ORD2016/0001 Judgment summary

IN THE HIGH COURT OF JUSTICE OF THE ISLE OF MAN
CIVIL DIVISION
ORDINARY PROCEDURE

Between:

GULF HIBISCUS LIMITED Applicant
and
LIME PETROLEUM PLC Respondent

Judgment summary issued by the High Court of Justice of the Isle of Man

This summary is provided to assist in understanding the judgment of the court. It does not form part of the judgment. The judgment itself is the only authoritative document. The full judgment is available at www.judgments.im.

On 31 May 2016 His Honour the Deemster Doyle, First Deemster and Clerk of the Rolls, delivered a judgment dealing with an application by the Applicant (“Gulf”) pursuant to section 175(1) of the Companies Act 2006 for permission to bring a derivative claim in the name and on behalf of the Respondent (“Lime”) against certain directors of the Respondent.

His Honour referred to the relevant law including the necessity, pursuant to section 175(2) of the Companies Act 2006, to take into account:

(a) whether the member is acting in good faith;

(b) whether the derivative claim is in the interests of the company taking into account the view of the company’s directors on commercial matters;

(c) whether the proceedings are likely to succeed;

(d) the cost of the proceedings in relation to the relief likely to be obtained; and

(e) whether an alternative remedy to the derivative claim is available (the “Derivative 5”).

The First Deemster concluded his judgment at paragraph 222 with the following overall assessment:

'Taking into account all relevant circumstances and in particular the Derivative 5 I have reached the conclusion that I should exercise the court’s discretion by refusing to grant leave to Gulf to bring the derivative claim on behalf of, and in the name of, Lime. I have concerns as to whether Gulf has acted in good faith. I am conscious of the interests that Gulf and the target directors seek to promote and protect, but having considered the views of the directors on commercial matters I doubt whether the derivative claim is in the interests of Lime. I am not persuaded that the proceedings are likely to succeed. In light of that view I doubt whether such proceedings would be cost effective. Moreover, an alternative remedy to the derivative claim is available. For all the reasons contained in this judgment I dismiss the application for leave.'