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Misfeasance Claim Case Study

A Decided Misfeasance Claim Case Awarding over £460,000 to the Liquidator. 

In our experience cases alleging Misfeasance brought by English Liquidators that go to Trial usually make their way into the law reports precisely because most cases are settled well before a final hearing. Click here for an overview of Misfeasance Claims.

This article looks at, and comments on, a summary of a recently decided Misfeasance Claim case, in the matter of Listowel Trading Ltd (‘the Company’) sub nom Richard A J Hooper (as Liquidator of Listowel Trading Ltd) versus Raymond Patterson (‘Mr Patterson’) (2015).  The case was heard by Deputy Registrar Cheryl Jones.  Judgment was given against Mr Patterson, a director of the company, in the sum of £463,046.28 in favour of the Liquidator.

The Misfeasance Claims against Mr Patterson

The heads of the liquidator’s case against Mr Patterson included claims of Misfeasance (amongst other heads of claim), including:

  1. Repayment of Mr Patterson’s Directors Loan account in the sum of £66,000.00;
  1. Repayment of sums paid towards Mr Patterson’s mortgage on a property from the Company bank account in the sum of £28,000.00;
  1. Repayment of the sum of £30,000.00 paid to a family member;
  1. Unidentified cheque payments for cash in the sum of over £140,000.00;
  1. Cash and cheque takings which were unaccounted for in the books/accounts of the Company in the sum of over £18,000.00;
  1. Unaccounted for petty cash surplus of over £140,000.00; and
  1. Penalties, surcharges and interest of £76,000.00.

The Deputy Registrar found (at paragraph 27) that Mr Patterson failed to discharge his fiduciary duties as a director in respect of the keeping of accounts and ensuring that he had knowledge of the financial position of the Company. She further found that the books of the Company were in chaos and that there was a remarkably casual attitude towards the financial affairs of the Company.

The Deputy Registrar also found (at paragraph 25) that:

“It is no defence for (Mr Patterson) to say that he relied on accountants or other third parties unless he had made enquiries and has satisfied himself that they were in fact doing what he had required them to do.

Mr Patterson as a director of the Company was found personally liable for a considerable sum in favour of the Liquidator of the Company.

The Deputy Registrar did comment that she had a lot of sympathy for Mr Patterson, but still found against him in favour of the Liquidator.

Our comment on this Misfeasance Claim

This reported case demonstrates again that a director must discharge his duties and ensure that those the director instructs to carry out delegated tasks, actually do so. These duties include acting to ensure that proper and adequate accounting records are maintained.

NDP Can Help in Defending or Prosecuting Misfeasance Claims

If you are a director facing a Misfeasance Claim or a Liquidator considering making a  Misfeasance Claim please do contact us for a free initial chat. NDP are regularly instructed to prosecute and defend Misfeasance Claims. Call our experienced team on 0121 200 7040.