''Re Cardiff Savings Bank'' 8922 Ch 100, often called the ''

Marquess of Bute Marquess of the County of Bute, shortened in general usage to Marquess of Bute, is a title in the Peerage of Great Britain. It was created in 1796 for John Stuart, 1st Marquess of Bute, John Stuart, 4th Earl of Bute. Family history John Stuart ...

's case'' is a

UK company law The United Kingdom company law regulates corporations formed under the Companies Act 2006. Also governed by the Insolvency Act 1986, the UK Corporate Governance Code, European Union Directives and court cases, the company is the primary legal ...

case, concerning the duty of care owed by members of the board. It is old law, but is still often mentioned as an extreme example of to what extent a "subjective" duty of care (as opposed to an objective duty of care under the modern law, see '' Re D'Jan of London Ltd'' and s.174

Companies Act 2006 The Companies Act 2006 (c 46) is an Act of the Parliament of the United Kingdom which forms the primary source of UK company law. The Act was brought into force in stages, with the final provision being commenced on 1 October 2009. It largely ...

) allowed directors to escape consequences of their

negligence Negligence (Lat. ''negligentia'') is a failure to exercise appropriate and/or ethical ruled care expected to be exercised amongst specified circumstances. The area of tort law known as ''negligence'' involves harm caused by failing to act as a ...

. The court held that there was no breach of duty of care for failing to attend bank meetings. It is unlikely in modern corporate law that this decision would be reached on the facts.

Facts

The

as an infant of six months was installed in 1848 on the

board of directors A board of directors (commonly referred simply as the board) is an executive committee that jointly supervises the activities of an organization, which can be either a for-profit or a nonprofit organization such as a business, nonprofit organiz ...

as "President" of the Cardiff Savings Bank, in effect inheriting the office from his father. The company was plunged into insolvency in 1886 when Lord Bute was 38 years old. He had been to a board meeting when he was 21, in 1868, and apparently signed the minutes. But he was generally ignorant of the company's affairs. The company went insolvent because the directors defrauded the company of large sums of money. The liquidator wanted Lord Bute to make a contribution for the losses.

Judgment

Stirling J held that the duty owed by Lord Bute was essentially to be determined by the knowledge and capability of the director himself. Lord Bute was not liable because he was entitled to rely on the other directors to have done their own jobs and there was no extra duty on him to oversee that..

References

{{DEFAULTSORT:Cardiff Savings Bank United Kingdom company case law 1892 in case law 1892 in British law High Court of Justice cases History of Cardiff Banking in Wales