Morphitis v Leonardo Bernasconi Pasqualino Monti Nicholas Bennett & Co (a firm)

Morphitis v Leonardo Bernasconi Pasqualino Monti Nicholas Bennett & Co (a firm)

Fraudulent trading within section 213 of the Insolvency Act 1986 was not made out because the business was not carried on with intent to defraud creditors; the only deception found was a single misleading promise, which did not amount to carrying on business with fraudulent intent. Contribution and punitive elements were not justified, and the directors’ liability was extinguished by the solicitors’ payment.

Parties
Applicant/appellant: Geoffrey Christopher Antony Morphitis; Defendant/respondent: Leonardo Bernasconi; Defendant/respondent: Pasqualino Monti; Defendant: Nicholas Bennett & Co (A Firm)
Jurisdiction
England and Wales
Judgment Date
05 March 2003
Procedural Posture
Civil Appeal / Appeal From High Court Judgment
Outcome
Appeal dismissed; cross-appeal allowed; action against respondents dismissed
Legal Topics
Fraudulent Trading, Director Liability, Liquidation, Contribution to Company Assets
Insolvency Law Company Law Fraudulent Trading Director Liability Liquidation Contribution to Company Assets

Case Brief

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Parties

Geoffrey Christopher Antony Morphitis

Applicant/appellant

Leonardo Bernasconi

Defendant/respondent

Pasqualino Monti

Defendant/respondent

Nicholas Bennett & Co (A Firm)

Defendant

Procedural Posture

Civil Appeal / Appeal From High Court Judgment

Legal Issues

  1. 1 Whether the directors were knowingly party to the carrying on of the business with intent to defraud creditors or for other fraudulent purposes within section 213 of the Insolvency Act 1986
  2. 2 Whether the directors were parties to fraudulent trading prior to 12 November 1993
  3. 3 Whether any relevant loss was suffered by reason of the directors’ participation in fraudulent trading

Ratio Decidendi

Fraudulent trading within section 213 of the Insolvency Act 1986 was not made out because the business was not carried on with intent to defraud creditors; the only deception found was a single misleading promise, which did not amount to carrying on business with fraudulent intent. Contribution and punitive elements were not justified, and the directors’ liability was extinguished by the solicitors’ payment.

Court Disposition

Appeal dismissed; cross-appeal allowed; action against respondents dismissed

Orders

  • Appellant granted permission to appeal on ground 1 of the appellant’s notice
  • Respondent granted permission to appeal on grounds 1 and 2 of the respondent’s notice