Buckingham Homes Ltd & Anor v Rutter & Ors [2019] EWHC 1760 (Ch) (12 July 2019)

Buckingham Homes Ltd & Anor v Rutter & Ors [2019] EWHC 1760 (Ch) (12 July 2019)

The court found that the defendants acted in breach of duty in causing PADS to make the £150,000 loan to PRCA&P and in relation to the payment of £343,231.97 to Barclays, as these transactions were not properly authorised and were not in the interests of PADS. The sale of part of the Property was also not properly authorised by a Special Majority as required. The Duomatic principle did not apply as Mr Ross did not assent to the relevant transactions. However, the court found that the £150,000 loan had been repaid, so no loss arose under that head. The claim for loss of development profit failed on causation grounds. The defendants were not entitled to relief under section 1157 as they had...

Citation
[2019] EWHC 1760 (Ch)
Parties
Claimant: Buckingham Homes Limited; Claimant: Michael Joseph Ross; Defendant: Peter Malcolm Rutter; Defendant: Alan Robert Gilmore; Defendant: Stephen Gerard Crawford; Defendant: Gary Raymond Symes
Jurisdiction
England and Wales
Judgment Date
12 July 2019
Procedural Posture
Breach of Directors' Duties Claim / High Court Trial Judgment
Outcome
Claim partly succeeded; declarations of breach of duty granted but no substantial monetary award.
Legal Topics
Directors' Duties, Breach of Fiduciary Duty, Shareholder Rights, Corporate Governance, Remedies for Breach of Duty
Company Law Equity and Trusts Directors' Duties Breach of Fiduciary Duty Shareholder Rights Corporate Governance Remedies for Breach of Duty

Case Brief

Summary, issues, holding and outcome

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Parties

Buckingham Homes Limited

Claimant

Michael Joseph Ross

Claimant

Peter Malcolm Rutter

Defendant

Alan Robert Gilmore

Defendant

Stephen Gerard Crawford

Defendant

Gary Raymond Symes

Defendant

Procedural Posture

Breach of Directors' Duties Claim / High Court Trial Judgment

Legal Issues

  1. 1 Whether the defendants, as former directors of PADS, acted in breach of duty in relation to (a) a £150,000 loan to PRCA&P, (b) the sale of part of the Property to 32VRL, and (c) the payment of £343,231.97 to Barclays.
  2. 2 Whether the relevant transactions were authorised by valid resolutions or by the Duomatic principle.
  3. 3 Whether the claimants are entitled to compensation or restitution for losses allegedly suffered by PADS.

Ratio Decidendi

The court found that the defendants acted in breach of duty in causing PADS to make the £150,000 loan to PRCA&P and in relation to the payment of £343,231.97 to Barclays, as these transactions were not properly authorised and were not in the interests of PADS. The sale of part of the Property was also not properly authorised by a Special Majority as required. The Duomatic principle did not apply as Mr Ross did not assent to the relevant transactions. However, the court found that the £150,000 loan had been repaid, so no loss arose under that head. The claim for loss of development profit failed on causation grounds. The defendants were not entitled to relief under section 1157 as they had...

Court Disposition

Claim partly succeeded; declarations of breach of duty granted but no substantial monetary award.

Orders

  • Declaration that defendants acted in breach of duty in relation to the £150,000 loan and the payment of £343,231.97 to Barclays.
  • No order for compensation in respect of the £150,000 loan as it was repaid.