Iesini v Westrip Holdings [2011] 1 BCLC 498

Court: High Court

Facts: Shareholders of a company brought a derivative action against the directors. The court had to determine if permission should be granted based on section 263(2)(a) of the Companies Act 2006.

Issue: Should permission be granted for the derivative action to continue if a hypothetical director, acting in accordance with section 172 of the Companies Act 2006, would not continue the claim?

Held: Permission was refused for certain claims. The court assessed various factors a director would consider under section 172, such as the strength of the claim, costs, and potential impact on the company.

Key Judicial Statement: Lewison J outlined the factors for a director to consider, including the claim's strength, cost implications, and impact on the company, reinforcing that the court should not replace commercial judgment with its own.

💡Leveluplaw: Courts will refuse permission for derivative claims if a hypothetical director, acting in good faith and in line with their duties, would not pursue the claim.