The respondent Bain was a director of a number of connected companies, including Smarturgent and Pantone, both of which he indirectly controlled. The liquidator of both companies brought proceedings against Bain on a number of claims for breach of duty as a director, including that he had caused Smarturgent to spend a total of over andpound;86,000 for the benefit of Pantone. It was argued on behalf of Bain that this claim was time-barred, but the liquidator relied on section 21(1)(b).
Held: Field QC responded to the submission saying: ‘The claim against Mr Bain is not that he transferred Smarturgent’s money to himself but that he caused the company’s money to be spent not for Smarturgent’s benefit but for Pantone’s. Mr Shaw submitted that the fact that the machine was acquired and the rentals paid for the benefit of Pantone, a company in which Mr Bain had an indirect controlling interest through his shareholding in AS2 meant that he was to be regarded as having received the trust property . . In my judgment, as a matter of basic principle where a fiduciary uses his beneficiary’s money to confer a benefit on a company he controls he is denying the beneficiary’s title to the money for his own purposes and this amounts to a conversion for his own use. The same is true where a fiduciary causes his beneficiary to incur a liability for the benefit of a company which the fiduciary controls. Since this is what the applicant is in substance alleging under the MOVP claim, I hold that this claim is within section 21(1)(b) of the Limitation Act and is therefore not statute barred.’
Judges:
Richard Field QC HHJ
Citations:
[2001] EWHC 705 (Ch), [2002] 1 BCLC 266, [2001] 2 EGLR 103
Links:
Statutes:
Jurisdiction:
England and Wales
Cited by:
Approved – Burnden Holdings (UK) Ltd v Fielding and Another CA 17-Jun-2016
The company, now in liquidation sought to claim for the alledged misapplication by former directors of its funds in 2007. It now appealed against a summary rejection of its claim as time barred.
Held: The appeal succeeded. Section 21(1)(b) . .
Lists of cited by and citing cases may be incomplete.
Company, Limitation
Updated: 21 October 2022; Ref: scu.372690