UT-2024-000019 - [2025] UKUT 00257 (TCC)

The first question we need to ask is whether AP was a party to any act or failure to act and to do that we first need to decide what is meant by being a party to an act or a failure to act.

We have seen that Mr Uberoi submitted that “party” should be construed in the light of the connection test and, as a result, a person should only be regarded as a party to a transaction if they procured or were a decision maker in relation to it. A person who plays no role in the decision making around an act and simply benefits from it is not, in his submission, a party to it. We are not with Mr Uberoi on this point. As Mr Robinson pointed out, the test of connection is very broad. A person with a very small shareholding in a company could be treated as connected with that company simply by being a member of a family which, taking all the members of the family together, has a 30% interest in that company. Such a person would not, by virtue of their shareholding, be in a position to play any major part in decision-making. Secondly, the legislation itself provides that a party to an act or failure includes a person who knowingly assists in it. Thirdly, the legislation refers to a person being a party to a failure to act, and we do not easily see concepts such as procurement or decision-making being as easily applicable to a failure to act as they are to an act. Finally, there is no articulation of any concept of hierarchy in the legislation.

For all of these reasons, we consider that “party to” should bear its ordinary meaning. In the words of the Oxford English Dictionary (“OED”), this is:

“With to (formerly also in): a person who is concerned in an action or affair; a participant; an accessory.”

That is all that is required to make a person a party to something.

Much of the discussion before us focused on the alleged failure of AP to discharge her duties as a director, and Mr Uberoi submitted that it was wrong to ask whether AP was a party to an act through the lens of directors’ duties alone. Put like that, we would agree with him.

We do not, however, need to come to a view on the question whether AP’s failings as a director meant that she was a party to a deliberate failure to act within section 38, and the reason is that, as Mr Robinson submitted, it is very clear that AP was an active party to the sale of her shares in DFHL and the associated financing. Although she did not personally approve or effect the drawdown from RBS or deal with the internal cash movements or book entries, it is clear beyond any doubt that, when she agreed to sell her shares in DFHL, she knew that the finance for that transaction would come from DFL’s own resources. That had been made clear from the time of CW’s first offer and she was party to several communications where that point was made abundantly clear. We consider that AP was a party to the sale of her shares in DFHL and as a result she was knowingly concerned in the associated financing arrangements, which she knew were a precondition for the sale of her shares. DFL’s facility with RBS was, as CW had explained from the outset, where the purchase price was going to come from.