In re Northwind Yachts v [2005] JLR 137 (20 April 2005)

In re Northwind Yachts v [2005] JLR 137 (20 April 2005)

The court held that a derivative action is not available where an adequate alternative remedy exists, such as liquidation for a dormant company. However, if the shareholder who agreed to fund the liquidation fails to do so, the derivative action may be revived.

Citation
[2005] JLR 137
Parties
Company: Northwind Yachts
Jurisdiction
Jersey
Judgment Date
20 April 2005
Procedural Posture
Company Law Application / Interlocutory
Outcome
Derivative action stayed in favour of liquidation, with liberty to revive if funding fails.
Legal Topics
Minority Shareholders, Unfair Prejudice, Derivative Action, Liquidation
Company Law Minority Shareholders Unfair Prejudice Derivative Action Liquidation

Case Brief

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Parties

Northwind Yachts

Company

Procedural Posture

Company Law Application / Interlocutory

Legal Issues

  1. 1 Whether a derivative action can proceed under Companies (Jersey) Law 1991, art. 143(2)(c) when an adequate alternative remedy is available
  2. 2 Whether liquidation is an adequate alternative remedy for a dormant company
  3. 3 Whether a derivative action may be revived if a shareholder fails to fund the agreed liquidation

Ratio Decidendi

The court held that a derivative action is not available where an adequate alternative remedy exists, such as liquidation for a dormant company. However, if the shareholder who agreed to fund the liquidation fails to do so, the derivative action may be revived.

Court Disposition

Derivative action stayed in favour of liquidation, with liberty to revive if funding fails.

Orders

  • Stay of derivative action
  • Liberty to apply to revive derivative action if liquidation funding not provided