Home Information Cases UK (Aid) Ltd v Martin Damian Andrew Mitchell (2007)

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UK (Aid) Ltd v Martin Damian Andrew Mitchell (2007)

Summary

It was appropriate to grant summary judgment against two former directors of a company in creditors' voluntary liquidation as they had no defence to a claim that they had misappropriated the company's monies for their own gain.

Facts

The claimant company (C), in creditors' voluntary liquidation, applied for summary judgment in its claim for misappropriated funds against the first defendant (M) and the second defendant (S), its former directors. C had brought a claim seeking an order, inter alia, that M and S account to it for the funds and assets of C misappropriated or diverted by them in breach of their fiduciary duties to C and an order for the payment of all sums found due upon the taking of the account. C alleged that substantial payments were made to an account of a third party company incorporated in the British Virgin Islands that was beneficially owned or controlled by the defendants and that funds had been paid out of the account to a number of payees. The signatories to the account were S and his son, the third defendant. Most of the payees were either entities which were fronts for the defendants, or accounts in the names of M and S or third parties for the purchase of villas, cars and other goods which were allegedly for the use and benefit of M and S. It was alleged that the defendants wrongfully concealed the existence of the third party company and their control of it and the payments into and out of its account. M's defence to the claim was that the payments made by C to the third party company were commission or profit sharing payments to a third party individual and that he had no responsibility for disbursements from the account in question. C contended that there was an overwhelming case that the payments to the third party company were misappropriations by M and S and that M's defence that they were commission payments to a third party was wholly incredible.

Held

The case against M was overwhelming and his defence was incredible. The evidence as to the uses to which the sums paid to the third party company's account and the links between the relevant entities and the defendants was by itself enough to establish C’s case at a summary stage. The total absence of any evidence of any connection with the third party individual or his alleged associates was to be contrasted with M’s close personal involvement in many of the payments. His defence rested entirely on what he said he was told by S about the payment of commissions to the third party individual and about the subsequent use of the monies paid to the account. The evidence as a whole demonstrated that M had no prospect of establishing that he was told those things by S or, if he was, that he believed them. The evidence against S was as overwhelming as that against M and the only possible defence available to S, namely that payments made were commission payments to the third party individual, was as an incredible defence for S as it was for M. Accordingly it was appropriate to grant summary judgment against S as well.

Application granted

Chancery Division
David Richards J
Judgment date
8 May 2007
References

LTL 15/5/2007 

Practice areas