Bhullar v Bhullar & Ors [2017] EWHC 407 (Ch) (2 March 2017)

Bhullar v Bhullar & Ors [2017] EWHC 407 (Ch) (2 March 2017)

The court found that Jatinderjit Singh Bhullar breached his fiduciary duties as director by causing BBL and BDL to make substantial payments to Torex Developments Limited, a company he owned, without proper board authority, documentation, or disclosure to the other directors, particularly Inderjit Singh Bhullar. The court rejected the existence of any binding agreement authorising such payments and found that the payments were not properly authorised loans. The breach was not excused by any acquiescence or knowledge of the other directors. Relief under s.1157 Companies Act 2006 was refused as Jatinderjit did not act honestly or reasonably.

Citation
[2017] EWHC 407 (Ch)
Parties
Claimant: Inderjit Singh Bhullar; First Defendant: Jatinderjit Singh Bhullar; Second Defendant: Bhullar Developments Limited; Third Defendant: Bhullar Brothers Limited
Jurisdiction
England and Wales
Judgment Date
02 March 2017
Procedural Posture
Derivative Claim / Final Judgment After Trial
Outcome
Claim allowed in part; declaration of breach of fiduciary duty and order for account and inquiry.
Legal Topics
Directors' Fiduciary Duties, Derivative Actions, Loans to Directors, Corporate Governance, Remedies for Breach of Duty
Company Law Directors' Fiduciary Duties Derivative Actions Loans to Directors Corporate Governance Remedies for Breach of Duty

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Parties

Inderjit Singh Bhullar

Claimant

Jatinderjit Singh Bhullar

First Defendant

Bhullar Developments Limited

Second Defendant

Bhullar Brothers Limited

Third Defendant

Procedural Posture

Derivative Claim / Final Judgment After Trial

Legal Issues

  1. 1 Whether Jatinderjit Singh Bhullar breached fiduciary duties as director by causing company funds to be paid to Torex Developments Limited without proper authority or disclosure.
  2. 2 Whether the payments to Torex were loans or gifts, and whether they were properly authorised.
  3. 3 Whether the other directors knew of, agreed to, or acquiesced in the Torex payments.

Ratio Decidendi

The court found that Jatinderjit Singh Bhullar breached his fiduciary duties as director by causing BBL and BDL to make substantial payments to Torex Developments Limited, a company he owned, without proper board authority, documentation, or disclosure to the other directors, particularly Inderjit Singh Bhullar. The court rejected the existence of any binding agreement authorising such payments and found that the payments were not properly authorised loans. The breach was not excused by any acquiescence or knowledge of the other directors. Relief under s.1157 Companies Act 2006 was refused as Jatinderjit did not act honestly or reasonably.

Court Disposition

Claim allowed in part; declaration of breach of fiduciary duty and order for account and inquiry.

Orders

  • Declaration that Jatinderjit Singh Bhullar breached fiduciary duties as director of BBL and BDL.
  • Order for account and inquiry as to losses suffered by BBL and BDL and/or profits made by Jatinderjit Singh Bhullar as a result of the Torex payments.