Gary Paul Shankland & Ors v Iain Urquhart McKeand (Re Lion House Portfolio Ltd (in liquidation))

Gary Paul Shankland & Ors v Iain Urquhart McKeand (Re Lion House Portfolio Ltd (in liquidation))

Mr McKeand breached his fiduciary duties as director by causing or permitting the misapplication of Lion House's funds after it was balance sheet insolvent, including improper advances to connected entities without commercial justification, and by using company funds for personal investment in Now Technologies. He is liable to account for the CorpAcq Payment and to make contribution for losses caused by post-28 November 2013 advances. The Fruehauf shares were held on trust for Mr McKeand and not an asset of Lion House; no liability arises in respect of their transfer or benefits received from Fruehauf.

Parties
Applicant / Joint Liquidator: Gary Paul Shankland; Applicant / Joint Liquidator: Jamie Taylor; Applicant / Company in Liquidation: Lion House Portfolio Ltd (in liquidation); Respondent / Former Director: Iain Urquhart McKeand
Jurisdiction
England and Wales
Judgment Date
20 March 2024
Procedural Posture
Insolvency / Misfeasance Application / Judgment After Trial
Outcome
Liability established for misfeasance and breach of duty; directions for inquiry into compensation; no liability regarding Fruehauf shares or benefits.
Legal Topics
Director's Breach of Duty, Misfeasance, Insolvency Act 1986 S.212, Companies Act 2006 S.172, Trusts and Beneficial Ownership, Accounting for Company Assets
Insolvency Law Company Law Fiduciary Duties Director's Breach of Duty Misfeasance Insolvency Act 1986 S.212 Companies Act 2006 S.172 Trusts and Beneficial Ownership +1 more

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Parties

Gary Paul Shankland

Applicant / Joint Liquidator

Jamie Taylor

Applicant / Joint Liquidator

Lion House Portfolio Ltd (in liquidation)

Applicant / Company in Liquidation

Iain Urquhart McKeand

Respondent / Former Director

Procedural Posture

Insolvency / Misfeasance Application / Judgment After Trial

Legal Issues

  1. 1 Whether Mr McKeand misapplied or retained company property in breach of duty under s.212 Insolvency Act 1986
  2. 2 Whether post-28 November 2013 advances to connected entities were in breach of duty
  3. 3 Whether the transfer or treatment of Fruehauf Ltd shares was a misappropriation or breach of duty

Ratio Decidendi

Mr McKeand breached his fiduciary duties as director by causing or permitting the misapplication of Lion House's funds after it was balance sheet insolvent, including improper advances to connected entities without commercial justification, and by using company funds for personal investment in Now Technologies. He is liable to account for the CorpAcq Payment and to make contribution for losses caused by post-28 November 2013 advances. The Fruehauf shares were held on trust for Mr McKeand and not an asset of Lion House; no liability arises in respect of their transfer or benefits received from Fruehauf.

Court Disposition

Liability established for misfeasance and breach of duty; directions for inquiry into compensation; no liability regarding Fruehauf shares or benefits.

Orders

  • Mr McKeand to account to Lion House for £149,861.65 used to buy Now Technologies shares.
  • Mr McKeand to account for receipt and use of the CorpAcq Payment (£1,757,168); directions to be given for inquiry into final sum due.