Neville & Anor v Krikorian & Ors [2006] EWCA Civ 943 (04 July 2006)

Neville & Anor v Krikorian & Ors [2006] EWCA Civ 943 (04 July 2006)

Avo Krikorian is liable under section 341(2)(b) Companies Act 1985 for unlawful loans made to his co-director after 27 July 1999, as he knew of and failed to stop the practice, but is not liable for earlier loans where knowledge was not established. Liability is limited to the difference between the outstanding loan at 30 June 2001 and at 31 December 1999 (£561,162), plus any further sums lent between 27 July 1999 and 31 December 1999.

Citation
[2006] EWCA Civ 943
Parties
Applicants/respondents: Neville (as administrator of Unigreg Ltd) and another; Respondents/appellant: Krikorian and others (Avo Krikor Krikorian, Krikor Avo Krikorian)
Jurisdiction
England and Wales
Judgment Date
04 July 2006
Procedural Posture
Civil Appeal / Appeal From Summary Judgment in High Court (chancery Division) to Court of Appeal
Outcome
Appeal allowed in part
Legal Topics
Directors' Duties, Unlawful Loans to Directors, Joint and Several Liability, Summary Judgment, Misfeasance, Pleading Requirements
Company Law Insolvency Law Directors' Duties Unlawful Loans to Directors Joint and Several Liability Summary Judgment Misfeasance Pleading Requirements

Case Brief

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Parties

Neville (as administrator of Unigreg Ltd) and another

Applicants/respondents

Krikorian and others (Avo Krikor Krikorian, Krikor Avo Krikorian)

Respondents/appellant

Procedural Posture

Civil Appeal / Appeal From Summary Judgment in High Court (chancery Division) to Court of Appeal

Legal Issues

  1. 1 Whether a director is jointly and severally liable for unlawful loans made to a co-director under section 341(2)(b) Companies Act 1985
  2. 2 Whether the claim for joint and several liability was sufficiently pleaded and supported by evidence
  3. 3 Whether refusal to adjourn the summary judgment hearing was justified

Ratio Decidendi

Avo Krikorian is liable under section 341(2)(b) Companies Act 1985 for unlawful loans made to his co-director after 27 July 1999, as he knew of and failed to stop the practice, but is not liable for earlier loans where knowledge was not established. Liability is limited to the difference between the outstanding loan at 30 June 2001 and at 31 December 1999 (£561,162), plus any further sums lent between 27 July 1999 and 31 December 1999.

Court Disposition

Appeal allowed in part

Orders

  • Set aside paragraph 3.2 of the order of 10 December 2004.
  • Order Avo Krikorian to pay £561,162 and any further sum lent between 27 July 1999 and 31 December 1999, with interest, to the company.