Jurisdiction(s):
United Kingdom

Conditional permission for common law derivative claim pending share register rectification: Boston Trust v Szerelmey (No 2) and CPR 19.9(4) (England and Wales)

Published on: 01 June 2020

Published by a LexisNexis Dispute Resolution expert

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Article summary

Boston Trust Company Ltd (in their capacities as trustees of Erutuf Trust) (suing on behalf of Erutuf Trust and all other shareholders in Tellisford Ltd other than VOC Trustee Ltd) v Szerelmey Ltd [2020] EWHC 1352 (Ch)

What are the practical implications of this case?

As permission to appeal has been granted, it would be premature to attach substantial weight to the ruling. Should the decision survive on appeal, though, it would amount to a practical yet striking enlargement of those entitled to advance common law derivative proceedings. The court acknowledged scenarios in which an applicant can present prima facie material indicating a derivative action has real prospects, but an apparent irregularity means the would‑be claimant presently lacks standing to sue. In that event, the court held it may confer permission conditionally, while remedial steps—such as bringing a rectification claim—are taken to cure the defect. This approach ensures that meritorious derivative claims are not thwarted because an anomaly on the share register strips the intended claimant of locus standi. Accordingly, where standing is impeded only by a defect that can be rectified, the court may keep the claim alive rather than let it fail on a technicality...

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