A shareholder who accused the company’s accountant of breach of fiduciary duty and professional negligence has failed in her bid to have the demerger of her family’s business overturned.
Carmela De Sena had applied to the court to have the demerger set aside. She alleged that the company had profited by £6.7 million at her expense and said that the assets she received were worth less than those she had given up.
Ms De Sena had been a shareholder, company secretary and principal administrator in her family’s property business. A demerger of the company was agreed after she complained that her brother, the managing director, had become controlling in his behaviour towards her.
Under the demerger agreement, Ms De Sena was handed the company’s low-risk residential properties and a cash settlement. The company held onto more speculative land assets in the hope that they could be developed. Six years later, Ms De Sena brought a claim that she had been disadvantaged by the demerger agreement.
One part of Ms De Sena’s claim was for breach of fiduciary duty and professional negligence against the company’s accountants, Bishop Fleming, who she claimed was working for her personally. In response, the firm argued it was only acting for the company.
Ms De Sena alleged the firm’s presence at shareholders meetings and the fact that it had prepared papers for the demerger indicated that it was acting for her personally in addition to advising the company. However, the court also heard that Bishop Fleming had advised Ms De Sena to seek independent advice about the demerger which she chose not to do.
The judge ruled that Bishop Fleming had only been appointed to work for the company. As a result, Bishop Fleming could not be found negligent as it did not owe a duty of care to Ms De Sena.
James Burgoyne of Brunel Professions says the case provides clear guidanceabout when a firm owes a fiduciary duty to a client. “This judgment shows the Court is unlikely to rule that firms have a duty of care to individual shareholders, when they are retained by a company,” he said.
Categorised in: Financial Services PI News
This post was written by James Burgoyne