Jurisdiction(s):
United Kingdom

Directors’ duty to account: evidential burden, Duomatic limits, record-keeping failures and CA 2006 s 1157 relief — Official Receiver v Haq [2025] EWHC 485 (Ch) (England and Wales)

Published on: 10 April 2025

Published by a LexisNexis Restructuring & Insolvency expert

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Article summary

The Official Receiver (as liquidator of WIFIME Ltd (in liquidation)) and another company v Haq and another [2025] EWHC 485 (Ch) What are the practical implications of this case?

This decision clearly demonstrates, in practical terms, the effect of the evidential burden shifting in fiduciary disputes (including claims against company directors). Once a claimant liquidator shows that company monies have been withdrawn from the business, the evidential onus then passes to the respondent director to establish that the sums were applied for a proper purpose.

The ruling also highlights the importance of:

companies maintaining proper books and records,
the basic need to back a party’s statement of case with evidence.

In the absence of relevant company records and any witness statement, the court was entitled to conclude that the company’s funds had been misapplied. The judgment also illustrates the need expressly to plead reliance on section 1157 of the Companies Act 2006 (CA 2006), setting out the particular facts on which the respondent relies to show at least a realistic prospect of obtaining relief under that section...

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