Hughes v Burley & Ors [2021] EWHC 104 (Ch) (22 January 2021)

Hughes v Burley & Ors [2021] EWHC 104 (Ch) (22 January 2021)

The claimant failed to demonstrate that a director acting in accordance with s.172 Companies Act 2006 would attach sufficient importance to continuing the derivative claim, given the company's insolvency, lack of funding, and the commercial context of the transactions. The pleaded breaches are not clearly actionable by the company, and the balance of factors under s.263(3) does not favour granting permission. Permission to continue the derivative action is refused.

Citation
[2021] EWHC 104 (Ch)
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 and Related Company Law Applications / Judgment on Application for Permission to Continue Derivative Action Under S.263 Companies Act 2006
Outcome
Permission to continue the derivative action refused; application dismissed.
Legal Topics
Derivative Actions, Directors' Duties, Joint Venture Disputes, Fiduciary Duties, Receivership, Contracts (rights of Third Parties), Administration Orders
Company Law Insolvency Equity and Trusts Derivative Actions Directors' Duties Joint Venture Disputes 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 and Related Company Law Applications / Judgment on Application for Permission to Continue Derivative Action Under S.263 Companies Act 2006

Legal Issues

  1. 1 Whether the claimant should have permission under s.263 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 breaches by the First and Third Defendants are actionable by the company
  3. 3 Whether the requirements of s.263(2) and (3) Companies Act 2006 are met

Ratio Decidendi

The claimant failed to demonstrate that a director acting in accordance with s.172 Companies Act 2006 would attach sufficient importance to continuing the derivative claim, given the company's insolvency, lack of funding, and the commercial context of the transactions. The pleaded breaches are not clearly actionable by the company, and the balance of factors under s.263(3) does not favour granting permission. Permission to continue the derivative action is refused.

Court Disposition

Permission to continue the derivative action refused; application dismissed.

Orders

  • Permission to continue the derivative claim on behalf of the Fourth Defendant is refused.
  • The other applications are stood over pending this judgment.