Bridge v Daley [2015] EWHC 2121

Facts

  • Bridge v Daley concerned a shareholder seeking to bring a derivative claim on behalf of a company against a director or another party, alleging harm to the company.
  • Under English company law, derivative claims enable shareholders to litigate on behalf of the company where the alleged wrongdoing is by those in control who would otherwise prevent action.
  • The Companies Act 2006, Part 11, Chapter 1, sets out the procedure and requirements for derivative claims, including the necessity to establish a prima facie case and to obtain the court’s permission at the outset.
  • The case addressed the evidential requirements and the proper judicial approach at the initial (permission) stage of such claims.

Issues

  1. What is the appropriate standard for establishing a prima facie case at the permission stage of a derivative claim under the Companies Act 2006?
  2. Should the court conduct a detailed factual analysis or resolve evidential disputes at the permission stage?
  3. How should the court assess the company’s interests and directors’ duties under section 263(2) and section 172 of the Companies Act 2006 when deciding whether to allow a derivative claim to proceed?

Decision

  • The court clarified that, at the permission stage, a claimant is only required to provide enough evidence to show a realistic (prima facie) prospect of success, not to prove the case conclusively.
  • The court should avoid in-depth scrutiny of evidence, factual disputes, or detailed analysis during the initial filter stage.
  • The claimant’s evidence should be accepted as correct at the permission stage unless it is clearly contradicted.
  • The assessment at this stage concerns whether the alleged harm is plausible and whether allowing the claim is genuinely in the company’s interests.
  • The judgment emphasized that the court’s decision should take into account whether a director acting properly under section 172 (duty to advance the company’s success) would pursue the claim.

Legal Principles

  • The prima facie case requirement involves a threshold of plausibility, not proof of merits.
  • Section 263(2) of the Companies Act 2006 outlines factors for the court, including consideration of the directors’ duties and balancing costs, benefits, and company interests.
  • The initial judicial review of derivative claims should be streamlined to prevent unnecessary delay and cost.
  • The process should protect both shareholders’ rights and the integrity of company decision-making.

Conclusion

Bridge v Daley established that the permission stage for derivative claims under the Companies Act 2006 requires a prima facie showing without detailed factual examination. The judgment provides a structured, efficient approach to early assessment, balancing the interests of claimants and companies, and has been followed in subsequent case law, forming the basis of the framework for derivative claims in English company law.

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