Director misfeasance

This case concerned a claim under section 212 of the Insolvency Act 1986 brought by a customer against the directors arising out of the collapse of FXS and GFX.

The customer had earlier brought a claim in deceit against one of the two directors which the claimant had largely won.

In the instant claim the claimant sought restitution in relation to three sums said to have been extracted from the company unlawfully. The claimant applied for summary judgment.

As regards the first claim the court granted summary judgment against the first defendant on the ground that it was not possible to go behind the judgment already made by Flaux J.

As regards the second claim, the court held that it was entitled to reject evidence that was manifestly incredible, but it had to exercise caution before doing so adding that, in the absence of cross-examination, the court should be slow to reject written evidence as untrue unless it can be said to be wholly incredible: this was a case in which, by a whisker, the court should decline to take that view.

The court referred to certain findings reached by Flaux J in the deceit claim, stating that, damning though Flaux J's findings were, the instant court could not simply adopt them for the purpose of the instant application. First, they went to the credibility of the second respondent, not the first; secondly, they were made after a trial that involved oral evidence; and finally, the court had to guard against the assumption that a party who lies about some things must necessarily be lying about other things. On the second claim the court instead made a conditional order, directing payment into court against both respondents.

On the third claim the court refused the claim for summary judgment in the circumstances.

Lindsay v O'Loughnane and O'Loughlane, Deputy ICC Judge Baister, 14 September 2023

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