JOHN PATRICK THOMSON + SHEILA ISABEL THOMSON v. THOMAS HENRY RUSSELL [2013] ScotSC 104 (22 November 2013)

JOHN PATRICK THOMSON + SHEILA ISABEL THOMSON v. THOMAS HENRY RUSSELL [2013] ScotSC 104 (22 November 2013)

Mr Russell, as director, caused the company to make payments totalling £43,611.55 to DELPS 1 (his own pension scheme) and £33,300 to Elbalite Ltd (a company he controlled) at a time when the company was insolvent. The payments to DELPS 1 constituted an unfair preference, and those to Elbalite a gratuitous...

Source-derived case information.

Citation
[2013] ScotSC 104
Parties
Noters: John Patrick Thomson and Sheila Isabel Thomson, as trustees of the Dyglen Engineering Limited Pension Scheme No. 2; Respondent: Thomas Henry Russell
Jurisdiction
Scotland
Judgment Date
22 November 2013
Procedural Posture
Section 212 Insolvency Act 1986 Application (misfeasance Proceedings) / Final Judgment After Proof (trial)
Outcome
Partially granted for noters; decree for payment against respondent for specified sums; other claims refused.
Legal Topics
Misfeasance, Unfair Preference, Gratuitous Alienation, Breach of Fiduciary Duty, Relief Under Companies Act 2006 S1157
Insolvency Company Law Director's Duties Misfeasance Unfair Preference Gratuitous Alienation Breach of Fiduciary Duty Relief Under Companies Act 2006 S1157

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Parties

John Patrick Thomson and Sheila Isabel Thomson, as trustees of the Dyglen Engineering Limited Pension Scheme No. 2

Noters

Thomas Henry Russell

Respondent

Procedural Posture

Section 212 Insolvency Act 1986 Application (misfeasance Proceedings) / Final Judgment After Proof (trial)

Legal Issues

  1. 1 Whether Mr Russell misapplied company assets or committed misfeasance as director under section 212 of the Insolvency Act 1986
  2. 2 Whether payments to DELPS 1 constituted an unfair preference
  3. 3 Whether payments to Elbalite Ltd were a gratuitous alienation

Ratio Decidendi

Mr Russell, as director, caused the company to make payments totalling £43,611.55 to DELPS 1 (his own pension scheme) and £33,300 to Elbalite Ltd (a company he controlled) at a time when the company was insolvent. The payments to DELPS 1 constituted an unfair preference, and those to Elbalite a gratuitous alienation, both to the prejudice of creditors and not in the ordinary course of business. Mr Russell did not act honestly or reasonably in making these payments and is liable to repay these sums to the company under section 212 of the Insolvency Act 1986. The sale of machinery to Southfield Properties Ltd was not at undervalue, and there was no misappropriation of stock.

Court Disposition

Partially granted for noters; decree for payment against respondent for specified sums; other claims refused.

Orders

  • Decree against Thomas Henry Russell for payment to Dyglen Engineering Ltd of £43,611.55 (unfair preference to DELPS 1) with interest at 8% per annum from date of decree until payment.
  • Decree against Thomas Henry Russell for payment to Dyglen Engineering Ltd of £33,300 (gratuitous alienation to Elbalite Ltd) with interest at 8% per annum from date of decree until payment.