''Re Purpoint Ltd''

991 Year 991 (Roman numerals, CMXCI) was a common year starting on Thursday of the Julian calendar. Events * March 1: In Rouen, Pope John XV ratifies the first Peace and Truce of God, Truce of God, between Æthelred the Unready and Richard I o ...

BCLC 491 is a

UK insolvency law United Kingdom insolvency law regulates companies in the United Kingdom which are unable to repay their debts. While Bankruptcy in the United Kingdom, UK bankruptcy law concerns the rules for natural persons, the term ''insolvency'' is generall ...

and

company law Corporate law (also known as company law or enterprise law) is the body of law governing the rights, relations, and conduct of persons, companies, organizations and businesses. The term refers to the legal practice of law relating to corp ...

case, concerning

misfeasance Misfeasance, nonfeasance, and malfeasance are types of failure to discharge public obligations existing by common law, custom, or statute. The Carta de Logu caused Eleanor of Arborea to be remembered as one of the first lawmakers to set up ...

and

wrongful trading Wrongful trading is a type of civil wrong found in UK insolvency law, under Section 214 Insolvency Act 1986. It was introduced to enable contributions to be obtained for the benefit of creditors from those responsible for mismanagement of the inso ...

Facts

The liquidator of Purpoint Ltd, a printing business, sued the former director Mr John Henry Meredith for

and misfeasance under the

Insolvency Act 1986 The Insolvency Act 1986 (c. 45) is an act of the Parliament of the United Kingdom that provides the legal platform for all matters relating to personal and corporate insolvency in the UK. History The Insolvency Act 1986 followed the publication ...

sections 212 and 214. Purpoint Ltd started trading in February 1986, with a plant and machinery, a printing press and two cars on hire purchase. Mr Meredith got a salary. Mr Meredith admitted the company was unable to pay its debts from December 1986. In May 1987, the accountants told him that he could be liable for trading while insolvent. In June Mr Meredith found a job with another firm. Purpoint Ltd ceased trading in November 1987 and went into liquidation in May 1988. The Inland Revenue's claims exhausted all the company's assets. The liquidator brought an action under section 214 and under section 212 claimed back money used to get the second car on hire purchase, which it said was not needed for the business; cash sums withdrawn in June and July 1987 and transactions between the company and the firm Mr Meredith left to work with.

Judgment

Vinelott J Sir John Evelyn Vincent Vinelott (15 October 1923 – 22 May 2006) was a leading barrister at the Chancery bar and an English High Court judge in the Chancery Division from 1978 to 1994. Biography He was born in Gillingham, Kent, and studied ...

held that Mr Meredith was liable and ordered him to pay £12,666.79 under section 212 (£4k for the car, £5k for cash withdrawals and £3k for work done for the firm) and £53,572.15 plus interest under section 214. Under section 212 (1) the car was not bought for business use, and the purchase was a breach of duty (2) cash that could not be accounted for and used by Mr Meredith and his wife had to be repaid (3) on one transaction the new firm Mr Meredith had moved to make a profit at the company's expense. He had to disgorge this gain. Under section 214, because Mr Meredith clearly knew the company was insolvent by December 1986, he was liable for all trading losses after then. Lastly, there was nothing wrong with making orders under both section 212 and section 214. He said the answer to double recovery arguments is that money recouped under s 212 can be used to pay off the debts that existed before the clock started to run under section 214. The only proviso is that Mr Meredith would not be made to pay back more under section 212 than needed to meet the company's liabilities.

Notes

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References

* United Kingdom insolvency case law High Court of Justice cases 1991 in United Kingdom case law

Facts

Judgment

See also

Notes

References