Director must repay value of assets taken from her company
A director breached her legal duties when she transferred company assets to herself during a period of financial difficulty.
Julie Anne Davey ran a company called Angel Group Ltd or AGL, which had three subsidiaries. The businesses specialised in development and lettings.
They had gone into administration in late 2012/early 2013 and into liquidation in 2015.
Davey held all the shares in AGL, either directly or through a dormant company.
In 2010 or 2011, she transferred to herself the beneficial interest in properties which she had previously held on trust for the company and its subsidiaries.
Following the transfer, she sold some of the properties.
The company liquidators sought compensation for breach of trust or breach of fiduciary duty and to recover the property she had appropriated.
Davey claimed that she only held the properties on trust to the extent that any of the companies had contributed to their original purchase prices.
She also said that by resolutions passed before 2011, AGL had declared large dividends in her favour and had transferred its beneficial interest in the properties to her.
The liquidators claimed that there had been no such resolutions and that documents relied on by Davey as evidence were fabricated.
The High Court ruled in favour of the liquidators. It held that the trusts made it clear that Davey should have dealt with the properties in a way that benefited AGL and its subsidiaries, not herself.
The court also found that documents relating to dividend payments were false.
Davey had breached her duties as a director and was ordered to pay compensation equal to the full market value of all the properties taken.
Please contact Sarah Liddiard if you would like more information about the issues raised in this article or any aspect of company law.