Parties had entered into a shareholders’ agreement as to voting arrengemets within a company. Thay disputed whether votes had been used in reach of that agreement, particularly as to the issue of new shares and their allotment, but the court now considered whether the claim was out of time. That issue depended upon whether a trust had been created.
Patten J followed Gwembe in holding that the claim fell within class 2: ‘On the Claimants’ case (Guernroy) acquired the shares through its own breach of duty in circumstances which give rise to what amounts to a remedial constructive trust. The case can be distinguished from the position of (eg) a director of a company who controls the property of the company and owes pre-existing duties to the company in respect of it: see JJ Harrison (Properties) Ltd v Harrison [2002] 1 BCLC 162. Guernroy owed no duties to anyone in respect of the unissued share capital of BMed. The company issued the shares in return for the issue price which was paid. The Claimants’ case is that the acquisition of the shares constituted a breach of duty to the existing shareholders, but it is not alleged that Guernroy in any sense held the unissued shares for the Claimants prior to the alleged breach. The most that can be said is that it owed fiduciary duties to the Claimants in respect of the voting powers and that it is through the alleged misuse of those powers that the shares have been acquired. In my judgment, this brings the case within class 2: see Gwembe Valley Development Co. Ltd v Koshy
Judges:
Patten J
Citations:
[2005] EWHC 1968 (Ch)
Links:
Statutes:
Limitation Act 1980 21(1), Trustee Act 1925
Jurisdiction:
England and Wales
Citing:
Cited – Re Coomber; Coomber v Coomber CA 2-Jan-1911
The Coomber family sold beer in Battersea. Coomber Senior had increasingly relied on his second son. After his father’s death, the second son continued to run the business. His mother shortly afterwards assigned both the licence and the premises to . .
Cited – Regal (Hastings) Ltd v Gulliver HL 20-Feb-1942
Directors Liability for Actions Ouside the Company
Regal negotiated for the purchase of two cinemas in Hastings. There were five directors on the board, including Mr Gulliver, the chairman. Regal incorporated a subsidiary, Hastings Amalgamated Cinemas Ltd, with a share capital of 5,000 pounds. There . .
Cited – Phipps v Boardman HL 3-Nov-1966
A trustee has a duty to exploit any available opportunity for the trust. ‘Rules of equity have to be applied to such a great diversity of circumstances that they can be stated only in the most general terms and applied with particular attention to . .
Cited – Hospital Products Ltd v United States Surgical Corporation 25-Oct-1984
High Court of Australia – A solicitor’s duty of loyalty to his client’s interest, and his duty to respect his client’s confidences, have their roots in the fiduciary nature of the solicitor-client relationship, but may have to be moulded and . .
Cited – Henderson v Merrett Syndicates Ltd HL 25-Jul-1994
Lloyds Agents Owe Care Duty to Member; no Contract
Managing agents conducted the financial affairs of the Lloyds Names belonging to the syndicates under their charge. It was alleged that they managed these affairs with a lack of due careleading to enormous losses.
Held: The assumption of . .
Cited – Mothew (T/a Stapley and Co) v Bristol and West Building Society CA 24-Jul-1996
The solicitor, acting in a land purchase transaction for his lay client and the plaintiff, had unwittingly misled the claimant by telling the claimant that the purchasers were providing the balance of the purchase price themselves without recourse . .
Cited – Swindle, Fillmore, Cox, Rowett v Harrison and Harrison CA 25-Mar-1997
Negligence short of fraud gave no right to damages for non-disclosure. . .
Cited by:
Cited – Williams v Central Bank of Nigeria SC 19-Feb-2014
Bank not liable for fraud of customer
The appellant sought to make the bank liable for a fraud committed by the Bank’s customer, the appellant saying that the Bank knew or ought to have known of the fraud. The court was asked whether a party liable only as a dishonest assistant was a . .
Appeal From – Halton International Inc Another v Guernroy Ltd CA 27-Jun-2006
The parties had been involved in investing in an airline to secure its future, but it was now said that one party had broken the shareholders’ or voting agreement in not allowing further investments on a pari passu basis. The defendants argued that . .
Lists of cited by and citing cases may be incomplete.
Company, Limitation
Updated: 05 July 2022; Ref: scu.239285
