The claimant sought damages against its former directors for negligence and breach of fiduciary duty. The defendants asked that the claims be struck out.
Held: It was no longer good law that directors might leave the conduct of the company’s business to competent management. Though section 727 might give relief to directors who had been negligent, but who had nevertheless acted reasonably, summary relief in this case was inappropriate. On the issue of the various elements of negligence claims it was not correct to characterise the claims as without a real prospect of success.
Judges:
The Honourable Mr Justice Langley
Citations:
[2003] EWHC 2263 (Comm)
Links:
Statutes:
Citing:
See also – Equitable Life Assurance Society v Hyman HL 20-Jul-2000
The directors of the Society had calculated the final bonuses to be allocated to policyholders in a manner which was found to be contrary to the terms of the policy. The language of the article conferring the power to declare such bonuses contained . .
Cited – Three Rivers District Council and Others v Governor and Company of The Bank of England (No 3) HL 22-Mar-2001
Misfeasance in Public Office – Recklessness
The bank sought to strike out the claim alleging misfeasance in public office in having failed to regulate the failed bank, BCCI.
Held: Misfeasance in public office might occur not only when a company officer acted to injure a party, but also . .
Cited – Re D’ Jan of London Limited 1993
The court described the roles of a director of a company: ‘ . . the duty of care owed by a director at common law is accurately stated in sec. 214(4) of the Insolvency Act 1986. It is the conduct of: a reasonably diligent person having both- (a) the . .
Cited – In re Barings plc (No 5) CA 2000
A finding of breach of duty is neither necessary nor of itself sufficient for a finding of unfitness. As the judge (at first instance) observed a person may be unfit even though no breach of duty is proved against him or may remain fit . .
No longer good law – In Re City Equitable Fire Insurance Company Limited ChD 1924
The duty of reasonable care expected of a company’s directors is generally said to be that of an ordinary prudent person might be expected to take in the circumstances on his own behalf, with the knowledge and experience of the director concerned. . .
Cited – Re Lands Allotment Company CA 1894
A limited company is not a trustee of its funds, but their beneficial owner. However, the fiduciary character of the duties of its directors mean that they are treated as if they were trustees of those funds of the company which are in their hands . .
Lists of cited by and citing cases may be incomplete.
Company, Professional Negligence
Updated: 25 October 2022; Ref: scu.187126