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Law Cases
Company Law Cases
Minority Rights and Remedies Cases

Giles v Rhind [2003] 2 WLR 237

Country:
United Kingdom
By Oxbridge Law Team
Held

  • Defendant, a director, diverted company’s most lucrative contract away from company in breach of duty.

  • As result of loss of this contract, company went into receivership and did not have enough money to launch proceedings against Defendant.

  • Claimant, fellow shareholder in company, was in shareholders agreement with Defendant; thus brought action against director for breach of duty.

Held

  • Shareholders agreement was designed to protect Claimant’s investment and remuneration, and Defendant’s breach of duty harmed both of these

    • Therefore Claimant has right of action.

  • Reflective loss principle does not prevent shareholder recovering damages where director’s breach of duty has made it impossible for company to pursue its own cause of action against him

    • Even where loss suffered by shareholder reflects that of shareholder.

  • Thus Claimant could recover his losses. 

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