MCGREGOR GLAZING Ltd AGAINST GEORGE MCGREGOR [2014] ScotSC 75 (15 August 2014)

MCGREGOR GLAZING Ltd AGAINST GEORGE MCGREGOR [2014] ScotSC 75 (15 August 2014)

The appellant's averments, though poorly drafted, are not irrelevant or lacking in specification. The statutory defence under Companies Act 2006 s213(7) allows a director to escape liability for unauthorised loans if he can prove lack of knowledge of the relevant circumstances. The appellant's denial of knowledge is sufficient to allow proof before answer. The sheriff's decree de plano was therefore premature and must be recalled.

Citation
[2014] ScotSC 75
Parties
Pursuer and Respondent: McGregor Glazing Limited (in liquidation); Defender and Appellant: George McGregor
Jurisdiction
Scotland
Judgment Date
15 August 2014
Procedural Posture
Civil Appeal / Appeal Against Decree De Plano; Interlocutor Recalled; Proof Before Answer Allowed
Outcome
Appeal allowed; sheriff's interlocutor recalled; proof before answer allowed; expenses of appeal awarded to appellant; employment of junior counsel certified.
Legal Topics
Directors' Loans, Liquidation, Companies Act 2006 S197, S213, S214, Insolvency Act 1986 S243, Directors' Statutory Duties, Relevancy and Specification of Pleadings
Company Law Insolvency Law Directors' Loans Liquidation Companies Act 2006 S197, S213, S214 Insolvency Act 1986 S243 Directors' Statutory Duties Relevancy and Specification of Pleadings

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Parties

McGregor Glazing Limited (in liquidation)

Pursuer and Respondent

George McGregor

Defender and Appellant

Procedural Posture

Civil Appeal / Appeal Against Decree De Plano; Interlocutor Recalled; Proof Before Answer Allowed

Legal Issues

  1. 1 Whether the pleadings of the appellant (defender) are irrelevant and lacking in specification regarding alleged directors' loans and liability under Companies Act 2006 s213.
  2. 2 Whether the appellant's lack of knowledge of loans to co-director (Mr Stewart) is a relevant defence under s213(7).
  3. 3 Whether payments to Heritage Window and Door Company Limited should be treated as directors' loans or debts due by that company.

Ratio Decidendi

The appellant's averments, though poorly drafted, are not irrelevant or lacking in specification. The statutory defence under Companies Act 2006 s213(7) allows a director to escape liability for unauthorised loans if he can prove lack of knowledge of the relevant circumstances. The appellant's denial of knowledge is sufficient to allow proof before answer. The sheriff's decree de plano was therefore premature and must be recalled.

Court Disposition

Appeal allowed; sheriff's interlocutor recalled; proof before answer allowed; expenses of appeal awarded to appellant; employment of junior counsel certified.

Orders

  • Allows the appeal.
  • Recalls the sheriff’s interlocutor of 15 May 2013.