Category: Company

In re Windsor Steam Coal Co. (1901) Ltd: 1929

The courts look more favourably on applications by gratuitous trustees than on those by paid trustees. In a company winding up the liquidator may be liable to the company for negligence on his part in making a compromise.
[1929] 1 Ch 151
Cited by:
Cited – Johnson v Gore Wood and Co HL 14-Dec-2000
Shareholder May Sue for Additional Personal Losses
A company brought a claim of negligence against its solicitors, and, after that claim was settled, the company’s owner brought a separate claim in respect of the same subject-matter.
Held: It need not be an abuse of the court for a shareholder . .

Lists of cited by and citing cases may be incomplete.
Updated: 16 October 2021; Ref: scu.252499

Parke v Daily News Ltd: 1962

The company which had sold its business, through its Board of Directors, had resolved to pay 1 million pounds to its former workers and the widows of such former workers. A shareholder sought to prevent this happening on the ground that such a payment went beyond the articles of association of the company, and such payment to ex-employees was not reasonably incidental to the carrying on of the business of the company.
Held: The shareholder’s application succeeded. The proposed payments were ultra vires and illegal. The making of an ex gratia payment as the company intended to do, and in the circumstances where that company no longer operated, was not reasonably incidental to the conduct of its business and was therefore ultra vires the company’s memorandum and articles. In such circumstances a shareholder has the right to bring the action.
‘A gift undirected to the interests of the shareholders (in a company) is invalid. This prevents the exercise of pure philanthropy which, by definition, is non-self-regarding. The law does not impose welfare responsibilities on trading companies and has not abandoned shareholder protection to the extent of sacrificing the interests of the minority to the liberal impulses of the majority. Gifts will accordingly be permitted only when they tend either directly or indirectly, to benefit the company in some genuine manner’
[1962] 2 All ER 929, [1962] Ch 927
England and Wales
Cited by:
Cited – Re Halt Garage (1964) Ltd ChD 1982
The company was a husband-and-wife business running a garage. They worked hard to build up the business, which included recovering broken-down vehicles from the nearby M1. They paid themselves modest remuneration as directors. In 1967 the wife . .
Cited – Progress Property Company Ltd v Moorgarth Group Ltd SC 8-Dec-2010
The appellants appealed against rejection of their claim that there had been an unlawful distribution of capital when the appellant had sold the share capital of a subsidary at an undervalue to the respondent purchaser. The valuation had . .

Lists of cited by and citing cases may be incomplete.
Updated: 14 October 2021; Ref: scu.427163

Lloyds and Scottish Finance Ltd v Cyril Lord Carpet Sales Limited: HL 1992

The appellants were a Northern Irish company, which had entered liquidation, and the liquidator of that company. The respondent was a finance house. The company entered into a ‘block discounting’ agreement, which involved assigning customer credit sale debts in blocks to the finance house in return for a lump sum payment. The arrangement was based upon a trading agreement, as a form of master agreement, governing all subsequent individual transactions for the sale of each block of debts.
Held: Lord Wilberforce considered whether certain assignment of book debts were in substance absolute assignments by way of sale or assignments by way of charge and would be void against a liquidator for non-registration under the Companies Act. He said: ‘My Lords, the fact that the transaction consisted essentially in the provision of finance and the similarity in result between a loan and a sale, to all of which I have drawn attention, gives to the appellants’ arguments an undoubted force. It is only possible, in fact, to decide whether they are correct by paying close regard to what the precise contractual arrangements between them and the respondents were.’ and ‘it has to be appreciated that block discounting is essentially a method of providing finance. Commercially and in its economic result, it may not differ from lending money at interest: the ‘discounting charge’, which represents the finance house’s profit, is stated in term of so much per cent per annum, which percentage is no doubt based upon current interest rates. Legally, however, there is no doubt that discounting is not treated as the lending of money and that the asset discounted is not considered as the subject of a charge.’
Lord Wilberforce, Lord Scarman
[1992] BCLC 609
England and Wales
Cited by:
Cited – Dutton and Another v Davis and Another CA 4-May-2006
The appellant had transferred his property with the intention that it should be subject to a right on his part to repurchase it. He now said the sale was in practice merely a charge.
Held: The appeal failed. The legal nature of the transaction . .
Cited – Humber Oil Terminals Trustee Ltd v Associated British Ports CA 10-May-2012
The tenant appealed against a finding that the landlord was entitled to resist renewal of its lease under the 1954 Act challenging the stated intention of the landlord to occupy the premises for its own business purposes. It said that the proposed . .

Lists of cited by and citing cases may be incomplete.
Updated: 14 October 2021; Ref: scu.242532

The Secretary of State for Trade and Industry v Bairstow: CA 11 Mar 2003

The Secretary of State attempted, in the course of director’s disqualification proceedings, to rely upon findings made against Mr Bairstow in an earlier wrongful dismissal action to which he had been a party but the Secretary of State not. The defendant wished to challenge the finding.
Held: Following Hollington v Hewthorn, a collateral attack on a finding of an earlier tribunal might be, but need not necessarily be, an abuse of process. If the earlier findings were in a criminal court, they would bind a later court in defamation proceedings, but would only be prima facie in others. An earlier finding in a civil court would bind a later civil court. If the parties in the later case were not parties to the first, it would be an abuse only if the later proceedings would be manifestly unfair, or relitigation would bring the court into disrepute. There was no reason why an earlier finding of a civil court with a lower burden of proof should bind a later court required to use a higher burden.
Sir Andrew Morritt V-C said: ‘In my view these cases establish the following propositions. (a) A collateral attack on an earlier decision of a court of competent jurisdiction may be but is not necessarily an abuse of the process of the court. (b) If the earlier decision is that of a court exercising a criminal jurisdiction then, because of the terms of sections 11 to 13 of the Civil Evidence Act 1968, the conviction will be conclusive in the case of later defamation proceedings but will constitute prima facie evidence only in the case of other civil proceedings. (It is not necessary for us to express any view as to whether the evidence to displace such presumption must satisfy the test formulated by Lord Cairns LC in Phosphate Sewage Co Ltd v Molleson 4 App Cas 801, 814, cf the cases referred to in paragraphs 32, 33 and 35 above.) (c) If the earlier decision is that of a court exercising a civil jurisdiction then it is binding on the parties to that action and their privies in any later civil proceedings. (d) If the parties to the later civil proceedings were not parties to or privies of those who were parties to the earlier proceedings then it will only be an abuse of the process of the court to challenge the factual findings and conclusions of the judge or jury in the earlier action if (i) it would be manifestly unfair to a party to the later proceedings that the same issues should be relitigated or (ii) to permit such relitigation would bring the administration of justice into disrepute’.
Lady Justice Hale, Lord Justice Potter, Sir Andrew Morritt VC
[2003] EWCA Civ 321, Times 31-Mar-2003, Gazette 09-May-2003, [2004] Ch 1, [2003] 3 WLR 841, [2003] 1 BCLC 696, [2003] BCC 682, [2003] CP Rep 46, [2004] 4 All ER 325
Bailii
Company Director Disqualification Act 1986
England and Wales
Citing:
Cited – Hollington v E Hewthorn and Co Ltd CA 1943
Decisions of an earlier tribunal were not binding or admissible in later proceedings where the earlier proceedings were before a court of criminal jurisdiction. Evidence of a prior conviction would not have been admissible in separate criminal . .
Cited – Hunter v Chief Constable of the West Midlands Police HL 19-Nov-1981
No collateral attack on Jury findigs.
An attempt was made to open up in a civil action, allegations of assaults by the police prior to the making of confessions which had been disposed of in a voir dire in the course of a criminal trial. The plaintiffs had imprisoned having spent many . .
Cited – Gleeson v J Wippell and Co Ltd ChD 1977
The court considered the circumstances giving rise to a plea of res judicata, and proposed a test of privity in cases which did not fall into any recognised category. ‘Second, it seems to me that the sub-stratum of the doctrine is that a man ought . .

Cited by:
Cited – Simms v Conlon and Another CA 20-Dec-2006
Solicitors within a practice sued each other, and one wished to plead the fact of a finding of professional misconduct.
Held: The defendant’s appeal succeeded. It was not an abuse for the appellant to continue to assert his innocence, and the . .
Cited – Laing v Taylor Walton (A Firm) QBD 20-Feb-2007
The claimant sought to pursue an action for professional negligence against his solicitors. They said that the action was an abuse being an attempted relitigation of matters already settled when a judge had decided that the defendants had not owed a . .
Cited – Calzaghe v Warren QBD 20-Jan-2010
The claimant boxer had secured judgement for fight fees from a company operated by the respondent manager and promoter. After the judgment the defendant had put the company into administration. The claimant now sought payment from the defendant . .
Cited – OMV Petrom Sa v Glencore International Ag ComC 7-Feb-2014
The claimant sought to have struck out as abuse of process parts of the defence, saying that the factual issues raised had already been resolved in arbitration proceedings, but as against a different oarty. The defendant replied that the arbitration . .
Cited – Michael Wilson and Partners Ltd v Sinclair and Another CA 13-Jan-2017
The appellant company sought to recover assets which, it said, had been acquired by a former partner in breach of his obligations under the partnership agreement, but which had been taken in the names of some of the respondents. There had been an . .
Cited – Spicer v The Commissioner of Police of The Metropolis QBD 6-Jul-2020
The claimant alleged defamation. He had been acquitted of a criminal offence and said that material published by the defendant continued to imply or assert his guilt of the offence. The defendant argued truth. The claimant now sought a strike out of . .

Lists of cited by and citing cases may be incomplete.
Updated: 10 October 2021; Ref: scu.179746

Wood v Woad: CEC 1 Jun 1874

Declaration, alleging that the plaintiff was a member of a mutual insurance society, which insured members against losses to ships entered and insured in the books of the society, on a deposit being made of 5l. per cent, on the amount insured ; that the defendants were the committee of the society, by the rules of which they had the entire control of the funds and affairs of the society, and were to determine on the admission or rejection of ships insured or proposed for insurance; that by another rule, ‘if the committee shall at any time deem the conduct of any member suspicious, or that such member is for any other reason unworthy of remaining in this society, they shall have full power to exclude such member, by directing the secretary to give such member notice in writing that the committee have excluded such member from the society, and, after the giving of such notice, such member shall be excluded, and have no claim or be responsible for or in respect of any loss or damage happening after such notice ; ‘ that the plaintiff, as such member, had entered a ship on the books of the society, and had paid the deposit, and was thereupon entitled to an indemnity for loss happening to the ship ; that the defendants, well knowing the premises, but ‘wrongfully, collusively, and improperly contriving to deprive the plaintiff of the benefit of such indemnity, did wrongfully, collusively, and improperly expel the plaintiff from the society on the alleged ground that his conduct was suspicious, or that he was for some reason unworthy of remaining in the society, without giving the plaintiff, or any person on his behalf, any opportunity whatsoever of being heard before them, and without, in fact, hearing the plaintiff, or any person on his behalf, in defence and vindication of the plaintiff’s conduct as a member of the society with reference to the said ground of expulsion ‘; whereby the plaintiff lost the benefit of an indemnity for damage which his ship subsequently sustained, and was otherwise damnified. Demurrer.
Held: that the declaration shewed no cause of action.
By Kelly, C.B., Pollock and Amphlett, BB. (following Blisset v. Daniel, 10 Hare, 493), on the ground that, assuming the allegations of the declaration to be true, the act of the defendants in expelling the plaintiff without giving him an opportunity of being heard was void ; that the plaintiff, therefore, still remained a member of the society, and had sustained no damage.
By Cleasby and Pollock, BB., on the ground that the declaration did not sufficiently charge mala fides.
Quaere, by Cleasby and Amphlett, BB., whether any action would lie against the defendants for acts done by them in the discharge of their functions as members of the committee.
Kelly CB said of audi alteram partem: ‘This rule is not confined to the conduct of strictly legal tribunals, but is applicable to every tribunal or body of persons invested with authority to adjudicate upon matters involving civil consequences to individuals’.
Kelly CB
[1874] UKLawRpExch 26, (1873-1874) LR 9 Exch 190
Commonlii
England and Wales
Citing:
Cited – Blisset v Daniel 1853
The court considered the limits on a power of expulsion from a partnership.
Held: (Page-Wood V-C) Construing the articles, two-thirds of the partners could expel a partner by serving a notice upon him without holding any meeting or giving any . .

Cited by:
Cited – Ridge v Baldwin (No 1) HL 14-Mar-1963
No Condemnation Without Opportunity For Defence
Ridge, a Chief Constable, had been wrongfully dismissed because he was not given the opportunity of presenting his defence. He had been acquitted of the charges brought against him, but the judge at trial had made adverse comments about his . .

Lists of cited by and citing cases may be incomplete.
Updated: 10 October 2021; Ref: scu.653098

Weinberger v Inglis and Others: HL 1919

A member of enemy birth was excluded from the Stock Exchange, and it was held that the Committee had heard him before acting.
Held: The power to admit persons to membership was held to be both an administrative power and a fiduciary power. The Committee had been entitled so to decide. The exercise of the power to refuse re-election did not depend on a finding that the plaintiff had committed any misconduct, indeed, none was suggested.
Lord Birkenhead LC said : ‘If I took the view that the appellant was condemned upon grounds never brought to his notice, I should not assent to the legality of this course, unless compelled by authority’ He said this although the rule under which the Committee acted was in the widest possible terms – that the Committee should each year re-elect such members as they should deem eligible as members of the Stock Exchange.
Lord Birkenhead LC s
[1919] AC 606
England and Wales
Citing:
Appeal From – Weinberger v Inglis ChD 1918
The plaintiff (who had been born in Germany) applied to become a member of the London Stock Exchange. The committee of the Stock Exchange, in the exercise of their discretion, refused the application. The plaintiff brought proceedings challenging . .

Cited by:
Cited – Ridge v Baldwin (No 1) HL 14-Mar-1963
No Condemnation Without Opportunity For Defence
Ridge, a Chief Constable, had been wrongfully dismissed because he was not given the opportunity of presenting his defence. He had been acquitted of the charges brought against him, but the judge at trial had made adverse comments about his . .

Lists of cited by and citing cases may be incomplete.
Updated: 10 October 2021; Ref: scu.653100

Andrews v Mitchell: HL 16 May 1904

Sect. 68 of the Friendly Societies Act, 1896, which enacts that every dispute between a member of a friendly society and the society shall be decided in manner directed by the rules of the society, and that the decision so given shall be binding and conclusive on all parties without appeal, does not apply to a decision given by the arbitration committee without jurisdiction, the rules having been disregarded upon a question of substance.
A member of a friendly society was duly summoned before the arbitration committee for a breach of the rules, and was in his absence expelled from the society by a resolution of the committee upon a different charge, namely, of fraud and disgraceful conduct, of which no written notice had been given to him as required by the rules.
Held: that the decision was null and void.
[1905] AC 78, [1904] UKLawRpAC 28
Commonlii
England and Wales
Cited by:
Cited – Ridge v Baldwin (No 1) HL 14-Mar-1963
No Condemnation Without Opportunity For Defence
Ridge, a Chief Constable, had been wrongfully dismissed because he was not given the opportunity of presenting his defence. He had been acquitted of the charges brought against him, but the judge at trial had made adverse comments about his . .

Lists of cited by and citing cases may be incomplete.
Updated: 10 October 2021; Ref: scu.653103

Fisher v Keane: ChD 2 Dec 1878

The committee of a club, being a quasi-judicial tribunal, are bound, in proceeding under their rules against a member of the club for alleged misconduct, to act according to the ordinary principles of justice, and are not to convict him of an offence warranting his expulsion from the club without giving him due notice of their intention to proceed against’ him, and affording him an opportunity of defending or palliating his conduct: and the Court will, at the instance of any member so proceeded against, declare any resolution passed by the committee without previous notice to him, based upon ex parte evidence and purporting to expel him from the club, to be null and void, and will restrain the committee by injunction from interfering, by virtue of such a resolution, with his rights of membership.
Lord Jessel MR, said ‘clubs, or by any other body of persons who decide upon the conduct of ordinary rules by which justice should be administered by committees of the Committee: They ought not, as I understand it, according to the others, to blast a man’s reputation for ever – perhaps to ruin his prospects for life, without giving him an opportunity of either defending or palliating his conduct ‘
Lord Jessel MR
(1879) 11 Ch D 353, [1878] UKLawRpCh 301;
Commonlii
England and Wales
Cited by:
Cited – Ridge v Baldwin (No 1) HL 14-Mar-1963
No Condemnation Without Opportunity For Defence
Ridge, a Chief Constable, had been wrongfully dismissed because he was not given the opportunity of presenting his defence. He had been acquitted of the charges brought against him, but the judge at trial had made adverse comments about his . .

Lists of cited by and citing cases may be incomplete.
Updated: 10 October 2021; Ref: scu.653099

Yorkshire Miners’ Association and Others v Howden and Others: HL 14 Apr 1905

A miners’ association, registered under the Trade Union Act 1871, made certain payments from its funds to its members, who were out of employment, in circumstances which involved a direct contravention of the rules of the association. Held (Lords Davey and James of Hereford diss.) that an action was maintainable by an individual member of the association against the association and its officers for an injunction to restrain such a misapplication of the funds, inasmuch as the action was not a legal proceeding instituted with the object of directly enforcing an agreement for the application of the funds of a trade union to provide benefits to members, within the meaning of the Trade Union Act 1871, section 4, sub-section 3.
Lord Chancellor (Halsbury), Lords Macnaghten, Davey, James of Hereford, Robertson, and Lindley
[1905] UKHL 868, 42 SLR 868
Bailii
Trade Union Act 1871 4
England and Wales
Citing:
Cited – Chamberlains Wharf Limited v Smith CA 18-Jul-1900
The rules of an association, called the Tea Clearing House, the members of which were dock companies and tea warehouse keepers carrying on the business of warehousing tea in bond, provided (rule 11) that every member should charge on teas the . .
Cited – Simpson v The Westminster Palace Hotel Company Limited 4-Jun-1860
. .

Lists of cited by and citing cases may be incomplete.
Updated: 10 October 2021; Ref: scu.621180

Henry Labouchere And Others v Emily Tupper And Others: PC 17 Jun 1857

Isle of Man – An executor of a trader carying on the trade after his death, though not avowedly in the character of executor, is nevertheless persmally liable for all the debts contracted in the trade after the Testator’s death, whether he is entitled or not, to be wholly, or to any extent, indemnified by the Testator’s personal estate, and whether the Testator’s estate is sufficient or insufficient for that purpose
Neither does the propriety of the executor’s conduct, as between himself and those beneficially interested in the Testator’s personal estate, give the creditors of the trade, becoming so after the death of the Testator, the rights of creditors of the Testator; it being immaterial, as. far as they are concerned, whether the Testator, if be had a partner, was bound by a covenant with him that the Testator’s executor should continue the trade in partnership with the surviving partners
The executor of a deceased shareholder in a Joint-stock Banking Cbmpany held not liable to make good out of his Testator’s assets, debts contracted by the Company subsequently to the Testator’s death, though the shares were registered in the executor’s name, and he received the dividends in his character of executor, the debts due at his death having been subsequently discharged by the Company
There is no difference between the Manx law and the law of England in respect to the principles applicable to the law of partnership
[1857] EngR 685, (1857) 11 Moo PC 198, (1857) 14 ER 670, [1857] UKPC 3
Commonlii, Bailii
England and Wales

Updated: 10 October 2021; Ref: scu.290431

Dawkins v Antrobus: CA 1 Feb 1881

The Court will not interfere against the decision of the members of a club professing to act under their rules, unless it can be shewn either that the rules are contrary to natural justice, or that what has been done is contrary to the rules, or that there has been mala fides or malice in arriving at the decision. One of the rules of a club provided that a general meeting might alter any of the standing rules affecting the general interests of the club, provided this was done with certain formalities and by a certain majority.
Held: that a rule providing for the expulsion of members who should be guilty of conduct injurious to the interests of the club was within the regulation, and could be validly passed by a general meeting. One of the rules of a club provided that in case the conduct of any member should, in the opinion of the committee, be injurious to the character and interests of the club, the committee should be empowered to recommend such member to resign, and if he should not comply, the committee should then call a general meeting, and if a majority of two-thirds of the meeting agreed by ballot to the expulsion of such member, he should be expelled.
The Plaintiff, a member of the club, sent a pamphlet which reflected on the conduct of S, a gentleman in a high official position, also a member of the club, to S, at his official address, enclosed in an envelope on the outside of which was printed ‘Dishonourable Conduct of S.’ The committee being of opinion that this action was injurious to the character and interests of the club, called upon the Plaintiff for an explanation, which he refused to give. They then called on him to resign, and as he did not comply with their recommendation, they duly summoned a general meeting, at which a resolution was passed by the requisite majority expelling the Plaintiff from the club. Held (affirming the decision of Jessel, MR), that the Court would not interfere to restrain the committee from excluding the Plaintiff from the club. t Nothing had been done contrary to natural justice. The fact that a decision is unreasonable may be strong evidence of malice, but is not conclusive, and may be rebutted by evidence of bona fides.

Sir George Jessel MR said: ‘I think it is my duty to construe the rules fairly and in the same way as I should any other contract and I have no right to give the words other than their ordinary meaning, or to construe the rules otherwise than in their ordinary sense.’
Sir George Jessel MR
(1881) 17 Ch D 615, [1881] UKLawRpCh 28
England and Wales
Cited by:
Cited – Speechley and Others v Allott and Others CA 10-Mar-2014
The parties disputed the management of a social club. The club owned a bowling green, and bowling members sought to restrain its closure. The appellants now said that the court should not have found at first instance that a meeting had validly . .
Cited – Ridge v Baldwin (No 1) HL 14-Mar-1963
No Condemnation Without Opportunity For Defence
Ridge, a Chief Constable, had been wrongfully dismissed because he was not given the opportunity of presenting his defence. He had been acquitted of the charges brought against him, but the judge at trial had made adverse comments about his . .

Lists of cited by and citing cases may be incomplete.
Updated: 08 October 2021; Ref: scu.551299

Freeman and Lockyer v Buckhurst Park Properties (Mangal) Ltd: CA 1964

The defendant company allowed one of its directors to act as the Managing Director and to give instructions to the Plaintiff to do work on its behalf.
Held: The fact that he had never been formally appointed as Managing Director was of no consequence. The other directors knew the facts, the Company had effectively held out that individual as having the powers of the Managing Director, and the fact that he may have gone outside his actual authority did not affect the fact that he had apparent (or ostensible) authority to do what he did, and the Company was bound.
Diplock LJ stated: ‘An ‘apparent’ or ‘ostensible’ authority . . is a legal relationship between the principal and the contractor created by a representation, made by the principal to the contractor, intended to be and in fact acted upon by the contractor, that the agent has authority to enter on behalf of the principal into a contract of a kind within the scope of the ‘apparent’ authority, so as to render the principal liable to perform any obligations imposed upon him by such contract . . The representation which creates ‘apparent’ authority may take a variety of forms of which the commonest is representation by conduct,, that is by permitting the agent to act in some way in the conduct of the principal’s business with other persons. By so doing the principal represents to anyone who becomes aware that the agent is so acting that the agent has authority to enter on behalf of the principal into contracts with other persons of the kind which an agent so acting in the conduct of his principal business has usually ‘actual’ authority to enter into.’
Diplock LJ
[1964] 2 QB 480, [1964] 1 All ER 630, [1964] 2 WLR 618
England and Wales
Cited by:
Cited – Evans v James (Administratrix of the Estate of Thomas Hopkin Deceased) CA 5-Jul-1999
Before the parties called evidence, and having read the papers, the court considered that there was no real defence shown, and invited submissions. Negotiations for the grant of a tenancy had been terminated by the sudden illness of the proposed . .
Cited – Computer 2000 Distribution Ltd and others v ICM Computer Solutions Plc CA 17-Nov-2004
The claimant delivered computer equipment against a fraudulent invoice issued in the name of the defendant.
Held: The loss here had to fall on an innocent party. Having delivered the equipment to the site requested, the claimant had done all . .
Cited – CRJ Services Ltd v Lanstar Ltd (T/A CSG Lanstar) TCC 19-Apr-2011
The claimant hired out recycling plant and equipment and the defendant had been a customer. A local agent of the defendant had properly entered into certain contracts with the claimant acting as the company’s agent, but then created three long term . .

Lists of cited by and citing cases may be incomplete.
Updated: 08 October 2021; Ref: scu.188878

Royal British Bank v Turquand: CEC 1856

The plaintiff sought payment from the defendants, a joint stock Company, on a bond, signed by two directors, under the seal of the Company whereby the Company acknowledged themselves to be bound to the plaintiff in pounds 2,000. The company said that there had been no resolution authorising the making of the bond, and that it was given without the authority of the shareholders.
Held: The plaintiff was entitled to judgement, the obligee having, on the facts alleged, a right to presume that there had been a resolution at a general meeting, authorising the borrowing the money on bond. Outsiders dealing with a company in good faith can assume that acts within the company’s constitution and powers have been properly and duly performed and are not bound to enquire whether acts of internal management have been regular.
Jervis CJ said: ‘We may now take for granted that the dealings with these companies are not like dealings with other partnerships, and that the parties dealing with them are bound to read the statute and the deed of settlement. But they are not bound to do more. And the party here, on reading the deed of settlement, would find, not a prohibition from borrowing, but a permission to do so on certain conditions. Finding that the authority might be made complete by a resolution, he would have a right to infer the fact of a resolution authorizing that which on the face of the document appeared to be legitimately done.’
Jervis CJ
(1856) 6 E and B 327, [1856] EngR 470, (1856) 6 El and Bl 327, (1856) 119 ER 886
Commonlii
England and Wales
Citing:
Appeal from – The Royal British Bank v Turquand 2-Jun-1855
. .

Cited by:
Cited – Douglas and others v Hello! Ltd and others; similar HL 2-May-2007
In Douglas, the claimants said that the defendants had interfered with their contract to provide exclusive photographs of their wedding to a competing magazine, by arranging for a third party to infiltrate and take and sell unauthorised photographs. . .
Cited – Criterion Properties plc v Stratford UK Properties LLC and others HL 17-Jun-2004
The parties presented their claim before the House, but the House found that it was to be argued differently. The new arguments had not been pursued or prepared before the case came to the House, and it was remitted to the lower courts for the issue . .
Cited – Lever (Finance) Ltd v City of Westminster CA 22-Jul-1970
The appellant developers had obtained detailed planning approval for fourteen houses, but after adjustments for a building line, moving several properties distances of several feet toward other properties, further plans were submitted without . .
Explained – Morris v Kanssen HL 1946
The House considered the effect of provisions relating to the acts of directors in the 1929 Act. Lord Simonds said: ‘There is, as it appears to me, a vital distinction between (a) an appointment in which there is a defect or, in other words, a . .

Lists of cited by and citing cases may be incomplete.
Updated: 08 October 2021; Ref: scu.251748

Blisset v Daniel: 1853

The court considered the limits on a power of expulsion from a partnership.
Held: (Page-Wood V-C) Construing the articles, two-thirds of the partners could expel a partner by serving a notice upon him without holding any meeting or giving any reason. But the power must be exercised in good faith: ‘the literal construction of these articles cannot be enforced’ and, after citing from the title ‘De Societate’ in Justinian’s Institutes, went on: ‘It must be plain that you can neither exercise a power of this description by dissolving the partnership nor do any other act for purposes contrary to the plain general meaning of the deed, which must be this, that the power is inserted, not for the benefit of any particular parties holding two-thirds of the shares but for the benefit of the whole society and partnership . . .’ In the Australian case of In re Wondoflex Textiles Pty. Ltd. [1951] V.L.R. 458, 467, Smith J. also contrasted the literal meaning of the articles with the true intentions of the parties: ‘It is also true, I think, that, generally speaking, a petition for winding up, based upon the partnership analogy, cannot succeed if what is complained of is merely a valid exercise of powers conferred in terms by the articles. . . . To hold otherwise would enable a member to be relieved from the consequences of a bargain knowingly entered into by him. . . . But this, I think, is subject to an important qualification. Acts which, in law, are a valid exercise of powers conferred by the articles may nevertheless be entirely outside what can fairly be regarded as having been in the contemplation of the parties when they became members of the company; and in such cases the fact that what has been done is not in excess of power will not necessarily be an answer to a claim for winding up. Indeed, it may be said that one purpose of [the just and equitable provision] is to enable the court to relieve a party from his bargain in such cases.’
Page-Wood V-C
(1853) 10 Hare 493
England and Wales
Cited by:
Applied – Ebrahimi v Westbourne Galleries Ltd and Others (on Appeal from In Re Westbourne Galleries Ltd) HL 3-May-1972
Unfair Prejudice to Minority Shareholder
A company had operated effectively as a partnership between two and then three directors. No dividends had been paid, but the directors had received salaries. One director was removed and sought an order for the other to purchase his shares, or . .
Cited – Wood v Woad CEC 1-Jun-1874
Declaration, alleging that the plaintiff was a member of a mutual insurance society, which insured members against losses to ships entered and insured in the books of the society, on a deposit being made of 5l. per cent, on the amount insured ; that . .
Cited – Ridge v Baldwin (No 1) HL 14-Mar-1963
No Condemnation Without Opportunity For Defence
Ridge, a Chief Constable, had been wrongfully dismissed because he was not given the opportunity of presenting his defence. He had been acquitted of the charges brought against him, but the judge at trial had made adverse comments about his . .

Lists of cited by and citing cases may be incomplete.
Updated: 08 October 2021; Ref: scu.180984

Airey v Cordell and Others: ChD 24 Aug 2006

Application by the claimant for permission to amend his Particulars of Claim to plead a new claim.
Held: Warren J pointed out that there are many cases in which some directors, acting in accordance with section 172, would think it worthwhile to continue a claim at least for the time being, while others, also acting in accordance with section 172, would reach the opposite conclusion.
Warren J
[2006] EWHC 2728 (Ch), [2007] BusLR 391, [2007] BCC 785
Bailii
Companies Act 2006 172
England and Wales
Cited by:
Cited – Iesini and Others v Westrip Holdings Ltd and Others ChD 16-Oct-2009
The claimants were shareholders in Westrip, accusing the Defendant directors of deliberately engaging in a course of conduct which has led to Westrip losing ownership and control of a very valuable mining licence and which, but for their . .

Lists of cited by and citing cases may be incomplete.
Updated: 01 October 2021; Ref: scu.341772

Sowman v David Samuel Trust: ChD 1978

When considering a mortgage created by a corporate debtor, the rights under the debenture are not the property of the mortgagor but that of the mortgagee. It was a case where a company which had created the debenture equivalent to the mortgage had gone into liquidation: ‘Winding up deprives the receiver, under such a debenture as that now in suit, of power to bind the company personally by acting as its agent. It does not in the least affect his powers to hold and dispose of the company’s property comprised in the debenture, including his power to use the company’s name for that purpose, for such powers are given by the disposition of the company’s property which it made (in equity) by the debenture itself. That disposition is binding on the company and those claiming through it, as well in liquidation as before liquidation, except of course where the debenture is vulnerable under [various sections of the Companies Act] or is otherwise invalidated by some provision more applicable to the winding up.
. . The view of the authorities which I have just stated is also fatal, I think, to Mr Monckton’s alternative submission that the sale by the receiver is a disposition of the company’s property avoided by section 227 of the Companies Act 1948 . . In truth, the rights and powers given by the debenture are themselves property, but not property of the company, and if they are not extinguished by the fact of winding up, their enforcement or exercise is not within the scope of section 227 at all.’
Goulding J
Sowman v David Samuel Trust [[1978] 1 WLR 22
Companies Act 1948 227
England and Wales
Cited by:
Cited – Calvert v Clydesdale Bank Plc and Others CA 27-Jun-2012
The widow and personal representative of the chargor challenged the enforcement proceedings taken by the bank under a guarantee. The chargor had begun to suffer Alzheimers disease. She now sought leave toappeal saying that to enforce the guarantee, . .

Lists of cited by and citing cases may be incomplete.
Updated: 01 October 2021; Ref: scu.471195

Re Richborough Furniture Ltd: ChD 21 Aug 1995

The court was faced with the question whether one of the three respondents, who was not a director of the company de jure, was nevertheless a director of the company de facto and as such liable to disqualification.
Held: A de facto director was as responsible as a formal director for disqualification purposes. However, in this case, a business consultant providing computer and other management services to a furniture-making company, was not a de facto director, despite his having undertaken extensive negotiations with creditors and performed some of the functions of a finance director. Where it is unclear that the acts of the person in question are referable to an assumed directorship or to some other capacity, the person in question is entitled to the benefit of the doubt
Timothy Lloyd QC said: ‘It seems to me that for someone to be made liable to disqualification under section 6 as a de facto director, the court would have to have clear evidence that he had been either the sole person directing the affairs of the company (or acting with others all equally lacking in a valid appointment, as in Morris v Kanssen [1946] AC 459) or, if there were others who were true directors, that he was acting on an equal footing with the others in directing the affairs of the company. It also seems to me that, if it is unclear whether the acts of the person in question are referable to an assumed directorship, or to some other capacity such as shareholder or, as here, consultant, the person in question must be entitled to the benefit of the doubt.’
Timothy Lloyd QC HHJ
Ind Summary 21-Aug-1995, [ 1996] BCC 155
Company Directors Disqualification Act 1986 6(1)
England and Wales
Citing:
Cited – Morris v Kanssen HL 1946
The House considered the effect of provisions relating to the acts of directors in the 1929 Act. Lord Simonds said: ‘There is, as it appears to me, a vital distinction between (a) an appointment in which there is a defect or, in other words, a . .

Lists of cited by and citing cases may be incomplete.
Updated: 01 October 2021; Ref: scu.85860

Re Seagull Manufacturing Co Ltd (In Liquidation) (No 2): ChD 12 Jan 1994

A director resident abroad is still subject to UK jurisdiction.
Gazette 12-Jan-1994
England and Wales
Citing:
See Also – Re Seagull Manufacturing Co Ltd ChD 3-May-1993
A company director who was resident overseas may be subject to disqualification proceedings. . .

Lists of cited by and citing cases may be incomplete.
Updated: 01 October 2021; Ref: scu.85880

Re: New Bullas Trading Ltd: ChD 5 Apr 1993

A fixed charge in a debenture without restrictions on dealing with monies received must be a floating charge.
Knox J
Ind Summary 05-Apr-1993, [1993] BCC 251
Insolvency Act 1986 40
England and Wales
Citing:
Appealed to – In Re New Bullas Trading Ltd CA 12-Jan-1994
A company debenture, which purported to create a fixed charge on book debts, and a second floating charge over the proceeds when paid, was valid and effective to create a fixed charge. The chargee was not a bank, and therefore no facility could be . .
Applied – In re Brightlife Ltd ChD 1987
Parties contractual freedom to be respected
A clause in a debenture gave a charge which provided that the chargor should not: ‘deal with its book or other debts or securities for money otherwise than in the ordinary course of getting in and realising the same which expression shall not . .

Cited by:
Appeal from – In Re New Bullas Trading Ltd CA 12-Jan-1994
A company debenture, which purported to create a fixed charge on book debts, and a second floating charge over the proceeds when paid, was valid and effective to create a fixed charge. The chargee was not a bank, and therefore no facility could be . .
Cited – National Westminster Bank Plc v Spectrum Plus Ltd; In re Spectrum Plus CA 26-May-2004
The court was asked whether a charge given over book debts in a debenture was floating or fixed.
Held: Since the charge asserted some control over receipt of the payments, it was a fixed charge. Upon payment into the account, title to the . .

Lists of cited by and citing cases may be incomplete.
Updated: 01 October 2021; Ref: scu.85909

Reynard v Secretary of State for Trade and Industry: ChD 5 Jul 2001

In the course of disqualification proceedings, a company director was found to have attempted to mislead the court. It was held that that finding could assist the court in finding that the director could be capable of misconduct. However that misconduct in court could not found a separate head of complaint under the Act, and nor could it justify an extension of the period of disqualification. The period of disqualification had to be fixed by reference to the conduct on which the original complaint was founded.
Times 10-Jul-2001, Gazette 05-Jul-2001
Company Directors Disqualification Act 1986 6(2)
England and Wales

Updated: 01 October 2021; Ref: scu.88759

Re D’Jan of London Ltd; Copp v D’Jan: ChD 1 Sep 1993

Directors liability to compensate on insolvency for own negligence. ‘In my view, the duty of care owed by a director at common law is accurately stated in s 214(4) of the Insolvency Act 1986. It is the conduct of – ‘a reasonably diligent person having both – (a) the general knowledge, skill and experience that may reasonably be expected of a person carrying out the same functions as are carried out by that director in relation to the company, and (b) the general knowledge, skill and experience that that director has.”
Hoffmann LJ
Gazette 01-Sep-1993, [1994] 1 BCLC
England and Wales
Cited by:
Cited – The Secretary of State for Trade and Industry v Goldberg, Mcavoy ChD 26-Nov-2003
The Secretary of State sought a disqualification order. The director argued that one shoul not be made in the absence of some breach of legal duty, some dishonesty should be shown.
Held: The answer was a mixture of fact and law. A breach of . .

Lists of cited by and citing cases may be incomplete.
Updated: 01 October 2021; Ref: scu.85754

Practice Direction No 2 of 1995: Directors Disqualification: ChD 15 Dec 1995

General practice directions were given to ensure the speedy disposal of disqualification proceedings. The direction deals with matters arising and to be dealt with on the first summons hearing, the setting down and fixing the date of the trial, time estimates, any pretrial review, the arrangement of documents for the hearing, and the summary procedure, and for hearings outside London.
Sir Richard Scott VC
Ind Summary 01-Jan-1996, [1996] 1 All ER 442
Insolvent Companies (Disqualification of Unfit Directors) Propceedings Rules 1987
England and Wales

Updated: 01 October 2021; Ref: scu.84926

Hawkins and Another v Carr; Parsons and Another v Carr: QBD 13 Nov 1865

To an action by surviving partners, for goods sold, money lent to, and on accounts stated with the defendant, by them and their late partner, the defendant pleaded a settlement of the account between him and the deceased by a bill not yet due. The Court, in conformity with the practice in Chancery, allowed interrogatories to be put to the defendant as to the circumstances of the alleged settlement.
The Court allowed similar interrogatories in a similar action by the executors of a deceased person, in which a similar plea had been pleaded.
[1865] EngR 727, (1865) 6 B and S 995, (1865) 122 ER 1460, (1865-1866) LR 1 QB 89, [1865] UKLawRpKQB 16
Commonlii, Commonlii
England and Wales

Updated: 29 September 2021; Ref: scu.281639

Thorby v Goldberg: 29 Jul 1964

(High Court of Australia) If, when a contract is negotiated on behalf of a company, the directors bona fide think it in the interests of the company as a whole that the transaction should be entered into and carried into effect they may bind themselves by the contract to do whatever is necessary to effectuate it.
Contract – Whether concluded bargain – Agreement by directors as to the future exercise of fiduciary powers – Illegality – Pleading – Non assumpsit – Illegality.
Kitto J said that an agreement, even between private parties, is not void for uncertainty ‘because it leaves one party or group of parties a latitude of choice as to the manner in which agreed stipulations shall be carried into effect, nor does it for that reason fall short of being a concluded contract’
McTiernan(1), Kitto(2), Menzies(3), Windeyer(4) and Owen(5) JJ.
(1964) 112 CLR 597, [1964] HCA 41
Austlii
Australia
Cited by:
Cited – Fulham Football Club Ltd v Cabra Estates plc CA 1994
Fulham, as lessees of Craven Cottage, agreed with CABRA, a developer, who had applied for planning permission to redevelop the ground, shortly before a public inquiry which had been set up to consider the planning application; and also a proposal by . .

Lists of cited by and citing cases may be incomplete.
Updated: 29 September 2021; Ref: scu.241637

Veuve Monnier et ses Fils, Limited, In re; Ex parte Bloomenthal: CA 9 Jun 1896

B lent to a limited company 1000 pounds on its promissory note on the terms that the company should give him collateral security on 10,000 fully paid up 1 pound preference shares, and that if the company should wish to pay off any part of the amount B. was to return shares at the same rate at which he had taken them. The company handed to B. certificates for 10,000 shares, which certificates stated that B was the registered holder of them, and that they were fully paid up. They were in fact shares on which nothing had been paid. The company sold some of these shares, and B executed transfers of the shares sold. His name remained on the register for the remainder when an order was made for winding up the company, and he was placed on the list of contributories in respect of them. B applied to have his name struck out from the list of contributories on the ground that the company were estopped by the certificates from denying that the shares were fully paid up.
Held: (affirming the decision of Vaughan Williams J), that as B knew that the shares were the property of the company, that they had not been transferred to him, and that they had not been fully paid up by himself, he knew facts enough to lead any one who considered them to the conclusion that the shares were not fully paid up; that he, therefore, could not rely on the certificates as an estoppel, and that he must remain on the list of contributories.
Lindley LJ, Rigby LJ
[1896] UKLawRpCh 103, (1896) 2 Ch 525
Commonlii
England and Wales
Cited by:
Appeal from – Bloomenthal v Ford HL 1897
The appellant lent money to a limited company upon the terms that he should have as collateral security fully paid shares in the company and the company handed to the appellant certificates for 10000 shares of 1 pound each. The certificates stated . .

Lists of cited by and citing cases may be incomplete.
Updated: 29 September 2021; Ref: scu.653303

JRRT (Investments) v Haycraft: ChD 1993

A purchaser of shares (under an inept agreement) raised a summons under RSC O.14A with the single issue of whether the purchaser was entitled to direct the vendor to vote the shares.
Chadwick J
[1993] BCLC 401
England and Wales
Citing:
Followed – Musselwhite v CH Musselwhite and Son Ltd ChD 1962
Parties had agreed to transfer shares in a small family company for the payment of a sum of money by way of instalments over a period of time. The agreement provided the transfers of the shares should be executed and that the executed transfers and . .

Lists of cited by and citing cases may be incomplete.
Updated: 29 September 2021; Ref: scu.662433

Bloomenthal v Ford: HL 1897

The appellant lent money to a limited company upon the terms that he should have as collateral security fully paid shares in the company and the company handed to the appellant certificates for 10000 shares of 1 pound each. The certificates stated that he was the registered holder of the shares, and that on each of them before and I don’t have been paid. no money had in fact been paid apologise, which were issued from the company direct to the appellant, but he did not know this and believe the documentation that they were fully paid shares. An order having been made to wind up the company the appellant was placed on the list of contributors.
Held: Since the company had obtained the loan by a representation that the shares were fully paid which the appellant believed and acted upon, the company and the liquidator were estopped from alleging that the shares were not fully paid and the appellant was entitled to have his name removed from the list of contributors.
If a company issues, as security to someone who provides the company with a loan, certificates stating that shares are fully paid up, the liquidator is estopped from denying that the shares are fully paid up when settling a list of contributories
There is no need, and indeed it is wrong, to introduce into the common law notion of estoppel, the equitable doctrine of the bona fide purchaser for value without notice.
Lord Halsbury C said: ‘The ground upon which it is suggested appears to be possibly a question of law and partly a question of fact. As to the question of law I confess for myself I entertain a doubt whether it is ever true in a case where one person has been induced to act by the misrepresentation and another that you can go beyond the fact whether it is so or not. In arriving at a conclusion upon this question of fact all the circumstances must be considered. A statement may be made so preposterous in its nature that nobody could believe but anyone was misled’.
Lord Herschell said: ‘I cannot myself think that, where an unequivocal statement is made by one party to another of a particular fact, the party who made that statement can get rid of the estoppel which arises from another man acting upon it by saying that if the person to whom he made the statement had reflected and thought all about it he would have come to see that it could not be true. Of course, if the person to whom the statement was made did not believe it, and they did not act on the belief induced by it, there is no estoppel. But supposing he did believe it and did act on the belief induced by it then it seems to me you do not get rid of the estoppel by saying ‘If you had thought more about it you would have seen it was not true.’
The very person who makes the statement of that sort has put the other party off making further inquiry. He had produced on his mind and impression as a result of which further inquiry is thought to be unnecessary or useless. Therefore, I confess I do not think that it is legitimate to speculate what is the conclusion at which a man would have arrived if he had put together – pieced together – all the considerations that might have occurred to a reflective mind cogitating on the whole subject, and then to say that because he would have come to the conclusion that the statement made to him could not have been true, he is not entitled to act upon it as if it had been true, when in point of fact he did not enter into those considerations, but did believe it and did act upon it.’
Lord Herschell, Lord Halsbury C
[1897] AC 16, (1897) 66 LJ Ch 253, (1897) LT 205, (1897) 45 WR 449, (1897) 13 TLR 240, (1897) 4 Mans 156
England and Wales
Citing:
Appeal from – Veuve Monnier et ses Fils, Limited, In re; Ex parte Bloomenthal CA 9-Jun-1896
B lent to a limited company 1000 pounds on its promissory note on the terms that the company should give him collateral security on 10,000 fully paid up 1 pound preference shares, and that if the company should wish to pay off any part of the amount . .

Cited by:
Cited – Cadbury Schweppes Plc and Another v Halifax Share Dealing Ltd and Another ChD 23-May-2006
Fraudsters had successfully contrived to sell shares of others, by re-registering the shares to new addresses and requesting new certificates. The question was which of the company, the company registrars and the stockbrokers should bear the loss. . .

Lists of cited by and citing cases may be incomplete.
Updated: 27 September 2021; Ref: scu.242176

Re Canadian Land Reclaiming and Colonizing Co: CA 1880

The court was asked whether two individuals who had been appointed and acted as directors while they were ineligible were directors or other officers liable to a summons for misfeasance.
Held: The test was was whether a man who had assumed a position could be allowed to deny in court that he was really entitled to occupy it.
A de facto director owes directors’ duties to the company in relation to which he performs those functions.
Sir George Jessel MR
(1880) 14 ChD 660
England and Wales
Cited by:
Cited – Ultraframe (UK) Ltd v Fielding and others ChD 27-Jul-2005
The parties had engaged in a bitter 95 day trial in which allegations of forgery, theft, false accounting, blackmail and arson. A company owning patents and other rights had become insolvent, and the real concern was the destination and ownership of . .
Cited – Holland v Revenue and Customs and Another SC 24-Nov-2010
The Revenue sought an order under section 212 of the 1986 Act, for payment of the tax debts of the insolvent company by a de facto director. H had organised a scheme under which IT contractors had worked through companies created by him under a . .

Lists of cited by and citing cases may be incomplete.
Updated: 21 September 2021; Ref: scu.230270

NW Robbie and Co Ltd v Witney Warehouse: CA 1963

A floating charge effects an equitable assignment of the charged asset to the security holder.
Russell LJ
[1963] 1 WLR 1324
England and Wales
Cited by:
Cited – Ultraframe (UK) Ltd v Fielding and others ChD 27-Jul-2005
The parties had engaged in a bitter 95 day trial in which allegations of forgery, theft, false accounting, blackmail and arson. A company owning patents and other rights had become insolvent, and the real concern was the destination and ownership of . .

Lists of cited by and citing cases may be incomplete.
Updated: 21 September 2021; Ref: scu.230292

Northern Counties Securities Ltd v Jackson and Steeple Ltd: ChD 1974

Walton J reiterated that, when a shareholder is voting for or against a particular resolution, he is voting as a person owing no fiduciary duty to the company and who is exercising his own right of property to vote as he thinks fit.
Walton J
[1974] 1 WLR 1133, [1974] 2 All ER 625
England and Wales
Cited by:
Cited – The Children’s Investment Fund Foundation (UK) v Attorney General and Others ChD 9-Jun-2017
The court considered the propriety of a payment made by a charitable company to a director for her loss of office. The charity was to transfer a substantial sum to a new charity headed by the departing director.
Held: The court approved the . .
Cited – Lehtimaki and Others v Cooper SC 29-Jul-2020
Charitable Company- Directors’ Status and Duties
A married couple set up a charitable foundation to assist children in developing countries. When the marriage failed an attempt was made to establish a second foundation with funds from the first, as part of W leaving the Trust. Court approval was . .

Lists of cited by and citing cases may be incomplete.
Updated: 20 September 2021; Ref: scu.652996

The Secretary of State for Business, Energy and Industrial Strategy v PAG Asset Preservation Ltd: CA 31 Jul 2020

Whether companies operating a scheme to enable property owners to avoid liability for national non-domestic rates (‘NNDR’ or ‘business rates’) in respect of unoccupied commercial properties, in the form of what is referred to in the judgment below as ‘Scheme 3’, should be wound up on public interest grounds because it is said that their business model ‘lacks commercial probity in their operation of Scheme Three which misuses and/or abuses and/or subverts the insolvency legislation and process’.
[2020] EWCA Civ 1017
Bailii
England and Wales

Updated: 20 September 2021; Ref: scu.652902

Bolton v Madden: QBD 25 Nov 1873

The Court of Queen’s Bench on appeal from the Lord Mayor’s Court held that they could ‘find no legal principle to justify us in holding that the subscriber to a charity may not give his votes as he pleases’. Blackburn J said that ‘The general rule is that an executory agreement, by which the plaintiff agrees to do something on the terms that the defendant agrees to do something else, may be enforced if what the plaintiff has agreed to do is either for the benefit of the defendant or to the trouble or prejudice of the plaintiff.’
The traditional requirement for consideration is that the person benefiting from the promise, the promisee, must either provide a benefit to the promisor in return for the promise, or suffer a detriment requested by the promisor.
Blackburn J
(1873) LR 9 QB 55
Commonlii
England and Wales
Cited by:
Cited – Lehtimaki and Others v Cooper SC 29-Jul-2020
Charitable Company- Directors’ Status and Duties
A married couple set up a charitable foundation to assist children in developing countries. When the marriage failed an attempt was made to establish a second foundation with funds from the first, as part of W leaving the Trust. Court approval was . .
Cited – Lehtimaki and Others v Cooper SC 29-Jul-2020
Charitable Company- Directors’ Status and Duties
A married couple set up a charitable foundation to assist children in developing countries. When the marriage failed an attempt was made to establish a second foundation with funds from the first, as part of W leaving the Trust. Court approval was . .

Lists of cited by and citing cases may be incomplete.
Updated: 17 September 2021; Ref: scu.652997

Heyting v Dupont: CA 1964

The plaintiff owned shares in a company registered in Jersey and created to make the most of an invention. The articles contained a deadlock provision.
Held: This was ‘essentially a dispute between two discordant partners’ There was a general exception to the rule in Foss v Harbottle where the interests of justice so required, and service out of the jurisdiction was allowed: ‘I dare say that the rule in Foss v. Harbottle is a conception as unfamiliar in the Channel Islands as is the Clameur de Haro in the jurisdiction of England and Wales. But clearly this is a matter of procedure to be decided according to the law of the forum.’
Russell LJ
[1964] 1 WLR 843
England and Wales
Citing:
Cited – Foss v Harbottle 25-Mar-1843
Company alone may sue for legal wrong against it.
A bill was lodged by two of the proprietors of shares in a company incorporated by Act of Parliament, on their own and the other shareholders’ behalf. They claimed against three bankrupt directors, a proprietor, solicitor and architect charging them . .

Cited by:
Cited – Konamaneni v Rolls Royce Industrial Power (India) Limited ChD 20-Dec-2001
The claimants founded their action on the assertion that the defendants had been corrupt in obtaining contracts in India. The defendants argued that the English courts had no jurisdiction. The claimants held various small shareholdings in a company . .

Lists of cited by and citing cases may be incomplete.
Updated: 17 September 2021; Ref: scu.183217

Wylie v Corrigan and Ansari: SCS 13 Oct 1998

The question was whether accounts which had been produced by the continuing partners, but which had been prepared not by them but by an auditor, were ones which they themselves could refer to arbitration or which, having been produced by them, were binding on them.
Held: A court will be reluctant to find, as a matter of implication, that an outgoing partner has been deprived of his right to object to the contents of accounts prepared after he has left the partnership.
Lord Coulsfield
[1998] ScotCS 24, (1999) SC 97
Bailii
Scotland
Cited by:
Cited – Hammonds (A Firm) v Danilunas and others ChD 13-Feb-2009
The claimant firm of solicitors sought repayment of sums which it said were excess drawing from the defendants, former partners. Drawings had been taken against anticipated profits, and the retiring partners left as profits declined. The defendants . .

Lists of cited by and citing cases may be incomplete.
Updated: 14 September 2021; Ref: scu.163340

Re Hailey Group Ltd; In re a Company No 008126 of 1989: 1992

The petitioner was a minority shareholder. He claimed an order that the majority shareholders sell their shares to him. An administrative receiver was then appointed. The claim changed to an order that an order that the majority shareholders buy his shares.
Held: There had been oppressive conduct, but the buyout order was refused. Richard Sykes QC said that the relief ‘need not be directed solely towards remedying the particular things that have happened’, but: ‘The fact is that the appointment of an administrative receiver has enabled the company to be properly run, so far as it is running at all, and there is no necessity to appoint anyone to supervise the operations of the administrative receivers, if anybody could be found to perform that task gratuitously.
Paradoxically, the appointment means that there now is no order which is appropriate for giving relief in respect of the matters complained of. I certainly take the view that sec 461(1) requires me to consider what order is appropriate at the time of the hearing and not, for example, what order would have been appropriate at the date of presentation of the petition.
It is very common that the order made on petitions under sec 459 is for one warring faction to purchase the shares of the other. In the case of a company which is continuing in business it certainly gives relief in respect of the matters complained of. The petitioner is no longer the bedfellow of the wrongdoer; he is either in control of the company because he has bought the wrongdoer’s shares or he is free from the company for a fair price, often adjusted for the damage done to the company by the wrongdoer. Such relief might well have been appropriate in the present case at the date of the presentation of the petition and so long as it continued as a going concern. To impose on some of the respondents an obligation to purchase the petitioner’s shares in the events which have happened is tantamount to imposing a fine on them: there is nothing of any value for them to purchase. Nor does the petitioner need to dispose of his shares in order to obtain relief in respect of the matters complained of: the administrative receiver has provided that relief.’
The buy-out order would be appropriate if the oppression had prevented the petitioner from selling his shares at a proper price prior to the onset of insolvency, but there was no evidence of that; and that it might have been appropriate if the buy-out order had been originally sought when the company was solvent, although that appears to be contrary to considering what order is appropriate at the time of the hearing. These possible qualifications do not detract from his Lordship’s central reasoning.
Richard Sykes QC
[1993] BCLC 459, (1992) BCC 542
England and Wales
Cited by:
Cited – Clark v Cutland CA 18-Jun-2003
One director discovered that his co-director had withdrawn substantial sums from the company. . .

Lists of cited by and citing cases may be incomplete.
Updated: 12 September 2021; Ref: scu.258600

Ness Training Limited v Triage Central Ltd and c: ScHC 27 Aug 2001

The complainant sought a contract to deliver services to the New Deal system in Scotland as part of a joint venture. They incorporated in England, but were then told they needed to be a Scottish company. A new company was established in Scotland, which continued the services. The other members of the venture later declined to account of a share of the receipts, and a claim was made for such a share.
Held: A joint venture need not amount to a partnership in law. Were the business profits held subject to a trust? It was difficult to identify just what property might be subject to such a trust. In reality any duty extended to one to award a share in the company which was to be set up to run the venture. That was not what was claimed, and would fall short of what was claimed.
Lord Eassie
[2001] ScotCS 212, [2001] ScotHC 94
Bailii, Bailii
Scotland
Citing:
Cited – Aberdeen Railway Co v Blaikie Brothers HL 1854
The plaintiff needed a large quantity of iron chairs (rail sockets) and contracted for their supply over an 18-month period with Blaikie Bros a partnership. Thomas Blaikie was the managing partner of Blaikie Bros and a director and the chairman of . .

Lists of cited by and citing cases may be incomplete.
Updated: 11 September 2021; Ref: scu.166509

In re Colonial Trusts Corporation: CA 13 Dec 1880

A company formed for the purchase and management of land, and which was empowered by articles to borrow money for the purposes of the company provided that the amount borrowed should not at any time exceed the amount of the unpaid subscribed capital, had issued debentures whereby they bound ‘themselves and their successors and their real and personal estate’ for payment of the sums advanced, with a proviso that the holders of the debentures should be entitled to be paid the principal and interest secured to them respectively pari passu. The company was in liquidation, a provisional liquidator having been appointed on the petition of the company, and a resolution having been subsequently passed for a voluntary winding-up, which was continued under supervision. On a claim by debenture holders to be entitled to a primary charge on the company’s property, including the uncalled capital.
Held: The debentures were a charge on the real and personal estate of the company as it existed at the commencement of the winding-up, but not including the then uncalled capital.
Held: Also, that the debenture holders, so far as they might be unable to obtain payment in full out of the property comprised in their charge, were at liberty to prove with the other creditors against the general assets.
Held: Also, that the winding-up must be taken to have commenced at the date of the appointment of the provisional liquidator.
Jessel MR used first the term ‘floating security.’
Jessel MR
(1880) 15 Ch D 465, [1880] UKLawRpCh 308
Commonlii
England and Wales
Cited by:
Cited – National Westminster Bank plc v Spectrum Plus Limited and others HL 30-Jun-2005
Former HL decision in Siebe Gorman overruled
The company had become insolvent. The bank had a debenture and claimed that its charge over the book debts had become a fixed charge. The preferential creditors said that the charge was a floating charge and that they took priority.
Held: The . .

Lists of cited by and citing cases may be incomplete.
Updated: 07 September 2021; Ref: scu.228301

Smith v Anderson: CA 16 Jul 1880

Investors subscribed for shares in telegraph companies which they vested in trustees to manage the investment on certain terms. A question arose whether this arrangement contravened section 4 of the 1862 Act which prohibited the formation of an association consisting of more than 20 persons ‘for the purpose of carrying on any business that has for its object the acquisition of gain’ unless it was registered in accordance with the Act.
Held: (inter alia) Brett LJ said that the expression ‘carrying on’ implied a repetition of acts and excluded the case of an association formed for doing one particular act which was never to be repeated.
Brett LJ
(1879) 15 ChD 247, [1880] UKLawRpCh 211, [1874-1880] All ER 1121
Commonlii
Companies Act 1862 4
England and Wales
Cited by:
Cited – GE Capital Bank Ltd v Rushton and Another CA 14-Dec-2005
The bank had entered into a master trading agreement with a trader under which the trader bought motor vehicles as agent for the bank for resale. The vehicles belonged to the bank. The defendant bought all the trader’s vehicles. The defendant now . .

Lists of cited by and citing cases may be incomplete.
Updated: 07 September 2021; Ref: scu.236665

Re William Porter and Co Ltd: 1937

Simonds J
[1937] 2 All ER 361
England and Wales
Citing:
Approved (Obiter) – Moriarty v Regent’s Garage and Engineering Co Ltd KBD 1921
A company director sought payment of his directors fees of andpound;150 per annum where during the course of the year he had ceased to be a director. There was no allegation of impropriety on his part. The company’s articles provided that the . .

Cited by:
Cited – Fassihim, Liddiardrams, International Ltd, Isograph Ltd v Item Software (UK) Ltd CA 30-Sep-2004
The first defendant (F) had been employed by a company involved in a distribution agreement. He had sought to set up a competing arrangement whilst a director of the claimant, and diverted a contract to his new company.
Held: A company . .

Lists of cited by and citing cases may be incomplete.
Updated: 07 September 2021; Ref: scu.215873

Compagnie de Saint-Gobain, Zweigniederlassung Deutschland v Finanzamt Aachen-Innenstadt: ECJ 21 Sep 1999

Europa Article 52 of the Treaty and Article 58 preclude the exclusion of a permanent establishment in Germany of a company limited by shares having its seat in another Member State from enjoyment, on the same conditions as those applicable to companies limited by shares having their seat in Germany, of tax concessions taking the form of:
– an exemption from corporation tax for dividends received from companies established in non-member countries (corporation tax relief for international groups), provided for by a treaty for the avoidance of double taxation concluded with a non-member country,
– the crediting, against German corporation tax, of the corporation tax levied in a State other than the Federal Republic of Germany on the profits of a subsidiary established there, provided for by German legislation, and
– an exemption from capital tax for shareholdings in companies established in non-member countries (capital tax relief for international groups), also provided for by German legislation.
The refusal to grant those tax concessions – which primarily affects non-resident companies and is based on the criterion of the company’s corporate seat in determining the applicable tax rules – makes it less attractive for such companies to have intercorporate holdings through branches in the Member State concerned, which thus restricts the freedom to choose the most appropriate legal form for the pursuit of activities in another Member State, which the second sentence of the first paragraph of Article 52 of the Treaty expressly confers on economic operators. In view of the fact that, as regards liability to tax on dividend receipts in Germany from shares in foreign subsidiaries and sub-subsidiaries and on the holding of those shares, companies not resident in Germany having a permanent establishment there and companies resident in Germany are in objectively comparable situations, the difference in treatment to which branches of non-resident companies are subject in comparison with resident companies must be regarded as constituting an infringement of Articles 52 and 58 of the Treaty.
As regards, specifically, the refusal to grant to permanent establishments of non-resident companies the international group relief provided for by a bilateral agreement, concluded in order to prevent double taxation, finds no justification in the fact that the Member States are at liberty, in the framework of such agreements, to determine the connecting factors for the purposes of allocating powers of taxation as between themselves. As far as the exercise of the power of taxation so allocated is concerned, the Member States nevertheless may not disregard Community rules, under which the national treatment principle requires a Member State which is party to the agreement to grant to permanent establishments of non-resident companies the advantages provided for thereunder on the same conditions as those which apply to resident companies.
C-307/97, [1999] EUECJ C-307/97
Bailii
European

Updated: 06 September 2021; Ref: scu.162215

Profinance Trust SA v Gladstone: CA 2 Jul 2001

When a court ordered the purchase of the shares of a minority shareholder by the majority holder, the shares should normally be valued as at the date of that order. This might cause unfairness in some cases, for example where the company had been restructured, or had been deprived of its business, or the majority shareholder had engaged in prejudicial conduct, and the court could, where appropriate, order a valuation at an earlier date. Nevertheless, that power should be exercised only where severe prejudice could be shown, and in the light of the behaviour of both parties, including the making and rejecting of offers before the hearing.
Schiemann LJ, Walker LJ, Lloyd J
Times 07-Aug-2001, Gazette 26-Jul-2001, [2001] EWCA Civ 1031, [2001] EWCA Civ 1133, [2002] 1 BCLC
Bailii, Bailii
Companies Act 1985 459
England and Wales
Cited by:
Cited – Allmark v Ervel Curt Burnham, Distinct Services Ltd ChD 30-Nov-2005
The petitioner sought for relief from alleged prejudicial conduct by the respondents in the management of the company. . .
Cited – Bonham v Crow and others CA 13-Dec-2001
The petitioner complained of unfair prejudice in the way the company had been operated, and sought an order that his shares be bought out. However the judge found that the net value of the company was negative and the shares worthless. The judge had . .

Lists of cited by and citing cases may be incomplete.
Updated: 03 September 2021; Ref: scu.136132

Pender v Lushington: CA 1877

After stating that the Court would not restrain the exercise of certain votes by members of a company merely because the holder of the votes had a motive for voting them which the Court might not approve, his Lordship said: ‘I am confirmed in that view by the case of Menier v. Hooper’s Telegraph Works, where Lord Justice Mellish observes: ‘I am of opinion that, although it may be quite true that the shareholders of a company may vote as they please, and for the purpose of their own interests, yet that the majority of shareholders cannot sell the assets of the company and keep the consideration.’ In other words, he admits that a man may be actuated in giving his vote by interests entirely adverse to the interests of the company as a whole. He may think it more for his particular interest that a certain course may be taken which may be in the opinion of others very adverse to the interests of the company as a whole, but he cannot be restrained from giving his vote in what way he pleases because he is influenced by that motive. There is, if I may say so, no obligation on the shareholder of a company to give his vote merely with a view to what other persons may consider the interests of the company at large.’
Sir George Jessel MR
(1877) 6 Ch D 70, (1877) 46 LJCh 317, (1877) LR 2 Eq 564
England and Wales
Cited by:
Cited – The Children’s Investment Fund Foundation (UK) v Attorney General and Others ChD 9-Jun-2017
The court considered the propriety of a payment made by a charitable company to a director for her loss of office. The charity was to transfer a substantial sum to a new charity headed by the departing director.
Held: The court approved the . .
Cited – Lehtimaki and Others v Cooper SC 29-Jul-2020
Charitable Company- Directors’ Status and Duties
A married couple set up a charitable foundation to assist children in developing countries. When the marriage failed an attempt was made to establish a second foundation with funds from the first, as part of W leaving the Trust. Court approval was . .

Lists of cited by and citing cases may be incomplete.
Updated: 01 September 2021; Ref: scu.652995

Belmont Finance Corporation Ltd v Williams Furniture Ltd (No 2): 1980

It had been alleged that there had been a conspiracy involving the company giving unlawful financial assistance for the purchase of its own shares.
Held: Dishonesty is not a necessary ingredient of liability in an allegation of a ‘knowing receipt’. The court was not swayed by the parties having obtained counsel’s advice that the scheme was lawful, apparently on the basis that: ‘if all the facts which make the transaction unlawful were known to the parties . . ignorance of the law will not excuse them’ and ‘A limited company is of course not a trustee of its own funds: it is their beneficial owner; but in consequence of the fiduciary character of their duties the directors of a limited company are treated as if they were trustees of those funds.’
Brown-Wilkinson LJ: ‘. . . If a transaction falls within the objects, and therefore the capacity, of the company, it is not ultra vires the company and accordingly it is not absolutely void. (5) If a company enters into a transaction which is intra vires (as being within its capacity) but in excess or abuse of its powers, such transaction will be set aside at the instance of the shareholders. (6) A third party who has notice – actual or constructive – that a transaction, although intra vires the company, was entered into in excess or abuse of the powers of the company cannot enforce such transaction against the company and will be accountable as constructive trustee for any money or property of the company received by the third party. (7) The fact that a power is expressly or impliedly limited so as to be exercisable only ‘for the purposes of the company’s business’ (or other words to that effect) does not put a third party on inquiry as to whether the power is being so exercised, i.e. such provision does not give him constructive notice of excess or abuse of such power.’
Buckley LJ: ‘In my judgment, the alleged conspiracy is established in respect of these three defendants, and they are not exempt from liability on account of counsel’s opinion or because they may have believed in good faith that the transaction did not transgress s 54. If all the facts which make the transaction unlawful were known to the parties, as I think they were, ignorance of the law will not excuse them: see Churchill v Walton ([1967] 2 AC 224 at 237). That case was one of criminal conspiracy, but it seems to me that precisely similar principles must apply to a conspiracy for which a civil remedy is sought. Nor, in my opinion, can the fact that their ignorance of, or failure to appreciate, the unlawful nature of the transaction was due to the unfortunate fact that they were, as I think, erroneously advised excuse them (Cooper v Simmons, and see Shaw v Director of Public Prosecutions, where the appellant had taken professional legal advice).
If they had sincerely believed in a factual state of affairs which, if true, would have made their actions legal, this would have afforded a defence (Kamara v Director of Public Prosecutions ([1974] AC 104 at 119)); but on my view of the effect of s 54 in the present case, even if andpound;500,000 had been a fair price for the share capital of Maximum and all other benefits under the agreement, this would not have made the agreement legal.’
Waller LJ: ‘A person is a party to a conspiracy if he knows the essential facts to constitute that conspiracy even though he does not know that they constitute an offence (see Churchill v Walton). Since there was a breach of s 54 and the defendants through their directors made all the arrangements and knew all the facts constituting the breach, it would follow that they conspired together to contravene s 54, the object of their conspiracy being Belmont, and if Belmont suffered damage they are liable.’
Buckley LJ, Browne-Wilkinson LJ, Waller LJ
[1980] 1 All ER 392
Companies Act 1948 54
England and Wales
Citing:
Cited – Churchill v Walton CA 1967
In a criminal conspiracy to evade fuel duties, the fact that the defendant had first obtained counsel’s opinion was no defence. . .
Cited – Re Lands Allotment Company CA 1894
A limited company is not a trustee of its funds, but their beneficial owner. However, the fiduciary character of the duties of its directors mean that they are treated as if they were trustees of those funds of the company which are in their hands . .
Cited – Russell v Wakefield Waterworks Co 1875
Jessel MR said: ‘In this court the money of the company is a trust fund, because it is applicable only to the special purposes of the company in the hands of the agents of the company, and it is in that sense a trust fund applicable by them to those . .
See also – Belmont Finance Corporation Ltd v Williams Furniture Ltd CA 1979
The company directors operated an elaborate scheme to extract value from Belmont by causing it to buy the shares of a company called Maximum at a considerable overvalue. This was a breach of the fiduciary duties of the directors. They sought to . .

Cited by:
Cited – Bank of Credit and Commerce International (Overseas) Ltd and Another v Akindele CA 22-Jun-2000
The test of whether a person who received funds held them on constructive trust, was not whether he himself was dishonest, but rather whether he had knowledge of circumstances which made it unconscionable to hold on to the money received. In respect . .
Cited – Eagle Trust Plc v SBC Securities Ltd; Same v Sbci Bank Corporation Investment Banking Ltd ChD 28-Sep-1994
A financial adviser was not liable in negligence for the allegedly negligent selection of sub-underwriters. On the issue of knowing receipt in a claim for restitution, ‘What the decision in Belmont (No 2) . . shows most clearly is that in a . .
Cited – Criterion Properties Plc v Stratford UK Properties and others CA 18-Dec-2002
The parties came together in a limited partnership to develop property. The appeal was against a refusal to grant summary judgment on a claim that one party had been induced to enter the contract by a fraudulent misrepresentation.
Held: In . .
Cited – Criterion Properties Plc v Stratford UK Properties and others CA 18-Dec-2002
The parties came together in a limited partnership to develop property. The appeal was against a refusal to grant summary judgment on a claim that one party had been induced to enter the contract by a fraudulent misrepresentation.
Held: In . .
Cited – Criterion Properties Plc v Stratford UK Properties Llc and others ChD 27-Mar-2002
Criterion sought to set aside a shareholders agreement. Their partner had said they were concerned that another party was taking Criterion over and that this would put at risk their working relationships. The agreement sought to add a poison pill to . .
Cited – Royal Brunei Airlines SDN BHD v Tan PC 24-May-1995
(Brunei) The defendants were a one-man company, BLT, and the one man, Mr Tan. A dishonest third party to a breach of trust was liable to make good a resulting loss even though he had received no trust property. The test of knowledge was an objective . .
See also – Belmont Finance Corporation Ltd v Williams Furniture Ltd CA 1979
The company directors operated an elaborate scheme to extract value from Belmont by causing it to buy the shares of a company called Maximum at a considerable overvalue. This was a breach of the fiduciary duties of the directors. They sought to . .
Cited – Meretz Investments Nv and Another v ACP Ltd and others ChD 30-Jan-2006
The applicant challenged the exercise of a power of sale under a mortgage, saying that the mortgagee’s purposes included purposes not those under the mortgage. The parties had been involved in an attempted development of a penthouse.
Held: The . .
Cited – Criterion Properties plc v Stratford UK Properties LLC and others HL 17-Jun-2004
The parties presented their claim before the House, but the House found that it was to be argued differently. The new arguments had not been pursued or prepared before the case came to the House, and it was remitted to the lower courts for the issue . .
Cited – Holland v Revenue and Customs and Another SC 24-Nov-2010
The Revenue sought an order under section 212 of the 1986 Act, for payment of the tax debts of the insolvent company by a de facto director. H had organised a scheme under which IT contractors had worked through companies created by him under a . .

Lists of cited by and citing cases may be incomplete.
Updated: 29 August 2021; Ref: scu.187272

Smith New Court Securities Ltd v Scrimgeour Vickers (Asset Man) Ltd: CA 8 Mar 1994

Where shares had been purchased at an artificially inflated price, after a fraudulent misrepresentation, the loss was calculated on the value they would have had on the market with full knowledge of the company’s affairs, absent that misrepresentation.
Gazette 08-Jun-1994, Times 08-Mar-1994, Gazette 20-Apr-1994
England and Wales
Cited by:
Appeal from – Smith New Court Securities Ltd v Scrimgeour Vickers HL 21-Nov-1996
The defendant had made misrepresentations, inducing the claimant to enter into share transactions which he would not otherwise have entered into, and which lost money.
Held: A deceitful wrongdoer is properly liable for all actual damage . .

Lists of cited by and citing cases may be incomplete.
Updated: 29 August 2021; Ref: scu.89322

Russell v Northern Bank Development Corporation Limited and Others: HL 15 Jul 1992

Four directors of the company agreed with each other not to create further share capital. A director seeking to enforce the agreement, appealed against a judgment that the agreement was invalid in seeking to fetter the company’s stautory powers.
Held: A shareholders’ agreement not to increase the share capital of a company was enforceable against the shareholders but not against the company. It could take effect only as a personal contract. Liability to the conflicts rule for nominee directors representing outside interests can be limited by a company’s constitution or the unanimous approval of its shareholders. An agreement by a company to fetter its statutory powers is unenforceable.
Lord Jauncey stated: ‘My Lords while a provision in a company’s articles which restricts its statutory power to alter those articles is invalid an agreement dehors the articles between shareholders as to how they shall exercise their voting rights on a resolution is not necessarily so.’
Lord Jauncey of Tullichettle
Gazette 15-Jul-1992, (1992) BCC 578, [1992] 1 WLR 588, [1992] 3 All ER 161
Northern Ireland
Citing:
Approved – Welton v Saffery 1897
Lord Davey said: ‘Of course, individual shareholders may deal with their own interests by contract in such way as they may think fit. But such contracts, whether made by all or some only of the shareholders, would create personal obligations, or an . .

Cited by:
Cited – Bonham v Crow and others CA 13-Dec-2001
The petitioner complained of unfair prejudice in the way the company had been operated, and sought an order that his shares be bought out. However the judge found that the net value of the company was negative and the shares worthless. The judge had . .
Cited – Grays Timber Products Ltd v Revenue and Customs SC 3-Feb-2010
An assessment to income tax had been raised after the employee resold shares in the company issued through the employees’ share scheme at a price which the Revenue said was above the share value. The company appealed against a finding that tax was . .

Lists of cited by and citing cases may be incomplete.
Updated: 29 August 2021; Ref: scu.88934

Smith New Court Securities Ltd v Scrimgeour Vickers: HL 21 Nov 1996

The defendant had made misrepresentations, inducing the claimant to enter into share transactions which he would not otherwise have entered into, and which lost money.
Held: A deceitful wrongdoer is properly liable for all actual damage flowing from his wrong. The calculation of damages was to be made without reference to any date or forseeability. Where a causal link could be shown, the defendant was liable.
Lord Browne-Wilkinson said: ‘The following principles apply in assessing damages payable where the plaintiff has been induced by fraud or misrepresentation
(1) The Defendant was bound to make reparation for all the damage directly flowing from the transaction.
(2) Although such damage may not have been foreseeable, it must have been directly caused by the transaction.
(3) In assessing such damage the Plaintiff is entitled to recover by way of damages the full price paid by him but he must give credit for any benefit which he has received as a result of the transaction.
(4) The general rule of benefits received by him include the market value of the property . .
(5) While the circumstances in which the general rule should not apply cannot be comprehensibly stated, it will only not apply when either (a) the misrepresentation has continued to operate after the date of the acquisition of the asset or (b) the circumstances of the case are such the Plaintiff is by reason of the fraud locked into the property.
(6) In addition the Plaintiff is also entitled to recover consequential losses caused by the transaction.
(7) The Plaintiff must take all reasonable steps to mitigate.’
Lord Steyn said ‘the principle is well settled that where there has been no misdirection from the issue of fact by the trial Judge the presumption is that his conclusion on the issue of fact is correct. The Court of Appeal will only reverse the trial Judge on an issue of fact when it is convinced that his view is wrong. In such a case if the Court of Appeal is left in doubt as to the correctness of the conclusion it will not disturb it.’
Lord Browne-Wilkinson, Lord Keith of Kinkel, Lord Mustill, Lord Slynn of Hadley, Lord Steyn
Gazette 13-Dec-1996, Times 22-Nov-1996, [1996] UKHL 3, [1997] AC 254, [1996] 4 All ER 769, [1996] 3 WLR 1051
House of Lords, Bailii
Misrepresentation Act 1967 2(1)
England and Wales
Citing:
Approved – Doyle v Olby (Ironmongers) Ltd CA 31-Jan-1969
The plaintiff had been induced by the fraudulent misrepresentation of the defendant to buy an ironmonger’s business for 4,500 pounds plus stock at a valuation of 5,000 pounds. Shortly after the purchase, he discovered the fraud and started the . .
Cited – Twycross v Grant CA 2-Jun-1877
The plaintiff had bought shares in a company promoted by the defendant. The prospectus was fraudulent having failed to mention certain contracts which made the shares valueless.
Held: The shares being worthless, the plaintiff was entitled to . .
Cited – Waddell v Blockey 1879
The damages for an item bought as a consequence of a misrepresentation or other tort are to be calculated as at the date of sale. . .
Cited – Peek v Derry CA 1887
The court considered an action for damages for deceit: ‘As I understand the law, it is not necessary that the mis-statement should be the motive, in the sense of the only motive, the only inducement of a party who has acted to his prejudice so to . .
Cited – McConnel v Wright CA 24-Jan-1903
In an action by a shareholder in a limited company against a director for damages for misrepresentation in the prospectus, the time at which the damage is ordered to be assessed, is the date of the allotment to the plaintiff; accordingly, where the . .
Cited – Livingstone v Rawyards Coal Co HL 13-Feb-1880
Damages or removal of coal under land
User damages were awarded for the unauthorised removal of coal from beneath the appellant’s land, even though the site was too small for the appellant to have mined the coal himself. The appellant was also awarded damages for the damage done to the . .
Cited – Clark v Urquhart HL 1930
The House considered the measurement of damages where property had been purchased as the result of a misrepresentation. Lord Atkin said: ‘I find it difficult to suppose that there is any difference in the measure of damages in an action of deceit . .
Cited – Doyle v Olby (Ironmongers) Ltd CA 31-Jan-1969
The plaintiff had been induced by the fraudulent misrepresentation of the defendant to buy an ironmonger’s business for 4,500 pounds plus stock at a valuation of 5,000 pounds. Shortly after the purchase, he discovered the fraud and started the . .
Cited – South Australia Asset Management Corporation v York Montague Ltd etc HL 24-Jun-1996
Limits of Damages for Negligent Valuations
Damages for negligent valuations are limited to the foreseeable consequences of advice, and do not include losses arising from a general fall in values. Valuation is seldom an exact science, and within a band of figures valuers may differ without . .
Cited – Downs v Chappell; Downs v Stephenson Smart (a Firm) CA 1996
The plaintiff purchased a book shop. He claimed that in doing so he had relied upon the accounts prepared and signed off by the respective defendants.
Held: The judge had been wrong by testing what would have been the true figures as against . .
Cited – Johnson v Agnew HL 1979
The seller had obtained a summary order for specific performance of a contract for the sale of land against the buyer.
Held: The breach was continuing and was still capable of being remedied by compliance with the order for specific . .
Cited – Dodd Properties (Kent) Ltd v Canterbury City Council CA 21-Dec-1979
The defendants had, in the course of building operations, caused nuisance and damage to the plaintiff’s building. The dispute was very lengthy, the costs of repair increased accordingly, and the parties now disputed the date at which damages fell to . .
Cited – IBL Ltd v Coussens 1991
Flexibility in the date of breach rule applies in assessing damages for conversion. . .
Cited – East v Maurer CA 1991
The plaintiffs had bought a hair dressing salon from the defendant, who continued to trade from another he owned, despite telling the plaintiffs that he intended not to. The plaintiffs lost business to the defendant. They invested to try to make a . .
Cited – In re H and R (Minors) (Child Sexual Abuse: Standard of Proof) HL 14-Dec-1995
Evidence allowed – Care Application after Abuse
Children had made allegations of serious sexual abuse against their step-father. He was acquitted at trial, but the local authority went ahead with care proceedings. The parents appealed against a finding that a likely risk to the children had still . .
Cited – Royscot Trust Ltd v Rogerson 1991
Doyle -v- Olby (Ironmongers) Ltd was an appropriate way of assessing damages for an action under the Act, and damages are calculated on the basis of fraud.
A client misled into an investment is entitled to the measure of damages he would . .
Cited – County Personnel (Employment Agency) Ltd v Alan R Pulver and Co (a Firm) CA 1987
The claimant sought damages after his negligent solicitors had saddled him with a ruinous underlease. They had had to buy themselves out of the lease. The court considered the date at which damages were to be calculated.
Held: The starting . .
Cited – Attorney-General of Hong Kong v Wong Muk Ping PC 1987
When making findings of credibility and reliability it is unsafe for a trial judge to compartmentalise the case: ‘It is commonplace of judicial experience that a witness who makes a poor impression in the witness box may be found at the end of the . .
Cited – Pasley v Freeman 1789
Tort of Deceit Set Out
The court considered the tort of deceit. A representation by one person that another person was creditworthy was actionable if made fraudulently. A false affirmation made by the defendant with intent to defraud the plaintiff, whereby the plaintiff . .
Cited – Davidson v Tullock 1860
In a case framed in deceit the measure of damages involved ascertainment of the ‘real’ or ‘face’ value of the shares at the time of allotment or purchase. . .
Cited – Derry v Peek HL 1-Jul-1889
The House heard an action for damages for deceit or fraudulent misrepresentation.
Held: The court set out the requirements for fraud, saying that fraud is proved when it is shown that a false representation has been made knowingly or without . .
Cited – Arkwright v Newbold CA 1881
Cotton LJ discussed the tort of deceit and said: ‘In my opinion, it would not be right in an action of deceit to give a plaintiff relief on the ground that a particular statement, according to the construction put on it by the court, is false, when . .
Cited – Shepheard v Broome 1904
. .
Cited – Broome v Speak 1903
. .
Cited – Potts v Miller 1940
High Court of Australia . .
Cited – Toteff v Antonas 1952
(High Court of Australia) Dixon J said: ‘In an action of deceit a plaintiff is entitled to recover as damages a sum representing the prejudice or disadvantage he has suffered in consequence of his altering his position under the inducement of the . .
Cited – Overseas Tankship (UK) Ltd v Morts Dock and Engineering Co Ltd (The Wagon Mound No 1) PC 18-Jan-1961
Complaint was made that oil had been discharged into Sydney Harbour causing damage. The court differentiated damage by fire from other types of physical damage to property for the purposes of liability in tort, saying ‘We have come back to the plain . .
Cited – In Re Smith Kline and French Laboratories Ltd HL 9-Feb-1989
The plaintiffs had applied for a product licence for a patented drug. To support its application, it supplied the authority with confidential information which the authority now sought to make use of the confidential information when considering . .
Cited – Kemp Properties (UK) Ltd v Dentsply Research and Development Corporation 1991
The measure of damages is the same as for fraudulent misrepresentation i.e. all loss caused by the plaintiff having been induced to enter into the contract. . .
Cited – Ruxley Electronics and Construction Ltd v Forsyth HL 29-Jun-1995
Damages on Construction not as Agreed
The appellant had contracted to build a swimming pool for the respondent, but, after agreeing to alter the specification to construct it to a certain depth, in fact built it to the original lesser depth, Damages had been awarded to the house owner . .
Cited – Yorkshire Dale Steamship Co Ltd v Minister of War Transport HL 1942
Treatment of Merchant as War Vessel
The House considered when a merchant vessel may be treated on the same footing as a war vessel and be deemed to be engaged on a warlike operation.
Held: This depended on the nature of the cargo and the voyage: ‘She was then in the act of . .
Not relied upon – Royscot Trust Ltd v Rogerson 1991
Doyle -v- Olby (Ironmongers) Ltd was an appropriate way of assessing damages for an action under the Act, and damages are calculated on the basis of fraud.
A client misled into an investment is entitled to the measure of damages he would . .
Appeal from – Smith New Court Securities Ltd v Scrimgeour Vickers (Asset Man) Ltd CA 8-Mar-1994
Where shares had been purchased at an artificially inflated price, after a fraudulent misrepresentation, the loss was calculated on the value they would have had on the market with full knowledge of the company’s affairs, absent that . .

Cited by:
Cited – Great Future International Limited and Others v Sealand Housing Corporation (in Liquidation) and Others ChD 3-Dec-2002
The claimants were to be awarded damages, having been fraudulently induced to purchase shares. The defendant claimed that the increase in the value of the shares which had subsequently occurred should be taken to reduce the damages awarded because . .
Cited – AMEC Mining v Scottish Coal Company SCS 6-Aug-2003
The pursuers contracted to remove coal by opencast mining from the defender’s land. They said the contract assumed the removal first of substantial peat depositys from the surface by a third party. They had to do that themselves at substantial cost. . .
Cited – MCI Worldcom International Inc v Primus Telecommunications Inc ComC 25-Sep-2003
The claimant sought judgment, and the defendant leave to amend its defence. The question was whether the proposed defence had any reasonable prospect of success.
Held: The misrepresentation alleged was made by the claimant’s in-house . .
Cited – Dingley v Chief Constable of Strathclyde Police HL 11-May-2000
The officer had been injured in an accident in a police van. He developed multiple sclerosis only a short time afterwards. The respondent denied that the accident caused the MS.
Held: There is no proof of what causes MS, but it was common . .
Cited – Watkins v Home Office and others HL 29-Mar-2006
The claimant complained of misfeasance in public office by the prisons for having opened and read protected correspondence whilst he was in prison. The respondent argued that he had suffered no loss. The judge had found that bad faith was . .
Cited – Veitch and Another v Avery CA 12-Jul-2007
The claimants appealed the award of only nominal damages after they succeeded in their claim against their solicitors for negligence in their conduct of the defence of a mortgage possession action.
Held: The appeal failed. The judge was . .
Cited – Grosvenor Casinos Ltd v National Bank of Abu Dhabi ComC 17-Mar-2008
Banker’s reference no guarantee
An Arab businessman lost pounds 18m at the claimant casino, and wrote scrip cheques against his account with the defendant. The claimant obtained judgment, but being unable to enforce that judgment pursued his bank. The club had used a system where . .
Cited – Sibley and Co v Reachbyte Ltd and Another ChD 4-Nov-2008
Solicitors appealed against a costs order made refusing them payment of all of Leading and Junior counsel’s fees.
Held: The leading counsel involved had not provided anything like a detailed account of the time he had spent on what was a . .
Cited – Cheltenham Borough Council v Laird QBD 15-Jun-2009
The council sought damages saying that their former chief executive had not disclosed her history of depressive illness when applying for her job.
Held: The replies were not dishonest as the form could have been misconstrued. The claim failed. . .
Cited – Joyce v Bowman Law Ltd ChD 18-Feb-2010
The claimant asserted negligence by the defendant licensed conveyancers in not warning him of the effect of an option in the contract. He had been advised that it would allow him to choose to buy additional land, but it was in fact a put option. The . .

Lists of cited by and citing cases may be incomplete.
Updated: 29 August 2021; Ref: scu.158871

SEC v Chenery Corporation: 1 Feb 1943

(United States Supreme Court) Frankfurter J held: ‘to say that a man is a fiduciary only begins analysis; it gives direction to further inquiry. To whom is he a fiduciary? What obligations does he owe as a fiduciary?’
[1943] 63 SCt 454, [1943] 87 LEd 626, [1943] USSC 32, [1943] 318 US 80
Worldlii
United States
Cited by:
Cited – Lehtimaki and Others v Cooper SC 29-Jul-2020
Charitable Company- Directors’ Status and Duties
A married couple set up a charitable foundation to assist children in developing countries. When the marriage failed an attempt was made to establish a second foundation with funds from the first, as part of W leaving the Trust. Court approval was . .

Lists of cited by and citing cases may be incomplete.
Updated: 29 August 2021; Ref: scu.652998

In re The French Protestant Hospital: ChD 1951

The charity was an incorporated body created by a Royal Charter granted in 1718. The governor and directors sought to exercise a power conferred on them by the charter to amend the byelaws to enable the directors’ professional firms to be remunerated for their services to the charity. The Court considered the obligations of its officers.
Held: The directors of the corporation in question were, although not technically trustees, in the same fiduciary position as trustees in respect of the corporation’s affairs, and were therefore within the scope of a rule of law which debarred trustees from receiving payment for their services. The governor, deputy governor and directors of a charitable corporation were ‘as much in a fiduciary position as trustees in regard to any acts which are done respecting the corporation and its property’ and that they were, ‘to all intents and purposes, bound by the rules which affect trustees’. It would be illegal if the directors used the property for their own purposes ‘and not for the purposes of the charitable trust for which the property is held’, and he also referred to it being a ‘great change’ if it were thought proper for a provision enabling remuneration to be charged ‘to be inserted in a document regulating a charitable trust’.
Danckwerts J said: ‘It is said by [Counsel for the directors] that it is the corporation which is trustee of the property in question, and that the governor and directors are not trustees. Technically that may be so. The property of the charity is, of course, vested in and held by the corporation.’
Danckwerts J
[1951] Ch 567
England and Wales
Cited by:
Cited – Von Ernst and Cie SA v Inland Revenue Commissioners CA 1979
The assets of a corporate charity were held on charitable trusts: ‘We were referred to certain authorities which give support to the view that a company incorporated for exclusively charitable purposes is in the position of a trustee of its funds or . .
Cited – The Children’s Investment Fund Foundation (UK) v Attorney General and Others ChD 9-Jun-2017
The court considered the propriety of a payment made by a charitable company to a director for her loss of office. The charity was to transfer a substantial sum to a new charity headed by the departing director.
Held: The court approved the . .
Cited – Lehtimaki v The Children’s Investment Fund Foundation (UK) and Others CA 6-Jul-2018
A charity established by H and W wanted to transfer part of its fund to a new charity headed by W in return for her resignation from the first charity on the breakdown of the marriage. Court approval was sought for a transfer, but the remaining . .
Cited – Lehtimaki and Others v Cooper SC 29-Jul-2020
Charitable Company- Directors’ Status and Duties
A married couple set up a charitable foundation to assist children in developing countries. When the marriage failed an attempt was made to establish a second foundation with funds from the first, as part of W leaving the Trust. Court approval was . .

Lists of cited by and citing cases may be incomplete.
Updated: 29 August 2021; Ref: scu.652835

Assenagon Asset Management Sa v Irish Bank Resolution Corporation Ltd: ChD 27 Jul 2012

The court considered the right of a company member to vote as he wishes. Briggs J said: ‘The basis for the application of that principle in relation to powers conferred on majorities to bind minorities is traditionally described as arising from general principles of law and equity, and by way of implication. ‘
Briggs J
[2012] EWHC 2090 (Ch), [2013] Bus LR 266, [2012] WLR(D) 243
Bailii, WLRD
England and Wales
Cited by:
Cited – Lehtimaki and Others v Cooper SC 29-Jul-2020
Charitable Company- Directors’ Status and Duties
A married couple set up a charitable foundation to assist children in developing countries. When the marriage failed an attempt was made to establish a second foundation with funds from the first, as part of W leaving the Trust. Court approval was . .

Lists of cited by and citing cases may be incomplete.
Updated: 25 August 2021; Ref: scu.463297

Royal Society for the Prevention of Cruelty to Animals v Attorney-General and others: ChD 26 Jan 2001

The right to freedom of association could be exercised by a society choosing to remove from its membership individuals who held views which it saw as inimical to its purposes. Such a removal did not infringe the members’ rights of freedom of speech. Nevertheless, such a charitable and respected association could not be seen to behave arbitrarily, and the proposed scheme should be amended to allow that those who met the criteria to be rejected for membership should have a right to have the rejection of their membership application reviewed.
Lightman J held that ‘the court starts with a clean sheet and has an unfettered discretion to decide what it considers should be done in the best interests of the trust’
Lightman J
Gazette 15-Feb-2001, Times 13-Feb-2001, [2001] EWHC 474 (Ch), [2001] 3 All ER 530, [2001] UKHRR 905, [2002] 1 WLR 448
Bailii
England and Wales
Cited by:
Cited – Lehtimaki and Others v Cooper SC 29-Jul-2020
Charitable Company- Directors’ Status and Duties
A married couple set up a charitable foundation to assist children in developing countries. When the marriage failed an attempt was made to establish a second foundation with funds from the first, as part of W leaving the Trust. Court approval was . .

Lists of cited by and citing cases may be incomplete.
Updated: 25 August 2021; Ref: scu.88899

Von Ernst and Cie SA v Inland Revenue Commissioners: CA 1979

The assets of a corporate charity were held on charitable trusts: ‘We were referred to certain authorities which give support to the view that a company incorporated for exclusively charitable purposes is in the position of a trustee of its funds or at least in an analogous position. The authorities were In re French Protestant Hospital [1951] Ch 567; Soldiers’, Sailors’ and Airmen’s Families Association v Attorney General [1968] 1 WLR 313; Construction Industry Training Board v Attorney General [1973] Ch 173 and In re Finger’s Will Trusts [1972] Ch 286. In the first two of these cases it seems to me that it was assumed, rather than decided, that a corporate charity was in the position of a trustee of its funds. In the third, the question was what was meant by the words ‘in the exercise of the court’s jurisdiction with respect to charities’ in section 45(1) of the Charities Act 1960. In the course of my judgment in that case I certainly did express the view that the court would exercise its jurisdiction over corporate charities on the basis that their assets were held on charitable trusts and it appears to me that Plowman J, as I understand his very short judgment, agreed with me in that respect. In re Finger’s Will Trusts turned on a question of whether or not a bequest to a charitable corporation, which ceased to exist in the testatrix’s lifetime, demonstrated a general charitable intention capable of permitting a cy-pres application. I do not think that it is a decision which is of assistance for present purposes.’
Buckley LJ
[1980] 1 WLR 468, (1979) 124 SJ 17, [1980] 1 All ER 677, [1979] TR 461, [1980] STC 111
England and Wales
Citing:
Appeal from (Reversed) – Von Ernst and Cie SA v Inland Revenue Commissioners ChD 1979
. .
Cited – In re The French Protestant Hospital ChD 1951
The charity was an incorporated body created by a Royal Charter granted in 1718. The governor and directors sought to exercise a power conferred on them by the charter to amend the byelaws to enable the directors’ professional firms to be . .

Cited by:
Cited – The Children’s Investment Fund Foundation (UK) v Attorney General and Others ChD 9-Jun-2017
The court considered the propriety of a payment made by a charitable company to a director for her loss of office. The charity was to transfer a substantial sum to a new charity headed by the departing director.
Held: The court approved the . .
Applied – Liverpool and District Hospital for Diseases of the Heart v Attorney-General ChD 1981
Charitable Company is Trustee of Assets
The court was asked as to the distribution of surplus assets of a charitable company which was in winding up, and the question whether or not s 257 et seq. Companies Act 1948 applied, including s 265 which made provision for the distribution of . .
Cited – Hope Community Church (Wymondham) v Phelan and Others ChD 22-May-2020
The Church, a private company limited by guarantee, sought a declaration that it had the right to enfranchise its church premises under the 1920 Act. . .
Cited – Lehtimaki and Others v Cooper SC 29-Jul-2020
Charitable Company- Directors’ Status and Duties
A married couple set up a charitable foundation to assist children in developing countries. When the marriage failed an attempt was made to establish a second foundation with funds from the first, as part of W leaving the Trust. Court approval was . .

Lists of cited by and citing cases may be incomplete.
Updated: 25 August 2021; Ref: scu.652991

Lehtimaki v The Children’s Investment Fund Foundation (UK) and Others: CA 6 Jul 2018

A charity established by H and W wanted to transfer part of its fund to a new charity headed by W in return for her resignation from the first charity on the breakdown of the marriage. Court approval was sought for a transfer, but the remaining trustee (L) declined to say how he would cast his decisive vote. When giving approval, the court had made an order for L to vote in favour of the transaction. He now appealed against that order.
Held: His appeal succeeded. He had not threatened to act contrary to his fiduciary duty, since he had stated that he intended to act in what he considered would promote CIFF’s charitable purposes.
A member of the charity was part of the internal workings of the charity and his powers were exercisable for the benefit of the charity. However, that the position might be different in relation to companies with a large membership, which it called ‘mass-membership charities’: ‘It does not necessarily follow that members of charities such as the National Trust also have fiduciary obligations. Since we are not dealing with such an organisation, we do not need to decide whether their members are in the same position as CIFF’s. There may possibly, moreover, be scope for argument as to whether it is less reasonable to expect those belonging to mass-membership charities to act exclusively in the charities’ interests. That said, it is far from clear that it should be legitimate for members of, say, the National Trust to vote to obtain benefits for themselves from an entity with exclusively charitable objects.’
The members of a charitable company have no proprietary rights. As to the content of their fiduciary duty, it was unnecessary: ‘to rule on the precise scope of the fiduciary duties owed by members of CIFF. It is sufficient to say that a member of CIFF owes, in our view, a duty corresponding to that specifically imposed on members of CIOs by section 220 of the Charities Act 2011. In other words, the member must exercise the powers that he has in that capacity in the way that he decides, in good faith, would be most likely to further the purposes of CIFF. It should be stressed that this duty is subjective: in other words, that what matters is the member’s state of mind (compare eg Regentcrest plc v Cohen [2001] 2 BCLC 80, para 120, dealing with company directors).’
Lady Justice Gloster (Vice-President of the Court of Appeal, Civil Division), Lord Justice David Richards and Lord Justice Newey
[2018] EWCA Civ 1605, [2019] 1 All ER 845, [2019] Ch 139, [2018] WLR(D) 423, [2018] 2 BCLC 478, [2018] 3 WLR 1470, 2018] WTLR 491
Bailii,
England and Wales
Citing:
Cited – In re The French Protestant Hospital ChD 1951
The charity was an incorporated body created by a Royal Charter granted in 1718. The governor and directors sought to exercise a power conferred on them by the charter to amend the byelaws to enable the directors’ professional firms to be . .
Cited – Liverpool and District Hospital for Diseases of the Heart v Attorney-General ChD 1981
Charitable Company is Trustee of Assets
The court was asked as to the distribution of surplus assets of a charitable company which was in winding up, and the question whether or not s 257 et seq. Companies Act 1948 applied, including s 265 which made provision for the distribution of . .
Appeal from – The Children’s Investment Fund Foundation (UK) v Attorney General and Others ChD 9-Jun-2017
The court considered the propriety of a payment made by a charitable company to a director for her loss of office. The charity was to transfer a substantial sum to a new charity headed by the departing director.
Held: The court approved the . .

Cited by:
Appeal from (CA) – Lehtimaki and Others v Cooper SC 29-Jul-2020
Charitable Company- Directors’ Status and Duties
A married couple set up a charitable foundation to assist children in developing countries. When the marriage failed an attempt was made to establish a second foundation with funds from the first, as part of W leaving the Trust. Court approval was . .

Lists of cited by and citing cases may be incomplete.
Updated: 25 August 2021; Ref: scu.618970

The Children’s Investment Fund Foundation (UK) v Attorney General and Others: ChD 9 Jun 2017

The court considered the propriety of a payment made by a charitable company to a director for her loss of office. The charity was to transfer a substantial sum to a new charity headed by the departing director.
Held: The court approved the proposed transaction and ordered the remaining director to cast his decisive vote in favour of the transaction. In the ‘unique circumstances’ of this ‘extremely unusual’ case, the Grant was in the best interests of CIFF. The principal reasons given by the Chancellor were that the parties should not be allowed to renege on the deal they had made in good faith, that Ms Cooper would be contributing a further $40m to her new charity and that approving the Grant would bring finality and avoid further legal costs. He referred to the considerable talents of Ms Cooper. The Chancellor expressly stated that, while he had come to a clear conclusion that he should approve the Grant, he was ‘not saying that no reasonable trustee or fiduciary could disagree with [his] view’ that the Grant was in the best interests of CIFF or that ‘anyone who disagreed with [his] view would automatically be acting in bad faith’
Section 217 of the 2006 Act applies as much to charitable companies as it does to ordinary trading companies.
Sir Geoffrey Vos Ch
[2017] EWHC 1379 (Ch), [2017] WLR(D) 390, [2018] 1 BCLC 677, [2018] 2 WLR 259, [2018] Ch 371, [2018] 2 All ER 504
Bailii, WLRD
Companies Act 2006 215 217
England and Wales
Citing:
Cited – In re The French Protestant Hospital ChD 1951
The charity was an incorporated body created by a Royal Charter granted in 1718. The governor and directors sought to exercise a power conferred on them by the charter to amend the byelaws to enable the directors’ professional firms to be . .
Cited – Von Ernst and Cie SA v Inland Revenue Commissioners CA 1979
The assets of a corporate charity were held on charitable trusts: ‘We were referred to certain authorities which give support to the view that a company incorporated for exclusively charitable purposes is in the position of a trustee of its funds or . .
Cited – Liverpool and District Hospital for Diseases of the Heart v Attorney-General ChD 1981
Charitable Company is Trustee of Assets
The court was asked as to the distribution of surplus assets of a charitable company which was in winding up, and the question whether or not s 257 et seq. Companies Act 1948 applied, including s 265 which made provision for the distribution of . .
Cited – Pender v Lushington CA 1877
After stating that the Court would not restrain the exercise of certain votes by members of a company merely because the holder of the votes had a motive for voting them which the Court might not approve, his Lordship said: ‘I am confirmed in that . .
Cited – The North-West Transportation Company and James Hughes Beatty v Henry Beatty and Others PC 21-Jul-1887
(Canada) . .
Cited – Allan v Gold Reefs of West Africa Ltd CA 19-Feb-1900
The company had altered its articles so as to give itself a lien on paid up shares in respect of the failure of the shareholder to pay calls on other shares which had not been fully paid up. The effect of the amendment was to alter the contractual . .
Cited – Arbuthnott v Bonnyman and Others CA 20-May-2015
Appeal from refusal of unfair prejudice petition.
After listing cases: ‘I would extract from them the following principles:
(1) The limitations on the exercise of the power to amend a company’s articles arise because, as in the case of . .
Cited – Northern Counties Securities Ltd v Jackson and Steeple Ltd ChD 1974
Walton J reiterated that, when a shareholder is voting for or against a particular resolution, he is voting as a person owing no fiduciary duty to the company and who is exercising his own right of property to vote as he thinks fit. . .

Cited by:
Appeal from – Lehtimaki v The Children’s Investment Fund Foundation (UK) and Others CA 6-Jul-2018
A charity established by H and W wanted to transfer part of its fund to a new charity headed by W in return for her resignation from the first charity on the breakdown of the marriage. Court approval was sought for a transfer, but the remaining . .
At First Instance – Lehtimaki and Others v Cooper SC 29-Jul-2020
Charitable Company- Directors’ Status and Duties
A married couple set up a charitable foundation to assist children in developing countries. When the marriage failed an attempt was made to establish a second foundation with funds from the first, as part of W leaving the Trust. Court approval was . .

Lists of cited by and citing cases may be incomplete.
Updated: 25 August 2021; Ref: scu.588022

Berghoff Trading Ltd and Others v Swinbrook Developments Ltd and Others: CA 19 May 2009

The court was asked whether a limited partnership in which its partners sold their equity interests to new buyers was and remains subject to any obligation to pay a common law indemnity or contribution to its erstwhile partner or was otherwise subject to repay to that partner a loan which, if it existed, did so only contingently before the sale and emerged into existence only after the sale.
[2009] EWCA Civ 413
Bailii
England and Wales

Updated: 24 August 2021; Ref: scu.346189

Faulkner and Another v Bennett and Others: ChD 20 Dec 2011

The court was asked whether the principle in Gold Reefs could be applied to prevent a proposed repurchase of shares.
Hodge QC J
[2011] EWHC 3702 (Ch)
Bailii
England and Wales
Citing:
Cited – Allan v Gold Reefs of West Africa Ltd CA 19-Feb-1900
The company had altered its articles so as to give itself a lien on paid up shares in respect of the failure of the shareholder to pay calls on other shares which had not been fully paid up. The effect of the amendment was to alter the contractual . .

Lists of cited by and citing cases may be incomplete.
Updated: 24 August 2021; Ref: scu.452973

Citibank Na and Another v QVT Financial Lp: CA 22 Jan 2007

Securitisation of Channel Tunnel debts.
The controlling noteholder of a series of notes issued by the company and secured by a trust deed argued that its extensive powers, while its notes remained outstanding, to direct the trustee of the trust deed how to exercise its discretion (for example, as to when to take enforcement action) diminished the role of the trustee below the irreducible core which a valid trust must have.
Held: The court rejected that argument by reference to various other powers which the trust deed vested in the trustee and the trustee’s obligation to act in good faith.
Sir Anthony Clarke MR, Arden and Dyson LJJ
[2007] EWCA Civ 11, [2007] 4 All ER 736
Bailii
England and Wales
Cited by:
Cited – Lehtimaki and Others v Cooper SC 29-Jul-2020
Charitable Company- Directors’ Status and Duties
A married couple set up a charitable foundation to assist children in developing countries. When the marriage failed an attempt was made to establish a second foundation with funds from the first, as part of W leaving the Trust. Court approval was . .

Lists of cited by and citing cases may be incomplete.
Updated: 24 August 2021; Ref: scu.248013

Abrath v North Eastern Railway Company: CA 22 Jun 1883

A claim was brought against the company for malicious prosecution. The jury acquitted it. And the plaintiff appealed.
Held: The judge’s direction had been correct.
Bowen LJ said: ‘Wherever a person asserts affirmatively as part of his case that a certain state of facts is present or is absent . . that is an averment which he is bound to prove positively.’
. . And ‘If there is a conflict of evidence as to these questions, it is unnecessary, except for the purpose of making plain what the judge is doing, to explain to the jury about onus of proof, unless there are presumptions of law, such as, for instance, the presumption of consideration for a bill of exchange, or a presumption of consideration for a deed. And if the jury is asked by the judge a plain question, as, for instance, whether they believe or disbelieve the principal witness called for the plaintiff, it is unnecessary to explain to them about the onus of proof, because the only answer which they have to give is Yes or No, or else they cannot tell what to say. If the jury cannot make up their minds upon a question of that kind, it is for the judge to say which party is entitled to the verdict. I do not forget that there are canons which are useful to a judge in commenting upon evidence and rules for determining the weight of conflicting evidence; but they are not the same as onus of proof. Now in an action for malicious prosecution the plaintiff has the burden throughout of establishing that the circumstances of the prosecution were such that a judge can see no reasonable or probable cause for instituting it. In one sense that is the assertion of a negative, and we have been pressed with the proposition that when a negative is to be made out the onus of proof shifts. That is not so. If the assertion of a negative is an essential part of the plaintiff’s case, the proof of the assertion still rests upon the plaintiff. The terms ‘negative ‘ and ‘ affirmative’ are after all relative and not absolute. In dealing with a question of negligence, that term may be considered either as negative or affirmative according to the definition adopted in measuring the duty which is neglected. Wherever a person asserts affirmatively as part of his case that a certain state of facts is present or is absent, or that a particular thing is insufficient for a particular purpose, that is an averment which he is bound to prove positively. It has been said that an exception exists in those cases where the facts lie peculiarly within the knowledge of the opposite party. The counsel for the plaintiff have not gone the length of contending that in all those cases the onus shifts, and that the person within whose knowledge the truth peculiarly lies is bound to prove or disprove the matter in dispute. I think a proposition of that kind cannot be maintained, and that the exceptions supposed to be found amongst cases relating to the game laws may be explained on special grounds come back to the question of the present trial, it is possible that the language of Cave, J., has been misunderstood; and must look and see out of the ways in which the question might possibly be tried, which way he has selected, because as soon as it is seen which mode of trial he has selected a great advance is made towards seeing that the criticisms which have been made on his direction are unsound. A judge may leave the jury to find a general verdict, explaining to the jury what the disputed facts are, telling them that if they find the disputed facts in favour of one side or the other, his opinion as to reasonable and probable cause will differ accordingly, telling them what, in each alternative, his view will be, and enabling them to apply that statement with reference to the issue as to malice; that is a way which in a very simple kind of case may be adopted. But I think it necessary only to state as much as I have stated about it, to see that a very clear head and a very clear tongue will be required to conduct a complicated case to a general verdict in that way. Accordingly, judges have, been in the habit of adopting a different course whenever there are circumstances of complication. A judge may accordingly, do this; he may tell the jury what the issues or questions are, and at the same time inform them what will be the effect upon the verdict, which they will ultimately be asked to find, of the answers they give to the specific questions, leaving the jury both to answer the questions and then to find a verdict, after he has explained to them what result the answers to the questions will involve. That is the way in which Cave, J. really did try this case. There is a third way in which a judge may conduct the trial, by asking the jury specific questions, and not leaving it to them to find the verdict, but entering the: judgment upon their findings himself. That is a third way, and that was not adopted in form by the learned judge, although it will be observed it differs only slightly in form from the second mode of procedure, which he, in fact, did adopt. Now, if the judge adopts the second method of procedure, it is obvious that he is putting specific questions to the jury with the intention, as soon as they have answered the specific questions, to request them to go still further, and to find a general verdict one way or the other on such answers.’
Lord Brett MR said that any party wishing to assert a negative proposition bears the onus of proving that negative.
Bowen LJ, Lord Brett MR
[1883] 11 QBD 440, [1883] UKLawRpKQB 122
England and Wales
Cited by:
Appeal from – Abrath v North Eastern Railway Co HL 15-Mar-1886
The plaintiff had brought an action against the company of malicious prosecution. It was rejected by the jury and again on appeal.
Held: The appeal failed. In an action for damages for the tort of malicious prosecution one of the elements of . .
Cited – Jetivia Sa and Another v Bilta (UK) Ltd and Others SC 22-Apr-2015
The liquidators of Bilta had brought proceedings against former directors and the appellant alleging that they were party to an unlawful means conspiracy which had damaged the company by engaging in a carousel fraud with carbon credits. On the . .

Lists of cited by and citing cases may be incomplete.
Updated: 23 August 2021; Ref: scu.565827

Abrath v North Eastern Railway Co: HL 15 Mar 1886

The plaintiff had brought an action against the company of malicious prosecution. It was rejected by the jury and again on appeal.
Held: The appeal failed. In an action for damages for the tort of malicious prosecution one of the elements of the tort is that there was no reasonable or probable cause for instituting the prosecution – the plaintiff in such an action bears the onus of proving absence of reasonable or probable cause.
Lord Bramwell said that it was impossible for a corporation to have either malice or motive: ‘A fictitious person is incapable of malice or of motive’ even if the whole body of its directors or shareholders in general meeting approved its acts for improper reasons. Malice was an unfortunate word in this context.
Lord Fitzgerald had no doubt that Lord Bramwell’s weighty observations would be instructive in the future and would ‘always carry with them that force before any tribunal which they so eminently deserve.’
Lord Bramwell, Lord Fitzgerald, Earl of Selborne
(1886) 11 App Cas 247, [1886] UKLawRpAC 15
Commonlii
England and Wales
Citing:
Appeal from – Abrath v North Eastern Railway Company CA 22-Jun-1883
A claim was brought against the company for malicious prosecution. The jury acquitted it. And the plaintiff appealed.
Held: The judge’s direction had been correct.
Bowen LJ said: ‘Wherever a person asserts affirmatively as part of his . .

Cited by:
Rejected – The Citizens Life Assurance Company Limited v Brown PC 6-May-1904
(New South Wales) A malicious libel was alleged. The life assurance company was vicariously liable in respect of a libel contained in a circular sent out by a person who was employed by the company under a written agreement as its ‘superintendent of . .
Cited – Jetivia Sa and Another v Bilta (UK) Ltd and Others SC 22-Apr-2015
The liquidators of Bilta had brought proceedings against former directors and the appellant alleging that they were party to an unlawful means conspiracy which had damaged the company by engaging in a carousel fraud with carbon credits. On the . .
Cited – Jetivia Sa and Another v Bilta (UK) Ltd and Others CA 31-Jul-2013
Defendants appealed against refusal of their request for a summary striking out for lack of jurisdiction, of the claims against them arising from their management of the insolvency of the first defendant. . .

Lists of cited by and citing cases may be incomplete.
Updated: 23 August 2021; Ref: scu.565826

The Citizens Life Assurance Company Limited v Brown: PC 6 May 1904

(New South Wales) A malicious libel was alleged. The life assurance company was vicariously liable in respect of a libel contained in a circular sent out by a person who was employed by the company under a written agreement as its ‘superintendent of agencies’. By the terms of the agreement that person was to devote his whole time to furthering the company’s business and was to be paid a salary weekly as well as a commission on policies procured by him.
Held: He was a servant of the company for whose actions the company was liable. Once companies are recognised by the law as legal persons, they are liable to have the mental states of agents and employees such as dishonesty or malice attributed to them for the purpose of establishing civil liability.
Lord Lindley said: ‘If it is once granted that corporations are for civil purposes to be regarded as persons, ie as principals acting by agents and servants, it is difficult to see why the ordinary doctrines of agency and of master and servant are not to be applied to corporations as well as to ordinary individuals.’
Lord Lindley
[1904] UKPC 20, [1904] AC 423
Bailii
Australia
Citing:
Rejected – Abrath v North Eastern Railway Co HL 15-Mar-1886
The plaintiff had brought an action against the company of malicious prosecution. It was rejected by the jury and again on appeal.
Held: The appeal failed. In an action for damages for the tort of malicious prosecution one of the elements of . .

Cited by:
Cited – Jetivia Sa and Another v Bilta (UK) Ltd and Others SC 22-Apr-2015
The liquidators of Bilta had brought proceedings against former directors and the appellant alleging that they were party to an unlawful means conspiracy which had damaged the company by engaging in a carousel fraud with carbon credits. On the . .
Cited – Jetivia Sa and Another v Bilta (UK) Ltd and Others CA 31-Jul-2013
Defendants appealed against refusal of their request for a summary striking out for lack of jurisdiction, of the claims against them arising from their management of the insolvency of the first defendant. . .

Lists of cited by and citing cases may be incomplete.
Updated: 22 August 2021; Ref: scu.419585

Hurst v Bryk and others: HL 30 Mar 2000

Where other partners committed a fundamental breach of their duties as partners, that did not release the innocent partner from existing obligations of the partnership, nor from the debts of the partnership on dissolution or even accruing after dissolution. His acceptance of the repudiatory breach by his partners could not alter his duties to others. The doctrines of repudiation could not award him either an indemnity from his former partners.
Lord Millett, Lords Browne-Wilkinson, Nicholls, Hope and Clyde
Gazette 28-Apr-2000, Times 04-Apr-2000, [2000] UKHL 19, [2000] 2 All ER 193, [2002] 1 AC 185
House of Lords, House of Lords, House of Lords, Bailii
Partnership Act 1890
England and Wales
Citing:
Appeal From – Hurst v Bryk CA 4-Feb-1997
The end of a partnership did not break a former partner’s obligation to the other partners on a lease held for the partnership. . .

Cited by:
Cited – Mullins v Laughton and Others ChD 19-Dec-2002
The claimant asserted that his partners had repudiated the partnership by their conduct toward him. He continued that he had accepted the repudiation, and that therefore the partnership was dissolved.
Held: The Hurst case had been on the basis . .

Lists of cited by and citing cases may be incomplete.
Updated: 20 August 2021; Ref: scu.159054

Brac Rent-A-Car International Inc: ChD 7 Feb 2003

The company was incorporated in Delaware. Its main centre of business was within the UK. The company resisted an attempt to wind the company up here.
Held: The English courts had jurisdiction. The company’s contracts were subject to English law, their employees were here, and their contracts also were under UK law. Whilst article 3 did not expressly extend its ambit to companies incorporated outside the EU, it should be read to do so, because its scope was defined primarily by reference to the area of operations of the company, and such an application was not excluded.
The Hon Mr Justice Lloyd
Times 24-Feb-2003, [2003] EWHC 114 (Ch), Gazette 01-Apr-2003, [2003] 2 All ER 201
Bailii
Council Regulation (EC) 1346/2000 3, Insolvency Act 1986 8(7)
England and Wales
Cited by:
Cited – In re The Salvage Association ChD 9-May-2003
The company wished to enter into a voluntary arrangement to protect itself from insolvency, but was an association incorporated by Royal Charter.
Held: For the purposes of the Act, the association was to be treated as having a legal persona . .

Lists of cited by and citing cases may be incomplete.
Updated: 20 August 2021; Ref: scu.179589

Primacom Holding Gmbh and Another v A Group of The Senior Lenders and Credit Agricole: ChD 20 Dec 2011

Application seeking an order convening four meetings of scheme creditors of a company called PrimaCom Holdings GmbH to consider and, if sought, approve a scheme of arrangement proposed by the company pursuant to part 26 of the Companies Act 2006.
Hildyard J
[2011] EWHC 3746 (Ch)
Bailii
Companies Act 2006
England and Wales

Updated: 20 August 2021; Ref: scu.451371

Blaikie and Others v Coats and Others (The British Mexican Railway Co): SCS 21 Nov 1893

Section 35 of the Companies Act of 1862 provides that ‘If the name of any person is without sufficient cause entered in or omitted from the register of any company under this Act . . the person or member aggrieved, or any member of the company, or the company itself, may, . . as respects companies registered in Scotland, by summary petition to the Court of Session, or in such other manner as the said Court may direct, apply for an order of the Court that the register may be rectified.’ . .
A petition was raised under this section by certain shareholders in a company craving the Court to order that the register of the company should be rectified by deleting therefrom the names of certain shareholders, in respect that their shares had been illegally allotted to them as promotion money. The respondents pleaded that the questions at issue could not be competently raised by a petition under the section.
The Court, without expressing a decided opinion as to the competency of the application, held that petition under the section was a very inappropriate and inconvenient way of dealing with the questions raised, and that the proper course for the petitioners was to raise an action of reduction in ordinary form, pending the raising of which the petition should be sisted.
Opinion by Lord M’Laren that section 35 was not intended to create a substitute for the ordinary forms of procedure in cases where there was a strong divergence between the parties as to facts.
[1893] SLR 31 – 115
Bailii
Companies Act 1862 35
Scotland

Updated: 18 August 2021; Ref: scu.613372