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GamlestadenFatigheter AB v Baltic Partners [2007] 4 All ER 164

By Oxbridge Law TeamUpdated 04/01/2024 07:12

Judgement for the case GamlestadenFatigheter AB v Baltic Partners

Table Of Contents

  • Claimant, a company, was a shareholder in Defendant but also a creditors of Defendant.

  • Claimant sued Defendant’s directors under Jersey version of section 994, alleging unfair prejudice caused by mismanagement.

    • If action was successful, Defendant would receive funds that were enough to pay off Defendant’s creditors but not enough to allow for any distribution (in form of dividends) to Defendant’s members.

  • Defendant sought to have action struck out on grounds that Claimant was sung in capacity as a creditor.

Lord Scott

  • Claimant may sue for corporate relief (i.e. payment of money to company in which he is a member) only if there is some financial benefit to be derived from that by Claimant.

  • However this financial benefit need not be in Claimant’s capacity as a member

    • Suffices that it is in Claimant’s capacity as a creditor. 

  • Thus fact that any money received by Defendant would be used to pay off Claimant as a creditor (and that there would be none left to give to Defendant’s shareholders) did not matter.

  • Thus Claimant not barred from making s.994 application.

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Company law Notes
805 total pages
1068 purchased

Company law notes fully updated for recent exams in the UK. These notes...