By Mary Young
Everything must go?
Legal 500 UK
Legal 500 UK
When individuals fall out in business it can have devastating consequences for the company, partnership or LLP. Our litigation team has extensive experience in resolving business disputes quickly and effectively. We recognise that boardroom disputes can be particularly fraught and stressful and we have the expertise to provide a bespoke service in times of crisis.
We combine advice about our clients’ legal rights and obligations, with strategic expertise, which is critical in any boardroom battle. We advise when and how to litigate or on alternative means of dispute resolution where appropriate, including arbitration, mediation and round table settlement discussions.
We act for shareholders, members, directors and companies (ranging from small privately-owned companies through to PLCs), and partners and LLPs in partnership in a wide range of disputes, including in the following areas:
Boardroom disputes are not unusual. In 2013, CEDR and the IFC Corporate Governance Group conducted a global survey of 191 directors and board members which revealed that 29.6% of respondents had experienced a boardroom dispute which affected the survival of the organisation and 42.8% reported that conflict had reduced the level of trust between board members.
We recognise that our commercial clients are concerned about the financial consequences of being involved in a dispute. We therefore provide clear costs advice and consider with our clients various litigation funding options. We also help our clients evaluate the commercial benefit of litigation against settlement at all stages of a dispute to enable them to make informed decisions for the good of their business interests.
Legal 500 UK 2012
sensible, realistic view of cases - seizing only the points worth arguing"
Chambers UK, A Client's Guide to the Legal Profession
In the recent case of Re Motion Picture Capital Limited  EWHC 2504 (Ch), the Court greenlit an unfair prejudice petition presented by a minority shareholder who no longer held shares in the relevant company at the time his petition was heard. The petitioner’s position was "Show me the money!", requesting an order that the company purchase his shares at a price reflecting the company’s value, even though his shares had already been transferred into the names of the company’s nominees.
In the case of KOZA LTD and HAMDI IPEK –v- KOZA ALTIN IŞLETMELERI AS  EWHC 786 (Ch), Mr Justice Trower awarded an injunction restraining Mr Ipek, Koza Ltd (“KL”)’s sole director, from causing KL to use its funds to pay legal costs in the litigation, which was in reality a shareholder dispute between Mr Ipek and Koza Altin Işletmeleri AS (“KAI”). The decision upholds the ‘legal costs principle’ in company disputes, which provides that a company’s money should not be spent on disputes between shareholders.
In the recent case of TMG Brokers Ltd (In Liquidation) (also known as: Baker v Staines) the High Court held a director of a company to be jointly and severally liable for payments made by his co-director out of the company’s bank account which were made without proper authority and amounted to disguised distributions of capital. The fact that he had placed trust in the other director for the company's financial affairs did not excuse him from performing his duties.
What happens when a director commits fraud by misappropriating company assets? Or what of the director who continues trading knowing that the company has no realistic prospect of paying its debts as and when they fall due? To whom does a director owe duties at that point and what recourse is there against that director? This article explores these questions.
Disputes between directors often arise because of, and/or result in, disputes about company money. Directors need to be alert to how they are required to act, particularly in times of conflict.
It is well known that directors owe duties to the company of which they are a director and, in certain circumstances, its shareholders, creditors and employees. Many people believe that if you have not been formally appointed as a director, i.e. you do not appear on Companies House records as a director, you will not owe the usual directors’ duties and, therefore, cannot be in breach of such duties or subject to sanctions for breach.
In the recent case of Barrowfen Properties Ltd v (1) Girish Dahyabhai Patel (2) Stevens & Bolton LLP (3) Barrowfen Properties II  EWHC 2536 (Ch), the High Court extended the iniquity exception to breaches of a director’s statutory duties.
Court of Appeal overturns injunction in favour of son who sought to restrain his family from participating in the management of their caravan park business - Loveridge –v- Loveridge  EWCA Civ 1104.
In the recent case of Simply Alarming Security Ltd  7 WLUK 330 the Court refused to order that the Respondent director/shareholder had to purchase the shares of a shareholder/former director (the Petitioner) who alleged that she had been the subject of unfairly prejudicial conduct by the Respondent.
It is a sad reality that the Covid-19 Pandemic is likely to lead to a spike in the number of companies being put into insolvency. This has the potential to leave parties with claims against those companies with a reduced prospect of full recovery, even if their claims are strong. As a result, claimants may look for alternative targets, including ways in which they could sue directors personally.
I have always had a soft spot for the Black Swan jurisdiction: nothing to do with the law, but because it reminds me of my previous study of philosophy and the use of “all swans are white” as an example of falsification theory.
In the recent case of Michael Gott v Rune Hauge and ors  EWHC 1152 (Ch) the court upheld the well-recognised principle of company law that a company’s money should not be used to pay legal costs in disputes between the company’s shareholders.
Treating a director who is a minority shareholder fairly in both their involvement in the management of a company and in any offers to acquire their shares is of paramount importance to defeating an unfair prejudice petition.
HENRY GEORGE DICKINSON (Claimant) v (1) NAL REALISATIONS (STAFFORDSHIRE) LTD (2) KEVIN JOHN HELLARD & GERALD KRASNER (JOINT LIQUIDATORS OF THE FIRST DEFENDANT) (Defendants) & JUDITH YAP DICKINSON (Third Party) & ROBERT WILLIAMSON (Fourth Party)  EWHC 28 (Ch)
Many obligations are imposed on directors in exercising their duties. A recent decision of the Supreme Court provides that when exercising your powers as a director you must always consider the actual purpose for which you propose to exercise those powers and ensure that purpose is proper. It is not sufficient simply for directors to act honestly to promote the success of the company for the benefit of its members as a whole.
In the case of IT HUMAN RESOURCES PLC v DAVID LAND  EWHC 3812, a former director was found to have infringed a company's copyright in a software system by providing it to a competitor without the company's consent. He thereby also breached his fiduciary duties as a director. Although the company's claims had been brought over six years after those events, they were not statute-barred because the company's knowledge of them had been delayed by the director's deliberate concealment.
Last Thursday, in the case of Hegglin v Google Inc. & ORS (2014) QBD, the High Court granted a businessman leave to serve proceedings under the Data Protection Act 1998 out of the jurisdiction on Google, seeking injunctive relief in respect of defamatory comments posted on websites by an anonymous individual.
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