Manhattan Coffee v Mwagiru: when directors lack standing to sue in a company's name during liquidation

The Privy Council has dismissed two connected appeals in Manhattan Coffee Investment Holding (in liquidation) v Stephen Mbugua Mwagiru [2026] UKPC 21, clarifying the circumstances in which a person other than a liquidator may be authorised to bring or continue proceedings in the name of a company in liquidation. The judgement, delivered on 14 May 2026 by Lord Richards, confirms that a director who is neither a creditor nor a contributory has no standing to seek such authority, regardless of remaining formally in office.

Manhattan Coffee Investment Holding, incorporated in Mauritius, had in 2017 lodged a claim seeking annulment of share issues that had allegedly diluted its stakes in two subsidiary holding companies from majority to minority positions. The potential recovery was said to be as much as US$340m. The company was wound up in May 2023, with joint liquidators appointed, who declined to pursue the claim and instead moved to sell the company's shareholdings in those subsidiaries.

Stephen Mwagiru, a director of the company but neither a creditor nor a shareholder, made two urgent applications to the Commercial Division of the Supreme Court of Mauritius in November 2023. Both were granted the same day or the day after filing, without notice to the liquidators and without any hearing or written reasons. The Court of Civil Appeal subsequently set aside both orders. The Privy Council upheld that outcome, though on partly different grounds.

The jurisdiction exists, but is confined to those with an interest in the estate

The Board confirmed, contrary to the Court of Civil Appeal's view, that a court does have jurisdiction under section 174 of the Insolvency Act 2009 to authorise a person other than the liquidator to bring or continue proceedings in the name of a company in liquidation. The power is long-established: it traces to mid-nineteenth century English Chancery practice and was authoritatively restated in Cape Breton Co v Fenn (1881) and subsequent Commonwealth decisions including Russell v Westpac Banking Corporation (1994) and Fargro Ltd v Godfroy [1986].

The rationale, consistently applied across those jurisdictions, is that a liquidation impresses the company's assets with a statutory trust for the benefit of creditors and contributories. Where a liquidator declines to pursue a valuable claim, those whose interests are prejudiced by that omission may, in appropriate cases, seek the court's authorisation to act in the company's name. The eligible class is confined to persons with a genuine stake in the distribution of the estate.

A director in that capacity alone falls outside the eligible class

The appellant contended that section 174(3) of the Insolvency Act 2009, which expressly lists directors as persons entitled to apply for directions, gave him standing. The Board rejected that argument, applying the approach taken in Brake v The Chedington Court Estate Ltd [2023] UKSC 29. The mere identification of a category of applicant in a supervisory provision does not confer standing to seek any particular form of relief. The applicant must demonstrate a legitimate interest in the order sought.

A director, as such, has no interest in the recovery of company assets or their distribution. That position was confirmed by the Malaysian Federal Court in Zaitun Marketing Sdn Bhd v Boustead Eldred Sdn Bhd [2010] and is consistent with nineteenth century English authority. The fact that Mauritian law, like New Zealand and British Virgin Islands legislation, keeps directors formally in office during liquidation changes nothing: section 154(1) of the Insolvency Act 2009 expressly strips them of all powers, functions and duties save as the legislation permits.

Procedural fairness

The Board was also critical of the process at first instance. Both orders were made without notice to the liquidators and without a hearing. Ex parte orders of that character are appropriate only where notice would frustrate the relief sought or where genuine urgency makes notice impossible. Neither condition was satisfied here. The joint liquidators were entitled to be heard before any order affecting the conduct of the liquidation was made against them.

The appeals were dismissed.