Popely v Popely

The High Court has recently handed down judgment in a case that provides useful guidance on two questions fundamental to coverage on many D&O notifications (1) Is the individual a Director, despite not being registered as such at Companies House; and (2) How do you assess whether the alleged wrongful acts were carried out in the capacity as a Director?

(1) John Anthony Popely (2) Andrew Popely v (1) Ronald Anthony Popely (2) Cosmos Trust Ltd (3) Casterbridge Properties Ltd (2019) 13 June 2019.

BACKGROUND

Family members with interests in various companies in the leisure industry were in dispute as to their respective shares of those companies.

A dispute between two brothers was first instigated in 2001 and has been the subject of actions in England and Wales, St Vincent and the Grenadines, France, Ireland and Gibraltar.

In the 90s, one brother established a number of resort based businesses, namely golf clubs and hotels in Kent and holiday resorts in Northern Cyprus. The company structure of these resorts was complex and included a number of companies involved in the selling of time shares and marketing. This included Casterbridge Properties Ltd, which was set up to buy and sell time shares. The dispute between the brothers included an alleged oral agreement made between them in 1997 which entitled their respective trusts to 70% and 30% of the company.

The Claim brought by the younger brother in the English high court concerned three payments by the older brother totalling £4,194,397 alleged to be for the benefit of himself or his family. The action was framed as a derivative claim which alleged the payments were fraudulent and in breach of fiduciary duty to Casterbridge (as a de facto director). The claim ultimately failed due issues with limitation, the unreliability of witnesses, deficiencies with the pleaded case and problems showing the alleged loss.

However, HHJ Hacon dealt with issues which frequently arise under claims notified under D&O policies. When is someone a director if they are not expressly appointed as such? How should it be determined whether an act is carried out in the capacity of a director?

ANALYSIS

What is a de facto director

It is of course a matter of record whether an individual is a statutory director registered with Companies House. However other individuals may, as a matter of fact, be directors despite not being appointed and registered as such. Drawing on previous authorities in Carlyle, Holland, Smithon...