No Limitation Defence for Company Directors Receiving Assets in Breach of Trust


28th February 2018

 

The Supreme Court has today handed down judgment in Burnden Holdings (UK) Ltd v Fielding & ors [2018] UKSC 14. View judgement here.

 

Comment from Aidan Briggs of New Square Chambers

 

The result of this decision is that wherever a company brings a claim against a director that the director has unlawfully or in breach of their fiduciary duties disposed of the company’s property for their own benefit, no limitation defence will apply. For all purposes, directors of a company are treated as having ‘previously received’ all of the company’s assets, and if they benefit from the transaction under scrutiny, then the assets are treated as having been converted to their use.


The greater impact of this decision will doubtless be on the indemnity insurance market; if directors’ actions in relation to the assets of their companies are open to scrutiny and challenge without limitation, the ability to insure against such claims must be severely hampered. Director-shareholders who want to extract the value from their companies in good times should take extra care in how those transactions are structured, lest distant future creditors seek to have them reversed.

 

View Aidan's full case report here.

 

Associated Members

Aidan Briggs


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