Wednesday, 22 August 2012

UK: England and Wales: permission granted to continue derivative claim

Judgment was given in Hughes v Weiss [2012] EWHC 2363 (Ch) last week; a copy of the judgment was added to the BAILII database this week. The trial judge, His Honour Judge Keyser QC (sitting as a judge of the High Court), granted permission to continue a derivative claim under Part 11 of the Companies Act 2006. Amongst other things, the trial judge rejected the argument that permission should be refused because of the availability of alternative remedies including voluntary winding-up and a petition under section 994 of the 2006 Act. Indeed, the trial judge made clear that the a derivative claim was more appropriate than a section 994 petition because the shareholder was seeking a remedy for the company for alleged misfeasance by a director and not the purchase of her shares.

One interesting aspect of the proceedings was the fact that a personal claim by the shareholder against the company was included in order to avoid the need for a second set of proceedings (and the associated costs). The trial judge was, at first, attracted to the view that it would be simpler and cheaper to permit the personal claim and derivative claim to be dealt with in the same proceedings. He nevertheless concluded that this would not be appropriate, noting that the position relating to costs was likely to be very different between the cases, and stayed the personal claim until the case management conference.

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