Boston Trust Company Ltd v Szerelmey Ltd & Ors

Boston Trust Company Ltd v Szerelmey Ltd & Ors

Boston currently lacks standing to pursue the derivative action at common law as they are not the legal or beneficial owners of the relevant shares; a lesser equitable interest is insufficient. However, if standing is established (e.g., via rectification of the share register), all four heads of claim have sufficient substance to proceed as a derivative action, satisfying the fraud on the minority exception, and are not precluded by ulterior purpose or adequate alternative remedy arguments.

Parties
Claimant: Boston Trust Company Limited; Claimant: Boston Fiduciary Management Ltd; Defendant: Szerelmey Limited; Defendant: Szerelmey (GB) Limited; Defendant: Szerelmey Restoration Limited; Defendant: Tellisford Limited; Defendant: Gordon Verhoef; Defendant: Szerelmey (UK) Limited; Defendant: London Stone Limited; Defendant: Heritage House (York) Limited; Defendant: Tusk Holdings Limited; Defendant: Hare and Ransome Joinery Ltd
Jurisdiction
England and Wales
Judgment Date
07 May 2020
Procedural Posture
Derivative Claim (common Law, Multiple Derivative) / Application for Permission to Continue Derivative Proceedings (second Stage)
Outcome
Permission to continue derivative action refused at present for lack of standing; court to hear parties on appropriate form of order, including possible conditional permission or stay pending rectification of share register.
Legal Topics
Derivative Actions, Fraud on the Minority, Shareholder Disputes, Board Independence, Reflective Loss, Standing in Derivative Claims
Company Law Equity and Trusts Civil Procedure Derivative Actions Fraud on the Minority Shareholder Disputes Board Independence Reflective Loss +1 more

Case Brief

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Parties

Boston Trust Company Limited

Claimant

Boston Fiduciary Management Ltd

Claimant

Szerelmey Limited

Defendant

Szerelmey (GB) Limited

Defendant

Szerelmey Restoration Limited

Defendant

Tellisford Limited

Defendant

Gordon Verhoef

Defendant

Szerelmey (UK) Limited

Defendant

London Stone Limited

Defendant

Heritage House (York) Limited

Defendant

Tusk Holdings Limited

Defendant

Hare and Ransome Joinery Ltd

Defendant

Procedural Posture

Derivative Claim (common Law, Multiple Derivative) / Application for Permission to Continue Derivative Proceedings (second Stage)

Legal Issues

  1. 1 Whether Boston has standing to pursue a multiple derivative claim at common law
  2. 2 Whether the claims fall within the fraud on the minority exception to Foss v Harbottle
  3. 3 Whether the claims have prima facie prospects of success

Ratio Decidendi

Boston currently lacks standing to pursue the derivative action at common law as they are not the legal or beneficial owners of the relevant shares; a lesser equitable interest is insufficient. However, if standing is established (e.g., via rectification of the share register), all four heads of claim have sufficient substance to proceed as a derivative action, satisfying the fraud on the minority exception, and are not precluded by ulterior purpose or adequate alternative remedy arguments.

Court Disposition

Permission to continue derivative action refused at present for lack of standing; court to hear parties on appropriate form of order, including possible conditional permission or stay pending rectification of share register.