Court rules director liable for fraudulent trading and misfeasance in Courtside Recycling Ltd case

Citation: [2024] EWHC 337 (Ch)
Judgment on


In the case of Dominik Thiel-Czerwinke & Anor (Joint Liquidators of Courtside Recycling Limited) v Nicholas James Crabb, certain legal principles concerning fraudulent trading, director’s misfeasance, and dispositions of company property post-petition were reviewed. This analysis delves into the application of these principles guided by the facts provided in the case and examines how the court interpreted them to arrive at its decision.

Key Facts

The key facts revolve around Mr. Nicholas Crabb’s involvement in Courtside Recycling Limited (“Courtside”), where he was the sole director and shareholder. Courtside was wound up following a petition by HMRC due to VAT declarations discrepancies. Liquidators alleged that Mr. Crabb intentionally defrauded creditors by under-declaring VAT, extracting large cash sums, and destroying company records.

Fraudulent Trading

The court applied section 213 of the Insolvency Act 1986 (IA86), which deals with conducting business with the intent to defraud creditors. The judgment reiterated the three elements identified in Re BCCI SA; Morris v Bank of India [2003], namely: (1) carrying on business with intent to defraud; (2) the defendant’s knowing participation; and (3) knowledge of the fraudulent intent. The court drew upon Ivey v Genting Casinos [2017] to outline that dishonesty is determined according to the standards of ordinary decent people, and this objective standard was crucial in adjudging Mr. Crabb’s conduct.


Misfeasance was assessed under section 212 IA86, reflecting fraudulent trading claims. The case relied upon the principle that directors are under a fiduciary duty to cause the company to keep proper records, as supported by Re Mumtaz Properties Ltd [2011] and Re GHLM Trading Ltd [2012]. Mr. Crabb’s destruction of records was a clear failing of his fiduciary duties.

Dispositions Post-Petition

Regarding section 127 IA86, the court considered dispositions of the company’s property between the HMRC petition presentation and winding up without any validation ordered by the court. Mr. Crabb’s liability for certain sums paid post-petition to himself, his wife, and third parties without proper consideration of Courtside’s other creditors’ interests falls under this.


Mr. Crabb was found liable for various sums totaling £2,575,796. This included contributions for fraudulent trading and dispositions post-petition deemed misfeasance. The cash extracted was determined to be for Mr. Crabb’s benefit, given his responsibility for maintaining records and his subsequent destruction of evidence.


The case concluded that Mr. Crabb knowingly partook in fraudulent trading under section 213 of the Insolvency Act 1986, misappropriated company funds, and destroyed vital accounting records, breaching his fiduciary duties. The objective standard for dishonesty by ordinary decent person criteria played a significant role in construing Mr. Crabb’s actions as fraudulent. The judgment holds important implications for directors’ conduct, the requirement to preserve company information, and the lawful handling of a company’s assets post-insolvency petition. As such, liquidators and company directors must prioritize maintaining accurate records and act transparently, especially when a company faces financial scrutiny or insolvency. The case also showcases the consequences for directors who engage in activities that defraud creditors and fail to fulfill their fiduciary duties.