Auden McKenzie (Pharma Division) Ltd v Patel [2019] EWCA Civ 2291 (20 December 2019)

Auden McKenzie (Pharma Division) Ltd v Patel [2019] EWCA Civ 2291 (20 December 2019)

A director cannot defeat a claim for equitable compensation for misappropriation of company funds solely by asserting that equivalent lawful payments would have been made to the same persons; such a defence is not unsustainable in law and requires full consideration at trial. Summary judgment was inappropriate given the factual and legal complexity.

Citation
[2019] EWCA Civ 2291
Parties
Respondent/first Claimant: Auden McKenzie (Pharma Division) Limited; Appellant/first Defendant: Amit Patel
Jurisdiction
England and Wales
Judgment Date
20 December 2019
Procedural Posture
Appeal / Court of Appeal Judgment on Summary Judgment From High Court
Outcome
Appeal allowed; summary judgment set aside.
Legal Topics
Equitable Compensation, Breach of Fiduciary Duty, Summary Judgment, Directors' Duties, Misappropriation of Funds
Company Law Equity Fiduciary Duties Equitable Compensation Breach of Fiduciary Duty Summary Judgment Directors' Duties Misappropriation of Funds

Case Brief

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Parties

Auden McKenzie (Pharma Division) Limited

Respondent/first Claimant

Amit Patel

Appellant/first Defendant

Procedural Posture

Appeal / Court of Appeal Judgment on Summary Judgment From High Court

Legal Issues

  1. 1 Whether a director can defend a claim for equitable compensation for misappropriation of company funds on the basis that equivalent lawful payments would have been made to the same persons as dividends or remuneration
  2. 2 Whether the quantum of compensation should be reduced by hypothetical corporation tax the company would have paid if the misappropriation had not occurred

Ratio Decidendi

A director cannot defeat a claim for equitable compensation for misappropriation of company funds solely by asserting that equivalent lawful payments would have been made to the same persons; such a defence is not unsustainable in law and requires full consideration at trial. Summary judgment was inappropriate given the factual and legal complexity.

Court Disposition

Appeal allowed; summary judgment set aside.

Orders

  • Summary judgment against Mr Patel set aside; matter remitted for trial.