Daniel Wagner v Bright Station Ventures Management Limited

A company may, as a matter of practice, operate as a group service company and discharge or channel liabilities for associated companies. A director does not necessarily breach duty by authorising transactions within that established practice merely because the company has no separate legal obligation to make the payment.

The practice has limits. Funding contentious litigation for a group company requires clear authority and is not established merely because the company has previously paid administrative or operational expenses. Corporate identity must also be respected: a shareholder cannot personally recover a loan advanced by another company.

The claimant, the former sole director of the defendant, sought repayment in debt or restitution of sums advanced personally or through other companies. The advances were said to have funded group liabilities, legal expenses and the closure of overseas subsidiaries. The defendant counterclaimed for payments allegedly directed improperly and for costs incurred in reconstructing its books and records.

The central issues were whether the defendant operated as a group service company, whether that practice authorised the disputed payments, whether the claimant personally owned claims arising from corporate advances, and whether the counterclaim established breaches of duty.

1. Service-company role. The defendant operated as a group service company from the outset. Its role evolved from paying administrative overheads to meeting wider group liabilities and receiving or advancing funds. In appropriate circumstances, an established practice of acting for associated companies could mean that a director did not breach duty by authorising transactions within that practice, even without a legal obligation to make the payment ([46]–[48]).
2. Limits of the practice. The practice did not extend to conducting or funding contentious litigation for the parent company without clear authority. The parent’s board had expressly decided not to pursue or fund the substantive litigation, and the claimant’s applications were pursued in his own name amid a shareholder and boardroom dispute. His claim for his own and adverse costs in the Administration Proceedings was rejected ([101]–[108]). Costs of the Isle of Man and Bothy Proceedings were likewise not properly payable by the defendant, being connected with disputes pursued for the claimant’s or individual directors’ interests and, in part, compromised by settlement ([109]–[117]).
3. Advances. The personal cash advances were recoverable. They were made during the post-administration period to meet urgent group liabilities and fell within the defendant’s practical service-company role ([118]–[125]). Claims arising from advances by BSL and Rezolve belonged to those companies and could not be recovered personally by the claimant, whose investment in them did not justify disregarding their separate legal identity ([126]–[128]). The VC247 advances were recoverable because an effective assignment transferred VC247’s debt claims to the claimant ([135]–[143]).
4. Counterclaim. Most challenged payments, including business expenses, foreign legal fees, mobile charges, employee payments, healthcare and salary-related payments, were within the service-company practice or were not shown to constitute breaches of duty. The payment to Anthony Caplin was not established as a proper BSVM expense. The claim concerning reconstruction of the books and records was not proved ([144]–[187]).
5. The parties were directed to agree the monetary result and an order giving effect to the findings ([188]).