Category: Company

Griffiths v Fleming: CA 4 Mar 1909

A husband and his wife effected with an insurance association a policy whereby, in consideration of a premium of which each paid part, a sum of money was made payable upon the death of whichever of them should die first to the survivor. The wife having died, the husband brought an action upon the policy to recover the policy money.
Held: Upon the footing that the policy was an insurance by the husband upon the life of the wife, that, notwithstanding the provisions of the Life Assurance Act, 1774, it was not necessary, in order to maintain the action, that the plaintiff should prove that he had any pecuniary interest in the life of his wife.
The interest ‘must be a legal interest, not a mere chance or expectation’
Farwell LJ said (read in agreement by Kennedy LJ: ‘[Section 3 of the 1774 Act] has been held to mean ‘pecuniary interest’ measured by the loss that would be suffered by the beneficiary if the life stopped at the date of the policy. Lord Blackburn says in Wilson v Jones (L.R. 2 Ex 139 at p.150): ‘I know of no better definition of an interest in an event than . . that, if the event happens, the party will gain an advantage, if it is frustrated he will suffer a loss.’ And the interest must be a legal interest, not a mere chance or expectation: Hebdon v West; Halford v Kymer.’
Farwell LJ and Kennedy LJ
[1909] 1 KB 805, [1909] UKLawRpKQB 57
Commonlii
Life Assurance Act 1774 3, Married Wome??’s Property Act 1882 11
England and Wales
Cited by:
Cited – Murphy (By Her Litigation Friend Stockmont) v Holland CA 19-Dec-2003
A married couple had taken out an insurance policy on their joint lives. The policy was maintained after they divorced. On his death, his child by the later marriage claimed a share in the policy under the 1975 Act.
Held: (Chadwick LJ . .

Lists of cited by and citing cases may be incomplete.
Updated: 16 August 2021; Ref: scu.195617

Charles Forte Investments Ltd v Amanda: CA 1964

A minority shareholder complained of the board’s refused to register transfers of his shares to a third party. He threatened to present a winding up petition unless the board registered the transfers.
Held: He would be restrained from presenting such a petition. Winding up is properly a remedy of last resort. He had other and more suitable remedies available to him, namely an action for rectification of the register or proceeding by way of motion under section 116, and his threat to employ the machinery of winding up was an attempt to bring pressure on the board to reverse its decision and was an abuse of the process of the court. I would cause unnecessary damage to the company.
In order for the inherent jurisdiction to be invoked successfully it must be ‘impossible for the party concerned to succeed on his claim’ without it.
[1964] 1 Ch 240, [1963] 2 All ER 940
Companies Act 1948 116
England and Wales
Cited by:
Cited – CVC/Opportunity Equity Partners Limited and Opportunity Invest II Limited v Luis Roberto Demarco Almeida PC 21-Mar-2002
(Cayman Islands) The respondent was a minority shareholder. An offer was made to buy out his interest. He petitioned for the winding up of the company on the just and equitable ground. The claimants obtained an injunction to prevent him doing so, . .

Lists of cited by and citing cases may be incomplete.
Updated: 16 August 2021; Ref: scu.192625

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 the Aberdeen Railway Company. The contract was partly performed but, having taken delivery of about two-thirds of the iron chairs, the Aberdeen Railway Company refused to accept any more. The defendant sought to enforce the contract or for damages for breach.
Held: The railway company’s defence succeeded on the grounds that Mr Blaikie’s self-dealing rendered the contract voidable at its suit.
The equitable rule as to the accountability of directors is not limited to cases in which there is a maturing business opportunity but extends to cases in which the director either has or can have a personal interest conflicting, or which possibly may conflict, with the interests of whose whom he is bound to protect. ‘This, therefore, brings us to the general question, whether a Director of a Railway Company is or is not precluded from dealing on behalf of the Company with himself, or with a firm in which he is a partner. The Directors are a body to whom is delegated the duty of managing the general affairs of the Company. A corporate body can only act by agents, and it is of course the duty of those agents so to act as best to promote the interests of the corporation whose affairs they are conducting. Such agents have duties to discharge of a fiduciary nature towards their principal. And it is a rule of universal application, that no one, having such duties to discharge, shall be allowed to enter into engagements in which he has, or can have, a personal interest conflicting, or which possibly may conflict, with the interests of those whom he is bound to protect. So strictly is this principle adhered to, that no question is allowed to be raised as to the fairness or unfairness of a contract so entered into.’
and ‘Mr Blaikie was not only a Director, but (if that was necessary) the Chairman of the Directors. In that character it was his bounden duty to make the best bargains he could for the benefit of the Company. While he filled that character, namely, on the 6th of February, 1846, he entered into a contract on behalf of the Company with his own firm, for the purchase of a large quantity of iron chairs at a certain stipulated price. His duty to the Company imposed on him the obligation of obtaining these chairs at the lowest possible price. His personal interest would lead him in an entirely opposite direction, would induce him to fix the price as high as possible. This is the very evil against which the rule in question is directed, and I here see nothing whatever to prevent its application. I observe that Lord Fullerton seemed to doubt whether the rule would apply where the party whose act or contract is called in question is only one of a body of Directors, not a sole trustee or manager. But, with all deference, this appears to me to make no difference. It was Mr Blaikie’s duty to give his co-Directors, and through them to the Company, the full benefit of all the knowledge and skill which he could bring to bear on the subject. He was bound to assist them in getting the articles contracted for at the cheapest possible rate. As far as related to the advice he should give them, he put his interest in conflict with his duty, and whether he was the sole Director or only one of many, can make no difference in principle. The same observation applies to the fact that he was not the sole person contracting with the Company; he was one of the firm of Blaikie Brothers, with whom the contract was made, and so interested in driving as hard a bargain with the Company as he could induce them to make.’
Lord Cranworth LC
(1854) 1 Macq 461, (1854) 17 D (HL) 20
Scotland
Cited by:
Cited – 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, . .
Cited – Bhullar and others v Bhullar and Another CA 31-Mar-2003
The claimants were 50% shareholders in a property investment company and sought relief alleging prejudicial conduct of the company’s affairs. After a falling out, two directors purchased property adjacent to a company property but in their own . .
Cited – Newgate Stud Company, Newgate Stud Farm Llc v Penfold, Penfold Bloodstock Limited ChD 21-Dec-2004
The claimants sought damages from the defendant. He had been employed to manage their horse-racing activities, and it was alleged that he had made secret profits. The defendant denied any dishonesty, saying all matters were known to the deceased . .
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 – Towers v Premier Waste Management Ltd CA 28-Jul-2011
The defendant appealed against a finding that as a director of the claimant company he had accepted personal benefits from a customer without disclosing this to the company.
Held: The appeal failed. . .
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: 16 August 2021; Ref: scu.180412

Re a company (No 003843 of 1986): 1987

The petitioners sought re-instatement as directors or the winding up of the company. The respondents had offered to buy their shares at more than their break up or liquidation value, at a price equal to a rateable proportion of the company’s assets at the market value of the company as a going concern, with an independent accountant’s valuation. The petitioners rejected the offer because they were not interested in selling their shares at any price. The court rejected that position: ‘It is now manifestly unreasonable for the petitioners to continue to press for a winding up order. That would give them a financial remedy only, but it would be a financial remedy which would inevitably result in a later payment of a lesser sum than could be obtained from the offer that has been made.’
Millett J
[1987] BCLC 562
England and Wales
Cited by:
Cited – CVC/Opportunity Equity Partners Limited and Opportunity Invest II Limited v Luis Roberto Demarco Almeida PC 21-Mar-2002
(Cayman Islands) The respondent was a minority shareholder. An offer was made to buy out his interest. He petitioned for the winding up of the company on the just and equitable ground. The claimants obtained an injunction to prevent him doing so, . .

Lists of cited by and citing cases may be incomplete.
Updated: 16 August 2021; Ref: scu.192624

Sidhu v Rathor: ChD 17 Jul 2020

Claim under the Partnership Act 1890 against the Defendant, Dr Sangeeta Rathor, for a declaration that they carried on business in partnership together, an order for dissolution and for the standard accounts and inquiries. Dr Rathor denies the existence of such a partnership and asserts that Jaswant and Sareet were employees whose employment was terminated for cause.
Tom Leech QC
[2020] EWHC 1916 (Ch)
Bailii
Partnership Act 1890
England and Wales

Updated: 14 August 2021; Ref: scu.652772

Adams v Cape Industries plc: ChD 1990

The piercing of the veil argument was used to attempt to bring an English public company, which was the parent company of a group which included subsidiaries in the United States, within the jurisdiction of the courts of the United States. Where a foreign judgment is impeachable on the ground of denial of procedural fairness, its enforcement would be contrary to public policy.
Scott J cautioned against ignoring the principle in Salomon merely because justice may be seen to require it, but at the same time recognised that the question is in each case the fact of presence and not some law of individual personality.
An agreement to accept jurisdiction must be express and cannot be implied.
Scott J
[1990] 1 Ch 433, [1990] BCLC 479; [1990] 2 WLR 657, [1991] 1 All ER 929, [1990] BCC 786
England and Wales
Citing:
Cited – Sirdar Gurdyal Singh v The Rajah of Faridkote PC 28-Jul-1894
(Punjab) THe Rajah of Faridkote had obtained in the Civil Court of Faridkote (a native state) ex parte judgments against Singh (his former treasurer), which he sought to enforce in Lahore, in British India. Singh was not then resident in Faridkote . .
Wrongly decided – Blohn v Desser 1962
The plaintiff had obtained a default judgment in Austria against an Austrian partnership, and sought to enforce it in England against an English resident who was a sleeping partner in the firm. Her name was registered as a partner in the commercial . .

Cited by:
Appeal from – Adams v Cape Industries plc CA 2-Jan-1990
Proper Use of Corporate Entity to Protect Owner
The defendant was an English company and head of a group engaged in mining asbestos in South Africa. A wholly owned English subsidiary was the worldwide marketing body, which protested the jurisdiction of the United States Federal District Court in . .
Cited – Vizcaya Partners Ltd v Picard and Another PC 3-Feb-2016
No Contractual Obligation to Try Case in New York
(Gibraltar) The appellant had invested in a fraudulent Ponzi scheme run by Bernard Madoff. They were repaid sums before the fund collapsed, and the trustees now sought repayment by way of enforcement of an order obtained in New York.
Held: The . .

Lists of cited by and citing cases may be incomplete.
Updated: 10 August 2021; Ref: scu.519365

Dennis and Sons Ltd v West Norfolk Farmers Manure and Chemical Co-operative Co Ltd: ChD 1943

Shareholders were entitled to disclosure of an accountants’ report concerning the rights and duties of the board commissioned by the directors, notwithstanding that by the time the report was received the shareholders had commenced proceedings against the company in relation to the conduct of the company’s affairs. The report had been commissioned by the directors on behalf of all the shareholders and not for the purpose of defending themselves against hostile litigation.
The general rule applied equally as between a company and its shareholders and as between a trustee and his beneficiaries. A claim to privilege between the company and its shareholders would have been inconsistent with the nature of the relationship.
Simonds J
[1943] Ch 220
England and Wales
Cited by:
Cited – James-Bowen and Others v Commissioner of Police of The Metropolis SC 25-Jul-2018
The Court was asked whether the Commissioner of Police of the Metropolis (‘the Commissioner’) owes a duty to her officers, in the conduct of proceedings against her based on their alleged misconduct, to take reasonable care to protect them from . .

Lists of cited by and citing cases may be incomplete.
Updated: 09 August 2021; Ref: scu.666494

Secretary of State for Trade and Industry v Langridge: CA 1991

The lower court had dismissed a petition for a director disqualification because of the failure to comply with the ten day requirement in section 16.
Held: (Majority) The provisions of section 16 were directory only and not mandatory. Directors owe responsibilities to the public (in the form of creditors, shareholders and employees). The public needs to be protected from persons whose conduct has shown that they have abused the privileges to trade through a company with the protection of limited liability, and with the use of capital subscribed by third parties.
Lord Justice Balcombe said ‘In my judgment the scope and purpose of the [Act] is clear. The ability to trade through a company with the protection of limited liability, and with the use of capital subscribed by third parties, is of great economic advantage and confers considerable privileges on persons so enabled. These privileges involve corresponding responsibilities and the public (in the form of creditors shareholders and employees . .) needs to be protected from persons whose conduct has shown that they have abused those privileges . . accordingly the purpose of the Act is to protect the public and its scope is the prevention of persons who have previously misconducted themselves in relation to companies, or who have otherwise shown themselves as unfit to be concerned in the management of a company, from being so concerned.’
and concluded: ‘In those circumstances, and applying the principles to which I have referred above, I would have no hesitation in holding that in this case, the failure to serve a proper ten day notice was a procedural irregularity which did not render the Secretary of State’s application for a disqualification order against Mr Langridge either void or voidable, and that the Secretary of State originating summons should not be struck out.’
Lord Justice Balcombe
[1991] Ch 402
Company Directors Disqualification Act 1986 6
England and Wales
Citing:
Cited – In re Sevenoaks Stationers (Retail) Ltd CA 1990
The court gave guidelines for the periods of disqualification to be applied for company directors under the Act. The maximum period of ten years should be reserved for only the most serious of cases. Periods of two to five years should apply to . .

Cited by:
Cited – Jones v Director of Public Prosecutions Admn 27-Jan-2011
jones_dppAdmn11
The driver appealed against his conviction for exceeding the relevant maximum speed on a Special Road, the A55 in North Wales. The speed limit signs were designed to be illuminated, but the lamps were not working. Instructions had been given not to . .

Lists of cited by and citing cases may be incomplete.
Updated: 07 August 2021; Ref: scu.428305

In Re William Hockley Ltd: ChD 1962

Pennycuick J said: ‘The expression ‘contingent creditor’ is not defined in the Companies Act 1948, but it must, I think, denote a person towards whom under an existing obligation, the company may or will become subject to a present liability upon the happening of a future event or at some future date or at some future date’. The importance of these words for present purposes lies in their insistence that there must be an existing obligation, and that out of that obligation a liability on the part of the company to pay a sum of money will arise in a future event, whether it be an event that must happen or only an event that may happen.’
Pennycuick J
[1962] 1 WLR 555, [1962] 2 All ER 111
Companies Act 1948 224(1)
England and Wales

Updated: 07 August 2021; Ref: scu.416336

Armour Hick Northern Ltd v Whitehouse; Armour Trust Ltd: ChD 1980

A vendor company was assisted by financial assistance given by a subsidiary.
Held: The use of money by a company to repay its existing indebtedness would not normally fall within the concept of the company giving financial assistance to another person within s 151: ‘such a payment does not alter the financial position, save to the extent that a debt due from the debtor is paid by the debtor, so no financial assistance is given’ However: ‘ if Hick Partners had paid its own debt to Armour Trust, it would have given no financial assistance within s 54, the reason being, as I understand, that such a payment does not alter the financial position, save to the extent that a debt due from the debtor is paid by the debtor, so that no help or assistance is given. There is merely a due discharge of a debt . But Hick Northern paying the Hick Partners debt is a horse of another colour. Hick Northern was not paying off its own debt. It may have been making merely a voluntary payment. Accordingly, the payment may have been financial assistance within s 54. ‘
Mervyn Davies QC HHJ
[1980] 1 WLR 1520, [1980] 3 All ER 833
England and Wales
Citing:
Cited – Gradwell (PTY) v Rostra Printers Ltd 1959
(South Africa) An offer was made of andpound;42,000 for the shares and the loan account that was then outstanding to the parent company less amounts owed to lenders on first mortgages. An analysis showed that andpound;40,258 was owed on the loan . .

Cited by:
Cited – Anglo Petroleum Ltd v TFB (Mortgages) Ltd ChD 24-Feb-2006
The company sought to say that loans of 15 million pounds were void under s151 of the 1985 Act. It was said that the loans infringed the provisions of s151 being unlawful financial assistance.
Held: The loans were valid: ‘if it is lawful for a . .

Lists of cited by and citing cases may be incomplete.
Updated: 07 August 2021; Ref: scu.238727

Prudential Assurance Co Ltd v Newman Industries Ltd (No 2): CA 1982

A plaintiff shareholder cannot recover damages merely because the company in which he has an interest has suffered damage. He cannot recover a sum equal to the diminution in the market value of his shares, or equal to the likely diminution in dividend, because such a ‘loss’ is merely a reflection of the loss suffered by the company. The shareholder does not suffer any personal loss. His only ‘loss’ is through the company, in the diminution in the value of the net assets of the company, in which he has (say) a 3 per cent, shareholding. The plaintiff’s shares are merely a right of participation in the company on the terms of the articles of association. The shares themselves, his right of participation, are not directly affected by the wrongdoing. The court rejected the notion that there is any general discretion to ignore the ‘proper plaintiff’ rule whenever the justice of the case so requires. ‘A derivative action is an exception to the elementary principle that A cannot, as a general rule, bring an action against B to recover damages or secure other relief on behalf of C for an injury done by B to C. C is the proper plaintiff because C is the party injured, and, therefore, the person in whom the cause of action is vested.’
‘What [a shareholder] cannot do is to recover damages merely because the company in which he is interested has suffered damage. He cannot recover a sum equal to the diminution in the market value of his shares, or equal to the likely diminution in dividend, because such a ‘loss’ is merely a reflection of the loss suffered by the company. The shareholder does not suffer any personal loss. His only ‘loss’ is through the company, in the diminution in the value of the net assets of the company, in which he has (say) a 3 per cent shareholding.’
If the fraud was not admitted by the insiders, how was it to be proved? ‘It cannot have been right to have subjected the company to a 30-day action (as it was then estimated to be) in order to enable him to decide whether the plaintiffs were entitled in law to subject the company to a 30-day action. Such an approach defeats the whole purpose of the rule in Foss v. Harbottle and sanctions the very mischief that the rule is designed to prevent. By the time a derivative action is concluded, the rule in Foss v. Harbottle can have little, if any, role to play. Either the wrong is proved, thereby establishing conclusively the rights of the company; or the wrong is not proved, so cadit quaestio.’ and answered: ‘In our view, whatever may be the properly defined boundaries of the exception to the rule, the plaintiff ought at least to be required before proceeding with his action to establish a prima facie case (i) that the company is entitled to the relief claimed, and (ii) that the action falls within the proper boundaries of the exception to the rule in Foss v. Harbottle.’
Cumming-Bruce, Templeman and Brightman LJJ
[1982] Ch 204, [1982] 1 All ER 354, [1982] 2 WLR 31
England and Wales
Citing:
Explained – Foss v Harbottle 25-Mar-1843
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 . .
See Also – Prudential Assurance Co Ltd v Newman Industries Ltd ChD 1979
Members of the defendant company had approved in general meeting, of an acquisition of the assets of another company in which its directors were substantially interested. The shareholders’ approval was given on the basis of a circular. The action . .

Cited by:
Cited – Barings Plc and Another v Coopers and Lybrand and Others; etc ChD 23-Nov-2001
The applicant company employed a trader who, through manipulation of trading systems ran up losses sufficient to bankrupt the company. They sought recovery from the defendant auditors for failing to spot the mis-trading and prevent continuing . .
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 . .
Cited – Johnson v Gore Wood and Co (A Firm) ChD 3-May-2002
The respondent firm acted on behalf of the claimant’s companies in land transactions. An option had been taken to purchase land, and he instructed the defendants to exercise it. The landowner claimed the notice to exercise the option was invalidly . .
Cited – Johnson v Gore Wood and Co (a Firm) CA 12-Nov-1998
The claimant had previously issued a claim against the defendant solicitors through his company. He now sought to pursue a claim in his own name. It was resisted as an abuse of process, and on the basis that no personal duty of care was owed to the . .
Cited – Stein v Blake and others CA 13-Oct-1997
The defendants challenged leave to appeal given to the plaintiff against dismissal of his claim following the Prudential Assurance case.
Held: The issue was whether the plaintiff can recover the loss which he has allegedly sustained by reason . .
Cited – Heron International v Lord Grade, Associated Communications Corp. Plc. and Others CA 1983
In the course of a contested take-over bid, the directors of the target company who owned a majority of the company’s voting shares were alleged, in breach of their duties both to the company and to its shareholders, to have accepted proposals which . .
Cited – Cabvision Ltd v Feetum and others CA 20-Dec-2005
The company challenged the appointment of administrative receivers, saying there had been no insolvency.
Held: No question arises of a derivative action arose here. The claimant had standing to apply for declaratory relief since they were . .
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 . .
Cited – Christensen v Scott 1996
(New Zealand Court of Appeal) Thomas J said: ‘the diminution in the value of Mr and Mrs Christensen’s shares in the company is by definition a personal loss and not a corporate loss. The loss suffered by the company is the loss of the lease and the . .
Cited – Barclays Bank Plc v Kufner ComC 10-Oct-2008
barclays_kufnerComC2008
The bank sought summary judgment under a guarantee to secure a loan to purchase a luxury yacht which was to be hired out in business. The loan had been charged against the yacht, but when the yacht was re-registered, the bank failed to re-establish . .
Cited – Barclays Bank Plc v Kufner ComC 10-Oct-2008
barclays_kufnerComC2008
The bank sought summary judgment under a guarantee to secure a loan to purchase a luxury yacht which was to be hired out in business. The loan had been charged against the yacht, but when the yacht was re-registered, the bank failed to re-establish . .
Cited – Webster v Sandersons Solicitors (A Firm) CA 31-Jul-2009
The claimant apealed against refusal of permission to amend his claim for negligence against his former solicitors by adding claims from 1993 and 1994 . .
Cited – Emerald Supplies Ltd and Another v British Airways Plc ChD 8-Apr-2009
The claim was for damages after alleged price fixing by the defendants. The claimants sought to recover for themselves and as representatives of others who had similarly suffered. The defendants sought that the representative element of the claim be . .
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: 07 August 2021; Ref: scu.179876

Walsh and Others v Needleman Treon (A Firm) and Others: ChD 25 Jul 2014

The claimants appealed against summary judgment striking out their claim against the first defendant firm of solicitors, on the basis that they had no real prospect of establishing that another defendant was or had held himself out to be a partner in the first defendant firm.
Barling J
[2014] EWHC 2554 (Ch)
Bailii
Partnership Act 1890 14, Civil Procedure Rules 24.2(a)(I)
England and Wales

Updated: 07 August 2021; Ref: scu.535414

The New Hampshire Insurance Company v Rush and Tompkins Group Plc, Rush and Tompkins International Limited: CA 3 Oct 1996

The applicant appealed against dismissal of two petitions to wind up the respondent companies. Group members in England were already subject to winding up orders, and the companies faced similar proceedings in Holland. The only asset was a bank account which would not be released to the applicant, and a contentious debt.
Held: The petitioner’s remedy, as a contingent creditor of BV, was to prove in the Dutch proceedings, and to apply to the Dutch Court for whatever remedy it is entitled to. Appeal dismissed.
[1996] EWCA Civ 634
England and Wales

Updated: 06 August 2021; Ref: scu.140501

Bankia SA v Union Mutua Asistencial de Seguros (UMAS): ECJ 3 Jun 2021

Reference for a preliminary ruling – Directive 2003/71/EC – Prospectus when securities are offered to the public or admitted to trading – Article 3(2) – Article 6 – Offer addressed to both retail investors and qualified investors – Content of information given in the prospectus – Action for damages – Retail investors and qualified investors – Awareness of the issuer’s economic situation
[2021] EUECJ C-910/19, ECLI:EU:C:2021:433, [2021] Bus LR 1008, [2021] WLR(D) 323
Bailii, WLRD
European
Citing:
Opinion – Bankia SA v Union Mutua Asistencial de Seguros (UMAS) ECJ 11-Feb-2021
Reference for a preliminary ruling – Directive 2003/71/EC – Companies – Obligation to publish a prospectus when securities are offered to the public or admitted to trading – Qualified and non-qualified investors – Civil liability towards qualified . .

Lists of cited by and citing cases may be incomplete.
Updated: 06 August 2021; Ref: scu.666487

Bankia SA v Union Mutua Asistencial de Seguros (UMAS): ECJ 11 Feb 2021

Reference for a preliminary ruling – Directive 2003/71/EC – Companies – Obligation to publish a prospectus when securities are offered to the public or admitted to trading – Qualified and non-qualified investors – Civil liability towards qualified investors in the event of a prospectus being inaccurate or incomplete
C-910/19, [2021] EUECJ C-910/19_O, ECLI:EU:C:2021:119
Bailii
European
Cited by:
Opinion – Bankia SA v Union Mutua Asistencial de Seguros (UMAS) ECJ 3-Jun-2021
Reference for a preliminary ruling – Directive 2003/71/EC – Prospectus when securities are offered to the public or admitted to trading – Article 3(2) – Article 6 – Offer addressed to both retail investors and qualified investors – Content of . .

Lists of cited by and citing cases may be incomplete.
Updated: 06 August 2021; Ref: scu.663969

Eclairs Group Ltd and Glengary Overseas Ltd v JKX Oil and Gas Plc: SC 2 Dec 2015

Company Director not Trustee but is Fiduciary

The Court was asked about an alleged ‘corporate raid’, an attempt to exploit a minority shareholding in a company to obtain effective management or voting control without paying what other shareholders would regard as a proper price.
Held: The appeal succeeded.
Lord Sumption said: ‘A company director differs from an express trustee in having no title to the company’s assets. But he is unquestionably a fiduciary and has always been treated as a trustee for the company of his powers. Their exercise is limited to the purpose for which they were conferred. One of the commonest applications of the principle in company law is to prevent the use of the directors’ powers for the purpose of influencing the outcome of a general meeting. This is not only an abuse of a power for a collateral purpose. It also offends the constitutional distribution of powers between the different organs of the company, because it involves the use of the board’s powers to control or influence a decision which the company’s constitution assigns to the general body of shareholders.’
and: ‘I am unable to accept the majority’s parting assertion, at para 143, that the application of the proper purpose rule would be an ‘encouragement to deceitful conduct’ by predators with ‘subversive but secret’ projects. There is, however, a more fundamental objection to it, which is that it is incoherent once the operation of the rule is properly understood. If the ‘deceit’ consists simply in the secrecy, ie in the withholding or deemed withholding of the information, a decision to impose restrictions which is based simply on that fact will be entirely consistent with the proper purpose of the power. But secrecy is one thing, subversion another. If the real objection is to the subversion, it is nothing to do with the issue or enforcement of disclosure notices. Directors owe a duty of loyalty to the company, but shareholders owe no loyalty either to the company or its board. Within broad limits, derived for the most part from Part 30 of the Companies Act 2006 (Protection of Members against Unfair Prejudice) and the City Code on Takeovers and Mergers, they are entitled to exercise their rights in their own interest as they see it and to challenge the existing management for good reasons or bad.’
As to the proper purpose rule: ‘The rule is not a term of the contract and does not necessarily depend on any limitation on the scope of the power as a matter of construction. The proper purpose rule is a principle by which equity controls the exercise of a fiduciary’s powers in respects which are not, or not necessarily, determined by the instrument. Ascertaining the purpose of a power where the instrument is silent depends on an inference from the mischief of the provision conferring it, which is itself deduced from its express terms, from an analysis of their effect, and from the court’s understanding of the business context.’
‘the imposition of restrictions under article 42 is a serious interference with financial and constitutional rights which exist for the benefit of the shareholder and not the company. In the case of listed companies such as JKX a restriction notice is also an interference with the proper operation of the market in its shares, in which there is not only a private but a significant public interest. One would expect such a draconian power to be circumscribed by something more than the directors’ duty to act in the company’s interest as they may in good faith perceive it.’
Lord Neuberger, President, Lord Mance, Lord Clarke, Lord Sumption, Lord Hodge
[2015] UKSC 71, [2015] WLR(D) 497, [2016] 2 All ER (Comm) 413, [2016] 3 All ER 641, [2016] BCC 79, [2015] BUS LR 1395, [2016] 1 BCLC 1, UKSC 2014/0179
Bailii, WLRD, Bailii Summary, SC, SC Summary
Companies Act 2006 793 794
England and Wales
Citing:
Cited – Lane v Page 15-Jun-1754
Fraudulent execution of a power to jointure. A power to jointure having been executed under an agreement that the creditor of the husband should have part of the jointure, the appointment was set aside as far as the creditors were to benefit. The . .
Cited – Vatcher v Pault PC 17-Dec-2014
(Jersey) A fraudulent exercise of a trust power is constituted if it is exercised for a purpose or with an intention beyond the scope of the power. It was said that ‘it is not enough that an appointor or some person not an object of power may . .
Cited – Aleyn v Belchier 5-Jul-1758
Power of jointuring executed in favour of a wife, but with an agreement that the wife should only receive a part as an annuity for her own benefit, and that the residue should be applied to the payment of the husband’s debts : held, a fraud upon the . .
Cited – The Duke Of Portland And Others v Lady Mary E Topham And Others HL 6-Apr-1864
A power, to be validly executed, must be executed without any indirect object. The donee of the power must give the property which is the subject of it, as property, to the person to whom he affects to give it.
A created a power to appoint a . .
Appeal from – JKX Oil and Gas Plc and Others v Eclairs Group Ltd CA 13-May-2014
The court was asked as to important issues on the validity and constitutionality of restrictions imposed by the directors pursuant to Part 22 of the 2006 Act and the company’s Articles of Association, including the purported disenfranchisement of . .
Cited – Hindle v John Cotton Ltd HL 3-Jul-1919
Viscount Finlay said: ‘Where the question is one of abuse of powers, the state of mind of those who acted, and the motive on which they acted, are all important, and you may go into the question of what their intention was, collecting from the . .
Cited – In re Ricardo Group Plc ChD 1989
The company had obtained a restrictions order under Part XV. An application was made to the court for relief.
Held: On the facts relief was refused. The respondent had secured discharge of the order under the liberty to apply, having provided . .
At First Instance – Eclairs Group Ltd and Another v JKX Oil and Gas Plc and Others ChD 30-Aug-2013
Challenge was made to restrictions on voting imposed on the directors under the company’s articles.
Held: The purpose of article 42 is to provide a ‘sanction or incentive’ to remedy a failure to comply with the disclosure notice. . .
Cited – In re TR Technology Investment Trust Plc ChD 1988
The court was asked whether the limition on the circumstances in which the court could remove restrictions imposed under section 794, applied to a merely interim order.
Held: It did not. Hoffmann J said of the powers t demand information given . .
Cited – Cannon v Trask 1875
The Court was asked as to the use of the directors’ powers to fix a time for the general meeting,
Held: It was improper to fix a general meeting at a time when hostile shareholders were known to be unable to attend. . .
Cited – Mills v Mills 1938
(High Court of Australia) Where the main purpose of the directors’ resolution (in this case to increase the share base) is to benefit the company it matters not that it incidentally also benefits a director.
Dixon J pointed out the difficulties . .
Cited – Birley v Birley CA 12-Mar-1858
An absolute appointment was made to an object of a power, under a prior ‘understanding’ between the appointor and appointee, to hold in ‘In trust ‘ for persons, some of whom were objects and some not.
Held: The whole was void. . .
Cited – Pryor v Pryor CA 29-Apr-1864
Parents having a power of appointing an estate to all or any of their children appointed it absolutely to two of their sons, upon the understanding that the appointments should resettle the estate upon certain trusts for the benefit of all the . .
Cited – Re Turner’s Settled Estates 1884
In the case of mixed motives the Court will apply a ‘but for’ test, namely whether the power to transfer would have been exercised but for the intent to achieve the ulterior purpose or whether the power would have been exercised in any event . .
Cited – Hogg v Cramphorn Limited ChD 1966
An honest belief that directors should seek to maintain their office for the good of the company did not prevent the motive for issuing additional shares to prevent a take-over from being an improper motive. The directors’ powers to issue shares . .
Cited – Fraser v Whalley CA 27-Feb-1864
The directors of a railway compriy are not justified in acting on an old resolution auithorising the issue of shares after the particular purpose for which the authority was given has ceased to be available.
Nor in issuing shares, supposing . .
Cited – Lloyds Bank plc v Bundy CA 1974
‘Broadchalke is one of the most pleasing villages in England. Old Herbert Bundy, the defendant, was a farmer there. His home was at Yew Tree Farm. It went back for 300 years. His family had been there for generations. It was his only asset. But he . .
Cited – Howard Smith Limited v Ampol Petroleum Limited PC 14-Feb-1974
(New South Wales) The court considered the use by directors of their fiduciary power of allotment of shares for a different purpose than that for which it was granted, and so as to dilute the voting power of the majority shareholding of issued . .
Cited – Anglo-Universal Bank v Baragnon CA 1881
If it was shown that the power to make calls was being exercised for the purpose of disqualifying hostile shareholders at a general meeting, that would be an improper exercise of the directors’ powers. . .
Cited – Whitehouse v Carlton House Pty 7-Apr-1987
High Court of Australia – Companies – Shares – Issue and allotment – Powers of directors – Bona fides of exercise – Ulterior purpose – Article vesting powers of directors in named governing director – Issue and allotment of shares by governing . .
Cited – Roadchef (Employee Benefits Trustees) Ltd v Hill and Another ChD 29-Jan-2014
Challenge to share transfer. . .

Lists of cited by and citing cases may be incomplete.
Updated: 05 August 2021; Ref: scu.556258

Attorney General and Another v Great Eastern Railway Company: HL 27 May 1880

An Act of Parliament authorised a company to construct a railway. Two other companies combined and contracted with the first to supply rolling stock. An injunction was brought to try to restrain this, saying that such a contract was not explicitly provided for in any of the Acts incorporating the companies.
Held: The contract was not ultra vires, but was warranted by the Acts. Powers conferred by statute are taken to include, by implication, a right to take any steps which are reasonably necessary to achieve the statutory purpose: ‘whatever may fairly be regarded as incidental to, or consequential upon, those things which the Legislature has authorised, ought not (unless expressly prohibited) to be held, by judicial construction, to be ultra vires.’
Lord Selborne LC said: The doctrine of ultra vires ‘ought to be reasonably, and not unreasonably, understood and applied, and that whatever may fairly be regarded as incidental to, or consequential upon, those things which the Legislature has authorized, ought not (unless expressly prohibited) to be held, by judicial construction, to be ultra vires.’ Lord Blackburn: ‘where there is an Act of Parliament creating a corporation for a particular purpose, and giving it powers for that particular purpose, what it does not expressly or impliedly authorize is to be taken to be prohibited . . those things which are incident to, and may reasonably and properly be done under the main purpose, though they may not be literally within it, would not be prohibited.’
Lord Watson said: ‘I cannot doubt that the principle by which this House in Ashbury tested the power of a joint stock company registered with limited liability under the Companies Act 1862, applies with equal force to the case of a company incorporated by Act of Parliament.’
Lord Blackburn said: ‘where there is an act of Parliament creating a corporation for a particular purpose, and giving it powers for that particular purpose, what it does not expressly or impliedly authorise is to be taken to be prohibited’ and ‘those things that are incident to, and may reasonably and properly be done under the main purpose, though they may not be literally within it, would not be prohibited’.
Lord Selborne LC said: ‘the question in this case is whether, under the Acts of Parliament to which your Lordships’ attention has been called, the Respondent company is authorized and empowered to let for hire to the Southend Company locomotive power and rolling stock. The company claims to be so entitled. The Master of the Rolls and Lord Justice Baggallay thought that it was not so authorized; but Lords Justices James and Bramwell thought otherwise, and they discharged the order for an injunction which the Master of the Rolls had made. The present appeal ta your Lordships is from that decision.
Lord Blackburn explained the position as follows: ‘… where there is an Act of Parliament creating a corporation for a particular purpose, in giving it powers for that particular purpose, what it does not expressly or impliedly authorize is to be taken to be prohibited. .’
Lord Blackburn, Lord Watson, Lord Selborne LC
[1880] UKHL 2, (1880) 5 AC 473, (1880) 5 App Cas 473
Bailii
England and Wales
Citing:
Cited – Ashbury Railway Carriage and Iron Co v Riche HL 1875
A company created under the Act is not created a corporation with inherent common law rights. The memorandum was the company’s charter which could not be departed from save so far as permitted by s12. A contract made by the directors upon a matter . .

Cited by:
Cited – In Re Northern Ireland Human Rights Commission Northern Ireland HL 20-Jun-2002
The coroner intended to hold an inquest into the deaths on the Omagh bombing. The Commission sought the right to be involved on the basis that human rights of interest to it might arise, and the coroner refused, saying that they had no standing to . .
Cited – Oakley Inc v Animal Ltd and others PatC 17-Feb-2005
A design for sunglasses was challenged for prior publication. However the law in England differed from that apparently imposed from Europe as to the existence of a 12 month period of grace before applying for registration.
Held: Instruments . .
Cited – Ward v Commissioner of Police for the Metropolis and others HL 5-May-2005
The claimant had been taken under warrant to a mental hospital, but was found not to be suffering any mental illness. She complained that the arrest was unlawful, since the police officer had not been accompanied by the people named on the warrant. . .
Cited – Attorney General v British Museum ChD 27-May-2005
The trustees brought a claim against the Attorney-General seeking clarification of their duties and powers to return objects which were part of the collection in law, but where a moral duty might exist to return it to a former owner. Here drawings . .
Cited – Roberts v Parole Board HL 7-Jul-2005
Balancing Rights of Prisoner and Society
The appellant had been convicted of the murder of three police officers in 1966. His tariff of thirty years had now long expired. He complained that material put before the Parole Board reviewing has case had not been disclosed to him.
Held: . .
Cited – Looe Fuels Ltd., Regina (on the Application of) v Looe Harbour Commissioners Admn 27-Apr-2007
The claimants sought judicial review of a decision of the defendant harbour masters themselves to install and sell from the harbour all fule for use by boats using it, saying that they had no power to operate such an enterprise.
Held: Whilst . .
Cited – Egan v Basildon Borough Council QBD 26-Sep-2011
The claimant sought a injunction to restrain the defendant council from executing enforcement notices regarding the use of the claimant’s land for residence by several traveller families. He argued that the council had failed to state its exact . .

Lists of cited by and citing cases may be incomplete.
Updated: 04 August 2021; Ref: scu.464871

F and C Alternative Investments (Holdings) Ltd v Barthelemy and Another (No 2): ChD 14 Jul 2011

The court was asked as to the fiduciary obligations owed by members of the board of a limited liability company.
Held: Sales J said that: ‘there is nothing in the Act to qualify the usual fiduciary obligations which an agent owes his principal in relation to the transactions which the agent enters into on the principal’s behalf’.
Sales J said: ‘Fiduciary obligations may arise in a wide range of business relationships, where a substantial degree of control over the property or affairs of one person is given to another person. Very often, of course, a contract may lie at the heart of such a business relationship, and then a question arises about the way in which fiduciary obligations may be imposed alongside the obligations spelled out in the contract. In making their contract, the parties will have bargained for a distribution of risk and for the main standards of conduct to be applied between them. In commercial contexts, care has to be taken in identifying any fiduciary obligations which may arise that the court does not distort the bargain made by the parties: see the observation by Lord Neuberger of Abbotsbury writing extrajudicially in ‘The Stuffing of Minerva’s Owl? Taxonomy and Taxidermy in Equity’ [2009] CLJ 537, 543 and Vercoe v Rutland Fund Management Ltd [2010] EWHC 424 (Ch) at [351]-[352]. The touchstone is to ask what obligations of a fiduciary character may reasonably be expected to apply in the particular context, where the contract between the parties will usually provide the major part of the contextual framework in which that question arises.’
Sales J
[2011] EWHC 1731 (Ch), [2012] 3 WLR 10, [2012] Ch 613
Bailii
Limited Liability Partnerships Act 2000 6(1)
England and Wales
Citing:
See Also – F and C Alternative Investments (Holdings) Ltd v Barthelemy and Another ChD 14-Jul-2011
The parties applied to the court for a conclusion to their action without the draft judgment being handed down and published, they having reached agreement.
Held: It was within the judge’s discretion and in this in the public interest for the . .

Cited by:
See Also – F and C Alternative Investments (Holdings) Ltd v Barthelemy and Another ChD 28-Oct-2011
. .
See Also – F and C Alternative Investments (Holdings) Ltd and Others v Barthelemy and Another CA 22-Jun-2012
The parties, former partners in a limited liability partnership providing investment funds management, had been involved in protracted and bitter litigation. The appellant now challenged the award of indemnity costs. . .
Cited – Hosking v Marathon Asset Management Llp ChD 5-Oct-2016
Loss of agent’s share for breach within LLP
The court was asked whether the principle that a fiduciary (in particular, an agent) who acts in breach of his fiduciary duties can lose his right to remuneration, is capable of applying to profit share of a partner in a partnership or a member of a . .
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: 04 August 2021; Ref: scu.441822

AAS v Benham: CA 1891

Benham was a partner in a ship-broking firm which hoped to act in negotiations between the Spanish and Portuguese Governments and ship builders. He had also been approached for advice by a shipbuilding company. He received information while acting for the firm suggesting that it could be reconstituted as a builder of warships and acquire a yard he discovered in Bilbao. He used that information to help write a prospectus for the ship-building company’s reconstruction, and made profits for himself as a result of the reconstruction.
Held: Mr Benham was not liable to account to his partners. It was no part of the firm’s business to advise on corporate reconstructions or to build ships. Even though Mr Benham had learnt of the information whilst on the firm’s business, he owed no fiduciary duty to his partners which prevented him from making use of the information as he did.
Lindley LJ said: ‘The answer, however, to this claim is short and conclusive. It was no part of the business of H. Clarkson and Co to promote or reconstruct companies, nor to advise them how to improve the management of them. All such matters are quite foreign to the business of H. Clarkson and Co . . He never was in fact acting for his firm in this matter, nor did his partners ever suppose he was, or treat him as so acting. Nor is it true in fact that Mr Benham or the company for which he was acting ever derived any benefit from his connection with the firm of H. Clarkson and Co. It is clear law that every partner must account to the firm for every benefit derived by him without the consent of his co-partners from any transaction concerning the partnership or from any use by him of the partnership property, name or business connection; but the facts of this case do not bring it within this principle. It is equally clear law that if a partner without the consent of his co-partners carries on business of the same nature as, and competing with that of the firm, he must account for and pay over to the firm all the profits made by him in that business, but the facts of this case do not bring it within that principle. Dean v. MacDowell (1878) 8 Ch. D. 345 shews that a partner is not bound to account to his co-partners for profits made by him in carrying on a separate business of his own, unless the case can be brought within one or other of the two principles to which I have alluded, even if he carries on such separate business contrary to one of the partnership articles. As regards the use by a partner of information obtained by him in the course of the transaction of partnership business, or by reason of his connection with the firm, the principle is that if he avails himself of it for any purpose which is within the scope of the partnership business, or of any competing business, the profits of which belong to the firm, he must account to the firm for any benefits which he may have derived from such information, but there is no principle or authority which entitles a firm to benefits derived by a partner from the use of information for purposes which are wholly without the scope of the firm’s business, nor does the language of Lord Justice Cotton in Dean v. MacDowell warrant any such notion. By ‘information which the partnership is entitled to’ is meant information which can be used for the purposes of the partnership. It is not the source of the information, but the use to which it is applied, which is important in such matters. To hold that a partner can never derive any personal benefit from information which he obtains as a partner would be manifestly absurd. Suppose a partner to become, in the course of carrying on his business, well acquainted with a particular branch of science or trade, and suppose him to write and publish a book on the subject, could the firm obtain the profits thereby obtained? Obviously not, unless, by publishing the book, he in fact competed with the firm in their own line of business.’
Bowen LJ said: ‘I think that when Lord Justice Cotton said that a partnership was entitled to the profits which arose out of information obtained by one of the partners as partner, he was speaking of information to which the partnership was entitled in the sense in which they are entitled to property. I think you can only read the sentence in which the expression occurs in that way. It is as follows: ‘Again, if he makes any profit by the use of any property of the partnership, including, I may say, information which the partnership is entitled to, there the profit is made out of the partnership property’. The language, like all Lord Justice Cotton’s language, is perfectly precise and neat. He is speaking of information which a partnership is entitled to in such a sense that it is information which is the property of the partnership – that is to say, information the use of which is valuable to them as a partnership, and to the use of which they have a vested interest. ‘ and ‘As regards the use by a partner of information obtained by him in the course of the transaction of partnership business, or by reason of his connection with the firm, the principle is that if he avails himself of it for any purpose which is within the scope of the partnership business, or of any competing business, the profits of which belong to the firm, he must account to the firm for any benefits which he may have derived from such information, but there is no principle or authority which entitles a firm to benefits derived by a partner from the use of information for purposes which are wholly without the scope of the firm’s business, nor does the language of Cotton LJ in Dean v MacDowell warrant any such notion. By ‘information which the partnership is entitled to’ is meant information which can be used for the purposes of the partnership. It is not the source of the information, but the use to which it is applied, which is important in such matters. To hold that a partner can never derive any personal benefit from information which he obtains as a partner would be manifestly absurd.’
Lindley LJ, Bowen LJ
[1891] 2 Ch 244
England and Wales
Cited by:
Cited – O’Donnell v Shanahan and Another CA 22-Jul-2009
The claimant appealed against dismissal of her petition for an order for the defendants to purchase her shares at a fair value, saying that they had acted unfairly toward her. Her co-directors had acquired, for another company of which they were . .

Lists of cited by and citing cases may be incomplete.
Updated: 04 August 2021; Ref: scu.374030

Ex parte Glossop; Re a Company (No 00370 or 1987): ChD 1988

The court heard a complaint as to the non payment of dividends. Harman J said: ‘It is, in my judgment, vital to remember that actions of boards of directors cannot simply be justified by invoking the incantation ‘a decision taken bona fide in the interests of the company’. The decision of the Privy Council in Howard Smith Ltd. v. Ampol Petroleum Ltd. [1974] A.C. 821 clearly establishes that a decision can be attacked in the courts and upset notwithstanding (a) that directors were not influenced by any ‘corrupt’ motive, by which I mean any motive of personal gain as by obtaining increased remuneration or retaining office, and (b) that directors honestly believed that their decision was in the best interests of the company as they saw its interests. Lord Wilberforce’s observations delivering the advice of the board at p. 831E acquits the directors of corrupt motive; at p. 832 he asserts the primacy of the board’s judgment; but he goes on, at p. 835, to assert that there remains a test, applicable to all exercises of power given for fiduciary purposes, that the power was not to be exercised for any ‘bye-motives’.
If it were to be proved that directors resolved to exercise their powers to recommend dividends to a general meeting, and thereby prevent the company in general meeting declaring any dividend greater than recommended, with intent to keep moneys in the company so as to build a larger company in the future and without regard to the right of members to have profits distributed so far as was commercially possible, I am of opinion that the directors’ decision would be open to challenge. This is an application, in a sense, of the principle affirmed in so many local government cases and usually called ‘the Wednesbury principle’: Associated Provincial Picture Houses Ltd. v. Wednesbury Corporation [1948] 1 K.B. 223. If it were proved that the board of directors had habitually so exercised its powers that could justify the making of an order for winding up on the just and equitable ground.’
Harman J
[1988] 1 WLR 1068
England and Wales
Citing:
Followed – Howard Smith Limited v Ampol Petroleum Limited PC 14-Feb-1974
(New South Wales) The court considered the use by directors of their fiduciary power of allotment of shares for a different purpose than that for which it was granted, and so as to dilute the voting power of the majority shareholding of issued . .

Cited by:
Cited – Kohli v Lit and Others ChD 13-Nov-2009
The claimant asserted that the other shareholders had acted in a manner unfairly prejudicial to her within the company.
Held: The claimant was allowed to bring in without prejudice correspondence to contradict evidence by the defendant which . .
Applied – Hunter v Senate Support Services Ltd and others ChD 2005
The court set aside a forfeiture of shares for non-payment of a call. The decisions of the directors to forfeit the shares and to transfer the forfeited shares to the group holding company were flawed, though not improperly motivated, because the . .

Lists of cited by and citing cases may be incomplete.
Updated: 04 August 2021; Ref: scu.378391

Cook v Deeks and Hinds: PC 23 Feb 1916

Company Directors not free to prefer Own Interests

Deeks and Hinds were the directors of a construction company. They negotiated a lucrative construction contract with the Canadian Pacific Railway. During the negotiations, they decided to enter into the contract personally, on their own behalves, and incorporated a new company, the Dominion Construction Company to carry out the work. The contract appeared to be taken over by this company, by whom the work was carried out and the profits made. A shareholder in the Toronto Construction Company brought a derivative action against the directors and the Dominion Construction Company. Because this was a derivative action, the Toronto Construction Company was also joined as a defendant.
Held: Deeks and Hinds were guilty of a breach of duty in the course they took to secure the contract, and were to be regarded as holding it for the benefit of the Toronto Construction Company: ‘while entrusted with the conduct of the affairs of the company they deliberately designed to exclude, and used their influence and position to exclude, the company whose interest it was their first duty to protect.’ This led to the legal conclusion that: ‘men who assume the complete control of a company’s business must remember that they are not at liberty to sacrifice the interests which they are bound to protect, and, while ostensibly acting for the company, divert in their own favour business which should properly belong to the company they represent.’
Lord Parker of Waddington, Viscount Haldane, Lord Sumner, Lord Buckmaster LC
[1916] 1 AC 554, [1916] UKPC 10, (1916) 27 DLR 1, [1916-17] All ER 285
Bailii
Canada
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 – Brown and Another v Bennett and Others CA 1-Dec-1998
Morritt LJ discussed the ‘corporate opportunitycases’: ‘Those are cases in which a beneficial commercial opportunity comes the company’s way and forms knowledge owned or possessed by the directors as agents for the company. Those directors then seek . .
Cited – FHR European Ventures Llp and Others v Cedar Capital Partners Llc SC 16-Jul-2014
Approprietary remedy against Fraudulent Agent
The Court was asked whether a bribe or secret commission received by an agent is held by the agent on trust for his principal, or whether the principal merely has a claim for equitable compensation in a sum equal to the value of the bribe or . .

Lists of cited by and citing cases may be incomplete.
Updated: 04 August 2021; Ref: scu.230283

Cayne and Another v Global Natural Resources Plc: ChD 12 Aug 1982

The court gave this example of the legitimate use of the directors’ powers to defeat a take-over: ‘If Company A and Company B are in business competition, and Company A acquires a large holding of shares in Company B with the object of running Company B down so as to lessen its competition, I would have thought that the directors of Company B might well come to the honest conclusion that it was contrary to the best interests of Company B to allow Company A to effect its purpose, and that in fact this would be so. If, then, the directors issue further shares in Company B in order to maintain their control of Company B for the purpose of defeating Company A’s plans and continuing Company B in competition with Company A. I cannot see why that should not be a perfectly proper exercise of the fiduciary powers of the directors of Company B. The object is not to retain control as such, but to prevent Company B from being reduced to impotence and beggary, and the only means available to the directors for achieving this purpose is to retain control. This is quite different from directors seeking to retain control because they think that they are better directors than their rivals would be . . .’
Megarry J
Unreported, 12 August 1982, [1984] 1 All ER 225
England and Wales
Citing:
Cited – In Re Smith and Fawcett Ltd CA 1942
Directors to act Without Collateral Purpose
The primary duty of a director imposed by the general law is that he should act in what he considers to be the best interests of the company, and not for any collateral purpose. That duty is a subjective one that depends on the directors exercising . .
Cited – Hogg v Cramphorn Limited ChD 1966
An honest belief that directors should seek to maintain their office for the good of the company did not prevent the motive for issuing additional shares to prevent a take-over from being an improper motive. The directors’ powers to issue shares . .
Cited – Teck Corporation Ltd v Millar 1972
The court discussed the validity of steps which might be taken by a company director to resist a take-over. Berger J said: ‘So how wide a latitude ought the directors to have? If a group is seeking to obtain control, must the directors ignore them? . .
Cited – Howard Smith Limited v Ampol Petroleum Limited PC 14-Feb-1974
(New South Wales) The court considered the use by directors of their fiduciary power of allotment of shares for a different purpose than that for which it was granted, and so as to dilute the voting power of the majority shareholding of issued . .
Cited – Mills v Mills 1938
(High Court of Australia) Where the main purpose of the directors’ resolution (in this case to increase the share base) is to benefit the company it matters not that it incidentally also benefits a director.
Dixon J pointed out the difficulties . .
Cited – Teck Corporation Ltd v Millar 1972
The court discussed the validity of steps which might be taken by a company director to resist a take-over. Berger J said: ‘So how wide a latitude ought the directors to have? If a group is seeking to obtain control, must the directors ignore them? . .

Cited by:
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 – Adidas-Salomon Ag v Drape and others ChD 7-Jun-2006
The claimants had sponsored tennis players to wear their logo. The respondents organised tennis tournaments whose intended rules would prevent the display of the claimant’s logos. The claimants said that the restriction interfered with their rights . .
Cited – NATS (Services) Ltd v Gatwick Airport Ltd and Another TCC 2-Oct-2014
NATS had tendered unsuccessfully for a contract to provide air traffic control services at Gatrwick airport, and challenged the award. GAL denied that the Regulations applied and now sought disapplication of the automatic suspension from the award . .

Lists of cited by and citing cases may be incomplete.
Updated: 04 August 2021; Ref: scu.194956

Ashbury Railway Carriage and Iron Co v Riche: HL 1875

A company created under the Act is not created a corporation with inherent common law rights. The memorandum was the company’s charter which could not be departed from save so far as permitted by s12. A contract made by the directors upon a matter not provided for in the memorandum of association is ultra vires and is not binding upon the company, and could not be made binding on the company even if assented to by a general meeting of the shareholders. It was, in its inception, void.
(1875) LR 7 App Cas 653
Companies Act 1862 12
England and Wales
Cited by:
Cited – Malone, Malone, Goldstein v Bircham and Co Nominees (No 2) Ltd, Stowell, Visortuning Ltd ChD 19-Dec-2003
Houseowners around a square had variously enfranchised their properties, but were now in dispute as to the management of the communal garden.
Held: Though the company was unable to recover the legal costs in the absence of an express power, . .
Cited – Attorney General and Another v Great Eastern Railway Company HL 27-May-1880
An Act of Parliament authorised a company to construct a railway. Two other companies combined and contracted with the first to supply rolling stock. An injunction was brought to try to restrain this, saying that such a contract was not explicitly . .

Lists of cited by and citing cases may be incomplete.
Updated: 04 August 2021; Ref: scu.191985

Teck Corporation Ltd v Millar: 1972

The court discussed the validity of steps which might be taken by a company director to resist a take-over. Berger J said: ‘So how wide a latitude ought the directors to have? If a group is seeking to obtain control, must the directors ignore them? Or are they entitled to consider the consequences of such a group taking over? In Savoy Corp Ltd v Development Underwriting Ltd (1963) NSWR 138 at p.147 Jacobs J said: ‘It would seem to me to be unreal in the light of the structure of modern companies and of modern business life to take the view that directors should in no way concern themselves with the infiltration of the company by persons or groups which they bona fide consider not to be seeking the best interests of the company.’ My own view is that the directors ought to be allowed to consider who is seeking control and why. If they believe that there will be substantial damage their powers to defeat those seeking a majority will not necessarily be categorised as improper.’
Berger J
[1972] 33 DLR (3d) 288, (1972) 33 DLR 288, [1973] 2 WWR 385
Canada
Citing:
Applied – Savoy Corp Ltd v Development Underwriting Ltd 1963
(Australia) The court discussed the extent of the director’s powers to arrange the company to prevent a take over: ‘It would seem to me to be unreal in the light of the structure of modern companies and of modern business life to take the view that . .

Cited by:
Cited – Cayne and Another v Global Natural Resources Plc ChD 12-Aug-1982
The court gave this example of the legitimate use of the directors’ powers to defeat a take-over: ‘If Company A and Company B are in business competition, and Company A acquires a large holding of shares in Company B with the object of running . .
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 . .
Approved – Howard Smith Limited v Ampol Petroleum Limited PC 14-Feb-1974
(New South Wales) The court considered the use by directors of their fiduciary power of allotment of shares for a different purpose than that for which it was granted, and so as to dilute the voting power of the majority shareholding of issued . .
Cited – Cayne and Another v Global Natural Resources Plc ChD 12-Aug-1982
The court gave this example of the legitimate use of the directors’ powers to defeat a take-over: ‘If Company A and Company B are in business competition, and Company A acquires a large holding of shares in Company B with the object of running . .
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 . .

Lists of cited by and citing cases may be incomplete.
Updated: 04 August 2021; Ref: scu.194958

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 prevent such a takeover. It was asserted that the agreement constituted dishonest assistance by the defendant in entering into an agreement in excess of the board’s powers.
Held: There was a triable issue that the put option created was in excess of the power of the board. However, the agreement was ‘motivated not by a desire to advance or protect the commercial interests of Criterion but from a desire contingently to cripple those interests so as to deter an unwanted predator. ‘ and so was unenforceable.
The Hon Mr Justice Hart
[2002] EWHC 496 (Ch)
Bailii
Limited Partnership Act 1907
England and Wales
Citing:
Appealed to – 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 – Savoy Corp Ltd v Development Underwriting Ltd 1963
(Australia) The court discussed the extent of the director’s powers to arrange the company to prevent a take over: ‘It would seem to me to be unreal in the light of the structure of modern companies and of modern business life to take the view that . .
Cited – Mills v Mills 1938
(High Court of Australia) Where the main purpose of the directors’ resolution (in this case to increase the share base) is to benefit the company it matters not that it incidentally also benefits a director.
Dixon J pointed out the difficulties . .
Cited – Howard Smith Limited v Ampol Petroleum Limited PC 14-Feb-1974
(New South Wales) The court considered the use by directors of their fiduciary power of allotment of shares for a different purpose than that for which it was granted, and so as to dilute the voting power of the majority shareholding of issued . .
Cited – Teck Corporation Ltd v Millar 1972
The court discussed the validity of steps which might be taken by a company director to resist a take-over. Berger J said: ‘So how wide a latitude ought the directors to have? If a group is seeking to obtain control, must the directors ignore them? . .
Cited – 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 . .
Cited – Rolled Steel Products (Holdings) Ltd v British Steel Corporation and Others CA 1986
The plaintiff company had guaranteed borrowings, using powers within the memorandum of association, but for purposes which were held to be improper, because they were not in the interests of the plaintiff company itself. One issue was whether the . .
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 – Bank of Credit and Commerce International (Overseas) Ltd and Another v Akindele ChD 1999
Chief Akindele agreed in 1985 with ICIC Overseas to invest US$10m in the purchase of 250,000 shares of BCCI Holdings, and to hold the shares for two years. If he wanted to sell the shares after the expiry of two years and up to five years from the . .
Cited – In re Montagu’s Settlement Trusts 1987
In the context of knowing receipt, a categorisation of knowledge is used to determine whether a person is bound by notice.
Sir Robert Megarry V-C said: ‘The cold calculus of constructive and imputed notice does not seem to me to be an . .
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 by:
Appeal from – 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 . .
Appealed to – 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 . .

Lists of cited by and citing cases may be incomplete.
Updated: 04 August 2021; Ref: scu.170060

Bruce Peskin; Kevin Milner v John Anderson and Others: CA 14 Dec 2000

The Royal Automobile Club (RAC) had been demutualised. The claimants were former members who sought damages from former directors because they had received no benefit. They had ceased to be members before the re-organisation and claimed they should have been informed of the plans. Their case had been struck out as disclosing no reasonable prospect of success. They appealed.
Held: The company was a company limited by guarantee. The governing instruments were altered with the permission of the court to allow distribution of assets to members on dissolution. The appeal failed. There was indeed no chance of success. The claim was a ‘flight of fancy’. The club might always be allowed to amend its constitution, and could expend money for this purpose.
Lord Justice Simon Brown Lord Justice Mummery And Lord Justice Latham
[2000] EWCA Civ 326, [2001] 1 BCLC 372
Bailii
Companies Act 1985 485, Companies Act 1989 108
England and Wales
Citing:
Cited – Re RAC Motoring Services Ltd ChD 8-Jul-1998
The court approved a scheme of arrangement allowing the RAC to sell off its roadside car resue service and to amend its constitution to allow distribution of the assets to members of the company. The effect of the scheme was that the members ceased . .
Appeal from – Peskin, Milner v John Anderson and Others ChD 7-Dec-1999
The claimants sought damages for the failure of the defendants, former directors of the RAC, to warn them of the impending re-organisation and demutualisation of the RAC. By resigning in ignorance they had lost the chance to participate in the . .
Cited – In The Matter of RAC Holdings Ltd ChD 8-Dec-2000
The nature of the membership of the RAC was that it ceased upon death, and that therefore the deceased estate had no interest in the proceeds of a later sale of the company. The share was a personal asset, akin to the membership of many other clubs. . .
Cited – Percival v Wright 1902
The directors of a company owe their duty to the company as a whole, and are not trustees for individual shareholders or owe them a fiduciary duty merely by virtue of their offices. They may purchase their shares without disclosing pending . .
Cited – Stein v Blake and others CA 13-Oct-1997
The defendants challenged leave to appeal given to the plaintiff against dismissal of his claim following the Prudential Assurance case.
Held: The issue was whether the plaintiff can recover the loss which he has allegedly sustained by reason . .
Cited – Allen v Hyatt 1914
The court considered the duties of directors toward shareholders in circumstances of them making representations to secure options to purchase shares of shareholders and undertaking to sell shares of shareholders in agency capacity. . .
Cited – Howard Smith Limited v Ampol Petroleum Limited PC 14-Feb-1974
(New South Wales) The court considered the use by directors of their fiduciary power of allotment of shares for a different purpose than that for which it was granted, and so as to dilute the voting power of the majority shareholding of issued . .
Cited – Re a Company 1987
. .
Cited – Re Chez Nico 1992
The court considered the liability of directors to a company’s shareholders where a fiduciary duty to be open was broken. . .

Cited by:
Cited – Oldham and others v Georgina Kyrris and Another CA 4-Nov-2003
The claimant sought to bring a claim against the administrators of a partnership alleging a duty of care to creditors.
Held: Such an administrator owed no greater duty to creditors than would a director. That duty was no different whether the . .

Lists of cited by and citing cases may be incomplete.
Updated: 04 August 2021; Ref: scu.147359

DHN Food Distributors Ltd v Tower Hamlets London Borough Council: CA 1976

The business was owned by DHN and the land upon which the business was operated was owned by a wholly owned subsidiary, Bronze. The Council acquired land owned by Bronze on which DHN operated its cash and carry warehouse. The Council submitted that while Bronze was entitled to compensation for loss of market value, DHN was not entitled to disturbance loss because it did not have any interest in the land, either legal or equitable. DHN was a licensee only. Section 20 of the Compulsory Purchase Act 1965 provided that if a person had no greater interest than a tenant from year to year in the land, then that person was only entitled to compensation for that lesser interest.
Held: The Court combined the interests of a parent and its subsidiary for the assessment of compensation following a compulsory acquisition.
Lord Denning MR observed: ‘Seeing that a licensee can be turned out on short notice, the compensation payable to DHN would be negligible.’
Lord Denning further observed that where a parent company owns all the shares of the subsidiaries, it can control their every movement. The subsidiaries are bound ‘hand and foot’ to the parent company and must do what the parent company says. He continued: ‘So here. This group is virtually the same as a partnership in which all the three companies are partners. They should not be treated separately so as to be defeated on a technical point. They should not be deprived of the compensation which should justly be payable for disturbance. The three companies should, for present purposes, be treated as one and the parent company, DHN, should be treated as that one.’
Lord Justice Goff upheld the appeal on the basis that DHN had an equitable interest in the land under a resulting trust. For his Lordship, the case was one which required the realities of the situation to be looked at to pierce the corporate veil.
Lord Justice Shaw, held that DHN and Bronze had an identity and community of interest.
Lord Denning MR, Lord Justice Goff, Lord Justice Shaw
[1976] 1 WLR 852, [1976] 3 All ER 462
England and Wales
Cited by:
Cited – R and B Customs Brokers Co Ltd v United Dominions Trust Ltd CA 1988
There was an issue whether or not the purchase by the plaintiff of a second-hand car was made ‘in the course of a business’ so as to preclude the plaintiff from relying upon the provisions of the 1977 Act.
Held: Speaking of Lord Keith’s . .
Cited – Alec Lobb (Garages) Ltd v Total Oil Ltd CA 1985
The court was asked whether the terms of a lease and lease back amounted to an unconscionable bargain and was unenforceable.
Held: The court affirmed the decision at first instance, but emphasised the need for unconscientious behaviour rather . .

Lists of cited by and citing cases may be incomplete.
Updated: 01 August 2021; Ref: scu.652989

TMO Renewables Ltd v Yeo and Others: ChD 20 Jul 2021

Allegation that the Director Defendants gerrymandered a vote at an extraordinary general meeting of TMO with a view to defeating resolutions aimed at changing control of the TMO board of directors (the ‘Board’) presented by a major shareholder,
Mrs Justice Joanna Smith DBE
[2021] EWHC 2033 (Ch)
Bailii
England and Wales

Updated: 01 August 2021; Ref: scu.666363

The North-West Transportation Company and James Hughes Beatty v Henry Beatty and Others: PC 21 Jul 1887

(Canada)
[1887] UKPC 39, (1887) 12 App Cas 589
Bailii
Canada
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: 30 July 2021; Ref: scu.418002

Simetra Global Assets Ltd and Another v Ikon Finance Ltd and Others: ComC 9 Oct 2018

False
[2018] EWHC 2624 (Comm), [2019] WLR(D) 475
Bailii, WLRD
England and Wales
Cited by:
Appeal from – Simetra Global Assets Ltd and Another v Ikon Finance Ltd and Others CA 9-Aug-2019
The claimant alleged that the various defendants had been involved in dishonest assistance in the running of an investment ponzi scheme leading to substantial losses.
Held: The Court considered the considerations for an appellate court asked . .

Lists of cited by and citing cases may be incomplete.
Updated: 29 July 2021; Ref: scu.625946

National Bank of Greece and Athens v Metliss: HL 1957

The National Bank of Greece had been created under the law of Greece. By a Greek decree, the bank was dissolved and, by the same decree, amalgamated with another bank into a new banking corporation under the name of ‘National Bank of Greece and Athens’. The Greek decree provided that the new bank was the ‘universal successor’ to the rights and obligations of the former banks.
Held: For the purposes of determining who was the nominated guarantor of certain bonds, the question was not one of contract (which was governed by English law) but one as to the status of the new bank. The House rejected the contention that ‘status’ was ‘confined to the existence, powers and dissolution of the new corporation’. It held that the question of the transfer of liabilities from the old bank to the new was a matter of, or pertaining to, the new bank’s ‘status’.
Held: Since English law looks to the law of incorporation for matters of status, and because Greek law provided that the new bank was the universal successor to the old bank, the new bank could be sued for the dissolved National Bank of Greece’s obligations as guarantor of certain bonds, although the question of whether the bonds were enforceable against the new bank was governed by English law.
Viscount Simonds, Lord Tucker, Lord Keith, Lord Morton
[1958] AC 509, [1957] 2 QB 33, [1957] 3 All ER 608
England and Wales
Citing:
Cited – New Zealand Loan and Mercantile Agency Company Limited v Christina Morrison PC 15-Dec-1897
(Victoria) . .

Cited by:
Cited – Global Distressed Alpha Fund 1 Ltd Partnership v Pt Bakrie Investindo ComC 17-Feb-2011
Action on an instrument of guarantee.
Held: judgment for the Claimant in respect of the principal sum of US$2m. and such interest payments as were due. . .
Cited – Goldman Sachs International v Novo Banco SA SC 4-Jul-2018
A banking facility was provided under a contract applying English law and jurisdiction. The parties now disputed whether on an assignment the dispute was to be resolved under Portuguese law.
Held: Recognition in the United Kingdom of measures . .

Lists of cited by and citing cases may be incomplete.
Updated: 29 July 2021; Ref: scu.659390

BNY Corporate Trustee Services Ltd and Others v Neuberger: SC 9 May 2013

Potential Insolvency effect under guarantee

The various parties had entered into complex and substantial financial arrangements incorporating guarantees. The guarantees were conditional upon the guaranteed party being solvent. The parties disputed whether a party which would otherwise be insolvent could call in aid possible longer term claims.
Held: The appeal failed, but the result was upheld on a different reasoning. Section 123 should not be read to have substantially change the law, and therefore when considering projected cashflows, it was correct to include debts falling due from time to time in the forseeabe reasonable future as well as those already due. It was necessary however to avoid including sums which would be properly described as merely speculative. Each case must be looked at in its own particular context, having particular regard to the nature of the business. The relevant test was properly the ‘balance sheet test’. A party wishing to say that a sum should not be so properly included had the responsibility of establishing that.
Lord Hope, Deputy President, Lord Walker, Lord Mance, Lord Sumption, Lord Carnwath
[2013] UKSC 28, [2013] BCC 397, [2013] 1 WLR 1408, [2013] 3 All ER 271, [2013] 1 BCLC 613, [2013] Bus LR 715, [2013] 2 All ER (Comm) 531, UKSC 2011/0086
Bailii, Bailii Summary, SC Summary, SC
Insolvency Act 1986 123
England and Wales
Citing:
At First Instance – BNY Corporate Trustee Services Ltd v Eurosail-UK 2007-3BL Plc and Others ChD 30-Jul-2010
The parties disputed whether the respondent was in law insolvent at the time it entered into financial transactions with it.
Held: The Court rejected the Noteholders’ submission that Eurosail was plainly insolvent for the purposes of section . .
Appeal from – BNY Corporate Trustee Services Ltd v Eurosail-UK 2007-3BL Plc and Others CA 7-Mar-2011
The court was asked questions to interpret the terms of interest-bearing notes, which were issued by Eurosail-UK 2007-3BL PLC, a special purpose vehicle formed to hold income-producing assets, consisting of mortgage loans, to be used to meet the . .
Cited – Cornhill Insurance plc v Improvement Services Ltd 1986
Held: Where a company was under an undisputed obligation to pay a specific sum and failed to do so, it could be inferred that it was unable to do so; that accordingly, the defendants could properly swear to their belief in the plaintiff company’s . .
Cited – In Re European Life Assurance Society 1869
Sir William James V-C dismissed a petition for the winding up of a company which had issued large numbers of life policies and annuity contracts, and appeared to be in financial difficulties. He rejected the basis of the ‘just and equitable’ ground . .
Cited – In Re Capital Annuities Ltd ChD 1979
Slade J said: ‘From 1907 onwards, therefore, one species of ‘inability to pay its debts’ specifically recognised by the legislature as a ground for the making of a winding up order in respect of any company incorporated under the Companies Acts was . .
Cited – In re a Company (Bond Jewellers) ChD 21-Dec-1983
A tenant company had a propensity for postponing payment of its debts until threatened with litigation. Nourse J felt unable to make an order under section 223(d), and considered, but ultimately did not make an order, on the ‘just and equitable’ . .
Cited – Byblos Bank SAL v Al-Khudhairy CA 1987
The parties disputed the validity of the appointment of a receiver. The ostensible ground for appointment of the receiver was not made out, but the bank relied on a new ground, section 223(d) of the 1948 Act. Nicholls LJ observed: ‘Construing this . .
Cited – In re a Company (No 0012209 of 1991) ChD 1992
It is an abuse of the process of the court to make a statutory demand or present a winding-up petition based on a claim to which there is a triable defence. Where a statutory demand is made but disputed on reasonable grounds, the creditor may find . .
Approved – In re Cheyne Finance Plc (No 2) ChD 17-Oct-2007
The court was asked as to the treatment of the assets of the company in case of a future insolvency.
Held: Briggs J decided section 123(1)(e) required: ‘In my judgment, the effect of the alterations to the insolvency test made in 1985 and now . .
Cited – Rainy Sky Sa and Others v Kookmin Bank SC 2-Nov-2011
Commercial Sense Used to Interpret Contract
The Court was asked as to the role of commercial good sense in the construction of a term in a contract which was open to alternative interpretations.
Held: The appeal succeeded. In such a case the court should adopt the more, rather than the . .

Lists of cited by and citing cases may be incomplete.
Updated: 28 July 2021; Ref: scu.503498

It’s A Wrap (UK) Ltd v Gula and Another: CA 11 May 2006

The company was said to have paid dividends unlawfully, in that the directors who were the shareholders had paid themselves dividends knowing that the company had not earned enough to pay them.
Held: Where shareholders had knowledge of the circumstances making a distribution unlawful, they could be required to repay the sums received.
Chadwick LJ, Sedley LJ, Arden LJ
[2006] EWCA Civ 544, Times 09-Jun-2006
Bailii
Companies Act 1985 277(1)
England and Wales
Citing:
Cited – Criminal Proceedings Against Kolpinghuis Nijmegen Bv ECJ 8-Oct-1987
Wherever the provisions of a directive appear, as far as their subject-matter is concerned, to be unconditional and sufficiently precise, those provisions may be relied upon by an individual against the state where that state fails to implement the . .
Cited – Revenue and Customs v IDT Card Services Ireland Ltd CA 27-Jan-2006
Under the Marleasing principle, or principle of conforming interpretation, the domestic court of a member state must interpret its national law so far as possible in the light of the wording and purpose of the Directive in question. However this . .
Appeal from – It’s A Wrap (UK) Ltd v Gula and Another ChD 16-Sep-2005
The defendant company directors were accused of having paid dividends to themselves when the company was in fact making a loss.
Held: A claim might lie, but the pleadings did not phrase it adequately, and an amendment would be improper. Though . .
Cited – Gingi v The Secretary of State for Work and Pensions CA 14-Nov-2001
It is possible that in some circumstances the same enactment may be construed differently according to whether it applies in circumstances covered by a directive. Arden LJ approved the following passage from Bennion: ‘It is legitimate for the . .
Cited – Marleasing SA v La Comercial Internacional de Alimentacion SA ECJ 13-Nov-1990
Sympathetic construction of national legislation
LMA OVIEDO sought a declaration that the contracts setting up Commercial International were void (a nullity) since they had been drawn up in order to defraud creditors. Commercial International relied on an EC . .
Cited – Trevor v Whitworth HL 1887
It is a fundamental rule of company law that that the Companies Acts by implication prohibit a company from returning capital to shareholders except in one of the ways expressly permitted by the Acts. A purchase of shares by a company which is not . .
Cited – Bairstow and Others v Queens Moat Houses plc CA 17-May-2001
The court considered the liability of directors for an unlawfully paid dividend.
Held: Robert Walker LJ: ‘The prospect of the former directors being able to obtain contribution from innocent recipients of unlawful dividends was debated . .
Cited – Swain v Puri CA 1996
The expression ‘reasonable grounds to believe’ meant actual knowledge or ‘shut-eye’ knowledge of the actual risk of injury to a child trespasser, or of primary facts that the court considers provides reasonable grounds for believing that the risk . .
Cited – Friedrich Binder Gmbh and C Kg v Hauptzollamt Bad Reichenhall ECJ 12-Jul-1989
ECJ A trader is not entitled under Article 5(2) of Regulation No 1697/79 to the waiver of the post-clearance recovery of import duties if the error made by the customs authorities from which he benefited was due . .
Cited – Thorne v Silverleaf CA 1994
Peter Gibson LJ said: ‘In s.217(1)(b) knowledge that it is a crime is required.’ . .

Lists of cited by and citing cases may be incomplete.
Updated: 28 July 2021; Ref: scu.241647

Trevor v Whitworth: HL 1887

It is a fundamental rule of company law that that the Companies Acts by implication prohibit a company from returning capital to shareholders except in one of the ways expressly permitted by the Acts. A purchase of shares by a company which is not authorised by the Companies Acts is unlawful and ultra vires
Lord Watson explained that the law prohibits: ‘every transaction between a company and a shareholder, by means of which the money already paid to the company in respect of his shares is returned to him, unless the Court has sanctioned the transaction. Paid-up capital may be diminished or lost in the course of the company’s trading; that is a result which no legislation can prevent; but persons who deal with, and give credit to a limited company, naturally rely upon the fact that the company is trading with a certain amount of capital already paid, as well as upon the responsibility of its members for the capital remaining at call; and they are entitled to assume that no part of the capital which has been paid into the coffers of the company has been subsequently paid out, except in the legitimate course of its business.’
Lord Macnaghten said that ‘. . if shareholders think it worth while to spend money for the purpose of getting rid of a troublesome partner who is willing to sell, they may put their hands in their own pockets and buy him out, though they cannot draw on a fund in which others as well as themselves are interested’.
Lord Watson, Lord Macnaghten
(1887) 12 App Cas 409
England and Wales
Cited by:
Cited – It’s A Wrap (UK) Ltd v Gula and Another CA 11-May-2006
The company was said to have paid dividends unlawfully, in that the directors who were the shareholders had paid themselves dividends knowing that the company had not earned enough to pay them.
Held: Where shareholders had knowledge of the . .

Lists of cited by and citing cases may be incomplete.
Updated: 28 July 2021; Ref: scu.242627

The Edinburgh Young Women’s Christian Institute and Others, Petitioners,: SCS 24 Jun 1893

A number of persons combined to form an association for the carrying out of certain benevolent purposes. The funds necessary to start the association were raised by means of a bazaar and direct contributions from the public, and the annual expenses were met by public subscriptions.
Held that the Court had no power to authorise the association to amalgamate with another association having kindred objects in view.
[1893] SLR 30 – 784
Bailii
Scotland

Updated: 26 July 2021; Ref: scu.613294

Lee v Sheard: CA 1956

The negligence of a car driver resulted in an injury to the plaintiff who was one of two directors and shareholders of a limited company and did outside work of buying and selling linen goods for it. As a consequence of the accident the plaintiff was unable for a time to do his work for the company, its profits were lower than they would otherwise have been and he received andpound;1,500 less from it than he would otherwise have done.
Held: The awrd of andpound;1,500 for the reduction in his earnings through the shareholding. The company could not have claimed for the same loss.
Denning LJ
[1956] 1 QB 192
England and Wales
Cited by:
Cited – Johnson v Gore Wood and Co (A Firm) ChD 3-May-2002
The respondent firm acted on behalf of the claimant’s companies in land transactions. An option had been taken to purchase land, and he instructed the defendants to exercise it. The landowner claimed the notice to exercise the option was invalidly . .
Cited – Collins Stewart Ltd and Another v The Financial Times Ltd QBD 20-Oct-2004
The claimants sought damages for defamation. The claimed that the article had caused very substantial losses (andpound;230 million) to them by affecting their market capitalisation value. The defendant sought to strike out that part of the claim. . .
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: 25 July 2021; Ref: scu.180653

Calcutta Jute Mills Co Ltd v Nicholson: 1876

(Court of Exchequer) The residence of a company for tax purposes is decided by where the ‘central management and control’ is.
[1876] 1 TC 83
England and Wales
Cited by:
Adopted – De Beers Consolidated Mines Ltd v Howe, Surveyor of Taxes HL 1905
The appellant Company was registered in the Cape Colony and it’s business was mining for diamonds in mines which it possessed in South Africa, and selling the diamonds there under annual contracts to a syndicate for delivery there. The Head Office . .
Cited – Wood v Holden (Inspector of Taxes) ChD 8-Apr-2005
The parties had entered into complex share transactions for the sale of their trading business, and sought to avoid liability for capital gains tax.
Held: Gains on disposals between members of a non-resident group of companies were exempt. The . .

Lists of cited by and citing cases may be incomplete.
Updated: 25 July 2021; Ref: scu.224772

Law v Law: 1905

A person with a right to rescind a contract may be held to have affirmed the contract even if there are some material facts which he did not know at the time of the affirmation. However: ‘ . . there is a duty resting upon the purchaser who knows, and is aware that he knows, more about the partnership accounts than the vendor, to put the vendor on possession of all material facts with reference to the partnership assets, and not to conceal what he alone knows; and that, unless such information has been furnished, the sale is voidable and may be set aside.’
Cozens-Hardy LJ
[1905] 1 Ch 140
England and Wales
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 . .

Lists of cited by and citing cases may be incomplete.
Updated: 25 July 2021; Ref: scu.248043

Simms v Conlon and Another: ChD 31 Oct 2007

David Richards J
[2007] EWHC 3041 (Ch)
Bailii
England and Wales
Citing:
See Also – 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 . .

Lists of cited by and citing cases may be incomplete.
Updated: 25 July 2021; Ref: scu.341747

Scottish Co-operative Wholesale Society Ltd v Meyer: HL 1959

Valuation of Shares on Order for Purchase

The Co-operative Society had formed a 51 per cent-owned subsidiary to manufacture rayon at a time of strict post-war controls. The other shares were owned by two outside directors with skill and experience in the trade. When these directors declined to sell their shares to the society it began switching its business to a new department within its own organisation. The subsidiary’s business declined and its shares fell heavily in value. On the directors’ petition the Court of Session had ordered the society to buy the directors’ shares at ‘what would have been the value of the shares at the commencement of the proceedings had it not been for the oppressive conduct of which complaint was made’.
Held: The House dismissed the Society’s appeal. The grant of relief was in the judge’s discretion. Viscount Simonds, Lord Keith and Lord Denning all specifically approved a valuation which was both back-dated to the presentation of the petition and adjusted to compensate for the past oppression.
An oppressing shareholder was directed to purchase the shares of the oppressed shareholder: (Lord Denning) ‘One of the most useful orders mentioned in the section — which will enable the Court to do justice to the injured shareholders — is to order the oppressor to buy their shares at a fair price: and a fair price would be, I think, the value which the shares would have had at the date of the petition, if there had been no oppression. Once the oppressor has bought the shares, the company can survive. It can continue to operate. That is a matter for him. It is, no doubt, true that an order of this kind gives to the oppressed shareholders what is in effect money compensation for the injury done to them: but I see no objection to this. The section gives a large discretion to the Court and it is well exercised in making the oppressor make compensation to those who have suffered at his hands.’
Viscount Simonds, Lord Keith and Lord Denning
[1958] 3 All ER 66, [1959] 3 WLR 404, [1959] AC 324
Companies Act 1948 210
Scotland
Cited by:
Applied – Coleman Taymar Ltd and Others v Oakes and Another ChD 19-Jul-2001
A company director owed a fiduciary duty to his company, but that could not, of itself, prevent him making arrangements to set up in competition once his employment by the company came to an end, save only for acts during the period of his . .
Cited – Foskett v McKeown and Others HL 18-May-2000
A property developer using monies which he held on trust to carry out a development instead had mixed those monies with his own in his bank account, and subsequently used those mixed monies to pay premiums on a life assurance policy on his own life, . .
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: 25 July 2021; Ref: scu.181230

Countrywide Banking Corporation Limited v Brian Norman Dean As Liquidator of C B Sizzlers Limited: PC 24 Nov 1997

(New Zealand) The issue was whether a transaction by a company should be set aside, following its liquidation, on the basis that it was a preference within the New Zealand Companies Act 1955. The applicant applied to the High Court of New Zealand for an order that the transaction should not be set aside on the ground that it had taken place in the ordinary course of business.
Held: The Board declined to formulate a universally applicable test for what was in the ordinary course of business for the purposes of a provision of the New Zealand Companies Act concerned with the avoidance of corporate transactions having a preferential effect, stressing the diversity of contexts in which the courts had given consideration to that expression. Gault J nevertheless stressed the need for ‘examination of the actual transaction in its factual setting’, an examination which is ‘undertaken objectively by reference to the standard of the ordinary course of business’. The judgment also noted that ‘there may be circumstances where a transaction, exceptional to a particular trader, will nonetheless be in the ordinary course of business’ and that ‘[t]he particular circumstances will require assessment in each case’
Gault J
[1997] UKPC 57, [1998] BCC 105, [1998] AC 338, [1998] 2 WLR 441, [1998] BPIR 676, [1998] 1 BCLC 306
Bailii
England and Wales

Updated: 25 July 2021; Ref: scu.159269

Taylor Goodchild Ltd v Taylor and Another: CA 23 Jul 2021

A shareholder obtains an order in unfair prejudice proceedings under which he is able to buy someone else’s shares. The company subsequently seeks relief against the person who was required to sell his shares in respect of matters which were relied on in support of the unfair prejudice petition. Can the defendant to that claim have it struck out as an abuse of process? On the facts of this case, Snowden J concluded that he should accede to a strike out application. That decision is now, however, challenged in this Court.
Lord Justice Newey
[2021] EWCA Civ 1135
Bailii
England and Wales

Updated: 25 July 2021; Ref: scu.666163

In re Mumtaz Properties Ltd; Wetton v Ahmed: CA 24 May 2011

Former directors appealed against finding as to their personal liability for directors’ and other loans.
Arden LJ discussed the task of a judge in fact finding: ‘By the end of the judgment, it is clear that what has impressed the judge most in his task of fact-finding was the absence, rather than the presence, of contemporary documentation or other independent oral evidence to confirm the oral evidence of the respondents to the proceedings.
There are many situations in which the court is asked to assess the credibility of witnesses from their oral evidence, that is to say, to weigh up their evidence to see whether it is reliable. Witness choice is an essential part of the function of a trial judge and he or she has to decide whose evidence, and how much evidence, to accept. This task is not to be carried out merely by reference to the impression that a witness made giving evidence in the witness box. It is not solely a matter of body language or the tone of voice or other factors that might generally be called the ‘demeanour’ of a witness. The judge should consider what other independent evidence would be available to support the witness. Such evidence would generally be documentary but it could be other oral evidence, for example, if the issue was whether a defendant was an employee, the judge would naturally consider whether there were any PAYE records or evidence, such as evidence in texts or e-mails, in which the defendant seeks or is given instructions as to how he should carry out work. This may be particularly important in cases where the witness is from a culture or way of life with which the judge may not be familiar. These situations can present particular dangers and difficulties to a judge.
In my judgment, contemporaneous written documentation is of the very greatest importance in assessing credibility. Moreover, it can be significant not only where it is present and the oral evidence can then be checked against it. It can also be significant if written documentation is absent. For instance, if the judge is satisfied that certain contemporaneous documentation is likely to have existed were the oral evidence correct, and that the party adducing oral evidence is responsible for its non-production, then the documentation may be conspicuous by its absence and the judge may be able to draw inferences from its absence.’
Arden, Aikens, Patten LJJ
[2011] EWCA Civ 610
Bailii
England and Wales
Citing:
Cited – Onassis and Calogeropoulos v Vergottis HL 1968
Lord Pearce (dissenting) discussed the assessment of a witness’ oral evidence: ‘Credibility involves wider problems than mere demeanour which is mostly concerned with whether the witness appears to be telling the truth as he now believes it to be. . .

Cited by:
Cited – Piper v Hales QBD 18-Jan-2013
The claimant owned a very vauable vintage Porsche racing car. It was hired to the defendant. The car suffered severe mechanical damage whilst being driven, and the insurers declined liability.
Held: The Defendant as hirer was under an . .
Cited – Hijazi v Yaxley-Lennon (Orse Tommy Robinson) QBD 22-Jul-2021
No Valid Evidence to Support Serious Accusations
The claimant was filmed being assaulted in the school playground. The film was published on the internet, and the defendant right wing politician re-published it, but falsely said that the claimant had himself been violent.
Held: The . .

Lists of cited by and citing cases may be incomplete.
Updated: 23 July 2021; Ref: scu.440119

Neslen and Others v Evans: QBD 8 Jul 2021

The Claimants brought Part 8 claims against the Defendant, as a representative of the Labour Party, seeking declarations that in carrying out investigations into allegations of, or related to, anti-Semitism against the Claimants, the Party’s conduct has been unfair and in breach of contract.
The Honourable Mr Justice Butcher
[2021] EWHC 1909 (QB)
Bailii
England and Wales

Updated: 22 July 2021; Ref: scu.666047

Blair v Bromley: ChD 18 Nov 1846

Two solicitors having entered into partnership, each of them continued to attend to the business of his former clients, but on the partnership account; and one of the partners having proposed to invest a sum of money belonging to a client in a certain mortgage, the proposal was agreed to by the client, and the money was paid to the joint account of the partnership, at their bankers, for the purpose of the investment. The negotiations for the mortgage were broken off by the proposed mortgagor, but the partner by whom the proposal had been made to the client untruly represented to the client that the mortgage had been effected, and thenceforward continued to pay the interest as if it had actually been done. Although the banking account was kept in the name of the firm, the monies standing to the account belonged exclusively to the partner who committed the fraud ; he alone attended to and had the control of the account, and the fraud was unknown to the other partner. Five years after the receipt of the money from the client the partnership was dissolved ; and ten years after the dissolution of the partnership, the partner who had committed the fraud became bankrupt, and the client, who, from the time of the dissolution until the bankruptcy, had continued to employ him as his solicitor, discovered the fraud. The client then filed his bill against the other partner to recover the money.
Held, that the defendant was originally liable to the Plaintiff for the money received by the firm ; that his original liability was continued, as well after as before the dissolution of the partnership, by the fraudulent representations of his former partner; and that in equity the limitation in bar of the claim did not begin to run in favour of the Defendant until the time when the client discovered the fraud.
That the fraud and misrepresentation of one of the partners entitled the client to relief in equity against the other, not only if the case was one in which the client might have recovered in an action at Law against such other partner, but also if the remedy at law against the other partner was barred by the lapse of time.
Sir James Wigram VC
[1846] EngR 1082, (1846) 5 Hare 542, (1846) 67 ER 1026
Commonlii
England and Wales
Cited by:
Appeal from – Blair v Bromley CA 3-Jul-1847
Held; . .
Cited – Dixon Coles and Gill (A Former Firm) v Baines, Bishop of Leeds and Another CA 20-Jul-2021
Innocent co-trustee not liable for Default
Proceedings were brought by former clients against their former solicitors. One of the partners stole money held in the firm’s client account on behalf of the claimants. The other two partners were entirely innocent of, and in no way implicated in, . .

Lists of cited by and citing cases may be incomplete.
Updated: 22 July 2021; Ref: scu.302977

Blair v Bromley: CA 3 Jul 1847

Held;
Cottenham LC
[1847] EngR 684, (1847) 2 Ph 354, (1847) 41 ER 979
Commonlii
England and Wales
Citing:
Appeal from – Blair v Bromley ChD 18-Nov-1846
Two solicitors having entered into partnership, each of them continued to attend to the business of his former clients, but on the partnership account; and one of the partners having proposed to invest a sum of money belonging to a client in a . .

Cited by:
Cited – Dixon Coles and Gill (A Former Firm) v Baines, Bishop of Leeds and Another CA 20-Jul-2021
Innocent co-trustee not liable for Default
Proceedings were brought by former clients against their former solicitors. One of the partners stole money held in the firm’s client account on behalf of the claimants. The other two partners were entirely innocent of, and in no way implicated in, . .

Lists of cited by and citing cases may be incomplete.
Updated: 22 July 2021; Ref: scu.301300

Vercoe and Others v Rutland Fund Management Ltd and Others: ChD 5 Mar 2010

Claim in respect of a management buy-in transaction in relation to a company which carried on business as a pawnbroker.
Sales J
[2010] EWHC 424 (Ch), [2010] WLR (D) 68, [2010] Bus LR D141
Bailii, WLRD
England and Wales
Cited by:
Cited – Morris-Garner and Another v One Step (Support) Ltd SC 18-Apr-2018
The Court was asked in what circumstances can damages for breach of contract be assessed by reference to the sum that the claimant could hypothetically have received in return for releasing the defendant from the obligation which he failed to . .

These lists may be incomplete.
Updated: 17 July 2021; Ref: scu.402543

Housemaker Services Ltd and Another v Cole and Another: ChD 26 Apr 2017

Appeal from limitation direction, and third party costs order: ‘in order to make it just to order a director to pay the costs of unsuccessful company litigation, it is necessary to show something more. This might be, for example, that the claim is not made in good faith, or for the benefit of the company, or it might be that the claim has been improperly conducted by the director.’
Paul Matthews HHJ
[2017] EWHC 924 (Ch)
Bailii
Companies Act 2006 1028
England and Wales
Citing:
See Also – Housemaker Services Ltd v Cole and Another ChD 7-Apr-2017
Part 8 Claim seeking a direction from the Court that the period of 608 days from November 2014 to July 2016, during which it was struck off the register and thus ceased to exist, should be discounted for the purposes of limitation in relation to the . .

Cited by:
Cited – Goknur v Aytacli CA 13-Jul-2021
Third Party Costs – Director of Insolvent Company
(Organic Village) The Court considered the circumstances Limited in which a director and shareholder of an insolvent company may be personally liable for some or all of that company’s costs liabilities incurred in unsuccessful litigation, pursuant . .

These lists may be incomplete.
Updated: 16 July 2021; Ref: scu.583680

Arklow Investments Ltd v Maclean: 19 May 2000

(High Court of New Zealand) The court considered the potential personal responsibility of a directors for costs incurred by the company in litigation: ‘Where a person is a major shareholder and dominant director in a company which brings proceedings, that alone will not justify a third party costs order. Something additional is normally warranted as a matter of discretion. The critical element will often be a fresh injection of capital for the known purpose of funding litigation . . the overall rationale [is] that it is wrong to allow someone to fund litigation in the hope of gaining a benefit without a corresponding risk that that person will share in the costs of the proceedings if they ultimately fail.’
Fisher J
(Unreported) 19 May 2000
England and Wales
Citing:
See Also – Arklow Investments Ltd and Another v Maclean and Others PC 1-Dec-1999
PC (New Zealand) Land was offered for sale. A potential buyer, the appellant was approached by a merchant bank with a proposal for finance. When he sought finance elsewhere, a company associated with the bank . .

Cited by:
Cited – BE Studios Ltd v Smith and Williamson Ltd ChD 2-Dec-2005
The claimant company had failed in its action. The court was asked to make a costs order personally against the principal director of the claimant who had controlled the litigation and funded it. He responded that no impropriety had been shown on . .
Cited – Media Cat Ltd v Adams and Others PCC 18-Apr-2011
The claimants had begun copyright infringement cases. Having been refused a request to be allowed to withdraw the cases as an abuse, their solicitors now faced an application for a wasted costs order.
Held: The court only has jurisdiction to . .
Cited – Goknur v Aytacli CA 13-Jul-2021
Third Party Costs – Director of Insolvent Company
(Organic Village) The Court considered the circumstances Limited in which a director and shareholder of an insolvent company may be personally liable for some or all of that company’s costs liabilities incurred in unsuccessful litigation, pursuant . .

These lists may be incomplete.
Updated: 16 July 2021; Ref: scu.237246

Housemaker Services Ltd v Cole and Another: ChD 7 Apr 2017

Part 8 Claim seeking a direction from the Court that the period of 608 days from November 2014 to July 2016, during which it was struck off the register and thus ceased to exist, should be discounted for the purposes of limitation in relation to the Claimant’s claim against the Defendants in respect of unpaid invoices delivered for building services.
Matthews HHJ
[2017] EWHC 753 (Ch)
Bailii
Companies Act 2006 1028(3)
England and Wales
Cited by:
See Also – Housemaker Services Ltd and Another v Cole and Another ChD 26-Apr-2017
Appeal from limitation direction, and third party costs order: ‘in order to make it just to order a director to pay the costs of unsuccessful company litigation, it is necessary to show something more. This might be, for example, that the claim is . .

These lists may be incomplete.
Updated: 16 July 2021; Ref: scu.581734

Brophy v Attorney-General of Manitoba: PC 1895

The purpose of granting to Roman Catholics the right to funding for separate schools and the right to elect trustees to manage their own schools was to enable the teachings of the Roman Catholic faith to be transmitted to the children of Roman Catholics while educating them in secular subjects: ”It was not doubted that the object of the 1st sub-section of sec. 22 was to afford protection to denominational schools.”
Lord Herschell LC
[1895] AC 202
British North America Act, 1867
Canada
Cited by:
Cited – Regina v Z (Attorney General for Northern Ireland’s Reference) HL 19-May-2005
The defendants appealed their convictions for being members of proscribed organisations. They were members of the ‘Real IRA’, but only the IRA was actually proscribed.
Held: The appeals failed. In construing an Act of Parliament it may be of . .

These lists may be incomplete.
Updated: 15 July 2021; Ref: scu.225198

Bratton Seymour Service Co Ltd v Oxborough: CA 1992

The company was set up to acquire and manage a property divided into flats which also included ‘amenity areas’ (tennis courts, swimming pool, gardens). It was argued that there should be implied into the articles of association an obligation on the part of each flat owner/member to contribute to the expenses of maintaining the amenity areas. The implication was said to be derived from the circumstances in which the property was acquired and the terms of the conveyance to the company.
Held: Such background facts were not admissible to construe the meaning of the articles. The court emphasised both the unusual nature of the contract between members of a company constituted by Articles of Association of the company and the very limited assistance which extrinsic evidence of surrounding circumstances can provide in construing the Articles. In construing the articles of association of the management company of a building divided into flats, background facts which would have been known to all the signatories were inadmissible because the articles should be regarded as addressed to anyone who read the register of companies, including persons who would have known nothing of the facts in question.
[1992] BCLC 693
England and Wales
Cited by:
Cited – Rose v Lynx Express Ltd. and Bridgepoint Capital (Nominees) Ltd CA 7-Apr-2004
In an request for pre-action discovery it was plainly wrong for the court to seek to decide in advance any element of the virtues of the case.
Held: The appeal should be allowed. The case was arguable and should be allowed to proceed.
Cited – Bermuda Cablevision Limited and others v Colica Trust Company Limited PC 6-Oct-1997
(Bermuda) An alternative remedy to winding up is available to a shareholder where oppressive conduct is alleged, though the main thrust is that the conduct is unlawful. . .
Cited – Chartbrook Ltd v Persimmon Homes Ltd and Others HL 1-Jul-2009
Mutual Knowledge admissible to construe contract
The parties had entered into a development contract in respect of a site in Wandsworth, under which balancing compensation was to be paid. They disagreed as to its calculation. Persimmon sought rectification to reflect the negotiations.
Held: . .
Cited – Attorney General of Belize and others v Belize Telecom Ltd and Another PC 18-Mar-2009
(Belize) A company had been formed to manage telecommunications in Belize. The parties disputed the interpretation of its articles. Shares had been sold, but the company was structured so as to leave a degree of control with the government. It was . .

These lists may be incomplete.
Updated: 15 July 2021; Ref: scu.196551

Trident International Limited v Barlow; Hughes and Goodman (the Joint Administrators of Hamley Plc and Jeffrey (Rogers) Imports Limited: CA 30 Jul 1999

A contractual possessory lien, coupled with a right to sell and use the proceeds to discharge the customer’s outstanding indebtedness was not a floating charge because the company did not purport to have any right to exercise any right to take possession as distinct from the right to detain possession
Henry LJ, Mummery LJ, Chadwick LJ
[1999] EWCA Civ 2061, [2000] BCC 602
Bailii
Insolvency Act 1986 11(3)(c), Companies Act 1985 395
England and Wales
Citing:
Appeal from – Trident International Limited v Barlow ChD 27-Feb-1998
. .
Cited – Great Eastern Railway Company v Lord’s Trustee HL 1909
The House was asked whether the appellant railway company had delivered the goods unconditionally to the goods owner so as to lose its lien for the price of coal carriage, or was there an agreement conferring ‘a right in equity to any personal . .

Cited by:
Cited – Online Catering Ltd v Acton and Another CA 10-Feb-2010
online_actonCA10
The claimant agreed for the defendant to repair its fleet of vehicles. The defendant, having fees outstanding, entered the claimants’ premises and removed vehicles saying falsely that they were to be repaired, and then refused to return them. The . .

These lists may be incomplete.
Updated: 15 July 2021; Ref: scu.146976

Clough Mill Ltd v Martin: CA 1984

The plaintiff had supplied yarn to a company H on terms that the goods were to remain its property until paid for in full, although H was granted the power to sell the goods or use them for the purpose of manufacturing products. The terms also provided that if any payment were overdue the plaintiff could recover or resell the goods and enter H’s premises for that purpose. When the defendant was appointed receiver of H the plaintiff informed him that it wished to repossess the unused yarn and asked to be allowed to collect it. The defendant refused on the grounds that the retention of title clause amounted to a charge to secure payment and was void for non-registration.
Held: Property in the yarn had not passed to H, which could not therefore have created a charge in favour of the plaintiff. Robert Goff LJ, and to a lesser extent Oliver LJ, assumed that the contract under which the yarn had been supplied was a contract for the sale of goods to which the Sale of Goods Act applied.
Sir John Donaldson MR, Oliver and Robert Goff LJJ
[1985] 1 WLR 111, (1984) 128 SJ 850, [1984] 3 All ER 962, (1985) 82 LS Gaz 116
England and Wales
Citing:
Appeal from – Clough Mill Ltd v Martin 1984
. .

Cited by:
Cited – PST Energy 7 Shipping Llc Product Shipping and Trading SA v OW Bunker Malta Ltd and Others CA 22-Oct-2015
The oil owners had contracted for its transport with OWBM aboard Res Cogitans under standard terms which would allow the captain to use the oil for navigation before transfer of the title in the oil. The court was now asked whether the agreement . .

These lists may be incomplete.
Updated: 14 July 2021; Ref: scu.617854

Phillips and others v Symes and others: ChD 16 Oct 2006

Peter Smith J
[2006] EWHC 2595 (Ch)
Bailii
England and Wales
Citing:
See Also – Phillips and Another v Robin James Symes and Robin Symes Ltd ChD 9-Jul-2001
English proceedings were issued to claim against a partnership. Simultaneously proceedings were issued in Greece, but the Greek proceedings were served on the London parties first. The plaintiffs in Greece asked the English court to issue a stay of . .
See Also – Phillips v Symes CA 2003
Courts should be reluctant to exclude altogether evidence merely because it is written. If the purpose of the order sought was to trace assets it would be wrong to permit cross-examination which was designed to show that there had been a contempt of . .
See Also – Phillips, Harland (Administrators of the Estate of Michailidis), Papadimitriou; Symes (A Bankrupt), Robin Symes Limited (In Administrative Receivership), Domercq etc ChD 30-Jul-2004
Under the Ciivil Procedure Rules, experts have acquired greater responsibilities to the court. Those responsibilities transcend their perceived obligations to the parties whom they give evidence. . .
See Also – Phillips, Harland (Suing As Administrators of the Estate of Christo Michailidis), Papadimitriou v Symes (A Bankrupt) Robin Symes Limited (In Administrative Receivership) Jean-Louis Domercq ChD 20-Oct-2004
Dr Zamar had given expert evidence in the principal proceedings. It was now said that that evidence had not been given in the proper way, and a remedy was now sought. . .
See Also – Phillips, Harland (Suing As Administrators of the Estate of Christo Michailidis), Papadimitriou v Symes (A Bankrupt) Robin Symes Limited (In Administrative Receivership) Jean-Louis Domercq etc ChD 20-Oct-2004
. .
See Also – Symes v Phillips and others CA 6-May-2005
. .
See Also – Symes v Phillips and others CA 19-May-2005
The applicant was in contempt of court. He successfully appealed a sentence of two years imprisonment, with the sentence being reduced to one year. Legally aided, he sought his costs from the claimant. The claimant replied that their part was only . .
See Also – Phillips, Harland (Suing As Administrators of the Estate of Christo Michailidis) v Symes (A Bankrupt), Nussberger, Galerie Nefer Ag, Geoff Rowley ChD 19-Aug-2005
The court allowed the appellant’s application to dispense with service of a claim form under the rule. The High Court became seised of the matter as at 19 January 2005. Further directions were given. . .
See Also – Phillips and Another v Symes and Others (No 6) CA 19-May-2006
Proceedings were issued in England for service on the defendant in Switzerland, but because of an error by the Swiss Court were not properly served. Proceedings were then issued in Sitzerland, and seisin was claimed for the Swiss Court. The claimant . .
See Also – Phillips and others v Symes and others ChD 12-Jul-2006
. .

Cited by:
See Also – Phillips and Another v Symes and others HL 23-Jan-2008
Various parties had sought relief in the English courts and in Switzerland after an alleged fraud. There had been a mistake in service of the proceedings in England. The high court had dispensed with service an backdated the effect of the order to . .

These lists may be incomplete.
Updated: 12 July 2021; Ref: scu.263679

Gluckstein v Barnes; Re Olympia Ltd, ex parte Gluckstein: HL 1900

Directors’ hidden profits disclosable

Promoters of a company had acquired a property intending its resale through the sale of shares in the company. In doing so the original directors made a substantial profit which they did not disclose (though it was discoverable). The company became insolvent and investors sought repayment of the hidden profit.
Held: The action succeeded. As promoters they were under a duty to make explicit declarations of the profits already made.
Lord Robertson said: ‘To my thinking, the central fact in the history is, that while the object of the syndicate was to make profit out of the resale, it was a essential part of the enterprise, as originally designed and as actually carried out, that the same individuals who sold as syndicate should buy as directors. This was provided by the third head of the agreement which set up te hsyndicate, and it has a far-reaching effect at all stages of the argument. Frst of all, it seems to to conclude the question whether these gentlemen were promoters when they bought the mortgages.’
Lord Macnaghten said that: ‘Everybody knows that sometimes half a truth is no better than a downright falsehood.’
Lord MacNaghten, Lord Robertson
[1900] AC 240, [1900] 69 LJ CH 385, [1900] 82 LT 393, [1900] 16 TLR 321, [1900] 7 Mans 321
England and Wales
Cited by:
Cited – HIH Casualty and General Insurance Limited and others v Chase Manhattan Bank and others HL 20-Feb-2003
The insurance company had paid claims on policies used to underwrite the production of TV films. The re-insurers resisted the claims against them by the insurers on the grounds of non-disclosure by the insured, or in the alternative damages for . .
Cited – Advanced Industrial Technology Corporation Ltd v Bond Street Jewellers Ltd CA 4-Jul-2006
The claimant left a valuable necklace with the defendant jewellers for sale. The jewellers fell into financial difficulties, and the director gave the necklace as security for a loan to the company. The jeweller failed to maintain payments on the . .
Cited – Stolzenberg and others v CIBC Mellon Trust Co Ltd and others CA 30-Jun-2004
The court considered the issue of the use of a strike out as a sanction for non-compliance with a court order.
Held: The approach of the court in a case considering relief for sanctions – exemplified by RC Residuals v Linton Fuel was bound to . .

These lists may be incomplete.
Updated: 12 July 2021; Ref: scu.219459

In re Cumana Ltd: CA 1986

The court considered the date at which shares are to be valued in a possible order for one set of shareholders to buy the shares of another.
Held: The choice was a matter of the judge’s discretion. Where a minority shareholder has a petition on foot and there is a general fall in the market, the court may in fairness to the claimant have the shares valued at an early date, especially if it strongly disapproves of the majority shareholder’s prejudicial conduct.
Lawton LJ said: ‘the shares had gone down in value between the date of the petition and the date of judgment. They might have gone up. The reason which the judge gave, on the facts of this case, for choosing the date of the petition was a sound one, viz:
‘The date of the petition is the date on which the petitioner elects to treat the unfair conduct of the majority as in effect destroying the basis on which he agreed to continue to be a shareholder, and to look to his shares for his proper reward for participation in a joint undertaking.’
I would stress, however, that the choice of a date for valuation in cases of this kind is a matter for the exercise of the trial judge’s discretion. If, for example, there is before the court evidence that the majority shareholder deliberately took steps to depreciate the value of shares in anticipation of a petition being presented, it would be permissible to value the shares at a date before such action was taken.’
and ‘What the judge was deciding was the amount of the compensation which Mr Bolton should pay Mr Lewis for the wrong he had done him . . The fact that a wrongdoer is impecunious is no reason why judgment should not be given against him for the amount of compensation due to his victim. What Mr Lewis should do to get money out of Mr Bolton, claiming, as he still does, that he is impecunious, is a matter from him to decide, not the court.’
Nicholls LJ said: ‘Counsel for Mr Bolton also attacked the judge’s choice of valuation date, which was nearly a year before the date when he made his order. Prior to the hearing, Mr Lewis had offered his shares to Mr Bolton for pounds 1,700,000, but he did not offer to sell them at their value at the date on which the petition was issued, and the price ought not to have been fixed at a date earlier than the date when it became apparent that the shares had to be sold. As it was, the price fixed by the judge was about pounds 25m more than the value of the shares at the time of the hearing. In my view, this attack also must fail. The choice of the valuation date was a matter for the judge’s discretion. The reasons he gave for choosing the earlier date seem to me sufficient to support his conclusion on this, albeit the result was a severe form of order.’
and ‘The form which the relief to be granted under s. 75 should take is discretionary. If, in a particular case, the court considers that a respondent who has wrongfully extracted substantial sums of money from a company should make recompense by paying a stated sum to the petitioner, or to the company, I do not see why such an order should not be made even if the respondent does not have and is unlikely to obtain the necessary means; although, no doubt, his financial position would be a matter to be taken into account by the court in deciding upon the form of relief. If that is correct, I do not see why the position is in principle any different in the case of a purchaser of shares: the respondent is being ordered to pay a fixed sum of money, and shares (like other forms of property) may subsequently fall or rise in value. Of course, in considering whether to make a purchase order, the court will have regard to the means of the respondent and also, if he will need to have recourse to the property which is the subject of the purchase order, or other property, to obtain the purchase price, to the likelihood of him being able to realise or obtain money on the security of that property. But these are questions of degree, and the weight to be attached to these considerations will depend on all the circumstances of the case. They are matters for the discretion of the trial judge.’
If there is a dispute as to which party should be ordered to buy out the other, the court has to decide who has the better claim on the company. Although a petitioner’s conduct may have a bearing on the relief to be granted, the mere existence of fault on the petitioner’s part is not normally a reason to deprive it of the benefit of a buy-out order. Since fairness is the touchstone, this may dictate that time should be given to enable the respondents to purchase the shares and to discharge shareholder loans.
Lawton LJ, Glidewell LJ, Nicholls LJ
(1986) BCC 99, [1986] BCLC 430
England and Wales
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 – Kohli v Lit and Others ChD 13-Nov-2009
The claimant asserted that the other shareholders had acted in a manner unfairly prejudicial to her within the company.
Held: The claimant was allowed to bring in without prejudice correspondence to contradict evidence by the defendant which . .
Cited – Macom Gmbh v Bozeat and Others ChD 21-Jun-2021
Order regulating company’s affairs
COMPANY – Unfair prejudice – Petitioner 60% shareholder – Respondents 40% shareholders – Alleged breaches of director’s duties and failures to observe Shareholders’ Agreement – Undermining company’s corporate governance – Appropriate remedy – . .

These lists may be incomplete.
Updated: 12 July 2021; Ref: scu.241638

Corporation of Sheffield v Barclay and Others: HL 3 Jul 1905

Lord Davey said: ‘I think that the appellants [Sheffield Corporation] have a statutory duty to register all valid transfers, and on the demand of the transferee to issue to him a fresh certificate of title to the stock comprised therein. But, of course, it is a breach of their duty and a wrong to the existing holders of stock for the appellants to remove their names and register the stock in the name of the proposed transferee if the latter has, in fact, no title to require the appellants to do so. I am further of opinion that where a person invested with a statutory or common law duty of a ministerial character is called upon to exercise that duty on the request, direction, or demand of another (it does not seem to me to matter which word you use), and without any default on his own part acts in a manner which is apparently legal but is, in fact, illegal and a breach of the duty, and thereby incurs liability to third parties, there is implied by law a contract by the person making the request to keep indemnified the person having the duty against any liability which may result from such exercise of the supposed duty. And it makes no difference that the person making the request is not aware of the invalidity in his title to make the request, or could not with reasonable diligence have discovered it.’ and as to Dugdale v Lovering: ‘I am also of opinion that the authority keeping a stock register has no duty of keeping the register correct which they owe to those who come with transfers. Their only duty (if that be the proper expression) is one which they owe to the stockholders who are on the register. This point was decided by all the learned Judges who took part in the decision of the first case of Simm -v- Anglo-American Telegraph [5 QBD 188]. I will content myself with quoting the language of Cotton L.J. [at 214] ‘The duty of the company is not to accept a forged transfer, and no duty to make inquiries exists towards the person bringing the transfer. It is merely an obligation upon the company to take care that they do not get into difficulties in consequence of their accepting a forged transfer, and it may be said to be an obligation towards the stockholder not to take the stock out of his name unless he has executed a transfer; but it is only a duty in this sense, that unless the company act upon a genuine transfer they may be liable to the real stockholder.’.’
Authorised irredeemable stock in Sheffield Corporation was registered in the joint names of Timbrell and Honnywill. Timbrell executed an appropriate form of transfer of the stock in his own name but forged the signature of Honnywill. The forged transfer was in favour of a bank, Barclay’s, as a lender. The bank sent the forged transfer to the Corporation for registration and the Corporation acted upon that request. The bank was thus given a stock certificate and, before or after that, the bank’s stock was sold on to holders for value to whom, the Bank having returned its certificate to the Corporation, the Corporation gave fresh stock certificates. Timbrell died and Honnywill then discovered the fraud and successfully insisted in proceedings that the stock of which he had been defrauded should be restored to him, as it was, at the Corporation’s expense. The Corporation then sued the bank for an indemnity. Had the Corporation any remedy against the bank which had asked it to act upon the forged transfer?
Held: The corporation was entitled to an indemnity from the bank. Adopting Dugdale -v- Lovering: ‘The principle insisted upon by Mr Cave in his argument quoted above has been undoubtedly sanctioned as part of the law by several old decisions, and I think the principle as enunciated is well-established.’
Where a person invested with a statutory or common law duty of a ministerial character is called upon to exercise that duty on the request, direction, or demand of another, and without any default on his own part acts in a manner which is apparently legal, but is in fact illegal and a breach of the duty, and thereby incurs liability to third parties, there is implied by law a contract by the person making the request to keep indemnified the person having the duty against any liability which may result from suet exercise of the supposed duty. And it makes no difference that the person making the request is not aware of the invalidity in his title to make the request. In an action by the corporation against C and Co, the latter were bound to indemnify the former. Judgment of the Court of Appeal reversed.
Lord Chancellor (Halsbury), Lords Davey and Robertson
[1905] AC 392, [1905] UKHL 556, 43 SLR 556
Bailii
England and Wales
Citing:
Approved – Dugdale v Lovering 1875
The court adopted the position proposed by Mr Cave, for the Plaintiff: ‘It is a general principle of law when an act is done by one person at the request of another which act is not in itself manifestly tortious to the knowledge of the person doing . .

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. . .
Adopted – Stanley Yeung Kai Yung and another v Hong Kong and Shanghai Banking Corporation PC 1980
The shareholder had had his share certificates stolen. The thief lodged forged transfers with stockbrokers, who in good faith sent the share certificates and transfer deeds to the bank for registration and transfer, which was done. The transferee . .
Cited – Downs and Another v Chappell and Another CA 3-Apr-1996
The plaintiffs had suceeded in variously establishing claims in deceit and negligence, but now appealed against the finding that no damages had flowed from the wrongs. They had been sold a business on the basis of incorrect figures.
Held: . .

These lists may be incomplete.
Updated: 11 July 2021; Ref: scu.621182

Brown v Bray and Another: ChD 29 Aug 2019

Re Audas Group Limited – Unfair prejudice petition – breaches of reserved matters provisions amounted to unfairly prejudicial conduct.
His Honour Judge Halliwell sitting as a Judge of the High Court
[2019] EWHC 2304 (Ch)
Bailii
Companies Act 2006 994 996
England and Wales
Cited by:
Cited – Macom Gmbh v Bozeat and Others ChD 21-Jun-2021
Order regulating company’s affairs
COMPANY – Unfair prejudice – Petitioner 60% shareholder – Respondents 40% shareholders – Alleged breaches of director’s duties and failures to observe Shareholders’ Agreement – Undermining company’s corporate governance – Appropriate remedy – . .

These lists may be incomplete.
Updated: 10 July 2021; Ref: scu.640885

Estera Trust (Jersey) Ltd and Another v Singh and Others: ChD 5 Jul 2018

Re Edwardian Group Ltd
Claim for relief under sections 994-996 of the Companies Act 2006 on the ground that the affairs of the Company have been and are being conducted in a manner unfairly prejudicial to their interests as members of the Company.
Held: The misleading and inadequate terms in which the shareholders had been informed of certain findings of the company had been unfairly prejudicial to all of the shareholders, as being contrary to the good administration of the company and the interests of the shareholders in having matters of complaint about a director of the company fairly and fully investigated and reported on.
Fancourt J rejected the contention that since the relevant breaches of fiduciary duty had caused no loss to the company, the misconduct of the company’s affairs was not unfairly prejudicial to the interests of the shareholders generally, or to the petitioners in particular. By their very nature, the breaches of duty had caused all of the shareholders prejudice, in that the respondent was wrongly putting himself in a position where his duty to the shareholders of the company conflicted with his own interests, and was then preferring his own interests. ‘That kind of conflict is corrosive of good administration and trust between shareholders and directors. Further, the prejudice was by its nature unfair. The members did not know of [the chief executive officer’s] personal interest: they were unaware of the undisclosed conflict that the CEO of the Company continued to have. They were deprived of the right to give or refuse consent to [him] taking the opportunity for his personal benefit.’
Fancourt J
[2018] EWHC 1715 (Ch)
Bailii
England and Wales
Cited by:
Cited – Macom Gmbh v Bozeat and Others ChD 21-Jun-2021
Order regulating company’s affairs
COMPANY – Unfair prejudice – Petitioner 60% shareholder – Respondents 40% shareholders – Alleged breaches of director’s duties and failures to observe Shareholders’ Agreement – Undermining company’s corporate governance – Appropriate remedy – . .

These lists may be incomplete.
Updated: 10 July 2021; Ref: scu.619892

Hawkes v Cuddy and Others: CA 2 Apr 2009

Affirmed
Stanley Burnton LJ rejected the suggestion that on a petition under s. 994 the court cannot award relief that the petitioner does not seek. He commented: ‘In the present case, the correctness or otherwise of that proposition is academic, since ultimately, when it was apparent from the judge’s judgment that Mr Hawkes would not be able to buy out Mr Cuddy, he agreed to the order proposed by the judge being made on his petition. On any basis, therefore, the judge had power to make the order he did. But I would not want it to be assumed that that proposition represents the law. The terms of section 996 are clear: once the court is satisfied that a petition is well founded, ‘it may make such order as it thinks fit’, not ‘such order as is sought by the petitioner’.’ Stanley Burnton LJ went on to conclude that: ‘The unacceptability to the petitioner of the relief that the court otherwise considers appropriate is doubtless a major consideration to be taken into account when deciding whether to grant that relief, but it goes to the exercise of the discretion of the court, not to the power of the court to make such order as it thinks fit.’
Lord Justice Stanley Burnton
[2009] EWCA Civ 291, [2009] 2 BCLC 427
Bailii
Companies Act 2006 994
England and Wales
Citing:
Appeal from – Hawkes v Cuddy and others ChD 13-Dec-2007
The court found that the petitioner had been unfairly prejudiced; but it granted the relief sought by the respondent. The court may exercise its own creativity in matching its remedy to the unfair prejudice which has been established. . .

Cited by:
Cited – Macom Gmbh v Bozeat and Others ChD 21-Jun-2021
Order regulating company’s affairs
COMPANY – Unfair prejudice – Petitioner 60% shareholder – Respondents 40% shareholders – Alleged breaches of director’s duties and failures to observe Shareholders’ Agreement – Undermining company’s corporate governance – Appropriate remedy – . .

These lists may be incomplete.
Updated: 10 July 2021; Ref: scu.329539

Mckillen v Misland (Cyprus) Investments Ltd and Others: ChD 2 Feb 2012

Preliminary judgment as to interpretation of shareholder agreement
David Richards J
[2012] EWHC 129 (Ch)
Bailii
Companies Act 2006 994
England and Wales
Citing:
See Also – McKillen v Misland (Cyprus) Investments Ltd and Others ChD 21-Dec-2011
‘prejudice need not be financial in character. A disregard of the rights of a member as such, without any financial consequences, may amount to prejudice falling within the section.’ . .

Cited by:
See Also – Mckillen v Misland (Cyprus) Investments Ltd and Another CA 24-Feb-2012
Coroin Limited . .
See Also – Mckillen v Misland (Cyprus) Investments Ltd and Others ChD 28-Feb-2012
. .
See Also – Mckillen v Misland (Cyprus) Investments Ltd and Others ChD 5-Mar-2012
Applications by the petitioner and claimant, Patrick McKillen, to make very extensive amendments to his Petition and Particulars of Claim in an associated Part 7 claim, and with an application by one of the respondents to the petition for further . .
See Also – Mckillen v Misland (Cyprus) Investments Ltd and Others ChD 26-Apr-2012
Application by the petitioner and claimant for the continuation during the trial of a confidentiality regime imposed for the purposes of pre-trial steps, particularly disclosure. . .
See Also – McKillen v Misland (Cyprus) Investments Ltd and Others ChD 10-Aug-2012
Re Coroin
The parties battled for the control of major London hotels. The claimant alleged unfair dealings in attempts to secure that control.
Held: David Richards J said that prejudice: ‘will certainly encompass damage to the financial . .
See Also – McKillen v Misland (Cyprus) Investments Ltd and Others CA 3-Jul-2013
. .
See Also – Misland (Cyprus) Investments Ltd and Another v Mckillen and Another ChD 25-Nov-2014
. .

These lists may be incomplete.
Updated: 10 July 2021; Ref: scu.450565

Grace v Biagioli and others: CA 4 Nov 2005

The petitioner complained that he had first been removed as director, and that the remaining directors had misdescribed the company’s profits and paid those profits to themselves as management expenses and in breach of a resolution requiring an equal distribution. He appealed a finding that he had not been improperly removed as director, and as to the remedy awarded.
Held: The claimant’s behaviour in negotiating to set up a competing company was sufficient to justify his removal as a director. The judge having found the misapplication of profits in one year had closed his mind to later years and had declined to receive evidence on the point. He had not therefore been correct to conclude that the misappropriation would not be repeated. The judge should have ordered the defendants to buy out the claimant’s shares.
Patten J (at [61]) highlighted the following principles from the speech of Lord Hoffmann in the leading case of O’Neill v. Phillips: ‘(1) The concept of unfairness, although objective in its focus, is not to be considered in a vacuum. An assessment that conduct is unfair has to be made against the legal background of the corporate structure under consideration. This will usually take the form of the articles of association and any collateral agreements between shareholders which identify their rights and obligations as members of the company. Both are subject to established equitable principles which may moderate the exercise of strict legal rights when insistence on the enforcement of such rights would be unconscionable.
(2) It follows that it will not ordinarily be unfair for the affairs of a company to be conducted in accordance with the provisions of its articles or any other relevant and legally enforceable agreement, unless it would be inequitable for those agreements to be enforced in the particular circumstances under consideration. Unfairness may, to use Lord Hoffmann’s words, ‘consist in a breach of the rules or in using rules in a manner which equity would regard as contrary to good faith’ . . ; the conduct need not therefore be unlawful, but it must be inequitable.’
Mummery, Mance LJJ, Patten J
[2005] EWCA Civ 1222, [2006] 2 BCLC 70, [2006] BCC 85
Bailii
Companies Act 1985 459
England and Wales
Citing:
Cited – Re London School of Electronics 1986
The court considered its powers under the section: ‘The combined effect of sub-ss (1) and (3) is to empower the court to make such order as it thinks fit for giving relief, if it is first satisfied that the affairs of the company are being or have . .
Explained – O’Neill and Another v Phillips and Others; In re a Company (No 00709 of 1992) HL 20-May-1999
The House considered a petition by a holder of 25 of the 100 issued shares in the company against the majority shareholder. The petitioner, an ex-employee, had been taken into management and then given his shares and permitted to take 50% of the . .
Cited – In re Bird Precision Bellows Ltd CA 1986
The company which was formed to combine one party’s expertise in the manufacturing of precision bellows with the general experience of two others in financial, commercial and industrial matters. For several years the company’s affairs had worked . .

Cited by:
Cited – Macom Gmbh v Bozeat and Others ChD 21-Jun-2021
Order regulating company’s affairs
COMPANY – Unfair prejudice – Petitioner 60% shareholder – Respondents 40% shareholders – Alleged breaches of director’s duties and failures to observe Shareholders’ Agreement – Undermining company’s corporate governance – Appropriate remedy – . .

These lists may be incomplete.
Updated: 10 July 2021; Ref: scu.234453

Mckillen v Misland (Cyprus) Investments Ltd and Others: ChD 5 Mar 2012

Applications by the petitioner and claimant, Patrick McKillen, to make very extensive amendments to his Petition and Particulars of Claim in an associated Part 7 claim, and with an application by one of the respondents to the petition for further information.
David Richards J
[2012] EWHC 521 (Ch)
Bailii
England and Wales
Citing:
See Also – Mckillen v Misland (Cyprus) Investments Ltd and Others ChD 2-Feb-2012
Preliminary judgment as to interpretation of shareholder agreement . .
See Also – McKillen v Misland (Cyprus) Investments Ltd and Others ChD 21-Dec-2011
‘prejudice need not be financial in character. A disregard of the rights of a member as such, without any financial consequences, may amount to prejudice falling within the section.’ . .
See Also – Mckillen v Misland (Cyprus) Investments Ltd and Another CA 24-Feb-2012
Coroin Limited . .
See Also – Mckillen v Misland (Cyprus) Investments Ltd and Others ChD 28-Feb-2012
. .

Cited by:
See Also – Mckillen v Misland (Cyprus) Investments Ltd and Others ChD 26-Apr-2012
Application by the petitioner and claimant for the continuation during the trial of a confidentiality regime imposed for the purposes of pre-trial steps, particularly disclosure. . .
See Also – McKillen v Misland (Cyprus) Investments Ltd and Others ChD 10-Aug-2012
Re Coroin
The parties battled for the control of major London hotels. The claimant alleged unfair dealings in attempts to secure that control.
Held: David Richards J said that prejudice: ‘will certainly encompass damage to the financial . .
See Also – McKillen v Misland (Cyprus) Investments Ltd and Others CA 3-Jul-2013
. .

These lists may be incomplete.
Updated: 10 July 2021; Ref: scu.452447

Mckillen v Misland (Cyprus) Investments Ltd and Another: CA 24 Feb 2012

Coroin Limited
Lord Justice Rimer
[2012] EWCA Civ 179, [2012] BCC 575
Bailii
Companies Act 2006 994
England and Wales
Citing:
Appeal from – McKillen v Misland (Cyprus) Investments Ltd and Others ChD 21-Dec-2011
‘prejudice need not be financial in character. A disregard of the rights of a member as such, without any financial consequences, may amount to prejudice falling within the section.’ . .
See Also – Mckillen v Misland (Cyprus) Investments Ltd and Others ChD 2-Feb-2012
Preliminary judgment as to interpretation of shareholder agreement . .

Cited by:
See Also – Mckillen v Misland (Cyprus) Investments Ltd and Others ChD 28-Feb-2012
. .
See Also – Mckillen v Misland (Cyprus) Investments Ltd and Others ChD 5-Mar-2012
Applications by the petitioner and claimant, Patrick McKillen, to make very extensive amendments to his Petition and Particulars of Claim in an associated Part 7 claim, and with an application by one of the respondents to the petition for further . .
See Also – Mckillen v Misland (Cyprus) Investments Ltd and Others ChD 26-Apr-2012
Application by the petitioner and claimant for the continuation during the trial of a confidentiality regime imposed for the purposes of pre-trial steps, particularly disclosure. . .
See Also – McKillen v Misland (Cyprus) Investments Ltd and Others ChD 10-Aug-2012
Re Coroin
The parties battled for the control of major London hotels. The claimant alleged unfair dealings in attempts to secure that control.
Held: David Richards J said that prejudice: ‘will certainly encompass damage to the financial . .
See Also – McKillen v Misland (Cyprus) Investments Ltd and Others CA 3-Jul-2013
. .
See Also – Misland (Cyprus) Investments Ltd and Another v Mckillen and Another ChD 25-Nov-2014
. .

These lists may be incomplete.
Updated: 10 July 2021; Ref: scu.451495

Mckillen v Misland (Cyprus) Investments Ltd and Others: ChD 28 Feb 2012

[2012] EWHC 505 (Ch)
Bailii
England and Wales
Citing:
See Also – Mckillen v Misland (Cyprus) Investments Ltd and Others ChD 2-Feb-2012
Preliminary judgment as to interpretation of shareholder agreement . .
See Also – McKillen v Misland (Cyprus) Investments Ltd and Others ChD 21-Dec-2011
‘prejudice need not be financial in character. A disregard of the rights of a member as such, without any financial consequences, may amount to prejudice falling within the section.’ . .
See Also – Mckillen v Misland (Cyprus) Investments Ltd and Another CA 24-Feb-2012
Coroin Limited . .

Cited by:
See Also – Mckillen v Misland (Cyprus) Investments Ltd and Others ChD 5-Mar-2012
Applications by the petitioner and claimant, Patrick McKillen, to make very extensive amendments to his Petition and Particulars of Claim in an associated Part 7 claim, and with an application by one of the respondents to the petition for further . .
See Also – Mckillen v Misland (Cyprus) Investments Ltd and Others ChD 26-Apr-2012
Application by the petitioner and claimant for the continuation during the trial of a confidentiality regime imposed for the purposes of pre-trial steps, particularly disclosure. . .
See Also – McKillen v Misland (Cyprus) Investments Ltd and Others ChD 10-Aug-2012
Re Coroin
The parties battled for the control of major London hotels. The claimant alleged unfair dealings in attempts to secure that control.
Held: David Richards J said that prejudice: ‘will certainly encompass damage to the financial . .
See Also – McKillen v Misland (Cyprus) Investments Ltd and Others CA 3-Jul-2013
. .

These lists may be incomplete.
Updated: 10 July 2021; Ref: scu.452444

McKillen v Misland (Cyprus) Investments Ltd and Others: ChD 10 Aug 2012

Re Coroin
The parties battled for the control of major London hotels. The claimant alleged unfair dealings in attempts to secure that control.
Held: David Richards J said that prejudice: ‘will certainly encompass damage to the financial position of a member. The prejudice may be damage to the value of his shares but may also extend to other financial damage which in the circumstances of the case is bound up with his position as a member. So, for example, removal from participation in the management of a company and the resulting loss of income or profits from the company in the form of remuneration will constitute prejudice in those cases where the members have rights recognised in equity if not at law, to participate in that way. Similarly, damage to the financial position of a member in relation to a debt due to him from the company can in the appropriate circumstances amount to prejudice. The prejudice must be to the petitioner in his capacity as a member but this is not to be strictly confined to damage to the value of his shareholding. Moreover, prejudice need not be financial in character. A disregard of the rights of a member as such, without any financial consequences, may amount to prejudice falling within the section.’
David Richards J
[2012] EWHC 2343 (Ch)
Bailii
Companies Act 2006
England and Wales
Citing:
See Also – Mckillen v Misland (Cyprus) Investments Ltd and Others ChD 2-Feb-2012
Preliminary judgment as to interpretation of shareholder agreement . .
See Also – McKillen v Misland (Cyprus) Investments Ltd and Others ChD 21-Dec-2011
‘prejudice need not be financial in character. A disregard of the rights of a member as such, without any financial consequences, may amount to prejudice falling within the section.’ . .
See Also – Mckillen v Misland (Cyprus) Investments Ltd and Another CA 24-Feb-2012
Coroin Limited . .
See Also – Mckillen v Misland (Cyprus) Investments Ltd and Others ChD 28-Feb-2012
. .
See Also – Mckillen v Misland (Cyprus) Investments Ltd and Others ChD 5-Mar-2012
Applications by the petitioner and claimant, Patrick McKillen, to make very extensive amendments to his Petition and Particulars of Claim in an associated Part 7 claim, and with an application by one of the respondents to the petition for further . .
See Also – Mckillen v Misland (Cyprus) Investments Ltd and Others ChD 26-Apr-2012
Application by the petitioner and claimant for the continuation during the trial of a confidentiality regime imposed for the purposes of pre-trial steps, particularly disclosure. . .

Cited by:
See Also – McKillen v Misland (Cyprus) Investments Ltd and Others CA 3-Jul-2013
. .
See Also – Misland (Cyprus) Investments Ltd and Another v Mckillen and Another ChD 25-Nov-2014
. .
Cited – Macom Gmbh v Bozeat and Others ChD 21-Jun-2021
Order regulating company’s affairs
COMPANY – Unfair prejudice – Petitioner 60% shareholder – Respondents 40% shareholders – Alleged breaches of director’s duties and failures to observe Shareholders’ Agreement – Undermining company’s corporate governance – Appropriate remedy – . .

These lists may be incomplete.
Updated: 10 July 2021; Ref: scu.463543

Gerrard v Koby and Another: ChD 8 Jul 2004

Baumler (UK) Ltd
The court recognised: ‘in the case of a quasi-partnership company a breach of duty by one participant may not in the event be causative of ‘prejudice or loss’ to the company, but may nevertheless lead to such a loss of confidence on the part of another, innocent, participant and breakdown in relations that the innocent participant is entitled to relief under section 461 of the 1985 Act. In effect the unfairness lies in compelling the innocent participant to remain a member of what was once a company formed with the characteristics which made it capable of being given the label of ‘quasi-partnership’, unsatisfactory as that label might be.’
Gompas QC DJ
[2004] EWHC 1763 (Ch)
Bailii
Companies Act 1985 461
England and Wales
Cited by:
Cited – Macom Gmbh v Bozeat and Others ChD 21-Jun-2021
Order regulating company’s affairs
COMPANY – Unfair prejudice – Petitioner 60% shareholder – Respondents 40% shareholders – Alleged breaches of director’s duties and failures to observe Shareholders’ Agreement – Undermining company’s corporate governance – Appropriate remedy – . .

These lists may be incomplete.
Updated: 10 July 2021; Ref: scu.551952