Part one: How rare are exceptions to the no reflective loss principle? ask Victor Joffe QC & James Mather
Reflective loss is the name given to the loss suffered by a shareholder where there is both breach of a duty owed to the company, and breach of a duty owed to the shareholder, but the shareholder’s loss would be made good if the company enforced its rights against the wrongdoer in respect of its loss (see: eg Johnson v Gore Wood [2002] 2 AC 1, Gardner v Parker [2004] 2 BCLC 554). Prime examples of reflective loss are diminution in value of the claimant’s shares, or loss of dividends on shares, but the term extends to “all other payments which the shareholder might have obtained from the company if it had not been deprived of its funds” (see: Johnson v Gore-Wood at [66]). The no reflective loss principle applies to claims brought by a shareholder not only in his capacity as such, but also to claims brought by him as employee or
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