Neville & Anor v Krikorian & Ors

Neville & Anor v Krikorian & Ors

Avo Krikorian is jointly and severally liable under section 341(2)(b) of the Companies Act 1985 for loans made to Krikor Krikorian after 27 July 1999, as he knew of and allowed the practice of unlawful lending to continue, and failed in his duty to stop and recover the loans. He is not liable for loans made before that date, as actual knowledge was not established to the required standard for summary judgment.

Parties
Applicant/respondent: Neville (as administrator of Unigreg Ltd) and another; Respondent/appellant: Krikorian and others
Jurisdiction
England and Wales
Judgment Date
04 July 2006
Procedural Posture
Civil Appeal / Appeal From Summary Judgment in High Court
Outcome
Appeal allowed in part
Legal Topics
Director's Duties, Unlawful Loans to Directors, Joint and Several Liability, Summary Judgment, Misfeasance
Company Law Insolvency Law Director's Duties Unlawful Loans to Directors Joint and Several Liability Summary Judgment Misfeasance

Case Brief

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Parties

Neville (as administrator of Unigreg Ltd) and another

Applicant/respondent

Krikorian and others

Respondent/appellant

Procedural Posture

Civil Appeal / Appeal From Summary Judgment in High Court

Legal Issues

  1. 1 Whether a director is jointly and severally liable for loans made to a co-director in contravention of section 330 of the Companies Act 1985.
  2. 2 Whether the claim to joint and several liability was properly pleaded and supported by evidence.
  3. 3 Whether the refusal to adjourn the summary judgment hearing to allow further evidence was proper.

Ratio Decidendi

Avo Krikorian is jointly and severally liable under section 341(2)(b) of the Companies Act 1985 for loans made to Krikor Krikorian after 27 July 1999, as he knew of and allowed the practice of unlawful lending to continue, and failed in his duty to stop and recover the loans. He is not liable for loans made before that date, as actual knowledge was not established to the required standard for summary judgment.

Court Disposition

Appeal allowed in part

Orders

  • Set aside paragraph 3.2 of the order of 10 December 2004.
  • Order Avo Krikorian to pay £561,162 and any further sum lent by the company to Krikor Krikorian between 27 July 1999 and 31 December 1999, with interest.