MCGREGOR GLAZING LTD (in liq) v. GEORGE MCGREGOR [2013] ScotSC 37 (20 May 2013)

MCGREGOR GLAZING LTD (in liq) v. GEORGE MCGREGOR [2013] ScotSC 37 (20 May 2013)

The defender's defences are irrelevant in law as directors cannot escape liability for unauthorised loans or misapplied company funds by claiming ignorance, lack of involvement, or erroneous accounting entries without proper specification. The pursuers' averments are sufficient to establish liability for repayment of directors' loans and unauthorised loans to a co-director. Payments made in insolvency circumstances may constitute unfair preference. Decree is granted for the sums claimed.

Citation
[2013] ScotSC 37
Parties
Pursuer: McGregor Glazing Limited (In Liquidation); Defender: George McGregor
Jurisdiction
Scotland
Judgment Date
20 May 2013
Procedural Posture
Civil (company Law, Director's Liability) / Judgment on Preliminary Pleas and Merits
Outcome
Decree granted in favour of pursuers; defender's preliminary pleas repelled; pursuers' pleas sustained; hearing on expenses reserved.
Legal Topics
Director's Duties, Directors' Loan Accounts, Unfair Preference, Liability for Unauthorised Loans, Specification and Relevancy of Pleadings
Company Law Insolvency Law Director's Duties Directors' Loan Accounts Unfair Preference Liability for Unauthorised Loans Specification and Relevancy of Pleadings

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Parties

McGregor Glazing Limited (In Liquidation)

Pursuer

George McGregor

Defender

Procedural Posture

Civil (company Law, Director's Liability) / Judgment on Preliminary Pleas and Merits

Legal Issues

  1. 1 Whether the defender is liable for repayment of sums shown as directors' loans in the company's accounts
  2. 2 Whether the defender is liable for loans advanced to a co-director without member approval
  3. 3 Whether the defender's defences based on lack of involvement, erroneous entries, or lack of authorisation are relevant in law

Ratio Decidendi

The defender's defences are irrelevant in law as directors cannot escape liability for unauthorised loans or misapplied company funds by claiming ignorance, lack of involvement, or erroneous accounting entries without proper specification. The pursuers' averments are sufficient to establish liability for repayment of directors' loans and unauthorised loans to a co-director. Payments made in insolvency circumstances may constitute unfair preference. Decree is granted for the sums claimed.

Court Disposition

Decree granted in favour of pursuers; defender's preliminary pleas repelled; pursuers' pleas sustained; hearing on expenses reserved.

Orders

  • Defender to pay pursuers £51,102.34 with interest at 8% per annum from date of citation until payment.
  • Defender to pay pursuers £48,739.12 with interest at 8% per annum from date of citation until payment.