DAVID FRASER GLASGOW IN THE NOTE BY THE LIQUIDATOR OF GLASGOW AND WEIR BLACKSMITHS Ltd v DAVID FRASER GLASGOW [2016] ScotSC 20 (11 March 2016)

DAVID FRASER GLASGOW IN THE NOTE BY THE LIQUIDATOR OF GLASGOW AND WEIR BLACKSMITHS Ltd v DAVID FRASER GLASGOW [2016] ScotSC 20 (11 March 2016)

Section 212 of the Insolvency Act 1986 empowers the court to order a director who has misapplied company funds to compensate the company as the court thinks just, without requiring proof of actual loss. The sheriff was entitled to order the appellant to pay compensation equal to the sums diverted to Windows, as this constituted misfeasance and breach of duty. The appeal is refused.

Citation
[2016] ScotSC 20
Parties
Defender and Appellant: David Fraser Glasgow; Noter and Respondent: The Liquidator of Glasgow and Weir Blacksmiths Limited
Jurisdiction
Scotland
Judgment Date
11 March 2016
Procedural Posture
Appeal in Liquidation Proceedings (section 212 Insolvency Act 1986) / Appeal From Sheriff's Interlocutors of 25 November and 15 December 2015
Outcome
Appeal refused; sheriff's interlocutors adhered to.
Legal Topics
Misfeasance by Director, Summary Remedy Under Section 212 Insolvency Act 1986, Director's Fiduciary Duties, Compensation for Misapplied Company Funds
Insolvency Company Law Misfeasance by Director Summary Remedy Under Section 212 Insolvency Act 1986 Director's Fiduciary Duties Compensation for Misapplied Company Funds

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 3 Authorities cited 11 Party arguments 2 Amounts and remedies 1
Sign in to unlock

Parties

David Fraser Glasgow

Defender and Appellant

The Liquidator of Glasgow and Weir Blacksmiths Limited

Noter and Respondent

Procedural Posture

Appeal in Liquidation Proceedings (section 212 Insolvency Act 1986) / Appeal From Sheriff's Interlocutors of 25 November and 15 December 2015

Legal Issues

  1. 1 Whether section 212 of the Insolvency Act 1986 is purely procedural or provides a substantive remedy against directors for misfeasance
  2. 2 Whether compensation under section 212(3) requires proof of actual loss to the company or is at the court's discretion based on sums misapplied
  3. 3 Whether the sheriff erred in ordering the appellant to compensate the company for sums diverted to a third party company (Windows)

Ratio Decidendi

Section 212 of the Insolvency Act 1986 empowers the court to order a director who has misapplied company funds to compensate the company as the court thinks just, without requiring proof of actual loss. The sheriff was entitled to order the appellant to pay compensation equal to the sums diverted to Windows, as this constituted misfeasance and breach of duty. The appeal is refused.

Court Disposition

Appeal refused; sheriff's interlocutors adhered to.

Orders

  • Appellant to pay compensation to the company for sums misapplied (over £177,000)
  • Appellant liable for expenses of the appeal