Solid Homes Ltd, Re

Solid Homes Ltd, Re

The court found that Ms Smith did not breach her statutory or common law duties as director in relation to the three payments. The First and Second Payments were properly authorised as dividends by unanimous shareholder assent (Duomatic principle) at a time when the company was solvent and had sufficient distributable profits, as evidenced by the last annual accounts and subsequent asset realisations. The Third Payment was made to discharge a legitimate creditor and was not for Ms Smith's benefit. The liquidators failed to prove insolvency or lack of distributable profits at the relevant time, and Ms Smith provided a credible explanation for each payment. Accordingly, the claims against...

Parties
Applicant (joint Liquidator): Paul Atkinson; Applicant (joint Liquidator): Glyn Mummery; First Respondent (former Director): Rodney Adu Kingsley; Second Respondent (former Director): Sharon Maria Smith
Jurisdiction
England and Wales
Judgment Date
03 November 2020
Procedural Posture
Insolvency/misfeasance Application / Final Judgment After Trial
Outcome
Claim dismissed
Legal Topics
Directors' Duties, Unlawful Distributions, Misfeasance, Dividends, Burden of Proof, Duomatic Principle
Company Law Insolvency Law Directors' Duties Unlawful Distributions Misfeasance Dividends Burden of Proof Duomatic Principle

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 7 Authorities cited 15 Party arguments 2 Amounts and remedies 10
Sign in to unlock

Parties

Paul Atkinson

Applicant (joint Liquidator)

Glyn Mummery

Applicant (joint Liquidator)

Rodney Adu Kingsley

First Respondent (former Director)

Sharon Maria Smith

Second Respondent (former Director)

Procedural Posture

Insolvency/misfeasance Application / Final Judgment After Trial

Legal Issues

  1. 1 Whether Ms Smith breached her duties as director under sections 171, 172, and 174 Companies Act 2006 in relation to three payments made by the company.
  2. 2 Whether the payments were unlawful distributions and/or made for no consideration.
  3. 3 Whether the payments were properly authorised as dividends and whether the company was solvent at the time.

Ratio Decidendi

The court found that Ms Smith did not breach her statutory or common law duties as director in relation to the three payments. The First and Second Payments were properly authorised as dividends by unanimous shareholder assent (Duomatic principle) at a time when the company was solvent and had sufficient distributable profits, as evidenced by the last annual accounts and subsequent asset realisations. The Third Payment was made to discharge a legitimate creditor and was not for Ms Smith's benefit. The liquidators failed to prove insolvency or lack of distributable profits at the relevant time, and Ms Smith provided a credible explanation for each payment. Accordingly, the claims against...

Court Disposition

Claim dismissed