Mission Capital plc v Sinclair
Permission to continue a derivative claim by dismissed directors was refused because a hypothetical director would not attach much importance to the claim, and they had an adequate alternative remedy.
Facts
Mr Sinclair and his wife were directors of Mission Capital, and were dismissed by the other directors, who alleged that they had been responsible for problems in the company's accounts. Mr and Mrs Sinclair brought a derivative claim on behalf of the company, alleging that the other directors had breached their duties by dismissing them, and applied for permission to continue the claim.
Legal principle
Floyd J refused permission. He said that a director acting in accordance with section 172 of the Companies Act 2006 would not attach great importance to continuing the claim, because the damage to the company was speculative, and the claimants had an adequate alternative remedy through a claim for wrongful dismissal or an unfair prejudice petition. The derivative claim procedure is not to be used to pursue what are essentially personal grievances.
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
- Kiani v Cooper [2010] EWHC 577 (Ch), [2010] 2 BCLC 427
- Pavlides v Jensen [1956] Ch 565
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