ABSTRACT
In Sevilleja v Marex Financial Ltd, a seven-member panel of the Supreme Court undertook a root-and-branch re-examination of the no reflective loss principle. While the Supreme Court’s unanimous rejection of the unprincipled expansion of the rule to creditors represents a welcome development of the law, it was held by a bare four to three majority that a shareholder is not entitled to pursue a personal claim to recover loss flowing from the diminution in share value and a reduction in distributions which the claimant receives as a shareholder. This note questions the majority’s claim that the no reflective loss principle is doctrinally rooted in the rule in Foss v Harbottle, explains why the policy considerations cited in support of the principle do not warrant a bright-line exclusionary rule, and argues that the majority’s approach should – in the final analysis – be eschewed in favour of the minority’s.
Sin, Ivan, The No Reflective Loss Principle in Marex v Sevilleja: One Step Forward, One Step Back (November 2, 2020). Journal of Business Law, forthcoming.
First posted 2021-01-07 13:23:26
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