Brown & Anor v Button & Ors

Brown & Anor v Button & Ors

The directors' loans contravened section 330 of the Companies Act 1985 and the dividends used to offset the loans were unlawful due to failure to comply with statutory requirements and lack of distributable profits; payments after March 2004 were loans, not salary; claims against Geoffrey Button and James Button succeed for sums actually received, but joint claims are statute barred after six years; claim against Mrs Button fails.

Parties
Applicant: Christopher John Brown; Applicant: Andrew Johnson Mayberry; Respondent: Geoffrey Button; Respondent: James David Button; Respondent: Catherine Valerie Button
Jurisdiction
England and Wales
Judgment Date
04 May 2011
Procedural Posture
Insolvency Application / Judgment
Outcome
Claims against Geoffrey Button and James Button succeed for sums actually received; claim against Catherine Valerie Button fails; joint claims statute barred.
Legal Topics
Director Loans, Unlawful Dividends, Fiduciary Duty, Limitation Period
Company Law Insolvency Law Director Loans Unlawful Dividends Fiduciary Duty Limitation Period

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Parties

Christopher John Brown

Applicant

Andrew Johnson Mayberry

Applicant

Geoffrey Button

Respondent

James David Button

Respondent

Catherine Valerie Button

Respondent

Procedural Posture

Insolvency Application / Judgment

Legal Issues

  1. 1 Whether directors are liable for sums due under director loan accounts
  2. 2 Validity of dividends used to offset loan accounts
  3. 3 Whether payments after March 2004 were loans or salary

Ratio Decidendi

The directors' loans contravened section 330 of the Companies Act 1985 and the dividends used to offset the loans were unlawful due to failure to comply with statutory requirements and lack of distributable profits; payments after March 2004 were loans, not salary; claims against Geoffrey Button and James Button succeed for sums actually received, but joint claims are statute barred after six years; claim against Mrs Button fails.

Court Disposition

Claims against Geoffrey Button and James Button succeed for sums actually received; claim against Catherine Valerie Button fails; joint claims statute barred.

Orders

  • Judgment against Geoffrey Button for £57,546.50
  • Judgment against James Button for £65,375.91