On 6 February 2026, the Court of Appeal handed down its judgment in South Bank Hotel Management Company Limited v Galliard Hotels Limited [2026] EWCA Civ 56.
The claim is brought by an investment vehicle (“South Bank”) through which individuals purchased rooms in a hotel which was to be developed by companies within the Galliard Group. After individuals had invested, but before the development was completed, the Galliard Group implemented the “Annex Lease Scheme”. Under that scheme, the benefit of a valuable part of the hotel – containing its conferencing facilities – was transferred out of South Bank to a company ultimately owned by a director and his family. The scheme was concealed from the investors, who only received their shares in South Bank years later.
The trial judge, Richards J, concluded that the claims against the director were time-barred and dismissed other claims against the companies involved in the scheme.
The Court of Appeal allowed South Bank’s appeal on all grounds.
As regards limitation, Newey LJ undertook a detailed analysis of the scope of s. 21(1)(b) of the Limitation Act 1980, which disapplies any limitation period where a claim is made to recover company property which a director has converted to his own use.
The Court of Appeal concluded that the Judge’s approach was contrary to the purpose of the provision, and instead adopted a broad and purposive interpretation to the concepts of “conversion” and “own use”. Newey LJ held that s. 21(1)(b) was capable of applying where the director dealt with company property in a manner which changed the legal state of that property so as to benefit another company which the director controlled, even if there was no transfer of title to the property.
The decision provides important clarification of the potential breadth of s. 21(1)(b) of the Limitation Act 1980. It will enable claims to be brought against a director in a wider range of circumstances where a director has, in some way, derived a benefit from the use of company property – even if title to the property itself has not been transferred out of the company.
The Court of Appeal also allowed South Bank’s appeal on grounds relating to (i) continuing breach of contract, and (ii) the application of the deeming provision contained in s. 44 of the Companies Act 2006, including the meaning of “good faith”.
The judgment can be found here.
James Willan KC, leading Saaman Pourghadiri of 3 Verulam Buildings, was instructed by South Bank for its appeal to the Court of Appeal (not having been instructed below) by Nick Ractliff and Caitlin Ferguson of PCB Byrne LLP.
