Madoff Securities International Ltd v Raven & Ors

Madoff Securities International Ltd v Raven & Ors

The directors of MSIL did not breach their fiduciary duties in authorising or permitting the MSIL Kohn Payments, Interest Payments, or Lifestyle Payments. The payments were made in good faith, with shareholder approval, were cost-neutral due to funding from BLMIS, and caused no loss to MSIL. The directors acted honestly and reasonably, and any technical breach was ratified by the Duomatic principle. Claims against Mrs Kohn and associated entities for dishonest assistance, knowing receipt, restitution, and proprietary remedies failed as there was no underlying breach of fiduciary duty, no loss, and no dishonesty. All claims were in any event time-barred for payments before 8 December 2004,...

Parties
Claimant: Madoff Securities International Limited (In Liquidation); 1st Defendant: Stephen Raven; 2nd Defendant: Leon Flax; 3rd Defendant: Christopher James Dale; 4th Defendant: Philip John Toop; 5th Defendant: Malcolm Stevenson; 6th Defendant: Peter Barnet Madoff; 7th Defendant: Mark David Madoff; 8th Defendant: Andrew Howard Madoff; 9th Defendant: Sonja Kohn; 10th Defendant: Erko Incorporated; 11th Defendant: Tecno Development & Research Limited
Jurisdiction
England and Wales
Judgment Date
18 October 2013
Procedural Posture
Commercial Court Civil Claim / Final Judgment After Full Trial
Outcome
All claims against all defendants dismissed.
Legal Topics
Directors' Duties, Breach of Fiduciary Duty, Knowing Receipt, Dishonest Assistance, Unlawful Distribution of Capital, Limitation of Actions, Restitution, Ex Turpi Causa, Duomatic Principle
Company Law Equity and Trusts Commercial Law Directors' Duties Breach of Fiduciary Duty Knowing Receipt Dishonest Assistance Unlawful Distribution of Capital +4 more

Case Brief

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Parties

Madoff Securities International Limited (In Liquidation)

Claimant

Stephen Raven

1st Defendant

Leon Flax

2nd Defendant

Christopher James Dale

3rd Defendant

Philip John Toop

4th Defendant

Malcolm Stevenson

5th Defendant

Peter Barnet Madoff

6th Defendant

Mark David Madoff

7th Defendant

Andrew Howard Madoff

8th Defendant

Sonja Kohn

9th Defendant

Erko Incorporated

10th Defendant

Tecno Development & Research Limited

11th Defendant

Procedural Posture

Commercial Court Civil Claim / Final Judgment After Full Trial

Legal Issues

  1. 1 Whether the directors of MSIL breached their fiduciary duties in relation to payments made to entities connected with Mrs Kohn ('MSIL Kohn Payments')
  2. 2 Whether the directors were liable for interest payments on subordinated loans and 'lifestyle payments' for the benefit of Bernard Madoff and his family
  3. 3 Whether Mrs Kohn and associated entities were liable for dishonest assistance, knowing receipt, restitution, or proprietary claims

Ratio Decidendi

The directors of MSIL did not breach their fiduciary duties in authorising or permitting the MSIL Kohn Payments, Interest Payments, or Lifestyle Payments. The payments were made in good faith, with shareholder approval, were cost-neutral due to funding from BLMIS, and caused no loss to MSIL. The directors acted honestly and reasonably, and any technical breach was ratified by the Duomatic principle. Claims against Mrs Kohn and associated entities for dishonest assistance, knowing receipt, restitution, and proprietary remedies failed as there was no underlying breach of fiduciary duty, no loss, and no dishonesty. All claims were in any event time-barred for payments before 8 December 2004,...

Court Disposition

All claims against all defendants dismissed.

Orders

  • All claims against each Defendant are dismissed.