Kiani v Cooper
Permission to continue a derivative claim was granted where there was a strong prima facie case that a director had misappropriated the company's money.
Facts
Mrs Kiani and Mr Cooper were the two directors and equal shareholders of a property development company. Mrs Kiani claimed that Mr Cooper had caused the company to pay large sums to companies associated with him, for work that had not been done, and had otherwise misappropriated the company's money. She brought a derivative claim against him, and applied for permission to continue it.
Legal principle
Proudman J granted permission to continue the claim. Mr Cooper had not given any satisfactory explanation of the payments, and there was a strong prima facie case against him. A hypothetical director acting in accordance with section 172 of the Companies Act 2006 would attach importance to continuing the claim, and the fact that the claimant could have brought an unfair prejudice petition did not prevent permission being granted. The court also ordered the company to indemnify the claimant for her costs up to the end of disclosure.
Related cases on derivative claims and reflective loss
- Daniels v Daniels [1978] Ch 406
- Edwards v Halliwell [1950] 2 All ER 1064
- Foss v Harbottle (1843) 2 Hare 461
- Franbar Holdings Ltd v Patel [2008] EWHC 1534 (Ch), [2009] 1 BCLC 1
- Iesini v Westrip Holdings Ltd [2009] EWHC 2526 (Ch), [2011] 1 BCLC 498
- Johnson v Gore Wood & Co [2002] 2 AC 1
- Mission Capital plc v Sinclair [2008] EWHC 1339 (Ch), [2010] 1 BCLC 304
- Pavlides v Jensen [1956] Ch 565
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