Monday 17 November 2025
Your weekly SQE Prep Quiz has arrived
Dear Subscriber,
Hope you had a great weekend! Please see below for the question, the answer to the previous question and associated resources. This is the web version of this newsletter.
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This Week’s Question: A director of a private company learns that the company plans to purchase a plot of land for development. Before the board has made a final decision, the director arranges for a separate company owned by his spouse to buy the same plot and then sell it to the company at a profit. When the transaction is later discovered, the company’s shareholders demand repayment of the profit made by the spouse’s company. The director argues that he acted in good faith and that the company ultimately suffered no loss.
Which duty under the Companies Act 2006 has the director most clearly breached?
A. The duty to exercise reasonable care, skill and diligence (s.174).
B. The duty to promote the success of the company for the benefit of its members (s.172).
C. The duty to avoid conflicts of interest (s.175).
D. The duty not to accept benefits from third parties (s.176).
E. The duty to declare interest in a proposed transaction or arrangement (s.177).
Dig Deeper: Update your knowledge of Company Law for the 2026 exams, by watching this video
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Last Week’s Question: A local council grants a licence for a late-night music festival in a residential area. The event is approved despite repeated noise complaints from residents and police concerns about public safety. The council’s own environmental health officers advised against the licence, but the licensing committee said it wanted to “boost tourism and local spending.” A residents’ association seeks to challenge the decision by judicial review, claiming the council acted unreasonably. Which statement best reflects the court’s likely approach?
A. The court will substitute its own view of the merits if it considers the decision economically unwise.
B. The court will quash the decision if it is so unreasonable that no reasonable authority could ever have made it.
C. The court will refuse to intervene because decisions involving public interest are not justiciable.
D. The court will only intervene if the council acted in bad faith or with improper motive.
E. The court will allow the challenge automatically because the council ignored expert advice.
✅ Correct Answer: B The court will quash the decision if it is so unreasonable that no reasonable authority could ever have made it. Feedback: The Wednesbury principle originates from Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223, where Lord Greene MR held that courts can quash a decision if it is so unreasonable that no reasonable authority could ever have come to it. Judicial review examines lawfulness, not the merits of decisions (see also Council of Civil Service Unions v Minister for the Civil Service [1985] AC 374).
- Option A is wrong: courts do not substitute their own judgment for that of the decision-maker.
- Option C is wrong: decisions affecting the public interest are reviewable if unlawful or irrational.
- Option D is incomplete: while bad faith is a ground for review, unreasonableness is broader.
- Option E is wrong: ignoring expert advice does not automatically make a decision unlawful — it must reach the Wednesbury threshold of irrationality.
This tests FLK2: Public Law / English Legal System, focusing on rationality review and the limits of judicial intervention in administrative decision-making.
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All the best
Dr Ioannis (Yannis) Glinavos
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