Scottish Court of Session Decisions

OUTER HOUSE, COURT OF SESSION [2011] CSOH 108
CA165/08	OPINION OF LORD HODGE in the cause GILLESPIE INVESTMENTS LIMITED Pursuer; against JOHN McLEAN THOMSON GILLESPIE Defender: ­­­­­­­­­­­­­­­­­________________

Pursuer: Iain Ferguson, Q.C., Simpson; Semple Fraser LLP

Defender: Dewar, Q.C., McIlvride; Anderson Fyfe LLP

22 June 2011

[1] This is an action in which Gillespie Investments Limited ("GIL") seeks damages from Mr John McLean Thomson Gillespie ("Mr Scott Gillespie"), who was formerly one of its directors, for breach of fiduciary duty. In my earlier opinion of 13 August 2010 ([2010] CSOH 114) I held that Mr Scott Gillespie was in breach of his fiduciary duty and rejected the defences of (i) consent, (ii) waiver and (iii) relief under s. 1157 of the Companies Act 2006.

[2] I heard the proof in this action at the same time as a proof in GIL's action against Mr Scott Gillespie's father, Mr Thomas Graham Gillespie ("Mr Graham Gillespie") (CA 166/08) in which I issued a longer opinion on the same date ([2010] CSOH 113).

[3] The circumstances which have led to this further opinion are set out in my opinion of today's date in the action against Mr Graham Gillespie. My findings and discussion of the legal submissions in that opinion, other than the quantification of GIL's claim against Mr Graham Gillespie, are equally relevant to this action. I adopt them for the sake of brevity in this opinion.

[4] In my earlier opinion in this action I listed in paragraph [3] the payments which Mr Scott Gillespie had authorised which were the subject of GIL's claim against him. I held that all of the shareholders of GIL were to be taken to have consented to the payments to Strathbell Limited ("Strathbell"). GIL therefore did not have a valid claim for £378,351.02 paid directly to Strathbell or for £5,500, which had been paid to Mr Scott Gillespie and which he had paid to Strathbell. The latter sum was included in GIL's claim for £24,766.95 in article 7 of condescendence.

[5] The payments for which Mr Scott Gillespie was responsible in breach of his fiduciary duty were therefore:

Kirkton Park Farm (a partnership) £294,770.19

Scott Gillespie (personal and other expenditure) £12,267.12

Scott Gillespie (other expenditure less the £5,500 £19,266.95

paid to Strathbell)

Those sums add up to £326,304.26.

[6] The payments from GIL for the Kirkton Park Farm partnership were disclosed in the two discussion documents, called Share Transfer Proposals, which I set out in my earlier opinions in this action and in the action against Mr Graham Gillespie. It appeared that no allowance for those payments was made in the calculation of the entitlement of the various shareholders of GIL in the Share Purchase Agreement. But, as I recorded in paragraph [13] of my earlier opinion in this action, Mr Scott Gillespie explained that Mr Steven Gillespie was paid £37,159.30 in excess of his entitlement under the Share Purchase Agreement in an attempt to make an allowance for the fact that he had had no interest in the Kirkton Park and Saltoun Street ventures on which GIL's resources had been spent. In paragraph [14] of my earlier opinion I invited counsel to address me on how I should take account of that payment.

[7] Mr Ferguson QC for GIL submitted that credit had to be given for part of the sum of £37,159.30 and suggested that one-quarter of that sum should be deducted from GIL's claim. Otherwise, he submitted, the wrongdoer would benefit at the expense of the shareholders. Mr Dewar submitted that, if, contrary to his principal submission, GIL were entitled to claim for loss by virtue of Mr Steven Gillespie's subrogated claim, the whole sum should be deducted from any subrogated claim.

[8] In my opinion, Mr Dewar is correct in his submission that the whole £37,159.30 falls to be deducted from GIL's claim. I accept Mr Scott Gillespie's contention that it was made to compensate Mr Steven Gillespie for the exclusion from the final calculation in the Share Purchase Agreement of the balancing of the shareholders' entitlements in relation to the Kirkton Park and Saltoun Street ventures. Although there was no suggestion that Mr Steven Gillespie was informed of this exclusion or of its compensation, no other explanation was proffered in evidence for the enhancement of his entitlement above that fixed in the Share Purchase Agreement. GIL's claim against Mr Scott Gillespie survived the repayment of its overdraft only to the extent that Mr Steven Gillespie had a subrogated claim. The subrogated claim exists to prevent the person with ultimate liability, Mr Scott Gillespie, from being unjustifiably enriched by the indemnifier's payment of GIL's loss. In such circumstances it seems to me that as Mr Steven Gillespie's contribution towards the loss has been reduced by £37,159.30 in an attempt to compensate him in part for impugned transactions, his claim must give credit for that payment.

[9] I therefore deduct £37,159.30 from Mr Steven Gillespie's one-quarter contribution towards the repayment to GIL of the misappropriations of £326,304.26 for which Mr Scott Gillespie is responsible. That results in the following: (£326,304.26 x 0.25) - £37,159.30 = £44,416.76.

[10] I deal with interest in the same way as I have dealt with it in the action against Mr Graham Gillespie.

Conclusion

[11] I therefore refuse to receive the pursuer's Minute of Amendment, which was attached to Mr Ferguson's submissions in this action also. I sustain the pursuer's first plea in law, repel the defender's first to fourth pleas in law and order the defender to pay to the pursuer £44,416.76, with interest thereon at the judicial rate from 12 May 2006. I reserve, and will have the case put out by order to deal with, all questions of expenses.