1. In the Dutch legal magazine Onderneming & Financiering (O&F 2009-1, p. 100-113), Professor Jan Bernd Huizink recently explored whether director liability based on the three most common grounds essentially should involve the same liability threshold (his thought-provoking article is called "Bestuurdersaansprakelijkheid, één pot nat?"). Those grounds are the following.
1) Section 2:9 DCC: liability vis-a-vis the company (i.e., internal liability) for improper performance of duties, which requires that the director made a 'serious mistake' (in Dutch: ernstig verwijt), in view of all the circumstances of the case at hand. I explained this mechanism more in detail, e.g., here.
2) Section 6:162 DCC: liability in tort vis-a-vis a third party (i.e., external liability), typically but not invariably a company creditor - although tort towards the company is also possible - which requires that the director made a 'serious mistake', in view of all the circumstances of the case at hand. This normally involves situations in which the director:
(i) either raised a wrong impression of the company's solvency when entering into an agreement on behalf of the company with a third party; or
(ii) directly or indirectly caused c.q. allowed the company to malperform under its contractual or statutory obligations: think of actively frustrating payment of a certain company creditor, 'asset-stripping', excessive dividend payments and/or selective - intra-group - payments to the detriment of a particular company creditor.
I touched upon this, e.g., here and here.
3) Section 2:138/248 DCC. This section provides that on the bankruptcy of a corporation, each member of the board of directors is jointly and severally liable to the estate for the amount of the liabilities to the extent that these cannot be satisfied out of the liquidation of the other assets, if the board of directors has manifestly performed its duties improperly and it is plausible that this is an important cause of the bankruptcy. According to the Supreme Court in its June 8, 2001 decision re Gilhuis q.q./Hamelinck, a manifest improper performance of duties implies that a director failed to act like a reasonably thinking director in similar circumstances would have. I explained this more in detail in Judicial Review of Director Conduct - Under Dutch and Delaware Corporate Law, Deventer: Kluwer 2007, no. 42.d.
2. Huizink answers this question in the affirmative, and concludes the liability threshold should be 'serious mistake'. As to section 2:9 DCC, he simply sticks to the Supreme Court case law mandating a 'serious mistake' threshold for director liability, without any nuance. As to section 6:162 DCC, he also sticks to the Supreme Court case law mandating the same standard, but for some reason he:
(i) fails to mention the fundamental decision of December 8, 2006 re Ontvanger/Roelofsen; and
(ii) does not signal anywhere the basic rationale of the liability threshold in this setting, as explained by Advocate-General Vino Timmerman in his conclusion re Ontvanger/Roelofsen that preceded the Supreme Court's ruling (see below): the 'secondary' nature of this type of liability.
As to section 2:138/248 DCC, he argues - mainly in view of consistency - that the liability threshold should be the same: 'serious mistake'.
3. Huizink has not convinced me. In fact, I reach a fundamentally different conclusion, based on basic policy rationale (also see my book at no. 42). I offer some musings about this below the fold.
4. Here we go.
Re 1. I explained the gist of director liability based on section 2:9 DCC, and how in my view the mechanism should work, in post No. 11 with additional sources. In short, I believe in this setting 'serious mistake' should not be the single liability threshold; in a more refined form (i.e., in combination with a Dutch business judgment rule type standard of review), this heightened liability threshold should basically be used in the business judgment realm, provided certain requirements are met (in terms of prima facie bona fides and neutrality). Once it has been determined whether or not there is reason to apply a normal or heightened liability threshold, the liability question should be answered in view of all the circumstances of the case at hand. This is not reflected yet in Supreme Court case law, but I've got my hopes up (at least as to introduction of a Dutch business judgment rule). What is clear from Supreme Court case law to date is that a 'serious mistake' in this setting does not necessarily require foreseeability of damage to the company.
Re 2. I explained the gist of secondary liability, based on section 6:162 DCC (tort), in post No. 7 with additional sources (I also touched upon this concept in post No. 30, discussing personal - or: 'pro se' - liability of the trustee in bankruptcy). For reasons explained there, it does make sense here to generally apply the 'serious mistake' concept - as framed in the tort setting - as the liability threshold. As I read the applicable Supreme Court case law concerning liability in tort towards a company's creditor, this form of liability - due to its secondary nature - normally seems to require that the director knew or should have known that his conduct would actually result in damage to that creditor (due to malperformance by the company), or at least that this result was rather likely, not that this result was in itself possible. See for example A-G Timmerman's instructive conclusion sub 5.6-5.11 re Ontvanger/Roelofsen (in Dutch; footnotes omitted):
5.6 Voor de beoordeling van het middelonderdeel is het arrest New Holland van belang. Ik citeer de kernoverweging van dit arrest:
"In de rechtspraak zijn gevallen aan de orde geweest, waarin aan een bestuurder van een vennootschap werd verweten dat hij in naam van de vennootschap verplichtingen was aangegaan terwijl hij wist of redelijkerwijs behoorde te begrijpen dat de vennootschap niet aan haar verplichtingen zou kunnen voldoen en geen verhaal zou bieden voor als gevolg van die niet-nakoming door de wederpartij te lijden schade. In een dergelijk geval zal in het algemeen - behoudens door de bestuurder aan te voeren, zijn handelwijze rechtvaardigende of verontschuldigende omstandigheden - moeten worden aangenomen dat de bestuurder een zodanig verwijt dat hij persoonlijk jegens de wederpartij van de vennootschap aansprakelijk is op grond van onrechtmatig handelen (verg. onder meer HR 6 oktober 1989, nr. 13.618, NJ 1990, 286). Klaarblijkelijk heeft het hof deze regel op het oog gehad en geoordeeld dat hij te dezen toepassing mist bij gebreke van de vereiste wetenschap aan de zijde van Oosterhof. In deze zaak doet zich evenwel een andere situatie voor, namelijk de situatie dat aan Oosterhof als bestuurder wordt verweten te hebben bewerkstelligd of toegelaten dat de door hem bestuurde vennootschap een eerder door haar aangegane overeenkomst niet nakomt en daardoor aan de wederpartij van de vennootschap schade berokkent. Ook in een dergelijk geval kan weliswaar sprake zijn van persoonlijke aansprakelijkheid van de bestuurder op grond van onrechtmatig handelen (vgl. HR 31 januari 1958, NJ 1958, 251), maar zal het van de concrete omstandigheden van het geval afhangen of het aan de bestuurder te maken verwijt voldoende ernstig is om hem persoonlijk aansprakelijk te houden."
Blijkens dit arrest is een bestuurder persoonlijk aansprakelijk indien hem ernstig verwijt valt te maken voor het ontstaan van de schade jegens de wederpartij van de vennootschap (in dit geval de Ontvanger). Aan het middel dient te worden toegegeven dat het hof nergens met zoveel woorden melding maakt van het ook door de Hoge Raad belangrijk geachte "ernstig persoonlijk verwijt"-vereiste. M.i. is het echter van belang hierbij te bedenken dat het "ernstig persoonlijk verwijt"-vereiste en het wel door het hof toegepaste "voorzienbaarheid van schade"-vereiste verwant zijn en in elkaar overlopen. Dit blijkt ook uit de uitleg die de Hoge Raad in de hierboven geciteerde overwegingen uit het New-Holland-arrest aan het Beklamel-arrest geeft: voorzienbaarheid van schade voor de handelende bestuurder impliceert doorgaans een voldoende persoonlijk verwijt. In overeenstemming hiermee kunnen de rov. 4.9-4.11 van het bestreden arrest van het hof heel wel zo worden opgevat dat deze een oordeel impliceren over de vraag of bestuurder een voldoende ernstig persoonlijk verwijt treft van de hem verweten handelingen. Het hof wijst er daarbij in rov. 4.11 onder andere op:
"Gelet daarop behoefde de voortzetting van de bestendige praktijk in de jaren 1995 tot en met 1998 (van het schuiven met omzetten, toevoeging LT) er naar het oordeel van het hof op zich zelf niet reeds toe te leiden dat bestuurder redelijkerwijze behoorde te begrijpen dat de naheffingsaanslagen door de fiscale eenheid onbetaald zouden blijven."
In deze overweging wordt in feite een oordeel gegeven over de persoonlijke verwijtbaarheid van de bestuurder. Voor zover het middel aanvoert dat het hof geen aandacht aan de persoonlijke verwijt-problematiek heeft geschonken, dient m.i. het te falen. Het hof heeft dit - zij het impliciet - wel gedaan.
5.7 Het middelonderdeel voert ook aan dat het er bij de invulling van het begrip persoonlijk verwijt om dient te gaan of bestuurder het risico van benadeling op de koop toe heeft genomen. Ik meen dat dit een te ruime invulling van dit begrip is. Het hof heeft m.i. terecht voor een meer strikte invulling gekozen, namelijk of het voor bestuurder redelijkerwijs te voorzien was dat er door het "schuiven" met omzetten schade voor de Ontvanger zou ontstaan. Ik ben geporteerd voor zo'n strengere invulling van het begrip benadeling, omdat het hier om een geval van secundaire aansprakelijkheid gaat. Deze dient op niet al te lichte gronden te worden aangenomen. Ik verwijs naar de hierboven geciteerde passages uit Asser-Van der Grinten-Kortmann. Hiermee faalt onderdeel 3.1.
5.8 Onderdeel 3.2 voert aan dat het bewerkstelligen door bestuurder dat de fiscale eenheid niet voldoet aan zijn wettelijke verplichtingen als zonder meer onrechtmatig moet worden aangemerkt en dat het daarbij niet van doorslaggevend belang is of de schade voorzienbaar is.
5.9 Ik meen dat dit onderdeel zou dienen te falen. Ik begrijp de woorden "en de wederpartij van de vennootschap schade berokkent" uit het New Holland-arrest zo dat het voor onrechtmatig handelen door een bestuurder van een vennootschap jegens de Ontvanger vereist is dat er bij de Ontvanger schade is ontstaan en deze schade voor de bestuurder redelijkerwijs voorzienbaar is geweest. Alleen dan is er van voldoende persoonlijk verwijt sprake. Hier komt nog iets anders bij: Nu de vraag of een bestuurder een voldoende ernstig verwijt valt te maken slechts aan de hand van de omstandigheden van het geval kan worden beoordeeld, is de regel die het onderdeel voorstaat onjuist. Deze is te categorisch. Ik verwijs naar hetgeen in de hierboven geciteerde passage uit Asser-Van der Grinten-Kortmann wordt gezegd.
5.10 Onderdeel 3.3 betoogt dat bestuurder een zorgvuldigheidsnorm heeft geschonden aangezien (i) hem een persoonlijk verwijt valt te maken (ii) de litigieuze gedragingen van bestuurder herhaaldelijk, en (iii) opzettelijk hebben plaatsgevonden.
5.11 Dit onderdeel faalt. Het middelonderdeel betrekt het persoonlijke verwijt dat bestuurder te maken valt ten onrechte niet op de voorzienbaarheid van de schade.
Typically, the corporate veil will be lifted to the detriment of the director in that type of situation, or one very close to it; I touched upon this in my book at p. 617. This 'foreseeability of damage' element does not return in section 2:9 DCC case law of the Supreme Court to date. Nice examples are its decisions of June 20, 2008 re NOM/Willemsen and November 29, 2002 re Schwandt/Berghuizer Papierfabriek, in which the Supreme Court rules that the violation of a provision in the corporation's articles of association that aims to protect the company in principle justifies liability (unless the director is able to show that this, in view of all the circumstances of the case at hand, does not qualify as a 'serious mistake'). Nowhere does the Supreme Court mention 'foreseeability of damage' to the company, or anything close to it; nowhere.
Re 3. Parliamentary history of section 2:138/248 DCC clarifies that what the legislator actually meant with the words 'manifest improper performance of duties', is that the director acted irresponsibly with the knowledge - so: the director knew or should have known - that the company's creditors could be damaged by this conduct (i.e., creditors as a collective, not just individual creditors; section Re 2. applies to the latter scenario). This liability ground - that I believe is an application of external liability and not internal liability - also has a 'foreseeability of damage' element, but is linked to creditors as a collective, and not to individual creditors (what qualifies as a 'collective' is a related, but different question). This approach really is different from the approach taken by the Supreme Court in section 6:162 DCC case law. As I explained in my book at no. 42, a Dutch business judgment rule type of review could also be of use in this setting.
In sum:
(a) there is no compelling reason to view the 'serious mistake' threshold as the single director liability threshold in terms of sections 2:9, 6:162 and 2:138/248 DCC; and
(b) broad application of that concept would have no real analytical upside anyway (other than that it would suggest some vague heightened liability threshold), now that the meaning of the 'serious mistake' concept by definition depends on the doctrinal context it is used in.
5. Three additional thoughts.
1) In the section 2:9 DCC setting, it makes sense to make a normative distinction between directors standards of conduct and judicial standard of review. A standard of conduct converges with the corresponding judicial standard of review, when the latter is the same as the former. For example: when - in terms of care - a director has a duty to inform the shareholder of all material information reasonably available, the standard of review is the same. A standard of conduct diverges from the corresponding judicial standard of review, when the latter is not the same as the former. For example, when - in terms of care - a director has a duty to be reasonably informed when making a business judgment, the corresponding standard of review under the Dutch business judgment rule - as argued by me - would be irrationality and not reasonableness (which is considerably stricter for the person involved). I'm not so sure a similar distinction makes sense in the section 6:162 DCC setting, as discussed under Re 2.
Why? Because whereas section 2:9 DCC - case law - suggests directors are under an affirmative duty to actively protect the company and advance its interests (in short: the relationship director-company has a 'fiduciary' character), section 6:162 DCC - case law - does not suggest directors are under a similar affirmative duty to actively protect the relevant third party - like a company creditor or an individual shareholder - and advance his/her interests (see for example the Supreme Court's June 13, 1986 (NJ 1986, 825) ruling, in which it stressed that a corporate director does not commit a tort towards a company creditor if he doesn't see to it that the creditor is paid in full by the company). In the latter scenario, there is no 'aspirational' element, in terms of 'taking care of'; here, the more realistic approach seems to be that in this setting, a director is - in terms of care - primarily under a duty to refrain from certain conduct. What conduct? Perhaps just this: that the director basically refrains from acting in a way that would foreseeably - likely - damage that third party. If this makes sense, and I'm inclined to think it does, the line between the standard of conduct and the standard of review (see Re 2.) is typically quite thin, if at all distinguishable. In view of this, the analytical upside of a standard of conduct/standard of review dichotomy seems limited in this setting.
2) It makes sense in general to distinguish between a director standard of conduct and a corresponding judicial standard of review that can converge or diverge, to recognize that those concepts exist and have merit in certain settings, not necessarily limited to director liability (another example is judicial review of director conduct in inquiry proceedings; see chapters V-VII of my book). These standards apply to the question whether a norm was violated, not directly whether this norm violation is attributable to the person violating the norm (normally in terms of culpability), and therefore should not be labelled as a standard of liability. The Supreme Court views the 'serious mistake' concept as a liability standard, although it only seems to cover the elements of norm violation and attributability, not also other elements typically associated with liability like damage and proximate cause between the violated norm and the damage (a full-fledged liability standard would logically have to include all the element necessary for liability, but anyway). Such a liability standard really is a third category, next to director standards of conduct and corresponding judicial standards of review. I believe the analytically more helpful approach is to focus separately on the necessary elements for liability, especially norm violation - that involves standards of conduct and standards of review - and attributability (typically in terms of culpability), instead of using fuzzy 'catch-all' terms of art like 'serious mistake'.
3) In its June 20, 2008 decision re NOM/Willemsen, concerning section 6:162 DCC liability (i.e., tort), the Supreme Court decided in view of its section 2:9 DCC case law:
(i) that a director must have made a 'serious mistake' - in view of all the circumstances of the case at hand - in order to be personally liable towards an individual shareholder in tort; and
(ii) that the violation by a director of a provision in the corporation's articles of association that aims to protect that shareholder in principle justifies liability (unless the director is able to show that this, in view of all the circumstances of the case at hand, does not qualify as a 'serious mistake').
No apparent 'foreseeability of damage' element here, which in the end suggests it's not a practically insurmountable liability threshold, on the contrary. Is this - from a doctrinal perspective - an obvious outcome, in view of the 'secondary' nature of this type of director liability and compared to related Supreme Court case law concerning director liability in tort towards a company's creditor (that does seem to contain a 'foreseeability of damage' element)? Granted, it's not inconceivable that at some point the Supreme Court will rule that a similar approach is feasible in the 'director liability in tort against a company creditor' setting, but relevant case law to date does not suggest this and this mechanism may not fit that well in this particular setting (as this may lead to liability a bit too easily). For now, my guess is that the Supreme Court did not think all this through in its NOM/Willemsen decision, that for some reason is linked to section 2:9 DCC case law instead of its - 'secondary' liability based - 'director liability in tort towards a company creditor' case law (I confess being a bit puzzled by this). In case it did think things through, my question is why the Supreme Court chose not to focus more heavily on the 'secondary' nature of this type of liability (for example by including some 'foreseeability of damage' element).
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