Cinematic Finance Ltd v Ryder & Ors [2010] EWHC 3387 (Ch) (21 October 2010)

Cinematic Finance Ltd v Ryder & Ors [2010] EWHC 3387 (Ch) (21 October 2010)

Permission to continue a derivative claim should not be granted to a controlling shareholder except in very exceptional circumstances. No such exceptional circumstances exist here, as the claimant could have procured the companies to bring the claim and the companies are insolvent, making insolvency procedures the appropriate route. The application is dismissed.

Citation
[2010] EWHC 3387 (Ch)
Parties
Claimant/applicant: Cinematic Finance Limited; Defendant/respondent: Dominic Ryder; Defendant/respondent: John Hirst; Defendant/respondent: Zeus Partners LLP
Jurisdiction
England and Wales
Judgment Date
21 October 2010
Procedural Posture
Derivative Claim Application Under Companies Act 2006 / Substantive Application for Permission to Continue Derivative Claim (second Stage, S.261(3))
Outcome
Application dismissed
Legal Topics
Derivative Actions, Shareholder Remedies, Corporate Control, Insolvent Companies, Directors' Duties
Company Law Insolvency Law Derivative Actions Shareholder Remedies Corporate Control Insolvent Companies Directors' Duties

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Parties

Cinematic Finance Limited

Claimant/applicant

Dominic Ryder

Defendant/respondent

John Hirst

Defendant/respondent

Zeus Partners LLP

Defendant/respondent

Procedural Posture

Derivative Claim Application Under Companies Act 2006 / Substantive Application for Permission to Continue Derivative Claim (second Stage, S.261(3))

Legal Issues

  1. 1 Whether a controlling shareholder can bring a derivative claim on behalf of companies it controls
  2. 2 Whether exceptional circumstances exist to justify permission for such a derivative claim
  3. 3 Whether insolvency of the companies affects the appropriateness of a derivative claim

Ratio Decidendi

Permission to continue a derivative claim should not be granted to a controlling shareholder except in very exceptional circumstances. No such exceptional circumstances exist here, as the claimant could have procured the companies to bring the claim and the companies are insolvent, making insolvency procedures the appropriate route. The application is dismissed.

Court Disposition

Application dismissed

Orders

  • Permission to continue derivative claim refused