Essay on Smithtn Ltd. Claim for Rights

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Smithton ltd (formerly Hobart) brought a claim for a loss suffered when the two companies Insureprofit ltd and Mariona ltd failed on their obligations to pay margin calls under contract with the claimant. The claim was brought against Mr Naggar who was a majority shareholder of Hobart and himself and his family owned and controlled the two companies who went insolvent. Hobart alleged that Mr Nagger was either a de facto or shadow director and had breached the duties he owed towards the company. The judge in this case, recognised that there is a distinction in the tests between shadow and the facto directors, as described by David Richards J in the McKillen judgement, however the parties decided not to make a distinction between the…show more content…
Smithton ltd (formerly Hobart) brought a claim for a loss suffered when the two companies Insureprofit ltd and Mariona ltd failed on their obligations to pay margin calls under contract with the claimant. The claim was brought against Mr Naggar who was a majority shareholder of Hobart and himself and his family owned and controlled the two companies who went insolvent. Hobart alleged that Mr Nagger was either a de facto or shadow director and had breached the duties he owed towards the company. The judge in this case, recognised that there is a distinction in the tests between shadow and the facto directors, as described by David Richards J in the McKillen judgement, however the parties decided not to make a distinction between the concepts in the evidence given. Therefore the judge decided to take the same approach, which may have impaired the decision and the interpretation for de facto and shadow director. Is important to establish the ‘identification of the hat’ that Mr Naggar was holding with and for the company so to establish whether he was a de facto or a shadow director. According to Ultraframe (UK) Ltd V Fielding where the alleged shadow director is also a creditor of the company, he is entitled to protect his own interest as creditor without becoming a shadow director. Therefore a position of strong influence is not necessarily a fiduciary position. Mr Nagger himself was the major shareholder of Hobart and had a strong influence over the company but this does
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