Abouraya v Sigmund [2014] EWHC 277 (Ch)

Court: High Court

Facts: The claimant, a shareholder in a holding company (Triangle HK), was challenging actions taken by the directors of a subsidiary (Sub A) that adversely affected Sub A but benefited another subsidiary (Sub B). The claimant, who was also a creditor of Sub A, sought a derivative claim against the directors of Sub A.

Issue: Can a shareholder bring a derivative action if their claim is primarily to benefit their position as a creditor, and does the case support double derivative actions?

Held: Permission for the derivative claim was refused. The claimant failed to demonstrate any loss as a shareholder in Sub A and the claim was seen as an attempt to advance the claimant's interests as a creditor rather than as a shareholder. The court endorsed the view that double derivative actions are recognized in common law but did not grant permission in this case.

Key Judicial Statement: David Richards J supported the judgment in Universal Project Management Services Ltd v Fort Gilkicker Ltd and emphasized that a derivative claim must show that the company, and thus the claimant, has suffered a loss due to alleged wrongdoing. The claim was dismissed as it was deemed an inappropriate use of derivative action to benefit the claimant’s position as a creditor.

💡Leveluplaw: Shareholders seeking to bring a derivative claim must demonstrate that the company itself has suffered a loss. Claims brought primarily to benefit a creditor or not reflecting shareholder loss may be dismissed.