Scottish Court of Session Decisions

Pursuer: Iain Ferguson, Q.C., Simpson; Semple Fraser LLP

Defender: Dewar, Q.C., McIlvride; Anderson Fyfe LLP

22 June 2011

[1] This is an action in which Gillespie Investments Limited ("GIL") seeks damages from Mr Thomas Graham Gillespie ("Mr Graham Gillespie"), who was formerly one of its directors, for breach of fiduciary duty. In my earlier opinion of 13 August 2010 ([2010] CSOH 113) I held that Mr Graham Gillespie was in breach of his fiduciary duty and rejected the defences of (i) consent, (ii) waiver and (iii) relief under s 1157 of the Companies Act 2006.

[2] I heard the proof in this action at the same time as a proof in GIL's action against Mr John McLean Thomson Gillespie ("Mr Scott Gillespie") (CA165/08) in which I issued a shorter opinion on the same date ([2010] CSOH 114) which incorporated the findings of fact in my opinion in this case. I held that Mr Scott Gillespie was in breach of his fiduciary duty and that the three defences, which I have enumerated above, failed.

[3] At the end of the first tranche of the proof on 12 March 2010 I raised with counsel the question whether GIL had suffered any loss as its shareholders, the four Gillespie brothers, had agreed to pay off and did pay off its overdraft, which was £2,700,943.15, on the sale of its shares to Eastercroft House Limited ("Eastercroft") on 12 May 2006. I discussed the Share Purchase Agreement of 12 May 2006, which among other things provided for the transfer of funds from Eastercroft to the Bank of Scotland on behalf of GIL to repay its overdraft, in paragraphs [6], [26], [27] and [56] to [59] of my earlier opinion in this action. One of the brothers, Mr Steven Gillespie, controlled Eastercroft. Through Eastercroft's acquisition of GIL's share capital, Mr Steven Gillespie gained effective control of GIL.

[4] At the end of the proof it was agreed that both cases would be put out by order to address the question of loss once I had decided whether there had been a breach of fiduciary duty and ruled upon the three grounds of defence. In paragraph [64] of my opinion in this action I invited further submissions from the parties in the following terms:

"I consider that it is necessary in the interests of justice for me to hear further submissions on (a) whether GIL can recover sums as damages subject to the condition that it pays over those sums to those shareholders who indemnified the company without being informed of the breaches of fiduciary duty, (b) whether Mr Graham Gillespie is entitled to set off against any liability to GIL part or all of the share of the sale proceeds which he did not receive because it was used to pay off that part of GIL's indebtedness which was caused by the breaches of fiduciary duty, and (c) whether and on what basis Mr Gary Gillespie and Mr Alan Gillespie would be entitled to payment under (a) as well as Mr Steven Gillespie."

[5] The background to my request for further submissions was as follows. I rejected the pursuer's submission that, but for the misappropriations, GIL would have retained more of the £4 million paid by Eastercroft. I expressed concern in paragraph [61] of the opinion that Mr McIlvride's position had the result that the wrong-doing directors would retain part of the benefit which they had derived from their breaches of fiduciary duty as a result of the shareholders having paid off the company's overdraft. Mr Graham Gillespie and Mr Scott Gillespie were guilty of significant breaches of their fiduciary duty to GIL. The company had suffered loss as a result. Some of the directors and shareholders of GIL knew of the misappropriations. Mr Steven Gillespie did not know the extent of the misappropriations. He did not consent to the misappropriations of which he was unaware. Thus all of the shareholders of GIL had not consented to those misappropriations. GIL had not waived its claims against the directors who were responsible for the misappropriations. But the repayment of GIL's overdraft by its shareholders out of the purchase price of its shares had the effect that each shareholder has received less for his shares in GIL than he would have received had there been no such misappropriations. If GIL could demonstrate no loss, the shareholder or shareholders, who did not consent to the misappropriations and who suffered loss as a result of the breaches of fiduciary duty, would see his or their claims for such loss disappear into a legal black hole. That would in my view be unjust; where such a shareholder and the wrongdoing directors were both liable to compensate GIL for its loss caused by the breach of fiduciary duty of the latter, the ultimate liability for that loss would rest on the wrongdoing directors.

[6] When the case called by order Mr Iain Ferguson QC for GIL moved a Minute of Amendment in which he sought to add pleas in law in each action seeking payment to GIL by Mr Graham Gillespie and Mr Scott Gillespie of the profit which each had obtained in breach of his fiduciary duty. By adding as an alternative to the claim for damages an application for an accounting for profit, he sought to enable GIL to circumvent the perceived problem that the shareholders had paid off the overdraft and thus removed its loss. He and Mr Dewar QC for the defender in each action agreed that the court could not competently pronounce a decree in favour of GIL subject to a condition that it apply the funds for a specified purpose. He submitted however that a similar result could be achieved by the giving of an undertaking by GIL. As Mr Steven Gillespie was not aware of the extent and circumstances of the misapplication of GIL's funds and as there was no evidence to support the view that Mr Alan Gillespie had such awareness, he submitted that the court should pronounce decree in favour of GIL subject to its undertaking to apply part of the sum recovered in payment to each of them of a one-quarter share of that sum. He accepted that this would leave GIL with a windfall of one-half of the sums which it claimed. But he submitted that that was more just than allowing the directors, who were in breach of their fiduciary duty, to retain the benefit of their wrongdoing.

[7] Mr Dewar submitted that GIL had not suffered any loss and that the Minute of Amendment had come too late. The case had proceeded as a claim for damages and the defender in each action had not had to address an accounting for profit. The court had raised the question whether GIL had suffered loss and counsel for GIL had not sought to alter its position during the proof. If the claim for an accounting had been made before or during the proof, the defender in each case would have addressed it and might have led different evidence.

[8] I accept, with the benefit of hindsight, that what I set out in paragraph [64] of my opinion was insufficiently clear, as neither party addressed the question whether the agreement of the shareholders to pay off GIL's overdraft amounted to an agreement to indemnify GIL which would allow a shareholder, who was unaware of the misappropriations, to make a subrogated claim. I had been hoping to be addressed on the question whether GIL's action could be analysed as a subrogated claim by Mr Steven Gillespie as an indemnifier to recover as damages his share of the sums paid to extinguish GIL's overdraft to the extent that he had not expressly or implicitly accepted the use of that company's resources to fund personal expenditure of the directors or other business ventures. I therefore invited counsel to address me on this matter and fixed a further hearing.

[9] Mr Ferguson submitted that Mr Steven Gillespie and his three brothers had indemnified the company when they paid off the company's overdraft at the insistence of its bankers, Bank of Scotland plc, in the context of the sale to Eastercroft. Of the shareholders, Mr Graham Gillespie and Mr Gary Gillespie, who were both directors, were aware of the misappropriations. Mr Steven Gillespie, although he was also a director, was not. Mr Alan Gillespie had not given evidence and it was not clear whether and if so to what extent he knew of the misappropriations. Mr Ferguson initially submitted that GIL was under an obligation to account to Mr Steven Gillespie for one-half of the sums it recovered from Mr Graham Gillespie and Mr Scott Gillespie and that it would have to account to Mr Alan Gillespie for the other half if he established that he did not know of the misappropriations. In the course of discussion however he amended his position to submit that Mr Steven Gillespie alone had a subrogated claim to recover one-quarter of the misappropriations. He referred to Simpson & Co v Thomson (1877) 5 R (HL) 40, Cairns LC at p.42, Esso Petroleum Co Ltd v Hall Russell & Co Ltd 1988 SLT 874, Lord Jauncey at pp.882 and 883, and Caledonia North Sea Ltd v London Bridge Engineering Ltd 2000 SLT 1123, the Lord President (Rodger) at pp. 1134 and 1138-1139.

[10] Mr Dewar renewed his submission that the repayment of the company's overdraft by its shareholders had extinguished GIL's claim against its directors. That payment had removed any loss which the company had suffered through its directors' breach of their fiduciary duties. A party pursuing a subrogated claim could have no greater right than that of the nominal pursuer in which the claim remained vested. There were only limited exceptions to the rule that the payments received by a pursuer extinguished or at least reduced his loss. They were payments to the pursuer (i) under an insurance policy, or its equivalent, for which he had paid the premiums or (ii) in cases of personal injury at least, as a result of the benevolence of third parties. Neither exception applied in this case. The four shareholders were under no contractual obligation to pay off the company's debt to the bank or otherwise to indemnify it. In the context of English law, they were to be seen as volunteers: Owen v Tate [1976] 1 QB 402. In Scots law none of the shareholders could be regarded as having acted as a negotiorum gestor as GIL was able to manage its own affairs when the shareholders repaid the bank borrowings.

[11] Further and in any event, he submitted that the repayment by the shareholders of the company's overdraft could not be regarded as an indemnification. He submitted that all of the shareholders who were also directors had some knowledge of the irregular use of GIL's borrowing facilities which had resulted in the building up of an overdraft of about £2.8 million. One could reasonably infer that the directors knew that they were repaying borrowings which were irregular. The sharing by the shareholders of the burden of the overdraft was sufficiently fair to warrant each shareholder to sign the Share Purchase Agreement. All directors who participated in or condoned conduct amounting to breach of fiduciary duty were jointly and severally liable for the losses which resulted: Palmer's Company Law (25^th ed.) paragraph 8.3322 and Neville v Krikorian [2006] BCC 937. He submitted that the repayment of the bank borrowings should be characterised as the repayment by joint wrongdoers of the sums due by them, jointly and severally, to the company and not as an indemnity.

[12] Thirdly, Mr Dewar submitted that it was too late and was materially prejudicial to the defender in each action to analyse the deal reached between the brothers to repay GIL's overdraft as an agreement to indemnify. This was not explored in detail in the evidence and it was unfair to raise it after the proof had been completed.

[13] Finally, GIL was not party to any agreement with the four shareholders which amounted to a contract of indemnity, nor was there any agreement by the shareholders to vest a right in the company: a ius quaesitum tertio. In the Share Purchase Agreement the shareholders of GIL undertook obligations to Eastercroft to repay the bank; no such undertaking was made to the company: Nicholson v Glasgow Asylum for the Blind 1911 SC 391. Even if there were an undertaking to the company, the shareholders should be regarded as volunteers like the plaintiff guarantor in Owen v Tate.

Discussion

[14] I am not persuaded that it is correct to analyse the payment by the shareholders as a repayment by joint wrongdoers of sums which they were due to pay the company. The executive directors of the company who knew most about its business dealings were Mr Scott Gillespie and Mr Gary Gillespie. In paragraph [38] of my earlier opinion in this action I held that, of the directors of GIL, Mr Steven Gillespie had had the least involvement in the affairs of GIL. He was not consulted on the application of the company's funds and borrowing facilities for the benefit of other business ventures in which he had no interest. I held that he must be taken to have been aware of the use of company funds to finance Strathbell Limited ("Strathbell") from which all four brothers took benefit. See paragraph [11] of my earlier opinion in this action and paragraph [8] in my earlier opinion in the action against Mr Scott Gillespie. But that does not support the view that he consented to misappropriations of which he was not informed and from which he received no benefit or that he condoned such misappropriations in breach of his fiduciary duty to GIL. The payments to Strathbell, to which all the shareholders consented, were not misappropriations.

[15] Mr Steven Gillespie's agreement to contribute to the repayment of GIL's overdraft out of the purchase price of the company's shares followed the earlier attempts by Mr Scott Gillespie to devise a fair distribution of the proceeds by taking account of those transactions which had benefitted some but not all of the brothers. That was the motivation behind the production of the two discussion papers, which were called Share Transfer Proposals. In paragraph [41] of the earlier opinion, I recorded Mr Scott Gillespie's evidence that he had sought to achieve a fair result for his uncle, Mr Steven Gillespie, in the Share Transfer Proposals by adding back into the value of GIL items of expenditure in which Mr Steven Gillespie had no interest before dividing the residue among the shareholders. One of the problems for the defender in each action, however, was that the Share Transfer Proposals were far from complete in identifying such items of expenditure.

[16] The £300,000, which Mr Steven Gillespie in fact received, and the £262,840.70, to which he was entitled under the Share Purchase Agreement, were broadly similar to the sums suggested to be due in the Share Transfer Proposals of December 2005 and of early 2006 after allowing for the irregular transactions disclosed in those documents. I set out the first of those documents in paragraph [21] of my earlier opinion in this action and the second in paragraph [12] of the earlier opinion in the action against Mr Scott Gillespie. The first estimated that Mr Steven Gillespie would be due £292,387 after money spent on ventures in which he had taken no part had been re-credited to the company and the equivalent figure in the second was £318,274. When one allows for the changes over time in the level of GIL's overdraft and for the fact that it was overstated in the Share Purchase Agreement as being £2,948,637.20, I do not consider that the sum stated as due to Mr Steven Gillespie in the Share Purchase Agreement or the larger sum actually paid to him were likely to have alerted him to the reality (i) that he was paying off debt incurred by GIL on irregular transactions in which he had no interest and which had not been disclosed to him or (ii) that his share had not been credited to take account of the irregular transactions which had been disclosed in the Share Transfer Proposals. There was no evidence that anyone had disclosed any other transactions to Mr Steven Gillespie or had explained to him how his share in the Share Purchase Agreement was calculated. The absence of such disclosure contributed to my findings that there was no consent to such payments and no waiver by GIL of its claims.

[17] In my opinion Mr Steven Gillespie's position falls to be distinguished from that of Mr Avo Krikorian in Neville v Krikorian (above). In that case, which involved misfeasance claims by an administrator of an insolvent company against two former directors, the Court of Appeal held that Mr Krikorian had knowledge of loans made to his son in breach of section 330 of the Companies Act 1985 and must be taken to have authorised such loans. By contrast, I conclude that Mr Steven Gillespie did not know of or condone the transactions which were not disclosed to him and in which he had no interest. He failed to examine the Share Purchase Agreement in any detail and did not investigate whether he had been given credit for the transactions described in the Share Transfer Proposals. But that inattention to the detail of the settlement of the share purchase did not amount to condonation of those transactions. I have held that he must have known of the payments to Strathbell, but the practice of making those payments was known to all of the shareholders. They consented to that practice. Therefore, as I have said, there was no breach of fiduciary duty in relation to such payments. As GIL was and is solvent, no one else has an interest in relation to those payments. One cannot infer from his knowledge of payments to which all consented that he condoned other transactions of which he was unaware or which were inadequately disclosed to him.

[18] Secondly, I do not accept that the defender in each case has been deprived of the opportunity of adducing evidence of the circumstances leading up to the Share Purchase Agreement. There is no obligation on a pursuer, who has been indemnified, to aver or otherwise explain that his claim is the subject of subrogation. There was no dispute as to the circumstances which led to the inclusion of the repayment of GIL's overdraft in the Share Purchase Agreement. Subjective evidence as to the intention of the parties to the agreement would not assist. I have concluded that Mr Steven Gillespie was not aware of the undisclosed misappropriations and believed that he was being reimbursed for those disclosed in the Share Transfer Proposals. I have also concluded that the other directors were aware of some at least of the misappropriations. Further, it is clear that the parties who were involved in the preparation of the agreement and who gave evidence were not able to recall much about how it came to be concluded and why it was departed from in the sums paid out to Mr Steven Gillespie. Mr Scott Gillespie was principally responsible of the arrangement of the deal and gave evidence of his involvement. If additional evidence of the circumstances which led up to the agreement had been available, it would have been relevant to the defences of consent and waiver and I would have expected the parties to adduce it. But the impressionistic evidence which was given and the decision of Mr Graham Gillespie not to give evidence in his own defence strongly suggest that no reliable evidence was available. I am therefore not persuaded that the defender in either case has suffered any prejudice by the fact that GIL did not assert that it was pursuing a subrogated claim for Mr Steven Gillespie or anyone else.

[19] The next issue is whether the repayment of the overdraft by the shareholders amounted, at least in part, to an indemnity. In my opinion it did. Indemnifying a person is compensating him for a loss suffered or an expense incurred: Farstad Supply AS v Enviroco Ltd [2010] UKSC 18, Lord Clarke at paragraph 26. I am satisfied that Mr Steven Gillespie indemnified GIL by making his contribution. Where he has been taken to have authorised payments, such as in the disbursements to Strathbell, his contribution does not have the status of a secondary liability but is a payment of sums which he and others were equally due to pay to GIL. The question which remains is whether he is entitled to be subrogated to GIL's claims against Mr Graham Gillespie and Mr Scott Gillespie to the extent of his indemnity of GIL in relation to irregular transactions (i) which he was unaware of and from which he did not benefit, or (ii) for which he was not reimbursed.

[20] Counsel did not dispute the entitlement of a person who has provided an indemnity to another under a contract of indemnity to be subrogated to the other's claims against the wrongdoer who caused the relevant loss. The relevant law may be summarised shortly. In this summary A is indemnifier, B is the person who has suffered loss which A has wholly or partly indemnified, and C is the person against whom B has a claim for the loss and who has the ultimate liability for that loss. First, if A is obliged to indemnify B, A's payment of indemnity does not discharge B's claim against C. Secondly, unless B assigns his claim to A, the claim remains vested in B. Thirdly, in order to reverse the unjustified enrichment of C by A's indemnity, A is subrogated to B's claim and can require B to lend his name to an action against C. See Caledonia North Sea Ltd v London Bridge Engineering Ltd (above) at pp. 1134 and 1138-1139.

[21] Thus, while the claim against the directors in breach of their fiduciary duty remains vested in GIL, the payment of the overdraft by the shareholders does not mean that GIL has no loss for which it can claim damages, if the repayment of the overdraft or part of it was made under a contract of indemnity. The principal remaining issues therefore are (i) whether the Share Purchase Agreement contained a contract of indemnity by which the shareholders were bound to GIL to indemnify it and (ii) if not, whether subrogation was nevertheless available in the circumstances.

[22] In the Share Purchase Agreement Eastercroft undertook to the selling shareholders "on behalf of the Company [i.e. GIL] [to] pay by telegraphic transfer the sum of £2,948,637.20, being an amount sufficient to discharge in full the liability of the Company in respect of the Bank Debt..." in addition to the defined consideration of £1,051,362.80. It was further agreed that Eastercroft and the selling shareholders would procure that the vendors' solicitors were instructed to pay the first sum to the bank immediately following completion "and discharge in full the liability of the Company in respect of the Bank Debt." See paragraph [27] of my earlier opinion in this action.

[23] GIL was not a party to the Share Purchase Agreement and Mr Ferguson did not assert that it had a ius quaesitum tertio. I am not persuaded that GIL could sue its shareholders under the Share Purchase Agreement for its performance, although the contract required the repayment of its overdraft on its behalf.

[24] In my opinion that does not mean that Mr Steven Gillespie was not entitled to be subrogated to GIL's claims against its directors in order to recover his indemnity. It is well established in company law that in many circumstances a decision by all of the shareholders of a company is to be treated as a decision or resolution of the company. See, for example, Re Duomatic Ltd [1969] 2 Ch 365, and the cases to which Buckley J referred on pp.370-372. This principle is of importance in this case.

[25] At some time before the Share Purchase Agreement was signed, Bank of Scotland plc demanded that GIL's overdraft be repaid if the ownership of the company were to be changed. GIL did not have funds to do so. All of the shareholders therefore agreed that part of the purchase price of £4 million would be used to effect that repayment. In my opinion their decision to repay GIL's overdraft inevitably involved the company accepting that its overdraft would be repaid in this manner and giving a mandate to its shareholders to do so. It was the equivalent of a formal resolution by the company to this effect. I consider that that amounted to a collateral agreement between GIL and its shareholders which took effect at the time the Share Purchase Agreement was signed. The shareholders were therefore liable to each other and to GIL to pay off the overdraft and the company could have sued any one or more of them under that collateral agreement. In this circumstance one would not need a formal contract between all of the shareholders and the company in order for the principle of subrogation to arise.

[26] To hold otherwise would mean that a shareholder, who in ignorance of the irregularity of the impugned transactions had agreed with the other shareholders to indemnify GIL, would bear the ultimate responsibility for the loss which the company incurred and the directors who had authorised those transactions in breach of their fiduciary duty would not have the primary liability. That outcome appears to me to be inconsistent with the policy of the law in the context of contracts of indemnity as explained by Lord Rodger in Caledonia North Sea Ltd. The fact that in this case the formal contract containing the obligation to pay off the overdraft was between the shareholders and Eastercroft rather than between the shareholders and the company does not in my opinion exclude that policy. Nor does it matter that the contract is not an insurance policy on which GIL has paid the premiums.

[27] I do not consider that Owen v Tate (above) affects this conclusion. In that case the plaintiff (A), in order to assist a third party (C), entered into a guarantee to repay the bank loan of another person (B) without B's knowledge or consent. A, having repaid B's loan under the guarantee, sought to recover his payment from B but was held to be a "volunteer" and as such not entitled to do so. In English law the payment of another's debt by a volunteer does not discharge the debt unless and until the debtor adopts the payment: Caledonia North Sea (above), Lord Rodger at pp.1144-5. By contrast, in this case GIL's debt to the bank was discharged by the implementation of the Share Purchase Agreement and it can hardly be said that GIL was not aware of or was not bound by the unanimous decision of its shareholders to pay off its debt. I do not therefore rely on negotiorum gestio in reaching my conclusion as that would arise where the dominus had not authorised the administration of his affairs: see Stair Memorial Encyclopaedia, Volume 15, "Obligations" (Niall R Whitty), paragraphs 95 and 105-109.

[28] The shareholders' repayment of the overdraft with the consent of GIL discharged GIL's obligation to the bank. But it did not extinguish GIL's claims against the wrongdoing directors. In my view the payment by Mr Steven Gillespie of his contribution towards the repayment of the overdraft is, in part, the equivalent of an insurer's payment to an insured to indemnify the latter against loss caused by another. If the insured pays the sums received from his insurer into his overdrawn bank account, that would not extinguish his claims against the wrongdoer.

[29] I conclude therefore that Mr Steven Gillespie is entitled to pursue in the name of GIL subrogated claims against Mr Graham Gillespie and Mr Scott Gillespie to recover that part of his contribution towards the repayment of GIL's overdraft which is attributable to the identified irregular transactions which have arisen through their breaches of fiduciary duty.

[30] In these circumstances I am not persuaded that it is necessary and thus in the interests of justice to allow Mr Steven Gillespie to amend his claim as Mr Ferguson has moved. I see no need for him to state his case on the alternative basis of an accounting for profit in order to obtain a remedy. Further, the proposed amendment comes very late in the day after all of the evidence has been led, the parties have completed their submissions on the question of breach of fiduciary duty and the three defences, and I have issued my earlier opinion on those matters in each case. I therefore refuse his motion to amend his pleadings in this action.

[31] I turn to the quantification of GIL's claim. The Share Purchase Agreement purported to use £2,948,637.20 of the purchase price to repay GIL's overdraft and Mr Steven Gillespie must be taken as having contributed one quarter of that sum, namely £737,159.30. Part of that sum is to be attributed to his one-quarter share of the repayment of the sums (£378,351.02), which GIL paid to or on behalf of Strathbell, namely £94,588. Each of the shareholders undertook a primary liability for their proportionate share of the repayment of the monies paid to Strathbell. Other parts of that sum are attributable to the misappropriations by Mr Graham Gillespie and Mr Scott Gillespie. The balance is unexplained.

[32] In a table in paragraph [43] of my earlier opinion in this action I listed the unauthorised payments out of GIL's funds for which Mr Graham Gillespie was responsible and I concluded that a payment to GIL of £26,475 by Herr Hofschruer fell to be deducted from those sums. By adding the sums in the table and deducting Herr Hofschruer's payment one gets a result of £508,162.42. That is the sum of GIL's loss which has been demonstrated to have arisen through Mr Graham Gillespie's breach of fiduciary duty. Each of the shareholders has received less as the consideration for his shares than he would have if that sum had not been misappropriated. Each has contributed equally in that regard. Mr Steven Gillespie indemnified the company in respect of one-quarter of that sum, namely £127,040.60, and that is the measure of his subrogated claim in this action.

[33] Mr Ferguson took a broad approach in relation to the pursuer's claim for judicial interest on the damages to which it was entitled. He sought interest from 1 March 2005 on the basis that the majority of the impugned payments was made before February 2005. In the action against Mr Scott Gillespie he adopted a similar approach, seeking interest from 1 March 2006. In my opinion it is appropriate to award interest in each case from 12 May 2006. Had it not been for the existence of Mr Steven Gillespie's claim to be subrogated to GIL's claims against the directors who were in breach of their fiduciary duty, I would have concluded that the repayment of the overdraft by the shareholders had meant that GIL had suffered no loss. I view the contributions to repay the overdraft by Mr Graham Gillespie and Mr Gary Gillespie as payments by those who authorised or condoned the misappropriations. Their contributions to the extent that they are attributed to the losses which GIL incurred from their breach of fiduciary duty reduced those losses and discharged their liability pro tanto.

[34] There was no reliable evidence of the extent of Mr Alan Gillespie's knowledge of the transactions which involved the use of GIL's resources on other business ventures or of whether he had consented to the irregular transactions which have given rise to the claims in this action and the one against Mr Scott Gillespie. He did not give evidence in either action. But, as he has supported Mr Graham Gillespie in the other disputes with Mr Steven Gillespie and has not supported GIL's claim in this case, it is likely that he has consented to or condoned the transactions. In any event, more than five years have now passed since the parties entered into the Share Purchase Agreement and it is likely that the directors' obligation to meet any claim, which he might have had, will have prescribed. Accordingly it seems to me that the only shareholder, who has a right to use GIL's name to recover sums which he paid to indemnify it, is Mr Steven Gillespie. His entitlement to a subrogated claim arose in 12 May 2006.

[35] For completeness I discuss briefly the mismatch between the actual amount by which GIL was overdrawn on 12 May 2006 and the figure stated in the Share Purchase Agreement. In this action and in that against Mr Scott Gillespie, GIL has identified sums which it claims were misappropriated in breach of fiduciary duty. As I have said, those sums and the payments to Strathbell, to which the shareholders consented, make up only part of GIL's overdraft at 12 May 2006. Further, I was given no explanation why the Share Purchase Agreement stated that the overdraft was £2,948,637.20 on 12 May 2006 when in fact it was £2,700,943.15. Absent an explanation for the balance of the actual overdraft and the differential between the overdraft and what is stated in the Share Purchase Agreement, I must assume that the payment on GIL's behalf to the bank on 12 May 2006 paid off liabilities which had been regularly incurred either as expenditure for the benefit of GIL or as all of the shareholders had consented to the expenditure on other family business ventures. GIL's claim in each of the two actions is limited to the share which Mr Steven Gillespie has paid towards the sums which it has proved were unauthorised expenditure.

Conclusion

[36] I therefore refuse to receive the pursuer's Minute of Amendment, which was attached to Mr Ferguson's submissions. I sustain the pursuer's first plea in law, repel the defender's first to fourth pleas in law and order the defender to pay to the pursuer £127,040.60, with interest thereon at the judicial rate from 12 May 2006. I will have the case put out by order to deal with all questions of expenses, which I reserve in the meantime.