The Court of Appeal has unanimously upheld an order refusing to strike out a claim by a “one-man” company in liquidation, which had been the vehicle for a VAT fraud, against its former directors and overseas suppliers alleged to have been involved in the fraud.

Key points

• To attribute a director’s fraud to a company, the company must be a one-man company

• A one-man company requires no innocent directors or shareholders

The Facts

Singularis Holdings Ltd (the “Company“) was set up to deal with the personal assets of Mr Al Sanea. Mr Sanea was at all the times the sole shareholder of the Company, though he was only one of a number of directors of the Company.

Key points

• Once clear that an action is improperly constituted, it should not be allowed to proceed.

• Those in control of a company have the duty to manage that company in accordance with its constitution.

The Facts

Ivey v Crockfords (2017 UKSC 67)

Whilst this is not a trust related case, it is an important one which may have an impact on the trust industry going forward as it sees the Supreme Court fundamentally change the test for dishonesty in English law.

Key points

• The Court of Appeal confirmed that there is a complete statutory code for the payment of interest.

• Statutory interest represents compensation for dividends paid after the administration, and does not depend on any right to interest under the underlying claim.

• Regard can be had, however, to the rate at which interest would have been paid to the creditor after the administration.

The facts

Key points

• Where the underlying liability on which a bankruptcy order is made is subsequently set aside, the correct remedy is rescission under s.375(1) of the Insolvency Act 1986.

• Annulment under s.282(1)(a) is the appropriate remedy when, on grounds existing at the time of making the bankruptcy order, the order ought not to have been made.

The facts

Key Points

• Statutory powers are to be exercised in accordance with a company’s articles of association
• The Duomatic principle cannot simply be used as a bandage to cure a company’s procedural errors

The Facts

This appeal considered whether the sole director of a company, whose articles required two directors for its board meeting to be quorate, could validly appoint administrators under paragraph 22 Schedule B1 of the Insolvency Act 1986.

In John Doyle Construction v Erith Contractors, the Court of Appeal has further considered the interrelation of insolvency and adjudication, providing guidance on the circumstances in which an adjudication award might be enforceable by a company in liquidation.

The key takeaways

Jurisdiction

The much-debated and closely-monitored Re Redwater Energy Corp.

On April 7, 2011, the Ontario Court of Appeal released its judgment in theRe Indalex Limited case (Indalex).1 The decision addresses the interplay between the deemed trust provision in the Ontario Pension and Benefits Act (PBA)2 and the federal Companies’ Creditors Arrangement Act (CCAA),3 as well as the fiduciary duties of pension plan administrators in CCAA proceedings. Indalex is important for pension plan sponsors and administrators for a number of reasons: