Property owners entered into a tenancy agreement with a company which was supposed to carry out construction work on the property to open a restaurant and a hotel. After the tenant failed to pay the rent and did not commence the work on the property on time, the property owners terminated the agreement and demanded compensation also personally from the tenant's CEO.
The Court held that failure to commence work on the property and pay the rent constitutes a breach of the agreement, but this alone is insufficient to impose personal liability on the CEO. The possibility of imposing personal liability on a corporate organ for the corporation's activities exists only in exceptional cases, where the organ's personal and subjective fault can be shown. This means that it must be shown that the director bears personal blame for the company's acts or omissions, according to a subjective standard that examines whether their actions were guided by internal conviction and belief in their fairness, detached from an external objective norm. Here, while there is no doubt that the tenant breached the agreement continuously and knowingly, the CEO's intentions were not malicious and it seems that he genuinely intended to realize the vision for the property but found himself unable to act on that vision. However, because he acted to hinder the efforts of the property owners to terminate the agreement and contract with a new tenant after it was already clear that the company could not meet its commitments, although the CEO is personally liable, but was not awarded his legal expenses in the proceedings.