Umbrella Care Ltd v Nisa & Ors [2022] EWHC 3139 (Ch) (08 December 2022)

Umbrella Care Ltd v Nisa & Ors [2022] EWHC 3139 (Ch) (08 December 2022)

Directors who cause or permit the misapplication of company funds in breach of their duties are liable to compensate the company for the resulting loss, measured as the amount required to restore the company to the position it would have been in but for the breach, less any assets recovered. Recipients of such funds with knowledge are similarly liable for equitable compensation. The quantum is determined by the company's outstanding liability to HMRC, less realised assets.

Citation
[2022] EWHC 3139 (Ch)
Parties
Claimant: Umbrella Care Limited (in liquidation); First Defendant: Khair Un Nisa; Second Defendant: Usman Khalid Raja; Third Defendant: Emil Cervenak; Fourth Defendant: Dynamic Int Limited; Fifth Defendant: Universal Real Estate (PVT) Limited; Sixth Defendant: Universal Total Care Limited; Seventh Defendant: First International Holdings Limited; Eighth Defendant: FI Holdings Limited
Jurisdiction
England and Wales
Judgment Date
08 December 2022
Procedural Posture
Insolvency/companies Court Civil Claim / Quantum Assessment Following Summary Judgment on Liability
Outcome
Judgment for the Claimant against the Second, Third, Fourth, Fifth, and Sixth Defendants for damages/equitable compensation; action stayed against First Defendant due to bankruptcy; claims dismissed against Seventh and Eighth Defendants with no order as to costs.
Legal Topics
Director's Duties, Breach of Fiduciary Duty, Knowing Receipt, Equitable Compensation, Constructive Trust, Liquidation, Fraud, Tracing, Assessment of Damages
Insolvency Company Law Equity and Trusts Director's Duties Breach of Fiduciary Duty Knowing Receipt Equitable Compensation Constructive Trust +4 more

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Parties

Umbrella Care Limited (in liquidation)

Claimant

Khair Un Nisa

First Defendant

Usman Khalid Raja

Second Defendant

Emil Cervenak

Third Defendant

Dynamic Int Limited

Fourth Defendant

Universal Real Estate (PVT) Limited

Fifth Defendant

Universal Total Care Limited

Sixth Defendant

First International Holdings Limited

Seventh Defendant

FI Holdings Limited

Eighth Defendant

Procedural Posture

Insolvency/companies Court Civil Claim / Quantum Assessment Following Summary Judgment on Liability

Legal Issues

  1. 1 Quantum of damages/equitable compensation for breach of director's duties and knowing receipt
  2. 2 Causation and assessment of loss in breach of trust/fiduciary duty context
  3. 3 Appropriate orders against non-participating or bankrupt defendants

Ratio Decidendi

Directors who cause or permit the misapplication of company funds in breach of their duties are liable to compensate the company for the resulting loss, measured as the amount required to restore the company to the position it would have been in but for the breach, less any assets recovered. Recipients of such funds with knowledge are similarly liable for equitable compensation. The quantum is determined by the company's outstanding liability to HMRC, less realised assets.

Court Disposition

Judgment for the Claimant against the Second, Third, Fourth, Fifth, and Sixth Defendants for damages/equitable compensation; action stayed against First Defendant due to bankruptcy; claims dismissed against Seventh and Eighth Defendants with no order as to costs.

Orders

  • Stay of action against Khair Un Nisa under s.285(1) Insolvency Act 1986.
  • Assessment of damages/equitable compensation against Usman Khalid Raja in the sum of £21,811,531.93.