• Mitchell & Ors v Al Jaber; Al Jaber & Ors v JJW Ltd [2024] EWCA Civ 423

    A director's breach of his fiduciary duty occurred by his ignoring the fact of liquidation of the company of which he was a director, and of the resulting termination of his powers, and instead causing the company to transfer away its shares to a knowing recipient. Play In the present case, a Saudi Arabian sheikh, who was also a director of a BVI company, 'impersonated' a pre-liquidation director of the company - someone with authority to execute some Share Transfer Forms on behalf of the company He did not have the power to execute the Share Transfer Forms as his powers had ceased when the company entered liquidation. In circumstances where those Share Transfer Forms were actually executed later than the director claimed (meaning that, because of the liquidation, his powers had in actual fact ceased before the date of their execution), he was unable to argue that he was not still subject to the fiduciary duties that accompanied such powers. So, in accordance with equitable principles, the court considered him as subject to the fiduciary duties that he would have had if his powers as a director of the company had not ceased.

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    Hurstwood Properties (A) Ltd and Ors v Rossendale BC and Anor [2021] UKSC 16

    This case has implications in matters where the parties attempt to avoid liability for business rates by using corporate vehicles Play The main question posed in this case was whether certain development companies bore any liability to pay non-domestic rates to the council on empty properties that had been leased by those development companies to special purpose vehicle companies (SPV) solely for the purpose of the development companies avoiding the rates liability for which they would otherwise have been liable.    The SPVs argued that there was no such liability, and that they were entitled to the unpaid business rates. They stated that this was because, alternatively:   The lease to an SPV which did not occupy the property did not meet the requirements to make the council the 'owner' of the empty property for rating purposes (the "Statutory Ground"); or   The SPV should be ignored because its purpose was to avoid business rates, which the defendants would otherwise have had to pay. This was claimed to amount to an abuse of the SPVs' separate personality that warranted the piercing of the corporate veil (the "Piercing the Corporate Veil Ground").    In respect of the Piercing the Corporate Veil ground, as is widely understood, to pierce the corporate veil is to disregard the separate legal personality of a company. This means to disregard the doctrine that a company is treated in law as a person in its own right, which is capable of owning property and having its own rights and liabilities distinct from the rights and liabilities of its shareholders. This ground did not find favour with the Supreme Court and was dismissed.   In response to the Statutory Ground, it was important to know who the "owner" of the relevant property was, as only the owner could qualify for rating relief, and only if it could show that it fell within the relevant exemption to liability for the business rates claimed. The relevant exemption was found within some Regulations to the Local Government and Finance Act 1988. These Regulations listed the classes of non-domestic hereditaments (or properties) which, exceptionally, don't give rise to a liability to pay rates when unoccupied. The relevant Regulation stated that these classes include a hereditament "whose owner is a company which is subject to a winding-up order made under the Insolvency Act 1986 or which is being wound up voluntarily under that Act."   In this case, the Supreme Court allowed the appeal by the Local Authorities against the striking-out of their claims to unpaid business rates from the defendant landlords on the basis that the legislation dealing with the payment of business rates for unoccupied properties should be interpreted in the context of the intention behind it, which, it held, was in line with the intention going as far back as the Poor Relief Act 1601, which aimed to deter owners from leaving properties unoccupied for personal financial advantage. It also ultimately held that a court will consider the liability of defendant landlords for business rates at a later stage at trial.  

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    Darty Holdings SAS v Carton-Kelly (as additional liquidator of CGL Realisations Ltd) [2023] EWCA Civ 1135

    When considering whether a transaction is challengeable as a preference it is important to analyse when the decision by the insolvent company was made. This analysis will be critical in determining whether the insolvent company had the required desire to prefer the creditor in question. Play This case is helpful in confirming that it is only the point of an operative decision to repay that is relevant for these purposes; an agreement or understanding to do so, or a decision which was conditional on board approval (or ratification) was not sufficient; nor was an inference that repayment was, essentially, inevitable. The fact that a creditor puts pressure on a debtor to repay a debt does not mean that the debtor has decided to repay it. Even if the new board had little choice but to accept the terms on offer at the completion board meeting on 3 February 2012, it does not follow that Comet had already made a decision in November 2011, when the Sale and Purchase Agreement was signed. The judgment is also a rare example of the Court of Appeal overturning a finding of a fact by a trial judge.

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    BNY Corporate Trustee Services v Eurosail UK

    - BNY Corporate Trustee Services v Eurosail UK [2011] EWCA Civ 227 - BNY Corporate Trustee Services v Eurosail & Ors [2013] UKSC 28 Play The term "insolvency" is not defined in the Insolvency Act 1986. Rather, the term is based upon two tests which are applied to determine whether a debtor is "unable to pay its debts" within the meaning of section 123 Insolvency Act 1986. Section 123 Insolvency Act 1986 contains a definition of what it means for a company to be, or to be deemed by the court to be, unable to pay its debts as they fall due. It follows from this that what is contained in section 123 Insolvency Act 1986 is what a person would have to prove to the court's satisfaction to show that a company is unable to pay its debts. Being able to show that a company is unable to pay its debts is very important, as it is a trigger, which makes it highly relevant in a range of contexts. For example: - the court can wind up a company (that means it can initiate an involuntary liquidation) if the debtor company is unable to pay its debts; and - certain statutory provisions concerning voidable transactions (that is, including certain transactions known as preferences and transactions at an undervalue) can only bite where the transaction in question took place within a specified time frame and also, where at the time of the transactions, the debtor company is, or has as a result of the transaction, become, unable to pay its debts. So, the two tests which are applied to demonstrate that a company cannot pay its debts as they fall due are called the cash-flow test and the balance sheet test. At section 123(2) Insolvency Act 1986 the balance sheet test is set out. This subsection states that "A company is deemed unable to pay its debts if it is proved to the satisfaction of the court that the value of a company's assets is less than the amount of its liabilities, taking into account contingent and prospective liabilities." The other test for insolvency, the cash-flow test, is referred to at section 123(1)(e) Insolvency Act 1986, where it states: "A company is unable to pay its debts.... if it is proved to the satisfaction of the court that the company is unable to pay its debts as they fall due.