How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • Go back-and-forth until satisfied
    Rate the answer you receive.
Ask Ed Turner Your Own Question
Ed Turner
Ed Turner,
Category: Employment Law
Satisfied Customers: 1917
Experience:  Director and Consultant Solicitor (Self-Employed) at Ed Turner LLB Limited
107013918
Type Your Employment Law Question Here...
Ed Turner is online now

If someone sits on a Board of Directors, and the Board

This answer was rated:

If someone sits on a Board of Directors, and the Board decides to “bury” unlawful conduct which has occurred within the company, how can that single Director separate themselves from the situation beyond voting against it? Can they protect themselves from liability?

Hello.   I am Ed, a Solicitor qualified in England & Wales with over a decade’s experience in the legal profession advising clients.

I specialise in Commercial Contracts, Business Transactions, Employment, Dispute Resolution, Personal Injury and Road Traffic Law and shall be reviewing your legal problem today.

Regarding the site’s automatic offer of a Premium Service Phone Call, I shall be delighted to talk with you by phone to discuss your issue in greater detail if you accept the offer.

However, if you do not want a phone call, please cancel the offer for a Premium Service Phone Call and you will not be charged extra.

You must resign from the board and report the misconduct under the company’s internal whistleblowing policy as well as a civil regulator, such as the Financial Conduct Authority or the Health and Safety Executive, or criminal investigation and enforcement bodies such as the Police or the Serious Fraud Office.

If you need further legal advice, contact the whistleblowers’ legal advice charity, Protect (formally PCAW: Public Concern At Work): https://protect-advice.org.uk/.

The other party (i.e., the company itself as a distinct legal entity, and its human directors, shareholders, employees, and other personnel) who you have accused of fraud may have a cause of action in Defamation against you as the author/publisher of the statement(s).

The claimants must issue court proceedings within one year of the statement first being published.

For a claimant to succeed in a Defamation Claim, the following conditions must be met:

1.  The statement in question must be a false statement of fact;

2.  The statement must be negative and derogatory to the extent that it is capable of lowering the claimant’s standing in the opinion of right-thinking members of society;

3.  The statement in question identifies or refers to the claimant;

4.  The statement in question was published to a third party;

5.  The statement must be capable of causing the subject “serious harm” if allowed to stand.

If your reports to the Board were not published outside the company to any third parties, it is arguable that your statements have not met the publication test.

The Defamation Act 2013 introduced the “Serious Harm” test in Court Proceedings for Libel and Defamation Claims.   Part of the rationale behind the reform in the law was to stop the High Court in London being the “Libel Tourism Capital of the World” and to prevent costly Court Claims for trivial and petty insults.

If the Claimant is an individual, the Court will consider whether the words complained of are likely to cause a “right thinking member of society” to lower their opinion substantially of the Claimant following sight of the statement.  Therefore, a statement alleging that the Claimant was a murderer, a thief or a child abuser would meet the “Serious Harm” test as an outsider reading or hearing these words would almost certainly think less of the Claimant after reading them.

If the Claimant is a business, the Court will consider whether words complained of would be capable of persuading the Claimant’s existing clients and customers to withdraw their business and seek the goods or services elsewhere, while dissuading prospective clients and customers from doing business with the Claimant.   A statement that alleged that the Claimant was incompetent or dishonest would probably meet the “Serious Harm” test.

In view of the context that you published the statements, I believe that you may have a good Defence to any Claim on the grounds of “Qualified Privilege” and/or “Honest Opinion”.

The Defence of Honest Opinion is that statement in question was a statement of opinion (as opposed to a statement of fact), they indicate the basis of the opinion and that an honest person could have held the opinion based on any fact which existed at the time the statement complained of was published, or anything asserted to be a fact in a privileged statement published before publication of the statement in question.

A Defence of Honest Opinion can succeed even if the statement was negative, derogatory, and capable of causing serious harm to the Claimant’s personal reputation and/or business interests, but the Defendant still had a good reason for authoring and publishing them and their motives were not malicious.   In your case, you will argue that your opinions over fraud and other irregularities in the running of the company were based in fact and other good reasons.

The Defence of Qualified Privilege covers information passed under a public or private legal, social, or moral duty from one individual to another individual who has a reciprocal duty to receive the information.  It will defeat any claim for Defamation even if the statement is untrue unless the Claimant can prove that the statement was made maliciously.

In your case, you can argue that you had a legal and/or moral duty to report your concerns of fraud and other irregularity to the company board, the company had a reciprocal duty to receive your statements and the statements were made in good faith and were not motivated by any malicious intent on your part.   Therefore, the Defence of Qualified Privilege should defeat a claim for Defamation from the subjects of your statements.

In summary, while your reports to the board may risk them bringing an action in Defamation against you, I believe that such a claim would fail to satisfy the publication test if they have not been seen by anyone else outside the company, and you have the Defences of Honest Opinion and Qualified Privilege available to you.

I hope this resolves your enquiry.   Please revert to me if you require any clarification of my answer to your question and I shall be delighted to assist.

Kind regards

LawyerEd

Customer: replied 14 days ago.
Thank you.Would it serve any purpose to prepare a written statement to submit to the Board saying that I do not condone their actions thereby creating a paper trail separating myself?Would this be useful if I wanted to stay on for a short while to tie up loose ends? Or would I damage my own defence by staying in the company for even a short period of time?Upon resigning I was considering submitting grievances for victimisation and bullying. Would this help or hinder my defence?

I have answered your first question to your satisfaction.  You have now posed additional questions which are outside the scope of the fee.   To answer these questions, I require payment of a further fee and have placed an offer on the Portal.

Customer: replied 14 days ago.
Do you mean the phone call? How long is it?

I can review a brief amount of documentation from the customers (up to 20 pages or so).

The phone calls generally last around 20 – 30 minutes at most.   I will let you know if we are going around in circles and I am repeating myself.

You will not receive any additional documentation from me or Just Answer (apart from payment confirmation).

I will discuss my fees with my main virtual law firm on the call.   Under my Just Answer Expert Agreement, I cannot provide Customers any direct contact details or information about my law firm’s charges unless they accept a Premium Service Phone Call.

If you choose to instruct me directly through my law firm, this will be a different contract from yours with Just Answer.   I will open a new client-matter for you with my firm and send you retainer documentation in the form of a Client Care Letter and Terms of Engagement.

Ed Turner and other Employment Law Specialists are ready to help you

Thanks, Angeline.   I will call you in a few minutes.