Mr Woodfull, while still a partner, incorporated a company which entered into a valuable contract with one of his partnership’s main customers (Colt), for which Mr Woodfull had been negotiating on behalf of the partnership.
Held: He was accountable for the profits. The issue was the date down to which the account should have been ordered. Arden LJ made general observations about the basis of Mr Woodfull’s liability: ‘The Colt contract clearly fell within the partnership’s area of business. No question arises as to whether the opportunity to obtain that contract was outside the scope of Mr Woodfull’s duties. That opportunity was, in my judgment, an intangible asset of the partnership which Mr Woodfull ought (in the absence of fully informed consent from his partners) to have taken up for the benefit of the partnership.’ and ‘The result looks extreme, but the purpose of imposing liability for breach of the fiduciary duty not to make a secret profit is partly to act as a deterrent . . The facts of this case do not suggest that the need for this deterrent has diminished since the eighteenth century. Moreover, it is obvious that if (as here) a fiduciary holds trust property at the cesser of his fiduciary relationship, he remains accountable for it. His duty is to hand it back to the person or persons to whom the fiduciary duty was owed.’
Judges:
Arden LJ, Thorpe LJ
Citations:
[2004] 2 BCLC 131
Jurisdiction:
England and Wales
Cited by:
Cited – Ultraframe (UK) Ltd v Fielding and others ChD 27-Jul-2005
The parties had engaged in a bitter 95 day trial in which allegations of forgery, theft, false accounting, blackmail and arson. A company owning patents and other rights had become insolvent, and the real concern was the destination and ownership of . .
Lists of cited by and citing cases may be incomplete.
Company
Updated: 10 May 2022; Ref: scu.230284