Decidendi

To recover damages for non-disclosure under section 38 of the Companies Act 1867, a plaintiff must prove that, had the omitted contract been disclosed, he would not have taken shares and that he suffered actual damage as a result. In this case, the plaintiffs failed to prove that the omission caused their loss, and the directors were protected by the waiver clause as the omission was an honest mistake.

Court Disposition

appeals allowed; actions dismissed

Orders

  • Judgments of the Court of Appeal reversed
  • Actions dismissed with costs both in the House of Lords and below