McTear & Anor v Engelhard & Ors [2014] EWHC 1056 (Ch) (10 April 2014)

McTear & Anor v Engelhard & Ors [2014] EWHC 1056 (Ch) (10 April 2014)

The court found that the payments made by BWL to EHL were not loans but payments on account of an accruing management charge for services provided by EHL. The directors did not breach their fiduciary or care duties, as the management charges were agreed, reflected in accounts, and provided value. The accounting adjustment was not a sham, and the claimants were estopped from challenging the management charges due to their acceptance of the accounting treatment and reliance on it during administration and CVA.

Citation
[2014] EWHC 1056 (Ch)
Parties
Claimant: Andrew Ian McTear; Claimant: Christopher Kenneth Williams; Defendant: Michael Conrad Engelhard; Defendant: Maria Elizabeth Risby; Defendant: Anna Marie Engelhard; Defendant: Sylvia Patricia Engelhard; Defendant: Natasha Risby; Defendant: Anna Marie Engelhard as the personal representative of Paul Siegfried Engelhard (deceased); Defendant: Engelhard Holdings Limited
Jurisdiction
England and Wales
Judgment Date
10 April 2014
Procedural Posture
Chancery Division Trial / Final Judgment
Outcome
Claims dismissed
Legal Topics
Directors' Duties, Inter Company Transactions, Estoppel, Sham Transactions, Management Charges, Preferences
Company Law Insolvency Fiduciary Duties Directors' Duties Inter Company Transactions Estoppel Sham Transactions Management Charges +1 more

Case Brief

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Parties

Andrew Ian McTear

Claimant

Christopher Kenneth Williams

Claimant

Michael Conrad Engelhard

Defendant

Maria Elizabeth Risby

Defendant

Anna Marie Engelhard

Defendant

Sylvia Patricia Engelhard

Defendant

Natasha Risby

Defendant

Anna Marie Engelhard as the personal representative of Paul Siegfried Engelhard (deceased)

Defendant

Engelhard Holdings Limited

Defendant

Procedural Posture

Chancery Division Trial / Final Judgment

Legal Issues

  1. 1 Whether payments made by BWL to EHL constituted loans or management charges
  2. 2 Whether directors breached fiduciary and care duties to BWL
  3. 3 Whether accounting entries were sham transactions

Ratio Decidendi

The court found that the payments made by BWL to EHL were not loans but payments on account of an accruing management charge for services provided by EHL. The directors did not breach their fiduciary or care duties, as the management charges were agreed, reflected in accounts, and provided value. The accounting adjustment was not a sham, and the claimants were estopped from challenging the management charges due to their acceptance of the accounting treatment and reliance on it during administration and CVA.

Court Disposition

Claims dismissed

Orders

  • Claimants' claims for repayment and damages dismissed
  • No order for damages against directors