Unsuccessful enforcement did not establish the company director’s personal liability
Editorial summary
The association could not recover OÜ Alelis’s debt personally from its director. The conditions for liability for failing to file for bankruptcy were not proved. The defendant directed an outside company, not the association.
Narva linn, Joala tn 11 korteriühistu · 80189885
OÜ Alelis
Participants and roles
- KÜ Joala 11 Narva — claimant, creditor and appellant
- XX — defendant, shareholder and director of OÜ Alelis
- OÜ Alelis — debtor under the earlier judgment
The dispute and the court’s decision
After obtaining a 14,342.62-kroon judgment against OÜ Alelis, KÜ Joala 11 Narva received no money through enforcement. It sued XX, the company’s shareholder and director, for that sum and interest, alleging breach of the duty to file for bankruptcy. The county court dismissed the claim on 3 September 2010, and the association appealed.
The circuit court distinguished a director’s liability to the company from possible tort liability to a creditor. For the latter, the association had to prove the company’s permanent insolvency and when it arose, breach of the filing duty and a causal link to the creditor’s loss. A certificate of unsuccessful enforcement was insufficient by itself; the accounts and payment information supplied also failed to establish the necessary facts. Nor was it proved that the alleged failure to file had caused the loss claimed.
The appeal was dismissed and refusal of the personal claim against XX upheld. This did not mean directors could never be liable to creditors, nor did it determine the truth or falsity of every item in the company’s records. Costs in both instances were allocated to the association. Later events and actual recovery from the company have not been reverified.
Outcome of this decision
The association’s appeal was dismissed. Grounds for recovering the company’s debt and interest personally from XX were not proved; the association bears costs in both instances.