Background
Mordaunt Estates Ltd transferred £615,000 from its bank account to the personal account of its director, Stephen Anthony Aldridge, in four tranches between May 2008 and January 2009. The company later sought repayment, alleging that the transfers were a loan prohibited by section 159(5) of Mauritius’s Companies Act 2001 and therefore voidable and immediately repayable under section 159(7).
The Supreme Court of Mauritius found that the transfers were a loan and ordered Aldridge to repay £615,000, together with damages of 2 million Mauritian rupees and interest. The Court of Civil Appeal affirmed. Before the Privy Council, Aldridge principally contended that a unanimous shareholders’ resolution dated 15 February 2010 had retrospectively authorized the payment under section 159(9), relieving him of any repayment obligation. He also disputed the characterization of the transfers, alleged apparent bias in the Court of Civil Appeal, and challenged the damages award.
The Court’s Holding
The Privy Council dismissed the appeal. It declined to disturb the concurrent factual findings that the £615,000 was a loan, which were supported by signed acknowledgments, the company’s ledgers, and witness testimony. Because Aldridge was a director, the loan breached section 159(5), subject to any valid defense based on shareholder approval.
The Board held that Aldridge could not rely on the 2010 shareholders’ resolution because he had not pleaded it as a defense or properly tendered it in evidence. The company was entitled to notice so that it could contest matters including whether the statutory solvency test was satisfied. The Board also rejected the preliminary objection to continuation of the appeal, the apparent-bias claim, and the challenge to damages, concluding that the trial judge’s broad-brush award fell within her discretion.
Key Takeaways
- A director seeking to rely on subsequent unanimous shareholder approval under section 159(9) must plead and prove that approval as a defense to repayment.
- The Privy Council will not ordinarily revisit concurrent factual findings by Mauritian courts without sufficient justification.
- Critical judicial remarks in another case, or references to a party’s prior litigation, do not establish apparent bias unless a fair-minded and informed observer would see a real possibility of bias.
Why It Matters
The decision underscores that shareholder approval of an otherwise prohibited director transaction does not assist a defendant unless it is properly raised in the pleadings and evidence. Procedural fairness requires the company to have an opportunity to challenge the resolution and the statutory solvency condition.
It also confirms the deference the Privy Council gives to local courts on pleading practice, concurrent factual findings, and discretionary assessments of damages.