Harris v Microfusion 2003-2 LLP & Ors [2016] EWCA Civ 1212 (06 December 2016)

Harris v Microfusion 2003-2 LLP & Ors [2016] EWCA Civ 1212 (06 December 2016)

The proposed claims do not fall within the 'fraud on the minority' exception to the rule in Foss v Harbottle because there is no allegation of deliberate and dishonest breach of duty or personal benefit to the alleged wrongdoers. The judge erred in granting permission for two claims; permission should be refused for all claims.

Citation
[2016] EWCA Civ 1212
Parties
Appellant in A3/2015/1253, Respondent in A3/2015/1227: Brian John Harris; Respondent in A3/2015/1253: Microfusion 2003-2 LLP; Respondent in A3/2015/1253, Appellant in A3/2015/1227: Future Films (Management Services) Limited; Respondent in A3/2015/1253, Appellant in A3/2015/1227: Future Films (Partnership Services) Limited
Jurisdiction
England and Wales
Judgment Date
06 December 2016
Procedural Posture
Appeal / Court of Appeal (civil Division), Judgment
Outcome
Mr Harris's appeal dismissed; Future Films' appeal allowed.
Legal Topics
Derivative Actions, Rule in Foss V Harbottle, Fraud on Minority, Fiduciary Duties, Limitation Periods
Company Law Partnership Law Derivative Actions Rule in Foss V Harbottle Fraud on Minority Fiduciary Duties Limitation Periods

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Parties

Brian John Harris

Appellant in A3/2015/1253, Respondent in A3/2015/1227

Microfusion 2003-2 LLP

Respondent in A3/2015/1253

Future Films (Management Services) Limited

Respondent in A3/2015/1253, Appellant in A3/2015/1227

Future Films (Partnership Services) Limited

Respondent in A3/2015/1253, Appellant in A3/2015/1227

Procedural Posture

Appeal / Court of Appeal (civil Division), Judgment

Legal Issues

  1. 1 Whether the proposed derivative claims fall within the 'fraud on the minority' exception to the rule in Foss v Harbottle
  2. 2 Whether breaches of fiduciary duty alleged are sufficient to permit a derivative action by a member of an LLP
  3. 3 Whether personal benefit to alleged wrongdoers is required for the exception to apply

Ratio Decidendi

The proposed claims do not fall within the 'fraud on the minority' exception to the rule in Foss v Harbottle because there is no allegation of deliberate and dishonest breach of duty or personal benefit to the alleged wrongdoers. The judge erred in granting permission for two claims; permission should be refused for all claims.

Court Disposition

Mr Harris's appeal dismissed; Future Films' appeal allowed.

Orders

  • Permission to proceed with all derivative claims refused.
  • No further consideration of limitation or exculpation issues necessary.