The claimant appealed against dismissal of her petition for an order for the defendants to purchase her shares at a fair value, saying that they had acted unfairly toward her. Her co-directors had acquired, for another company of which they were sole directors, a property which might have been bought by the company.
Held: The appeal succeeded. Directors of companies occupy a ‘general trusteeship or fiduciary position’, and ‘any inquiry as to whether the company could, would or might have taken up the opportunity itself is irrelevant; so also, therefore, must be a ‘scope of business’ inquiry. The point is that the existence of the opportunity is one that it is relevant for the company to know and of which the director has a duty to inform it. It is not for the director to make his own decision that the company will not be interested and to proceed, without more, to appropriate the opportunity for himself. His duty is one of undivided loyalty and this is one manifestation of how that duty is required to be discharged.’
Judges:
Lord Justice Waller, Lord Justice Rimer and Lord Justice Aikens
Citations:
[2009] EWCA Civ 751, Times 21-Aug-2009
Links:
Statutes:
Companies Act 1985 459, Companies Act 2006 994
Jurisdiction:
England and Wales
Citing:
Appeal from – O’Donnell v Shanahan and others; In re Allied Business and Financial Consultants Ltd ChD 7-Aug-2008
. .
Cited – AAS v Benham CA 1891
Benham was a partner in a ship-broking firm which hoped to act in negotiations between the Spanish and Portuguese Governments and ship builders. He had also been approached for advice by a shipbuilding company. He received information while acting . .
Cited – Parker v McKenna CA 1874
The directors of a bank acquired for themselves, and made a profit on, certain shares the subject of a new issue that were not taken up by the bank’s shareholders.
Held: James LJ said: ‘I do not think it is necessary, but it appears to me very . .
Cited – Trimble v Goldberg PC 1906
The parties entered into a partnership to acquire ‘stands of land’ for conversion into a township and subsequent re-sale. The land was acquired, along with shares in a company owning other stands in the same locality. One of the partners then bought . .
Cited – Henderson v Merrett Syndicates Ltd HL 25-Jul-1994
Lloyds Agents Owe Care Duty to Member; no Contract
Managing agents conducted the financial affairs of the Lloyds Names belonging to the syndicates under their charge. It was alleged that they managed these affairs with a lack of due careleading to enormous losses.
Held: The assumption of . .
Cited – Furs Ltd v Tomkies 1936
(High Court of Australia) ‘the inflexible rule that, except under the authority of a provision in the articles of association, no director shall obtain for himself a profit by means of a transaction in which he is concerned on behalf of the company . .
Cited – Kak Loui Chan v Zacharia 1984
(High Court of Australia) The fundamental rule that obliged fiduciaries to account for personal benefit or gain had two separate themes: ‘The variations between more precise formulations of the principle governing the liability to account are . .
Cited – Regal (Hastings) Ltd v Gulliver HL 20-Feb-1942
Directors Liability for Actions Ouside the Company
Regal negotiated for the purchase of two cinemas in Hastings. There were five directors on the board, including Mr Gulliver, the chairman. Regal incorporated a subsidiary, Hastings Amalgamated Cinemas Ltd, with a share capital of 5,000 pounds. There . .
Cited – Phipps v Boardman HL 3-Nov-1966
A trustee has a duty to exploit any available opportunity for the trust. ‘Rules of equity have to be applied to such a great diversity of circumstances that they can be stated only in the most general terms and applied with particular attention to . .
Cited – Industrial Development Consultants Ltd v Cooley 1972
Mr Cooley was the managing director of the claimant. His duties included procuring business in the field of developing gas depots. The company had unsuccessful negotiations with the Eastern Gas Board for the development of four depots. However, the . .
Cited – Bhullar and others v Bhullar and Another CA 31-Mar-2003
The claimants were 50% shareholders in a property investment company and sought relief alleging prejudicial conduct of the company’s affairs. After a falling out, two directors purchased property adjacent to a company property but in their own . .
Lists of cited by and citing cases may be incomplete.
Company
Updated: 30 July 2022; Ref: scu.352261