High Court Case: Equitable Compensation, Directors' Liability, and Proprietary Claims in Business Law

Citation: [2024] EWHC 171 (Ch)
Judgment on


The High Court of Justice case Mercy Global Consult Ltd (In Liquidation) v Abayomi Adegbuyi-Jackson & Ors offers rich insights into several legal principles relevant to business and property law. As we analyse the case, we focus on equitable compensation, the impact of proprietary claims on such compensation, liability of directors for losses incurred during their tenure, and the approach to calculating damages. This case also touches upon adjournment, permissions to appeal, the application of interest on unpaid amounts, and costs in the context of a liquidation proceeding.

Key Facts

The case involves Mercy Global Consult Ltd, which is in liquidation, claiming against multiple defendants, including Mr Adegbuyi-Jackson, for various financial liabilities and misappropriations arising from their actions leading up to the company’s liquidation. Mercy had succeeded in its claims for equitable compensation and tracing of assets during the main judgment on 13 December 2023. The current hearing, presided over by HHJ Johns KC, was to determine matters consequential to that judgment, including the calculation of equitable compensation, interest, costs, and post-judgment orders.

The judgment considered whether credits for assets, against which a proprietary claim had been established, should be applied when calculating equitable compensation. It also assessed applications for adjournment, permission to appeal, and post-judgment relief concerning rental income from properties owned by Mercy.

Equitable Compensation and Proprietary Claims

The court applied the principle that when equitable compensation is calculated, credit must be given for recoveries and realisations linked to proprietary claims (Snell’s Equity, 34th Ed.). This ensures that claimants are not overcompensated. Any increase in the value of an asset that has been reclaimed should benefit the beneficiary and not reduce the amount for which the defendant is liable.

Liability of Directors

For the directors other than Mr Adegbuyi-Jackson, their liability was limited to the losses incurred by Mercy during their respective tenures as directors. Misappropriations received were considered alternative bases for liability but not additive to the sum total of losses for equitable compensation.

Adjournment and Permission to Appeal

Permission for an adjournment of the hearing and permission to appeal was refused, aligning with the principle that debarring orders should be firmly upheld barring compelling reasons otherwise, as established in Foenander v Bond Lewis & Co[2001] EWCA Civ 759.

Costs and Interest

The court decided costs should reflect the claim’s success and failure where relevant. Mercy was ordered to pay costs for the unsuccessful claim against Mr Somade. In consideration of interest on unpaid amounts, the rate charged by HMRC for late payment was deemed appropriate, connecting to the precedent set in Bilta (UK) Ltd v Natwest Markets plc [2020] EWHC 2598 (Ch).


  1. Equitable Compensation: The court corrected the amounts of equitable compensation claimed by Mercy for assets recovered through proprietary claims, aligning with legal principles that prevent overcompensation.

  2. Proprietary Claims: The defendants were directed to give credit for all assets to which a proprietary claim was successfully established.

  3. Directors’ Liability: The liability of the director defendants was clarified to reflect losses in the period for which they were directors, excluding amounts for misappropriations already addressed.

  4. Adjournment and Appeal: The requests for adjournment and permission to appeal were denied, asserting the authority of the court’s previous debarring orders and case management decisions.

  5. Post-Judgment Relief: The court deferred consideration of post-judgment relief for rent, freezing orders, charging orders, or third-party debt orders to a subsequent hearing.

  6. Costs: Mercy was ordered to pay the defendants’ costs proportionate to the claims’ success and failure.

  7. Interest: Interest was applied at the HMRC late payment rate.

  8. Payment on Account: A payment on account of costs in the sum of £765,000 was deemed to be a reasonable proportion of the total costs incurred.


The case reinforces key principles in dealing with equitable compensation, particularly in the context of a company in liquidation. Proper credits must be applied for the recovery of assets through proprietary claims to avoid overcompensation. The liability of directors needs to be calculated on actual incurred losses and not on a cumulative basis. The court demonstrated restraint in granting adjournments and appeals, emphasizing the importance of upholding case management decisions. The outcomes of this case provide clear guidance on the approach courts may take with respect to equitable compensation related to mismanaged or fraudulent practices, and the impact of proprietary claims on such compensation.