LRH Services Ltd v Trew & Ors [2018] EWHC 600 (Ch) (21 March 2018)

LRH Services Ltd v Trew & Ors [2018] EWHC 600 (Ch) (21 March 2018)

The directors failed to make adequate provision for LRH's onerous lease liabilities and did not ensure the company had sufficient assets or secure income to meet them. The solvency statement was not made on reasonable grounds. The directors did not exercise the care, skill, and diligence required, nor did they properly promote the success of the company. The subsequent release of obligations for inadequate consideration further breached directors' duties.

Citation
[2018] EWHC 600 (Ch)
Parties
Claimant: LRH Services Ltd (In Liquidation); First Defendant: Raymond Arthur Trew; Second Defendant: Jason Marcus Brewer; Third Defendant: Derek O'Neill
Jurisdiction
England and Wales
Judgment Date
21 March 2018
Procedural Posture
Company/directors' Duties Claim / High Court Trial Judgment
Outcome
Defendants found in breach of duty; judgment for the claimant.
Legal Topics
Directors' Duties, Solvency Statement, Reduction of Capital, Breach of Duty, Unlawful Dividend, Onerous Lease Provision
Company Law Insolvency Law Directors' Duties Solvency Statement Reduction of Capital Breach of Duty Unlawful Dividend Onerous Lease Provision

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Parties

LRH Services Ltd (In Liquidation)

Claimant

Raymond Arthur Trew

First Defendant

Jason Marcus Brewer

Second Defendant

Derek O'Neill

Third Defendant

Procedural Posture

Company/directors' Duties Claim / High Court Trial Judgment

Legal Issues

  1. 1 Whether the directors breached their duties of care, skill, and to promote the success of the company in devising and implementing the 2009 reorganisation; whether the solvency statement was made on reasonable grounds; whether the provision for onerous leases was adequate; whether subsequent actions of the directors constituted further breaches of duty.

Ratio Decidendi

The directors failed to make adequate provision for LRH's onerous lease liabilities and did not ensure the company had sufficient assets or secure income to meet them. The solvency statement was not made on reasonable grounds. The directors did not exercise the care, skill, and diligence required, nor did they properly promote the success of the company. The subsequent release of obligations for inadequate consideration further breached directors' duties.

Court Disposition

Defendants found in breach of duty; judgment for the claimant.

Orders

  • Defendants to compensate LRH for losses arising from breach of duty, including losses from inadequate provision for onerous leases and unlawful dividend.
  • Further directions for quantification of damages to be determined.