Manolete Partners Plc v Smith & Ors [2022] EWHC 364 (Ch) (23 February 2022)

Manolete Partners Plc v Smith & Ors [2022] EWHC 364 (Ch) (23 February 2022)

The court found that Mr Dartmouth was not a de facto or shadow director of City Build or ISS, and therefore owed no directors' duties to the Companies. Mr Smith, as de jure director, admitted breach of duty and liability for the payments. The Applicant failed to prove that the payments to Mr Dartmouth and CDL were transactions at an undervalue under section 238 of the Insolvency Act 1986, as there was insufficient evidence that the payments were not for value or that the Companies received no consideration. Accordingly, the claims against Mr Dartmouth and CDL were dismissed.

Citation
[2022] EWHC 364 (Ch)
Parties
Applicant: Manolete Partners PLC; First Respondent: Clifford Norman Smith; Second Respondent: Charles John Dartmouth; Third Respondent: Charles Dartmouth Ltd
Jurisdiction
England and Wales
Judgment Date
23 February 2022
Procedural Posture
Insolvency Application (misfeasance and Transactions at Undervalue) / Trial Judgment
Outcome
Claims against the Second and Third Respondents (Mr Dartmouth and CDL) dismissed; First Respondent (Mr Smith) admitted liability.
Legal Topics
Directors' Duties, De Facto and Shadow Directors, Transactions at an Undervalue, Breach of Trust, Liquidator's Claims
Insolvency Company Law Directors' Duties De Facto and Shadow Directors Transactions at an Undervalue Breach of Trust Liquidator's Claims

Case Brief

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Parties

Manolete Partners PLC

Applicant

Clifford Norman Smith

First Respondent

Charles John Dartmouth

Second Respondent

Charles Dartmouth Ltd

Third Respondent

Procedural Posture

Insolvency Application (misfeasance and Transactions at Undervalue) / Trial Judgment

Legal Issues

  1. 1 Whether Mr Dartmouth was a de facto or shadow director of City Build (London) Ltd and ISS London Ltd
  2. 2 Whether Mr Smith and Mr Dartmouth breached directors' duties by causing or acquiescing in payments to Mr Dartmouth and/or CDL
  3. 3 Whether the payments were transactions at an undervalue under section 238 of the Insolvency Act 1986

Ratio Decidendi

The court found that Mr Dartmouth was not a de facto or shadow director of City Build or ISS, and therefore owed no directors' duties to the Companies. Mr Smith, as de jure director, admitted breach of duty and liability for the payments. The Applicant failed to prove that the payments to Mr Dartmouth and CDL were transactions at an undervalue under section 238 of the Insolvency Act 1986, as there was insufficient evidence that the payments were not for value or that the Companies received no consideration. Accordingly, the claims against Mr Dartmouth and CDL were dismissed.

Court Disposition

Claims against the Second and Third Respondents (Mr Dartmouth and CDL) dismissed; First Respondent (Mr Smith) admitted liability.

Orders

  • Claims against Mr Dartmouth and CDL dismissed
  • Mr Smith admitted liability for breach of duty as director