bto is acting for two companies and a Director in the first ever case brought under the new provisions of the Companies Act 2006 regarding “derivative” claims. These take their name from the right of a shareholder to sue in the name of a company where the company has refused to sue. Now, derivative claims have to be brought under new rules set out in Part 11 of the Companies Act 2006. In Scotland, unlike England, a derivative claim cannot be raised without the advance permission of the court. Thus, as here, the claimant has to make a separate permission application.
In Wishart, Petitioner [2009] CSOH 20, the claimant alleged that Directors of a company, C Limited, had secretly entered into and profited from certain commercial property deals. They denied these allegations, argued that the Petitioner was aware of the transactions and that he had brought the Petition for permission to raise a derivative proceeding in bad faith. Lord Glennie took the unusual step of investigating the issue of good faith through the use of Affidavit evidence. He held that on the face of it, the Petitioner was entitled to start a derivative claim.
The Petitioner also asked for, and was granted, what has become known in England as a “Wallersteiner” Order. These have not been granted before in Scotland. Lord Glennie held that any shareholder given permission to raise a derivative action was an agent of the company. Therefore, he ought to be indemnified by the company being sued against the whole costs of bringing the derivative action, even though (as here) the company has opposed this step.
bto’s clients appealed Lord Glennie's decision. Paul Motion, Partner and Solicitor Advocate, acted for the Company in the Outer House and appeared as junior counsel in the Inner House. The appeal court ruled in July 2009 that Lord Glennie had erred in certain procedural aspects, including the format of the order granted, but nevertheless had reached the correct decision overall.
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Paul Motion