Re D'Jan of London Ltd

Facts

A director signed an insurance proposal form, filled in by his broker, without reading it. It contained a wrong answer, and the insurers refused to pay on a fire claim.

Issue

Was the director negligent?

Held

Yes. Hoffmann LJ applied an objective and subjective test: the care of a reasonably diligent person with the knowledge and skill that may be expected of someone in his position, and that the director actually has. But relief was given in part because he acted honestly.

Principle

Directors are judged by an objective minimum standard of care.

Why it matters

It matches the 'reasonably prudent director' test in section 232.

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