Directors & Trustees’ Limitation Defence Fails

The Supreme Court ruled on 28 February that on an inter-company transaction, Directors & Trustees can’t rely on a standard six-year limitation defence.[i] The claim by company Liquidators against its Directors for alleged breach of statutory and fiduciary duties was originally struck out on a summary judgment application, as being past the standard six years deadline.

  • The Supreme Court’s decision rejecting that and other lines of defence has wider implications including for Directors, Trustees and D&O Indemnity insurers regarding the way that transfer of company assets are dealt with.


The decision was based on preliminary points of law of general importance, and the Defendants maintain their defence to the allegations as a whole.

This case concerned a claim by a company, Burnden Holdings which went in to administration in October 2008 and liquidation in 2009.The claim was against some of its former Directors for breach of fiduciary and statutory duty under the Companies Act 2006, including allegations that the directors failed to:

  • act in accordance with the company’s constitution and use their powers for the purpose for which they are conferred (s171);
  • exercise independent judgment (s173);
  • avoid conflicts of interest and conflicts of duty (s175);
  • declare interest in proposed transaction or arrangement (s177).

The Liquidator alleged that a distribution “in specie” (in its current form without converting it to cash) of the Claimant company’s shareholding in a subsidiary company on 12 October 2007 was unlawful and in breach of duty. The Directors were previously majority shareholders. The Liquidator contended that the claimant company did not have sufficient accumulated realised profits to make the distribution.

The claim against the Directors was issued on 15 October 2013. It was agreed between the parties that the proceedings were issued more than six years after the date of the distribution in specie on 12 October 2007. The Directors’ application for summary judgment striking out the claim was confined to the question of limitation.


  • The Liquidator relied upon s.21(1)(b) of the Limitation Act 1980, (LA 1980), which provides that no standard six years or other period of limitation applied to an action by a beneficiary under a trust to recover from the trustee trust property or the proceeds of trust property in the possession of the trustee. The Liquidator argued that this included a transfer to a company directly or indirectly controlled by the trustee. As such, no period of limitation applied to the present claim.
  • The Liquidator also claimed that questions relating to the availability of a postponed limitation period, such that those proceedings had been commenced in time, under LA 1980, s 32, on the basis that the breach of duty was deliberately concealed, could not be determined on an application for summary judgment.
  • The Liquidator’s case was that the Company’s claim was analogous to an action by a beneficiary under a trust where a beneficiary can recover trust property or trust proceeds from a trustee which has been converted to the trustees’ benefit. These types of claim can’t be barred for being “out of time”.


  1. The Supreme Court unanimously agreed, dismissing the appeal, finding that section 21(1)(b) applies to trustees who are company directors, to be treated as being in possession of the trust property from the outset.  For the purposes of section 21, the Defendant Directors are regarded as trustees, because they are entrusted with the stewardship of the company’s property and owe fiduciary duties to the company in respect of that stewardship.
  2. The company is regarded as the beneficiary of the trust under section 21. Contrary to the Defendants’ submissions, section 21(1)(b) does not become inapplicable merely because the misappropriated property has remained legally and beneficially owned by corporate vehicles, rather than having become vested in law or in equity in the defaulting directors.
  3. Section 21 is primarily aimed at express trustees and is applicable to company directors by a process of analogy. An express trustee might or might not from time to time be in possession or receipt of the trust property. By contrast, in the context of company property, directors are to be treated as being in possession of the trust property from the outset. It is precisely because, under the typical constitution of an English company, the directors are the fiduciary stewards of the company’s property, that they are trustees within the meaning of section 21.
  4. If their misappropriation of the company’s property amounts to a conversion of it to their own use, they will necessarily have previously received it, by virtue of being the fiduciary stewards of it as directors.
  5. On the assumed facts of the present case, the Defendants converted the company’s shareholding in the subsidiary when they procured or participated in its subsequent unlawful distribution. By the time of that conversion the defendants had previously received the property because, as directors of the Claimant, they had been its fiduciary stewards from the outset.
  6. Regarding the LA 1980, s 32 argument, in-depth analysis of the issue would take the court into a minefield of difficulties. It was not necessary to decide this point because of a recent amendment to the claim pleading fraud, and because of the court’s decision about the meaning of section 21, meaning the issue is unsuitable for summary judgment.


  • Where a company claims against a Director that the director has wrongfully or in breach of their fiduciary duties transferred the company’s property for their own benefit, no limitation defence will apply.
  • When considering limitation issues, it is important to assess whether LA 1980, s 21(1)(b) regarding a beneficiary’s claim against a trustee applies. If it does, then there will be no limitation period for the purposes of the claim, and the claim can’t be struck out for delay.
  • The effect of LA 1980, s 21(1)(b) can’t be avoided simply by using a corporate vehicle to receive the assets involved. The section includes a transfer to a company directly or indirectly controlled by the trustee.
  • Directors of a company are treated as having previously received all of the company’s assets, where they benefit from the transaction complained of and the assets are treated as having been converted to their benefit.
  • Regarding D&O’s indemnity insurance, this will be impacted where there is now no time limitation on claiming against directors regarding disposal of company assets.
  • On disposing of company assets, additional due diligence is required, ensuring that there is no breach of Directors’ statutory or fiduciary duties, to protect against future scrutiny from creditors seeking to reverse disposals, claw back company property or claim damages.

[i] Burnden Holdings (UK) Ltd v Fielding & ors [2018] UKSC 14.

Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.



Directors & Shareholder Claims: 3


Understanding the options – 5 tips

As discussed in previous posts, Boardroom and shareholder disputes arise for many reasons. When they do, it is important to understand the legal rights of all parties and the options available. The consequences of allowing things to drift and potentially get worse shouldn’t be ignored. There are options which help make life easier.

  • If you are a minority shareholder in a company, what happens if you have a disagreement with the majority shareholder, or a group which has more control?
  • How do you solve the problem, or even avoid a dispute?
  • In the third of this series, here are five important tips:


1] Shareholder Agreements

The House of Lords in Russell v Northern Bank Developments Corp Ltd[i] emphasised the practical utility of Shareholder Agreements. These are used for a wide variety of purposes, adding significantly to the company’s constitutional regime of Memorandum and Articles. This includes providing personal rights to minority shareholders who otherwise have no control over fundamental points.  The minority shareholder’s concerns would be more difficult to deal with unless specifically covered as an enforceable private contract between members.

These should be provided in the Shareholder Agreement, covering similar areas to partnership agreements.

The benefits include avoiding future misunderstandings and practical difficulties in running the business.

A Shareholder Agreement typically deals with issues such as:

  • restrictions on transferability of shares
  • lack of a market for sale of shares
  • establishing a purchaser
  • formulas for valuation and funding
  • pre-emption rights
  • compulsory transfer or option arrangements
  • protection of minority members by permitting a veto
  • preserving confidentiality
  • efficient transfer on death, disability, retirement
  • estate planning
  • regulating management and involvement of investors
  • mechanisms for dealing with stalemate.


2] “Unfair Prejudice” Petition
Section 994 of the Companies Act 2006 permits a shareholder to petition the court on the basis that the shareholder’s interests have been unfairly prejudiced in the conduct of the Company’s affairs due to e.g. breach of:

  • the Articles of Association
  • the Shareholder Agreement
  • fiduciary duties by directors
  • exclusion of a minority from the running of the company in small “quasi-partnership” companies.

The Court has wide discretion to grant the relief it decides is appropriate. This is often an order that the aggrieved minority shareholder’s shares are purchased for ‘fair value’. This may include a premium on the actual value of the shares as recompense to the petitioner for any wrongdoing by the majority.

3] What is a ‘derivative claim’ – S.260 of the Companies Act 2006?

In certain circumstances a shareholder can ask the court to prevent action being taken by the Directors which is harmful to the company, or make a claim against the Directors for any loss suffered by the company as a result of their action.  The claim must be made by the shareholder on behalf of the company. The shareholder’s right to bring a claim “derives from” the company. This is a claim made in a “representative capacity” by the individual shareholder, not on the shareholder’s own behalf. It is the company which is suffering the harm.  The damage to the company may also harm the shareholder indirectly, e.g. if there is a reduction in profits or other damage suffered.

Derivative claims are relatively unusual because although it is the member who issues the court proceedings as claimant to launch the action, the court must give permission for the claim to continue to trial.  A number of tests have to be satisfied before the court will give permission.

The shareholder runs a risk on costs and at least initially has to fund the claim themselves. It is possible to obtain an order that the company indemnify the member, although they may obtain no immediate benefit themselves by launching the court case. However, if the claim succeeds, the company will have been protected. Ultimately, that should benefit the shareholder because it protects their investment in the company.


4] What is a claim under S.122(g)  of the Insolvency Act 1996?

Any shareholder may apply to have a company wound up on “just and equitable grounds” including in quasi-partnerships, involving the shareholder’s right to manage the company – Ebrahimi  v Westbourne Galleries Ltd[ii]. The sole remedy here of winding up is draconian, available only in specific circumstances. This is the “nuclear option” in shareholder disputes – the aggrieved shareholder petitions the court for a winding up order to terminate the company.

Usually the shareholders’ differences have become irreconcilable and a ‘commercial divorce’ is the only way to move forward. When a company is wound up, if there is anything left after paying the creditors and the liquidator the proceeds are divided amongst the shareholders.

Not every aggrieved shareholder will be able to justify a winding up petition to the court. There must be compelling reasons showing that the company can no longer continue.  The aggrieved shareholder has to prove there will be a concrete benefit in making a winding up order.  If there is some alternative remedy, which would allow the company to continue, the court may refuse to make the order.

A typical scenario where a winding up may be justified is where there is deadlock or stalemate between two or more shareholders in a quasi-partnership company which can’t be resolved. Where there is an aggrieved minority shareholder, experience shows that the majority shareholder will seek to dispute:

  • the complaints by the minority that there was any “quasi-partnership” in the first place
  • the circumstances of any alleged unfairly prejudicial conduct
  • the alleged value of the business
  • the aggrieved minority shareholder’s share


5] Finally

The sooner informed negotiations start, the more likely it is that a private business will survive a shareholder dispute. A comprehensive Shareholder Agreement can help to preserve operations and resolve matters quickly.

Expert legal advice early on could keep the process out of prolonged, expensive and destructive litigation. This is by providing the facts, insight and information to allow all parties to make informed decisions quickly. This would ultimately be to the benefit of the company as a whole and the shareholders individually.

For further information regarding minority shareholder / business disputes and unfair prejudice petitions contact

[i] [1992] 1 WLR 588

[ii] [1972] 2 All ER 492

Unfair Prejudice & Drag Along

Minority Shareholder wins Quasi Partnership claim

8 Ways to avoid a Business Dispute

Are you a Shadow or de facto director?

Service of a Claim Form on a Director




Directors & Shareholder Claims: 2


Resolving Boardroom Conflict  – 5 More Tips

Disputes between shareholders of private companies are often emotional and can be as complicated as a personal divorce. The disruption to any business can be extremely damaging. Knowing what remedies are available to resolve matters quickly could be the key to survival.

  • What if the majority is taking unfair advantage of you?
  • What if you suspect co-shareholders are stealing from the company?
  • In the second of a series, here are five further important pointers to be aware of:

1/ Protecting the Minority

There is a common misconception that the complex laws and regulations relating to companies should achieve a just and fair relationship between a minority shareholder and the majority. However, there is very little law which protects the minority, unless the parties have agreed beforehand.

Differences between shareholders don’t always arise because of power struggles or personal animosity. Frequently, disputes are down to differences in approach where one party wants to retire or withdraw their investment. Disagreements may centre on

  • timing
  • valuation issues
  • the direction of the company

The public courts are unlikely to be the ideal venue for resolving shareholder disputes. Proceedings are in the public domain and the procedure can be expensive and slow.

Particularly where private companies are concerned, there are effective alternatives, including: negotiation, mediation and arbitration.


2/ Shareholder Agreement

An effective way to address potential problems before they arise is a Shareholder Agreement. This sets out ground rules for the shareholders in given circumstances. Many potential and predictable problems can be addressed in advance in a Shareholder Agreement. This leaves the shareholders to concentrate on managing the business, rather than a future internal dispute.

Amongst other things, the agreement can cover:

  • management responsibilities
  • non-competition restrictions
  • bonus and remuneration formulae
  • approval/decision process for major corporate decisions
  • buy/sell provision – e.g. a “shotgun clause” to force a transaction
  • how a shareholder can realise his or her investment in the company
  • whether to impose any restrictions on selling shares
  • criteria on valuing the shareholding
  • exit provisions – timetable for sale
  • appointment of an independent third party to value the shares
  • a detailed dispute resolution framework



3/ What is an “Unfair Prejudice” claim?

The majority shareholders are in a powerful position, even where there is a Shareholder Agreement. However, the court will protect the position of minority shareholders from being abused in certain circumstances.

Section 994 of the Companies Act 2006 allows a shareholder to apply to the Court for an order declaring that the affairs of the company are being conducted in a manner unfairly prejudicial to the minority shareholder’s interests. If the court agrees, it will usually order that the shares of the minority shareholder are bought for fair value. However, the Court has a very wide discretion as to what it can order, including:

  • purchase of the shares of any members of the company by other members or by the company itself and, in the case of the purchase by the company itself, the reduction of the company’s capital accordingly
  • conduct of the company’s affairs in the future
  • company to refrain from doing or continuing an act complained about, or to do an act about which the petitioner has complained that it has omitted to do
  • civil proceedings to be brought in the name and on behalf of the company by such persons and on such terms as the court may direct
  • company not to make any, or any specified, alterations in its articles without the court’s permission

4/ When might a court find “unfair prejudice”?

Where a minority shareholder believes that the company is being run in a way which is unfairly prejudicial to some of the shareholders, the aggrieved shareholder can make an application to the Companies Court for a remedy. Unfairly prejudicial conduct may include for example:

  • majority shareholders paying themselves excess remuneration
  • majority shareholders failing to pay dividends
  • breach of duty by diverting business to majority shareholders or their connected companies
  • directors selling or buying assets at an unfair price
  • failing to pay declared dividends
  • undertaking activities which are not permitted under the company’s Articles
  • doing something which might result in the company’s insolvency
  • failure to follow company law or proper procedure on meetings.
  • failure to issue annual accounts


5/ “Quasi-Partnership”

In small to medium sized private companies, the court might be persuaded that a “quasi-partnership” exists. The aggrieved party may complain that there is a breach of their ‘legitimate expectations’ about what the company was set up to do, and how it would be run. E.g.

it was agreed, or a common intention is proved:

  • the company would carry on a particular business
  • all would be entitled to an equal say in how the company is managed
  • a mutual expectation of continued employment
  • the directors would be fair when deciding on the salaries to be paid, the amounts to be kept in the company to fund growth, and the dividends to be paid out

If the court decides that a quasi-partnership exists, termination of that arrangement or unfair prejudice to the minority may result in the majority being obliged to buy out the shares of the aggrieved minority shareholder. If the majority acts in breach of such

“legitimate expectations”

the court may intervene.

Where an aggrieved shareholder has cause for complaint, urgent action is required. The court may refuse to interfere if a minority shareholder let the matter slide. The court will treat this as acceptance of the action taken by the majority:

“delay defeats equity”.

The court will consider all of the background circumstances on an application, including the minority shareholder’s own conduct.

These applications are rarely straightforward and are often settled by negotiation before the court is asked to make a final decision.  Quite often, one or more of the shareholders leave with a package.

Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.


Directors & Shareholder Claims: 1

Unfair Prejudice & Drag Along

Minority Shareholder wins Quasi Partnership claim

8 Ways to avoid a Business Dispute

Are you a Shadow or de facto director?







Directors & Shareholder Claims: 1

How to break the deadlock – 8 tips


Boardroom and shareholder disputes can arise for many reasons. When they do, it’s important to understand the legal rights of all parties and the options available as well as the consequences of allowing things to get worse. However, there are some options which can make life easier:

  • If you are a minority shareholder in a company, what happens if you have a disagreement with the majority shareholder, or a group which has more control?
  • How do you solve the problem, or even avoid a dispute?
  • In the first of a series, here are seven important pointers to be aware of:

1/ Minimal Influence

In company law, a minority shareholder (anyone with 49% or less) has minimal influence over the management of the company or the distribution of its profits.  The standard constitution of a company and rules under the Companies Act give little protection to a minority shareholder.

Differences can and do arise as the business evolves and personal circumstances change:

  • there may be differences on strategy or the direction of the company
  • power struggles and poor personal relationships may develop
  • shareholders may wish to retire or disagreements occur on service contracts and remuneration.

There are ways in which the minority shareholder’s interests can be protected, either by agreement with the other shareholders or as a last resort by taking action through the courts.  It is easy for entrepreneurs to preference the initial brokering of a deal, and getting the new business up and running, over longer term, but equally important considerations.  But it’s always advisable to consider these scenarios at the beginning.

2/ Shareholder Agreements

A shareholder agreement is a must for a private company, especially where there are a relatively small number of shareholders who also manage the business. These don’t always arrive without (you) the minority shareholder/s pressing for one. You need to proactively pursue this as part of the start up, or failing that, you should put it at the  top of the agenda.  In a Shareholder Agreement, the majority shareholder usually gives up some rights to the minority.

The process of preparing the Agreement helps shareholders address points which could become potential problems. This encourages the key players to work through the issues early, when everyone is positive and communications are still good.

It’s much more straightforward and economic to deal with this as part of the start up, rather than risk the expense and uncertainty of going to court later.  All concerned will know where they stand where there is a Shareholder Agreements. It reduces the risk of conflicts arising or getting out of hand.

An existing businesses can certainly set up a Shareholder Agreement at whatever stage in its evolution, for example when one of the main shareholders is considering retiring or their circumstances have changed.

It is also worth remembering that a Shareholder Agreement

  • is confidential
  • doesn’t have to be filed at Companies House
  • sits behind the company’s public face
  • is a private document between the shareholders.



3/ Points to Cover

A Shareholder Agreement can go a long way to ensuring disputes are avoided or at least, provide the mechanism that allows them to be settled quickly. An agreement identifies shareholders’ specific responsibilities and outlines how and where disputes are to be resolved. For example, it can specify forced buy/sell provisions during a dispute and even include a formula or other means to determine the transaction price.

Amongst other things, the Agreement can cover:

  • key objectives
  • financing and borrowing
  • dividends, directors’ fees and salaries / profit distribution
  • controls on the appointment of Directors
  • major expenditure
  • exit mechanisms – for shareholder deaths, misconduct, divorce, incapacity, etc.
  • fair valuation process for transfer of shares
  • succession arrangements – insurance of key persons
  • dispute resolution

The Shareholder Agreement gives minority shareholders a say in the business and some security. Without one, the minority would have little impact on decisions regarding the company and protecting their interests.

4/ How to enforce my rights as a shareholder?

Negotiation is the key, this should be explored first, rather than threatening legal action. However it is important to know your legal rights, and the provisions of the Company constitution.

  • How do these apply to your position and the other interested parties?
  • It may be necessary for you to obtain details or documents as part of the process, which the company is reluctant to provide.
  • Take legal advice early on as to the pros and cons, the likely outcome, and the likely timescales and costs

Even where proceedings are issued, frequently a solution is reached through negotiation. This is usually much quicker and cheaper than having a decision imposed by the court. However, it may be necessary to exercise leverage by relying on your strict legal rights to achieve any progress.


5/ Solutions

There are various options, including:

  • proposing a resolution at a general meeting which redresses the situation
  • complaining to the police of any criminal acts
  • asking the board of directors to take action in the company’s name against an individual director (because the shareholders can’t sue in the company’s name)
  • using a mediation service to settle a dispute.

6/ Mediation

A mediator will be someone who is experienced in this area of law.  If agreement is reached with the help of the mediator, the compromise can be recorded in a legally binding document which can be enforced in the court, if one of the parties breaks it. The advantages of mediation include its relative cheapness compared to going to court, privacy (there is no public record) and speed.

If it isn’t desirable or possible to achieve an accommodation where the aggrieved shareholder stays in the company, other solutions include:

  • the other shareholders buy out the aggrieved shareholder at a fair price
  • the company buys back the aggrieved shareholder’s shares at a fair price
  • Make a reasonable offer to the aggrieved shareholder.

7/ Further Options

Where the Company refuses to cooperate, further options include:

  • applying to the court for an order that the company is acting or has acted unfairly (an “unfair prejudice” action under s.994 Companies Act 2006)
  • applying to the courts for the company to be wound up under s.122 of the Insolvency Act 1996
  • suing the directors for negligence by means of a Derivative Action under s.260  of the Companies Act 2006:

The courts encourage settlement of all disputes, including shareholder disputes. Where the majority has made a reasonable offer to the aggrieved minority shareholder to buy them out on reasonable terms, it is unlikely that the majority will have acted ‘unfairly’. Then it wouldn’t be ‘just and equitable’ to wind the company up. It is essential to take advice on the terms of any offer you make.

If you offer to go to mediation or alternative dispute resolution, you are also unlikely to have acted unfairly. However if the company is in financial difficulties a creditor may issue a petition under S.122 of the Insolvency Act, irrespective of the shareholders’ wishes.


8/ Finally

Where the Court decides that a minority shareholder has been oppressed or unfairly prejudiced and the appropriate remedy is for the majority buy the minority shares, this is often done at a “fair value” i.e. fair market value, without deduction for a minority discount.

Where the majority gives an undertaking to buy the shares of the aggrieved minority at fair value, usually the court will adjourn the unfair prejudice petition.  However, the fundamental battle ground is frequently

  • the basis of the business valuation
  • the underlying assumptions
  • the data and criteria on which it is based.

The valuation of a private company is an area of potential significant difference between the parties. These can be quite complex disputes, but qualified and experienced legal advisors and valuation experts hired early in the process will help you through this potentially sensitive and difficult area.

Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.




Unfair Prejudice & Drag Along

Minority Shareholder wins Quasi Partnership claim

8 Ways to avoid a Business Dispute

Are you a Shadow or de facto director?






Santa’s Lawyer: World Exclusive

Unauthorised Interview!christmas-1015324_1280


 CAUTION:  Broad minded, consenting adult’s supervision required:
Spoiler Alert Especially “next to last ” Q&As

In the run-up to Christmas, everyone knows Father Christmas and his elves are extra busy, but we managed to track down one of the unsung heroes of Santa’s Kingdom

*Father Christmas’s Lawyer*

We asked him, or her (because of the extreme sensitivity of the position, we were asked to keep the lawyer’s identity confidential!) to fill us in on a few secrets.


Here is the exclusive and previously unseen, unheard and unheralded low down on crucial legal issues that Father Christmas currently faces!



Q1: In times of increasing regulation and potential litigation, how do you defend Father Christmas – He faces accusations of setting a bad example, putting his life and the lives of others at risk through breaches of health and safety laws?

A1: Well, thank you for asking me and showing such an interest. This is a big thrill for me, I love my work, being Father Christmas’s lawyer, and answering all the questions that everyone has around the world at this special time.

Q2: Landing a sleigh on the roofs of houses and climbing down chimneys to deliver sack-loads of questionable gifts – is that a good example for Santa Claus to set for children everywhere?

A2: But it’s not just at Christmas time – this is a 365 day a year operation in the law offices at Santa’s Grotto back home. Of course we have 24/7 remote access for Father Christmas whenever he might need any legal advice or counsel.  But the thing is, Father Christmas never really needs any advice because, well he’s omnipotent. And omniscient. He’s all knowing. He knows everything – I’m not saying he’s a “know all”, he’s just great to work for!

Q3: You haven’t really answered any of my questions – these are serious issues and Father Christmas has to come clean.

A3: I’m sorry, it really is appreciated and what a great first question. It’s certainly a pleasure to be here, and may I say a big “Happy Christmas!” to you and all your subscribers!

Q4: There is a growing charge sheet: Santa Claus is accused of promoting drunk driving, speeding, breach of the Highway Code, reckless endangerment by flying livestock without a permit and climbing down chimneys.


A4: I want to pick you up on some conflation in your questions. You are talking about Father Christmas and Santa Cluas interchangeably, as though they were one and the same, and that there is only one of them. And that he (or she) exists.  So am I in fact – that’s great! Now that might be your perception, and the presumption behind your question. I’m happy to go along with that. But no warranty is intended or to be implied, you must rely on your own searches or enquiries. No liability is accepted, and the usual exceptions and limitations apply (see rider).


Q5: Are you saying that there is a turf war going on – the public have a right to know?

A5: Well I appreciate the insight, and I know how much you love a scoop! Having said that, I have to be mindful not to disclose any details of any historic confidential settlement of any joint venture, or ventures, existing or not, known or unknown, all names rights, territorial and exclusivity protocols between the various jurisdictions and entities. I hope you understand.


Q6: He flagrantly refuses to wear a seatbelt or crash helmet!

A6: But as you well know, Father Christmas has magical powers. He’s been doing this for centuries. He’s very expert, and he does what he does – you know?

Q7:  OK, I can see you aren’t going to be drawn, but what about some specifics? What about, say the Work at Height Regulations 2005? Isn’t Father Christmas in contempt of Parliament and of RoSPA?

A7: I’m so glad you asked me that. You know, it isn’t reasonably practical for him to avoid working at heights. The defence of necessity is an obvious response, but Santa adopts best practice and a safe system of work. This is regularly checked, updated and monitored. The sleigh has protective rails to prevent a fall. A descent mitigation system operates so that in the unlikely event Father Christmas has an accident, he is protected. Plus, he can fly.

Q8: What about occupier’s liability – isn’t it an imposition that people visited by Father Christmas, maybe on an unsolicited basis have obligations thrust on them without consent? Shouldn’t they be worried that Father Christmas could sue them?



A8: Householders have duties to all visitors, to take reasonable steps to make sure that the area is safe and in particular that Santa and the reindeer are not injured, or the sleigh damaged. Your roof needs to be in good repair and the chimney mustn’t pose a risk of injury. However, if you don’t have a roof or chimney, or the roof is in disrepair, or your chimney is blocked, or ablaze, don’t worry; this will all have been subject to rigorous hazard analysis ahead of time. Father Christmas knows all about your home and its environs. This is just basic for him. No, that’s not creepy.

Q9: But a question all children want answering – how does Father Christmas get in?

A9: Father Christmas can get past even the most challenging obstacles. Obviously I am not at liberty to disclose how exactly, but Father Christmas makes sure that all the good little boys and girls get their presents. Some grown-ups just stay awake to let him in on Christmas Eve. Others assume he gets in through a door, a window or even an air vent.  As a last resort Father Christmas uses his magic key, but I guess you knew that already?

Q10: What if Father Christmas was breathalysed? Anecdotal evidence suggests he takes an alcoholic drink at almost every other house – doesn’t this make him unsafe on the roads and in the air. Couldn’t he be arrested and banned?christmas-1070830_1280A10: We are well aware of our duties and responsibilities, for example for every pilot the limit is 20 milligrams per 100 millilitres of blood.  In England and Wales for drivers it’s s 80 milligrammes of alcohol per 100 millilitres of blood, 35 microgrammes per 100 millilitres of breath or 107 milligrammes per 100 millilitres of urine.

Q11; You seem to be over- familiar with that, which isn’t reassuring. Does Father Christmas have an on-board breathalyser?

A11: The average human could be over the limit after a wee dram of whisky, tot of rum or snifter of port. Even too much brandy butter on a mince pie is risky for pilots. But it should go without saying that Father Christmas is an exception.

Q12: Are you saying he is a substance abuser?

A12: I can’t disclose personal medical details, but your question makes a lot of assumptions; who’s to say that Father Christmas’s blood stream is the same as ordinary mortals? At this time of year it could be running on 100% undiluted sweet sherry – I couldn’t possibly comment. But you just have to ponder the prejudices and assumptions underlying your questions to reveal their underlying fallacy.


Remember everyone, Father Christmas supports responsible drinking for all the good people out there, fundamentally though, he embodies the “Spirit of Christmas.”

Q13: Aren’t you just an apologist for an international criminal racket? Santa flouts Regulations against importing merchandise or animals without permits.  Shouldn’t Santa and his reindeer be arrested, kept in quarantine or even destroyed? Santa’s sacks of toys would also be confiscated as he circumvents customs and imports them illegally, and let’s not get started about the serial Data Protection offences.

A13: I think you are over reacting. Don’t forget, Father Christmas is a supernatural being, transcending cultural, theistic, legal and international norms.  His actual whereabouts (intended plural) at any given time are an undisclosed secret. Although there are various authorised outposts including in Lap Land and the North Pole, Santa’s Kingdom is protected by International Reciprocal Treaties.



Q14: Isn’t it time that an International Arrest Warrant was issued against the fugitive, Father Christmas?

A14: Father Christmas has never been arrested or tried. He would have to be arraigned before a court of his peers. I doubt Jack Frost, Mother Nature, Neptune, the East Wind and the Green Man are ever going to agree to give these defamatory accusations any legitimacy. On a procedural basis, however, the unique off shore nature of Santa’s business centres provides no address for legal service of any proceedings. No applications for alternative service against Santa have ever been upheld. In any event, Santa obviously has a magic hour glass so that any proceedings would effectively be, or be construed as being out of time.

Q15: It has been rumoured that Rudolph is taking legal advice on a number of claims – exploitation, equitable accounting; breach of copyright, unauthorised image use and failure to pay Royalties on merchandising. How do you respond?

A15: I speak entirely hypothetically, because I am not going to breach client confidentiality or privilege. Firstly, I can neither confirm nor deny that Rudolph is a red nosed reindeer, known to my client. Secondly, we rely on universal legal principles, recently reaffirmed in the UK, that an animal has no legal personality, and cannot bring any action.

Q 16: Really, isn’t that anti-equality?

dogs-on-a-leash-1220224-sfree images

A 16: Absolutely not. Mr Justice Snowden in November this year in the Chancery Division of the High Court dismissed a claim for damages brought by two dogs. Amongst other things, this was on the basis that CPR Part 2.3 (1) defines “Claimant” as a person who makes a claim, and a dog is not a person.  How could a dog, or a reindeer give instructions to bring any legal proceedings, let alone sign a certificate of truth, give an undertaking, pay court fees, give security for costs, or comply with an order of the court?


Q17: But what if Father Christmas was sued, say by the Elves for breach of Working Time Directives?

A17: The elves would never sue Santa, he is their spiritual Father, and they love him, even when he’s feeling grumpy. All insinuations are denied and Santa’s Workshop adopts a progressive full participation, grant aided Share Ownership scheme and cooperative partnering philosophy. So the Elves own the business.


Q18: What about Father Christmas’s personal liability for all of the risks that he runs?

A18: There are unresolved questions, which I’m not going to comment on here regarding the existence or otherwise of any relevant Declarations of Trust, Corporate Constitutions and business matrix. Whether Father Christmas is a sole trader, a partner (whether with Mrs Claus or otherwise as an LLP Member), an employee, director, shadow director from 26 May 2015 under the Small Business, Enterprise and Employment Act 2015 so that the general duties of directors under sections 170-177 of the Companies Act 2006 apply, or a Registered or Unregistered charity, Unincorporated Charitable Association, Community Interest Company, Club, Credit  Union  or unregulated spiritual being is best left for others to ponder. But if you sue him, I can assure you the outcome is assured – your ass is grass!


Q19: There are unconfirmed reports of an Anti-Trust, Monopoly and Cartel busting consortium being launched with backing from The Grinch and Scrooge Enterprises. They are petitioning in the United States for interventions under the Racketeer Influenced & Corrupt Organizations Act (RICO).  What’s your reaction?

A19: Any jurisdiction, liability, locus standi, causation, quantum and limitation would be denied. Preliminary issues include whether any claim was against Father Christmas or Santa Claus, or Santa’s Grotto. Fundamental issues of fact and law, not to say theology, natural laws and physics would need to be explored and proved. You shouldn’t overlook the fact that if he exists, he will undoubtedly have diplomatic immunity, as will all his manifestations, subsidiaries, servants, agents and employees. All are Envoys of the Winter Wonderland and Santa’s Grotto which are non-justiciable and impervious to any such moves by the misguided entities you mention.

Q20: What if Wizzard  or Slade, and Mud and a vast number of other British groups from the 70’s and other less eclectic decades (from a popular music perspective) all brought a Class Action for passing off against Father Christmas and an account of profits? Might he go bankrupt?


A20: I think it more likely that he has a theoretical claim against them. Moreover, even if there was any claim, it would be very difficult to empanel a jury or identify an impartial Judge who wouldn’t recuse themselves for either being on or off the Nice List.

Q21: How do you respond to critics like Dr Nathan Grills of Australia’s Monash University who says Santa’s “rotund sedentary image” has had the effect of making “obesity synonymous with cheerfulness and joviality” around the world?



A21: Father Christmas is certainly a role model for his unfailing generosity, devotion to duty, get up and go and can do attitude. It is worth noting that the European Court of Justice has this December again ruled that obesity can be classed as a disability, so employers and individuals alike are best advised to avoid discriminatory behaviour.

Q22: Father Christmas has a reputation for being popular with the ladies; but what when it goes further? Witnesses report seeing Mommy Kissing Santa Claus, under the mistletoe, tickling Santa under his beard. Won’t this be traumatic for the children – would Daddy be able to sue Santa Claus for intermeddling in marital harmony?


adult-15585_1280 (1)

A23: Well this is a horny old chestnut isn’t it? It’s true that Santa does have to have his wits about him, if he is to avoid being propositioned by the over-amorous. He has 20 million households to service in the UK alone. Santa has regular situational and observational training a la Jason Bourne and the Sioux, equipping him to handle anything that might arise, whether he’s being asked to fill his boots or empty his bulging sack, or otherwise importuned when about his lawful business.

Q24: There must be a putative claim to come out of the closet?

A24: It is highly doubtful that there could be any legal claim, even in theory: most jurisdictions have eliminated the tort of “alienation of affection” as a matter of public policy, either by statute or court opinion. Even where the tort survives in theory, “eulogistic commendation of the res vendita”, has only ever made Father Christmas more committed to ensuring satisfaction guaranteed.

Q25: What do you say to people who say Santa Claus doesn’t exist – how do you prove he does?

A25: There have been few legal cases on the subject, not surprisingly, because of the difficulty for example of conflict of laws, cross border and jurisdictional issues, identification evidence and other jurisprudential matters. How are you going to serve Santa Clause with any proceedings, or prove service, not least if you assert his non-existence?

Q 25: Your having a giraffe, right?

A25: Nevertheless – No. There have been some interesting cases. One that was before my time and which I call to your attention, which I don’t necessarily rely on as setting a precedent or having any basis in reality, but which you may nevertheless think might be of at least persuasive authority:  Judge Michael Musmanno of Allegheny County, Court of Quarter Sessions of Pennsylvania in 1936 reportedly opined 

In re: The Legality and Authenticity of Santa Claus

“….Santa Claus is a reality recognizable by the law and he will be protected in this court against all aspersions and insinuations to the contrary…. Santa Claus is the symbol of amiable kindness; he is the token of smiling charity he is the badge of all that is cheerfully benevolent in the make-up of man. The best judge is he who walks with Santa Claus.

On weighing all the evidence in the case, which was made up of the testimony of the season, the attestations of the human heart, and the exhibits presented by Mother Nature, the Judge declared:

“… after listening to the rosy-cheeked laughter of the December winds laden with the glittering snow, each flake a pattern of beauty and harmony, we conclude and find that Santa Claus is a reality. We find further that without him life would be dull and cheerless, and that with him the heart is merry and the spirit gay, as life should be….” 

Q26: So you quoted that from memory, but there must be dissenting opinions!?

angel-564351_1280 (1)

A26: Yes we learn it by heart at Santa Law School. Who could disagree with that judgement?  By the way, before answering, and the last thing I want to do is to influence your reporting in any way: you are aware that I am Santa’s

 Appointed Representative Solicitor Extraodinaire

I enjoy his full authority in this and all jurisdictions. Accordingly he relies on me to make preliminary recommendations on everyone, boys and girls, and grown ups  viz a viz their “Yuletide Expectation Present Status” (YEPS). This is colloquially known as the Good List / Naughty List.

Father Christmas knows if you have been bad or good!

Ho Ho Ho! Merry Christmas to One and ALL!nicholas-206279_1280

  • Under Licence
  • patents pending

(As revealed in conversation)





Shareholder and Boardroom Disputes: Tips (2)


In the second in a series of articles, read my piece in the link below on:

Minority Shareholders

  • Boardroom Disputes
  • Shareholder Agreements
  • Unfair Prejudice claims

Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.


Shareholder & Boardroom Disputes: Tips (1)


In the first of a series of articles, read my piece in the link below on:

  • Minority Shareholders
  • Boardroom Disputes
  • Shareholder Agreements
  • Unfair Prejudice claims

Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.



Unfair Prejudice & Drag Along


My analysis on Court of Appeal decision in Re Charterhouse Capital Limited; Arbuthnott v Bonnyman [2015] EWCA Civ 536 :

Minority Shareholder wins Quasi Partnership claim


Read my piece in the link below on

  • A succesful claim establishing unfair prejudice by a petition under s. 994 of the Companies Act 2006
  • The latest Practice Direction on unfair prejudice claims, introducing Automatic Directions



Single typo costs Companies House £8m

Companies House liable for mistakenly saying Company had been wound up



Companies House has been held responsible for the financial collapse of Taylor & Sons Ltd, of Cardiff, a 124 year old engineering company. On 20 February 2009, Companies House mistakenly recorded on the register that a winding up order had been made against it. But there was a typo; it was an entirely unconnected company with a very similar name, “Taylor & Son Ltd” that had been wound up. After 3 days the error had been corrected. By then it was too late.

Companies House had sold the records to credit reference agencies. Customers and suppliers wouldn’t trade with the blameless and solvent Taylor & Sons Ltd; they lost business, income and credit. Within two months the business, which employed 250 people collapsed and it was forced in to Administration.


Negligent Misstatement

 The Co-Owner and managing director of Taylor & Sons Ltd, Philip Sebrey took proceedings against Companies House, an executive agency of the Department of Business, Innovation and Skills. His claim was based on the law of negligence, which has been developing continuously since the leading 1963 Case of Hedley Byrne v Heller[i], extending the law of negligence. Where a careless statement is made which causes economic loss, the victim can claim damages. That now includes cases involving the careless exercise of statutory powers.



After a 4 year battle, the claim for compensation succeeded. Sebry v Companies House [2015] EWHC 115[ii]. Although damages have not yet been decided, the claim is for approximately £8m.

The Judge, Mr Justice Edis said that the long standing 3 stage test in Caparo[iii] applied:

  • Forseeability: this was “obvious”
  • Proximity: the duty was owed to one individual company whose identity was readily discoverable. To say that it was also owed to every other company on the Register is only to say for example that a hospital owes a duty to each patient which it treats, and may come to owe duties to many thousands of people in the course of a year. Whilst true, this is not a reason for denying that the hospital ever owes any duty. Very large organisations such as hospitals who impact on the wellbeing of a very large number of people owe a very large number of duties to a very large number of people. The class is limited and its members ascertainable at the stage when treatment is given
  •  Whether it is fair, just and reasonable to impose a duty: The Judge could find no proper ground on which to conclude that it would not be fair, just and reasonable to impose a duty to avoid foreseeable harm to a sufficiently proximate victim.


“…..the Registrar owes a duty of care when entering a winding up order on the Register to take reasonable care to ensure that the Order is not registered against the wrong company. That duty is owed to any Company which is not in liquidation but which is wrongly recorded on the Register as having been wound up by order of the court. The duty extends to taking reasonable care to enter the Order on the record of the Company named in the Order, and not any other company. It does not extend to checking information supplied by third parties. It extends only to entering that information accurately on the Register….”

Ultimately, Edis J could see no legal principle or policy excusing Companies House for its negligence. Where there is a legal wrong, there ought to be a remedy. If Companies House had escaped liability, Mr Sebrey would have had no redress. The previous understanding of the law has been applied, and moderately extended under the doctrine of “incrementalism”.

For liability to be established, a claimant has to prove that it suffered losses directly as a result of reliance on a negligent misstatement. An executive agency carrying out a statutory function was not immune. However, the liability in these particular circumstances did not extend to other, less proximate or easily identifiable parties, including lenders and employees.


[i] [1963] 2AC 465


[iii] Caparo Industries v Dickman [1990] 2 AC 605