Shaker and Ors v. Al-Bedrawi and Ors [2001] EWHC Ch 159 (26th July, 2001)

Shaker and Ors v. Al-Bedrawi and Ors [2001] EWHC Ch 159 (26th July, 2001)

The claimant's claims are barred to the extent that the loss alleged is merely reflective of the loss suffered by the company. The reflective loss principle precludes a shareholder from recovering for diminution in share value or loss of dividends where the company has a cause of action for the same loss. Only if the claimant can establish a personal cause of action and a loss separate and distinct from the company's loss can the claim proceed.

Citation
[2001] EWHC Ch 159
Parties
Claimant: Ghassan Shaker; Defendant: Mohammed Al-Bedrawi; Defendant: Abdullah Masry; Defendant: Steggles Palmer defendants; Defendant: M. B. C. Ltd
Jurisdiction
England and Wales
Procedural Posture
Civil / Preliminary Issue Determination
Outcome
Preliminary issue determined in favour of the defendants; claimant's claims are barred to the extent they are reflective of company loss.
Legal Topics
Reflective Loss, Shareholder Claims, Breach of Fiduciary Duty, Fraudulent Misrepresentation, Dishonest Assistance, Constructive Trust
Company Law Equity and Trusts Civil Procedure Reflective Loss Shareholder Claims Breach of Fiduciary Duty Fraudulent Misrepresentation Dishonest Assistance +1 more

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 3 Authorities cited 15 Party arguments 2 Amounts and remedies 8
Sign in to unlock

Parties

Ghassan Shaker

Claimant

Mohammed Al-Bedrawi

Defendant

Abdullah Masry

Defendant

Steggles Palmer defendants

Defendant

M. B. C. Ltd

Defendant

Procedural Posture

Civil / Preliminary Issue Determination

Legal Issues

  1. 1 Whether the claimant's loss is merely reflective of the loss suffered by the company and thus barred by the rule in Prudential Assurance v. Newman Industries Ltd. (No. 2) and Johnson v. Gore Wood.
  2. 2 Whether the claimant has a personal cause of action against the defendants for breach of duty independently owed to him.

Ratio Decidendi

The claimant's claims are barred to the extent that the loss alleged is merely reflective of the loss suffered by the company. The reflective loss principle precludes a shareholder from recovering for diminution in share value or loss of dividends where the company has a cause of action for the same loss. Only if the claimant can establish a personal cause of action and a loss separate and distinct from the company's loss can the claim proceed.

Court Disposition

Preliminary issue determined in favour of the defendants; claimant's claims are barred to the extent they are reflective of company loss.

Orders

  • Claimant may not proceed against the defendants in relation to the proceeds of sale to the extent the loss is reflective of company loss.
  • Any claims based on personal loss, separate and distinct from company loss, may proceed subject to further determination.