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Law Cases
Company Law Cases
Directors' Duties Cases

Re D’Jan of London [1994] 1 B.C.L.C 561

Country:
United Kingdom
By Oxbridge Law Team
Held
Relief by court

  • Defendant was 99% shareholder of company, and a director.

  • Signed a fire insurance form with some insurers, as a result of which the insurers repudiated liability for a fire at company’s premises; fire caused £174,000 of damage.

  • Liquidator brought action against Defendant under Insolvency Act 1986 (under equivalent provisions to those in s.175).

Held

  • If document is huge and in legal prose, is not breach of duty for Defendant to sign it on advice of solicitor

  • However here, document was small and simple, plus Defendant was best person to sign it

  • Thus by failing to read it prior to signing it, Defendant was not reasonably diligent

Relief by court

  • Nevertheless, is appropriate for court to relieve liability (under predecessor to s.1157)

    1. Defendant is majority shareholder:

      • Thus more reasonable for him to run the risk

      • Only person’s interests he endangered were him and his wife

    2. Defendant’s misconduct was not gross

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