Re Brian D Pierson (Contractors) Ltd
Encyclopedia
Re Brian D Pierson Ltd [1999] BCC 26 is a UK insolvency law
and company law case, concerning misfeasance and wrongful trading
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s. It fell into difficulty after contracting parties failed to pay on two projects. It continued to trade. In June 1994 the auditor reported a ‘fundamental uncertainty’ about whether the company would continue as a going concern. (Importantly, this was not, however, what is known as a ‘going concern qualification’ of the accounts which would amount to an expression of the auditor’s ‘significant doubt’ about the company’s ability to continue as a going concern.) It went into insolvent liquidation in January 1996. The liquidator, amongst others, applied for a contribution for wrongful trading for the period after June 1994. The court considered whether at that point in time the directors ought to have realised that there was no reasonable prospect of avoiding insolvent liquidation.
from June 1994, but company’s losses were partly due to extraneous actors like bad weather. The order was accordingly reduced by 30%. She noted that under IA 1986 s 214, ‘One cannot be a “sleeping director”; the function of “directing” on its own requires some consideration of the company’s affairs to be exercised.’
Furthermore, the absence of warnings from one’s advisers is no excuse for wrongful trading.
UK insolvency law
United Kingdom insolvency law deals with the insolvency of firms and individuals in the United Kingdom. The important statutes are the Insolvency Act 1986, as amended by the Enterprise Act 2002, as well as the Company Director Disqualification Act 1986 and the Companies Act 2006.Insolvency is a...
and company law case, concerning misfeasance and wrongful trading
Wrongful trading
Wrongful trading is a type of civil wrong found in UK insolvency law, under s 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 insolvent company....
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Facts
Brian D Pierson (Contractors) Ltd built and maintained golf courseGolf course
A golf course comprises a series of holes, each consisting of a teeing ground, fairway, rough and other hazards, and a green with a flagstick and cup, all designed for the game of golf. A standard round of golf consists of playing 18 holes, thus most golf courses have this number of holes...
s. It fell into difficulty after contracting parties failed to pay on two projects. It continued to trade. In June 1994 the auditor reported a ‘fundamental uncertainty’ about whether the company would continue as a going concern. (Importantly, this was not, however, what is known as a ‘going concern qualification’ of the accounts which would amount to an expression of the auditor’s ‘significant doubt’ about the company’s ability to continue as a going concern.) It went into insolvent liquidation in January 1996. The liquidator, amongst others, applied for a contribution for wrongful trading for the period after June 1994. The court considered whether at that point in time the directors ought to have realised that there was no reasonable prospect of avoiding insolvent liquidation.
Judgment
Hazel Williamson QC held there was wrongful tradingWrongful trading
Wrongful trading is a type of civil wrong found in UK insolvency law, under s 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 insolvent company....
from June 1994, but company’s losses were partly due to extraneous actors like bad weather. The order was accordingly reduced by 30%. She noted that under IA 1986 s 214, ‘One cannot be a “sleeping director”; the function of “directing” on its own requires some consideration of the company’s affairs to be exercised.’
Furthermore, the absence of warnings from one’s advisers is no excuse for wrongful trading.