## Facts

- Mr. Williams invested in a franchise based on information provided in a brochure by Natural Life Health Foods Ltd.
- The company was managed by Mr. Mistlin, the managing director, who supplied the information in the brochure.
- The business failed, resulting in losses for Mr. Williams.
- Mr. Williams sued both the company and Mr. Mistlin personally for his financial losses, alleging negligent misstatement.

## Issues

1. Whether a director can be personally liable for negligent misstatements made by a company.
2. Whether a "special relationship," involving a direct assumption of responsibility by the director to the claimant, existed in this case.
3. Whether the corporate veil should be lifted to impose liability on the director for the company's actions.

## Decision

- The House of Lords found that Mr. Mistlin was not personally liable for the false statements made in the company's brochure.
- The reasoning was that there was no direct relationship or assumption of personal responsibility by Mr. Mistlin towards Mr. Williams.
- The statements in the brochure were made by the company, not by Mr. Mistlin in his personal capacity.
- The protection of the corporate veil remained intact; no special circumstances justified piercing it to impose personal liability.

## Legal Principles

- Company directors are generally protected by the principle of separate legal personality and are not automatically personally liable for company actions.
- Personal liability for negligent misstatement requires a "special relationship" characterized by a direct and personal assumption of responsibility.
- The Hedley Byrne principle allows for liability in negligence for pure economic loss based on reliance, but Williams clarified that a director must personally accept responsibility, not merely act through company mechanisms.
- Merely providing information as a director or officer does not create personal liability; explicit acts, such as personal guarantees or direct promises, are required for liability to arise.

## Conclusion

The case established that directors cannot be held personally liable for negligent misstatements made by their company unless they have directly and personally assumed responsibility towards the claimant. The decision reinforced the protection offered by the principle of separate legal personality and clarified the boundaries of director liability in tort for economic loss.


Williams v Natural Life Health Foods Ltd [1998] 1 WLR 830 (HL)