Liquidator Claims Against Directors Can Be Tricky

Liquidator claims against directors can be tricky and Manolete Partners PLC v Brown & Ors (Re New Line Polymers Ltd) [2025] EWHC 522 (Ch) demonstrates why that might be the case.

Whilst the claimant here was undoubtedly the successful party it certainly did not have everything all its own way with many of the claims being dismissed. It did obtain a sizeable judgment against one of the respondents.

A classic case of director deployment of company money in circumstances in which company records might have been missing.

The Judge had much to say about pleadings and made some other notable comments.

A key point the Judge made was that a litigant in person deserves to have the case against them put “fairly and comprehensively“. In other words, it needs to be clear what the case is they have to meet.

The well known position that a director who receives company money has the burden to then show valid receipt of the same. However, a point highlighted was that the burden in the first instance is for it to be shown by the liquidator that the director has actually received the monies complained about.

Judgment Highlights

The claims are diffuse, and nobody has found them easy to follow …
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These claims as pleaded make no allowance for any salary for the Browns.
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I raise these matters not to detract from the principle that a party is not obliged to plead all causes of action available to it, but to discover the boundaries of Manolete’s case; and to ensure that, particularly where the Respondents have been acting in person throughout (Mr Brown had pre-claim representation), the case against them is put fairly and comprehensibly; and in accordance with what has been formally pleaded.

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As a first step, the onus is on Manolete to show that these were on all the evidence, bearing in mind that which is lacking, probably personal payments.

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Those were factors emphasised by the main witness, Mr Brown. He was a patriarchal figure, not just in his desire to found the Company for future generations, but in his domination at trial of Thomas Brown and Mrs Marley. He undertook the cross-examination, and made the submissions, Mrs Marley assisting in pointing him to documents. As he acknowledged, he is someone for whom “waffling has been a lifelong trait”. The trouble was that along with the repeated themes of the passage of time and the lack of documents, there was very little engagement with the substance of the claim or effort at genuine recollection, which led to over-generalities: to take an on-point example, we had either 10% or 40% of documents available at trial…
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The pleading might be read as alleging a breach of duty by Mr Brown in causing the Company to lease luxury/ high performance cars for the benefit of himself, Thomas Brown, and Mrs Marley, the ill being their “luxury/ high performance” nature. But there is nothing inherently wrong in a company paying for a luxury car, or a high performance car, or one which is both….

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Mr Brown is liable for certain of the debit card payments; £253,650 of the direct payments; and the £268,351 paid into the unknown accounts. The claims against him are otherwise dismissed.

The claims against Thomas Brown and Mrs Marley are dismissed in their entirety.