Tayplan Ltd v Smith [2011] ScotCS CSIH_8 (04 February 2011)

Tayplan Ltd v Smith [2011] ScotCS CSIH_8 (04 February 2011)

Directors' claims for salary and loan interest failed due to lack of genuine agreement and absence of valid company resolution; purported documents were not contemporaneous or authentic. Sale price of company property to director was £1.1 million, not £825,000, based on credible evidence and documentation. Both directors breached fiduciary duties and materially contributed to company loss, justifying joint and several liability for misappropriated funds and unpaid property price.

Citation
[2011] ScotCS CSIH_8
Parties
Pursuer/respondent: Tayplan Limited (in administration); Defender/reclaimer: Alan Smith; Defender/reclaimer: Lee Smith (also known as Lee Stow Smith)
Jurisdiction
Scotland
Judgment Date
04 February 2011
Procedural Posture
Reclaiming Motion (appeal) / Post Proof, Appellate Judgment
Outcome
Reclaiming motion refused
Legal Topics
Directors' Remuneration, Breach of Fiduciary Duty, Company Records, Joint and Several Liability, Director's Loan Accounts, Sale of Company Assets
Company Law Insolvency Law Fiduciary Duties Directors' Remuneration Breach of Fiduciary Duty Company Records Joint and Several Liability Director's Loan Accounts +1 more

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Parties

Tayplan Limited (in administration)

Pursuer/respondent

Alan Smith

Defender/reclaimer

Lee Smith (also known as Lee Stow Smith)

Defender/reclaimer

Procedural Posture

Reclaiming Motion (appeal) / Post Proof, Appellate Judgment

Legal Issues

  1. 1 Whether directors were entitled to salary and loan interest from the company
  2. 2 Whether the sale price of company property to a director was £825,000 or £1.1 million
  3. 3 Whether directors' liability for misappropriated funds should be joint and several

Ratio Decidendi

Directors' claims for salary and loan interest failed due to lack of genuine agreement and absence of valid company resolution; purported documents were not contemporaneous or authentic. Sale price of company property to director was £1.1 million, not £825,000, based on credible evidence and documentation. Both directors breached fiduciary duties and materially contributed to company loss, justifying joint and several liability for misappropriated funds and unpaid property price.

Court Disposition

Reclaiming motion refused

Orders

  • Decree against defenders jointly and severally for payment of £175,305 and £124,931 with interest at 8% from 5 April 2007 until payment
  • All questions in relation to expenses reserved