Sevilleja v Marex Financial Ltd

Sevilleja v Marex Financial Ltd

The reflective loss principle is limited to shareholders claiming for diminution in share value or distributions that merely reflect company loss; it does not bar claims by creditors for losses suffered as creditors, even where the company has a concurrent claim. The extension of the principle to creditors in...

Source-derived case information.

Parties
Appellant: Marex Financial Ltd; Respondent: Sevilleja; Intervener: All Party Parliamentary Group on Fair Business Banking
Jurisdiction
England and Wales
Judgment Date
15 July 2020
Procedural Posture
Civil Appeal / Supreme Court Judgment
Outcome
Appeal allowed
Legal Topics
Reflective Loss, Shareholder Rights, Creditor Rights, Double Recovery, Company Autonomy, Economic Torts
Company Law Tort Law Insolvency Law Reflective Loss Shareholder Rights Creditor Rights Double Recovery Company Autonomy +1 more

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Parties

Marex Financial Ltd

Appellant

Sevilleja

Respondent

All Party Parliamentary Group on Fair Business Banking

Intervener

Procedural Posture

Civil Appeal / Supreme Court Judgment

Legal Issues

  1. 1 Does the reflective loss principle bar claims by company creditors as well as shareholders?
  2. 2 Should the reflective loss principle be confined to shareholders?
  3. 3 Is there an exception to the reflective loss rule where the wrongdoer prevents the company from pursuing its claim?

Ratio Decidendi

The reflective loss principle is limited to shareholders claiming for diminution in share value or distributions that merely reflect company loss; it does not bar claims by creditors for losses suffered as creditors, even where the company has a concurrent claim. The extension of the principle to creditors in Gardner v Parker and similar cases was wrong. Marex, as a creditor, is not barred from pursuing its claim against Sevilleja.

Court Disposition

Appeal allowed

Orders

  • Marex is permitted to pursue its claims in full against Sevilleja.
  • The reflective loss principle does not bar Marex's claims as a creditor.