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Litigation: A useful insight into de facto directorships

29th January, 2019

In the recent case of Integral Petroleum SA v Petrogat FZE and San Trade GmBh [2018] EWHC 2686, Mrs Justice Moulder had to determine whether individuals had acted as de facto directors. Sue Austin considers that aspect of the judgment.

This case involved the Claimant’s application for an order that 5 individuals (“Third Parties”) be committed to prison for contempt of court, the stated grounds being that the Third Parties as “owners and/or principals and/or directors” of Petrogat and San Trade had caused and/or enabled and/or permitted the Defendants to breach injunctions made against the Defendants.

The Third Parties included 3 individuals who were not formally appointed directors of either Petrogat or San Trade:

Mr Sanchouli - The evidence considered by the court in relation to San Trade, was a description of Mr Sanchouli role as being “in charge of determining company policy, company organisation and negotiations with creditors”; a description of Mr Sanchouli by his daughter as “the single owner of San Trade”; his signature on contracts as “director” of San Trade and on a guarantee from San Trade as “President”. As to Petrogat, the evidence referred to a meeting and telephone discussions between Mr Sanchouli and the Claimant to discuss delays in performance of the contract by Petrogat.

Ms Sanchouli – This individual held broad powers of attorney on behalf of both Petrogat and San Trade, however, the evidence before the court suggested that her involvement was more far-reaching than the exercise of her powers under the powers of attorney. Mrs Justice Moulder found it particularly notable that Ms Sanchouli signed a letter ordered by the court on behalf of both Petrogat and San Trade. It was also noted that the de jure managing director of San Trade was not involved in the correspondence with the Claimant until after the injunction had been served

Ms Nadia Lobis - This individual was the operations manager of Petrogat. She was involved in operational correspondence and signed contracts on behalf of Petrogat as “representative of the Company”.

The view of Mrs Justice Moulder was that, on the evidence before the court, the Claimant had established that both Mr Sanchouli and Ms Sanchouli should be regarded as de facto directors of San Trade and Petrogat. However, as regards Ms Lobis, her authority was consistent with that of an operations manager rather than a director and her authority did not extend to control of the company to the extent that she should be regarded as a de facto director.

The judgment highlights the potential pitfalls of acting in the capacity of a director while not formally appointed as such.

Please contact [javascript protected email address] for a copy of the judgment, more information on this subject, or to ask a question.#

To find out more about Howes Percival and their approach to cases such as these, visit our Dispute Resolution and Litigation service page.

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