''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, 4th Earl of Bute. Family history John Stuart was the member of a family that ...

's case'' is a

UK company law British company law regulates corporations formed under the Companies Act 2006. Also governed by the Insolvency Act 1986, the UK Corporate Governance Code, European Union Directive (European Union), Directives and court cases, the company is th ...

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 In Tort, tort law, a duty of care is a legal Law of obligations, obligation that is imposed on an individual, requiring adherence to a standard of care, standard of Reasonable person, reasonable care to avoid careless acts that could foreseeab ...

(as opposed to an objective duty of care under the modern law, see ''

Re D'Jan of London Ltd ''Re D’Jan of London Ltd'' 9941 BCLC 561 is a leading English company law case concerning a Directors' duties, director's duty of care and skill, whose main precedent is now codified under Section 174 of the Companies Act 2006. The case wa ...

'' and section 174 of the

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 largel ...

) allowed directors to escape consequences of their

negligence Negligence ( Lat. ''negligentia'') is a failure to exercise appropriate care expected to be exercised in similar circumstances. Within the scope of tort law, negligence pertains to harm caused by the violation of a duty of care through a neg ...

. 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 the decision would have been 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 is a governing body that supervises the activities of a business, a nonprofit organization, or a government agency. The powers, duties, and responsibilities of a board of directors are determined by government regulatio ...

as "President" of the Cardiff Savings Bank and in effect inherited 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 United Kingdom case law High Court of Justice cases History of Cardiff Banking in Wales