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    The Supreme Court clarifies its Spanish Villa judgment

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  • In the Spanish Villa case, a real estate agent sold a house of which he knew it did not have the required licenses. The Supreme Court (i) held the real estate agent personally liable due to the fact that the agent breached a standard of due care (zorgvuldigheidsnorm) and (ii) held alongside the real estate company additionally liable because the wrongful conduct of the agent could be considered as a wrongful conduct of the company.

    This ruling has been heavily criticized as the director was not to a sufficient degree seriously to blame for it (voldoende ernstig verwijt), which is the standard for directors' personal liability. Many feared that the Court adopted a new type of directors' liability.

    On 5 September 2014 the Supreme Court clarified its Spanish Villa judgment. In its judgment, the Court argued that in case a director acts in his personal capacity and not in his capacity of a director, he can be held liable under the standard regime of liability. If the director acts in in his capacity of a director of the company, in order to hold him personally liable alongside the company, it is required that the director is to a sufficient degree seriously to blame.

    This judgment shows that in the Spanish Villa case the Supreme Court did not adopt a new standard of liability for directors - as was feared. The only thing the Court did was distinguishing the requirements for liability when someone is acting in his personal capacity or as a director. The high threshold remains a standard to hold directors personally liable. In that way directors' worries are rightly calmed. However, case law has not clarified yet how the capacities can be distinguished from each other.

    Michael Serphos

    Jordie Bakker

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