The court considered the arguments presented as to the duty of a director of a company to disclose his own breach of fiduciary duty: ‘Counsel . . submitted, as a general proposition, that, putting fraud on one side, there is no general duty on directors or employees to disclose a breach of duty on their part. As I understood his argument he recognised in the case of fiduciaries, such as directors, if they have failed to account for secret profits which they had made, then their failure to account must necessarily involve in consequence a failure to reveal a breach of duty which had given rise to that duty to account. Counsel . . put in the forefront of the authorities on which he relied a dictum . . in Bell and Lever Bros Ltd . . There is, in my judgment, much force in counsel’s (Mr Powles) submission. Indeed counsel for the plaintiff’s (Mr Thoresby) argument, that a director is under a duty to disclose any breach of duty on his part before an agreement of the kind in the present case was entered into, could lead to the extravagant consequence that the director might have to make what counsel for the defendant (Mr Powles) has called a ‘confession’ as a prerequisite of such an agreement. But, in my judgment, it is not necessary to decide in this case whether counsel for the defendant’s (Mr Powles) submission is correct, because, as I have read the judgment of the judge, having regard to the facts found by him, no breach of duty was committed by the defendant in this case, before the termination agreement was made.’
Judges:
Robert Goff LJ
Citations:
[1984] BCLC 549
Jurisdiction:
England and Wales
Citing:
Cited – Bell v Lever Brothers Ltd HL 15-Dec-1931
Contract – Mutual Mistake Test
Bell was director and chairman of Niger, a subsidiary of Lever Brothers Ltd who dismissed him, offering and paying pounds 30,000 compensation. Lever then discovered that Mr Bell had made secret profits at the expense of Niger for which he could have . .
Cited – Healey v Societe Anonyme Francais Rubastic 1917
A director of the company claimed arrears of salary for work done notwithstanding that he had been summarily dismissed for misconduct. There was no question of a claim for damages for breach of duty. . .
Appeal from – Horcal Ltd v Gatland ChD 1983
Directors have a positive duty to disclose breaches of fiduciary duty. A failure by a director of a company, as opposed to an employee, to disclose an earlier breach of fiduciary duty would render an agreement terminating his contract of service (on . .
Cited – Sybron Corporation v Rochem CA 1983
There was an allegation that the employee had failed to disclose breaches of contract by fellow employees. This had taken place at a time when a decision was being taken as to the payment to be made to him under the terms of a pension scheme. The . .
Cited by:
Appealed to – Horcal Ltd v Gatland ChD 1983
Directors have a positive duty to disclose breaches of fiduciary duty. A failure by a director of a company, as opposed to an employee, to disclose an earlier breach of fiduciary duty would render an agreement terminating his contract of service (on . .
Cited – Tesco Stores Limited v Pook, Pook, Universal Projects (UK) Limited ChD 14-Apr-2003
A trustee in breach of his duty has a duty to disclose that breach. It was alleged that the defendants, including a director of the claimant, had submitted false invoices to the claimants, and purchased property with the resulting profits.
Cited – Fassihim, Liddiardrams, International Ltd, Isograph Ltd v Item Software (UK) Ltd CA 30-Sep-2004
The first defendant (F) had been employed by a company involved in a distribution agreement. He had sought to set up a competing arrangement whilst a director of the claimant, and diverted a contract to his new company.
Held: A company . .
Lists of cited by and citing cases may be incomplete.
Company
Updated: 29 April 2022; Ref: scu.194876
