PRACTICE DIRECTION 19C – DERIVATIVE CLAIMS

This Practice Direction supplements CPR Part 19

Contents of this Practice Direction

Title
Application of this practice direction
Claim form
Application for order delaying notice
Form to be sent to defendant company or other body
Early intervention by the company
Hearing of applications etc.
Discontinuance of derivative claim
Transitional provisions

Application of this practice direction

1  This practice direction –

(a) applies to –

(i) derivative claims, whether under Chapter 1 of Part 11 of the Companies Act 2006 or otherwise; and

(ii) applications for permission to continue or take over such claims; but

(b) does not apply to claims in pursuance of an order under section 996 of that Act.

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Claim form

2

(1) A claim form must be headed ‘Derivative claim’.

(2) If the claimant seeks an order that the defendant company or other body concerned indemnify the claimant against liability for costs incurred in the permission application or the claim, this should be stated in the permission application or claim form or both, as the case requires.

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Application for order delaying notice

3  If the applicant seeks an order under rule 19.9A(7) delaying notice to the defendant company or other body concerned, the applicant must also –

(a) state in the application notice the reasons for the application; and

(b) file with it any written evidence in support of the application.

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Form to be sent to defendant company or other body

4  The form required by rule 19.9A(4)(a) to be sent to the defendant company or other body is set out at the end of this practice direction. There are separate versions of the form for claims involving a company, and claims involving a body corporate of another kind or a trade union.

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Early intervention by the company

5  The decision whether the claimant's evidence discloses a prima facie case will normally be made without submissions from or (in the case of an oral hearing to reconsider such a decision reached pursuant to rule 19.9A(9)) attendance by the company. If without invitation from the court the company volunteers a submission or attendance, the company will not normally be allowed any costs of that submission or attendance.

(Sections 261, 262 and 264 of the Companies Act 2006 contain provisions about disclosing a prima facie case in applications to continue a derivative claim.)

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Hearing of applications etc.

6

(1) Where a permission application to which this practice direction applies is made in the High Court it will be assigned to the Chancery Division and decided by a High Court judge.

(2) Where such an application is made in a county court it will be decided by a circuit judge.

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Discontinuance of derivative claim

7  As a condition of granting permission to continue or take over a derivative claim, the court may order that the claim is not to be discontinued, settled or compromised without the court's permission. Such a condition may be appropriate where any future proposal to discontinue or settle might not come to the attention of members who might have an interest in taking over the claim.

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Transitional provisions

8

(1) From 1st October 2007 new rules came into force about procedures for derivative claims. The new rules are set out in CPR rules 19.9 to 19.9F.

(2) The rules of court in force immediately before 1st October 2007 apply to derivative claims begun before 1st October 2007. These (former CPR rule 19.9) are set out below:

Derivative claims (PDF - opens in new window)

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