D was 99% shareholder of company, and a director. Signed a fire insurance form with some insurers, as a result of which the insurers repudiated liability for a fire at company’s premises; fire caused £174,000 of damage. Liquidator brought action against D under Insolvency Act1986 (under equivalent provisions to those in s.175). Held:
· If document is huge and in legal prose, is not breach of duty for D to sign it on advice of solicitor
· However here, document wassmall and simple
Ø Plus D was best person to sign it
· Thus by failing to read it prior to signing it, D was not reasonably diligent
Relief by court
· Nevertheless, is appropriate for court to relieve liability (under predecessor to s.1157)
i) D is majority shareholder
- Thus more reasonable for him to run the risk
- Only person’s interests he endangered were him and his wife
ii) D’s misconduct was not gross
