Hughes v Burley & Ors

Hughes v Burley & Ors

Permission to continue the derivative claim is refused because the Claimant failed to provide evidence of means to fund the litigation or to indemnify the company against adverse costs, leaving the company at risk of further harm. The claims, while not unarguable, are speculative, factually and legally complex, and unlikely to benefit the company given its insolvency and the absence of evidence that the litigation would improve its position. The hypothetical director under section 172 would not proceed without assurance of funding and indemnity.

Parties
Claimant: Daniel Roger Hughes; First Defendant: Nicholas James Burley; Second Defendant: Burprop Limited; Third Defendant: Jonathan Paul Philmore; Fourth Defendant: Nida Properties Limited
Jurisdiction
England and Wales
Judgment Date
22 January 2021
Procedural Posture
Derivative Claim / Company Law / Insolvency / Judgment on Application for Permission to Continue Derivative Action
Outcome
Permission to continue derivative claim refused
Legal Topics
Derivative Actions, Directors' Duties, Joint Venture Agreements, Fiduciary Duties, Receivership, Reflective Loss, Contracts (rights of Third Parties) Act 1999
Company Law Insolvency Law Equity Derivative Actions Directors' Duties Joint Venture Agreements Fiduciary Duties Receivership +2 more

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Parties

Daniel Roger Hughes

Claimant

Nicholas James Burley

First Defendant

Burprop Limited

Second Defendant

Jonathan Paul Philmore

Third Defendant

Nida Properties Limited

Fourth Defendant

Procedural Posture

Derivative Claim / Company Law / Insolvency / Judgment on Application for Permission to Continue Derivative Action

Legal Issues

  1. 1 Whether the claimant should have permission under section 263 of the Companies Act 2006 to continue a derivative action on behalf of the Fourth Defendant against the First to Third Defendants
  2. 2 Whether the pleaded causes of action are maintainable as derivative claims under the Companies Act 2006
  3. 3 Whether the First Defendant owed fiduciary or contractual duties to the Claimant and/or the Fourth Defendant

Ratio Decidendi

Permission to continue the derivative claim is refused because the Claimant failed to provide evidence of means to fund the litigation or to indemnify the company against adverse costs, leaving the company at risk of further harm. The claims, while not unarguable, are speculative, factually and legally complex, and unlikely to benefit the company given its insolvency and the absence of evidence that the litigation would improve its position. The hypothetical director under section 172 would not proceed without assurance of funding and indemnity.

Court Disposition

Permission to continue derivative claim refused