Johnson v Gore Wood & Co [2002] 2 AC 1

Court: House of Lords

Facts: After a company settled a negligence claim against its solicitors, Johnson, a majority shareholder, brought a separate claim against the solicitors. Johnson alleged that they had breached duties owed to him personally, distinct from any breach owed to the company.

Issue: Can a shareholder bring a claim for loss that is personal and separate from the company’s losses?

Held: Yes, Johnson’s claim can proceed. The House of Lords found that Johnson’s claim was based on a breach of duty owed to him personally, distinct from any breach owed to the company. The personal nature of the loss allowed Johnson to pursue the claim independently of the company's interests.

Key Judicial Statement: Lord Bingham articulated that a shareholder can sue for personal loss if they can show a breach of duty that is separate and distinct from any wrong done to the company, provided that there is an independent duty owed to them.

💡LevelUpLaw: The rule in Foss v Harbottle does not bar a shareholder from pursuing a claim if they have suffered a personal loss due to a breach of duty that is independent of any harm done to the company. Shareholders can seek redress for personal grievances even when a company has also been harmed.