The English Court of Appeal has confirmed that cases
concerning reflective loss are suitable for strike out / summary
judgment. The reflective loss principle has its origins in a
principle of company law known as the rule in Foss v
Harbottle, or the “proper plaintiff” rule,
i.e. the only person who can seek relief for an injury done to a
company is the company itself.
The rule against reflective loss is a rule of substantive law
(rather than procedural law) which provides that a shareholder
cannot claim for losses it has suffered in its capacity as a
shareholder (for example a diminution in share value or in
distributions). Those are the losses of the company which the law
does not regard as separate and distinct from the
shareholder's loss. Were it not for the application of the
reflective loss principle, the rule in Foss v
Harbottle would be subverted.
