Director Not Necessarily an Agent

Director not necessarily an agent was considered in the case of Poole v Hinton [2019] EWHC 2331 (Ch).

The case concerned the setting aside of a default judgment against Mr Poole who had been declared bankrupt. Whilst in the process of setting aside the creditor’s default judgment, Mr Poole was made bankrupt.

The case culminated in Mr Poole’s application to appeal the Trustee in Bankruptcy’s decision to admit the default judgment creditor claim.

Mr Hinton, the Trustee in Bankruptcy, adopted a neutral stance and the Court looked into the claim for default judgment.

The outcome was that the Court found for the bankrupt and set aside the default judgment on the basis of matters of construction in an assignment document. It considered if Mr Poole was an agent whilst acting as a Director because the term “agent” was a relevant reference point in the definitions of the assigned claims.

The court said that a Director might be an agent of a company and then again might not be.

Mr Mundy’s starting point is that Claims Direct did not assign to Mr Carroll claims against directors. He accepts that a director may act as a company’s agent, but the two things are different. Simply being a director does not make you the agent of the company for all purposes. He submits that for Mr Carroll’s claim to come within this class of claim, the director (Mr Poole) had to be acting as an agent of Claims Direct when he undertook the sale which gives rise to it. Or to put it more broadly, that the claim is against an agent for something he did (or did not do) as an agent. It may be that there is a claim against Mr Poole for breach of his director’s duties in relation to this sale, but if he was not acting as an agent how is the claim said to be brought against an agent? …

Mr McCormick QC submits that to come within this class of claim is a two stage process. The first question is whether this an action against one of the classes of people listed? He submits that Mr Poole was a Director and so he was an agent of the company. He puts the matter this way in his skeleton argument: directors are agents of a company and so the ordinary usage of the word “agents” includes directors. The second question is whether this is a claim which arises out of the operation of the business? Again he submits that it is. He disagrees with Mr Mundy’s submission that the agent must have been acting as the company’s agent in relation to the matters which give rise to the claim. Mr McCormick QC submits that it is sufficient that he was in fact an agent. The language of the assignment does not require more …

Mr McCormick QC’s approach is that the word “Agent” in the assignment would include a director. The point Mr Mundy makes is a fine one, but he is right to say that whilst a director may be an agent of a company, he might not be. Consequently I should not read the word “Agent” in the assignment as necessarily including a director without more. If the director was acting as an agent for the purposes of the matters giving rise to the claim, then the claim against him would be caught by the definition of “the Claims” but if he were not then it would not be.

It follows that the claim was not validly assigned.

https://www.bailii.org/ew/cases/EWHC/Ch/2019/2331.html