Saxon Woods Investments Limited and others (Respondents) v Costa (Appellant)

Permission to Appeal application lodged

Case summary
Permission to Appeal
Previous proceedings

Case summary

Case ID

UKSC/2025/0149

Parties

Appellant(s)

Francesco Costa

Respondent(s)

Saxon Woods Investments Limited

Far East Media Holdings PTE Limited

Grosvenor Investment Project Limited

HDO Holding Limited

BAY CAPITAL INVESTMENTS LIMITED

Khattar Holdings Private Limited

Spring Media Investments Limited

Simon Powell

Issue

Does a director’s duty to act in “good faith” in the best interests of a company under s172(1) Companies Act 2006 require them to act in a way that is objectively honest, or does it suffice that the director subjectively believed that what they were doing was in the best interests of the company?

Facts

This appeal concerns the duty of a director to act in the best interests of a company under s172(1) Companies Act 2006. Mr Costa was the chairman of Spring Media Investments Limited (“the Company”). He also held an indirect interest in the Company through investment vehicles. SW (“the Petitioner”) was another shareholder in the Company. The shareholders in the Company entered into a shareholders agreement (“the SHA”) by which they undertook to work together to effect a sale of the Company by the end of 2019 and, failing that, to instruct an investment bank to “cause” an Exit, which was defined as a sale of the shares in the company or of its assets. As part of this agreement, the shareholders undertook to give good faith consideration to any opportunity for a sale before the end of 2019. During 2019, a number of potential buyers were found but no sale occurred. The Petitioner alleged that the lack of sale was due to the behaviour of Mr Costa, who, the petitioner alleged, obstructed the sale of the Company. Mr Costa argued that he had done so because he believed it would be in the best interests of the company to delay a sale as that would create more value for the shareholders in the long run. The Petitioner brought a petition under s994 Companies Act 2006 alleging that Mr Costa’s conduct had caused unfair prejudice to the petitioner as a shareholder, and was in breach of the SHA and s172(1) Companies Act 2006. The High Court dismissed the s172(1) claim on the grounds that Mr Costa had acted in good faith as he had subjectively believed that what he was doing was in the best interests of the Company. The Court of Appeal reversed that decision on the grounds that s172(1) required that the director’s conduct be honest according to the standards of ordinary people. Mr Costa now appeals to the Supreme Court.