Homes for England v Nick Sellman (Holdings) Ltd & Anor [2020] EWHC 936 (Ch) (21 April 2020)

Homes for England v Nick Sellman (Holdings) Ltd & Anor [2020] EWHC 936 (Ch) (21 April 2020)

Section 263 of the Companies Act 2006 does not apply to LLPs; the correct test for permission to continue a derivative claim on behalf of an LLP is the common law test as set out in Abouraya v Sigmund and Harris v Microfusion; the pleaded case did not satisfy the common law requirements for a derivative claim; the appeal is allowed and permission to continue the derivative claim is refused.

Citation
[2020] EWHC 936 (Ch)
Parties
Claimant and First Respondent: Homes for England; First Defendant and Appellant: Nick Sellman (Holdings) Limited; Second Defendant and Second Respondent: Bromham Road Development LLP
Jurisdiction
England and Wales
Judgment Date
21 April 2020
Procedural Posture
Appeal / Permission to Appeal and Substantive Appeal From County Court Order Granting Permission to Continue Derivative Action
Outcome
Appeal allowed; permission to continue derivative claim refused
Legal Topics
Derivative Claims, Limited Liability Partnerships, Common Law Vs Statutory Test, Civil Procedure Rules, Permission to Appeal
Company Law Civil Procedure Derivative Claims Limited Liability Partnerships Common Law Vs Statutory Test Civil Procedure Rules Permission to Appeal

Case Brief

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Parties

Homes for England

Claimant and First Respondent

Nick Sellman (Holdings) Limited

First Defendant and Appellant

Bromham Road Development LLP

Second Defendant and Second Respondent

Procedural Posture

Appeal / Permission to Appeal and Substantive Appeal From County Court Order Granting Permission to Continue Derivative Action

Legal Issues

  1. 1 Does section 263 of the Companies Act 2006 apply to derivative actions in LLPs?
  2. 2 Should the common law test or the statutory test under s.263 be applied for permission to continue a derivative claim on behalf of an LLP?
  3. 3 Should a new legal point be allowed to be raised for the first time on appeal?

Ratio Decidendi

Section 263 of the Companies Act 2006 does not apply to LLPs; the correct test for permission to continue a derivative claim on behalf of an LLP is the common law test as set out in Abouraya v Sigmund and Harris v Microfusion; the pleaded case did not satisfy the common law requirements for a derivative claim; the appeal is allowed and permission to continue the derivative claim is refused.

Court Disposition

Appeal allowed; permission to continue derivative claim refused

Orders

  • Permission to appeal granted
  • Permission to take new point on appeal granted