B – Breach of fiduciary duty
26/3/24
EXPERT TOOLING AND AUTOMATION LTD v ENGIE POWER LTD [2024] EWHC 374 (Ch)
A principal’s claim to recover commission received by an agent failed. The claim was time-barred whether in contract, tort, or in equity by analogy under s.36 Limitation Act 1980. The primary limitation period was not extended under s.32(1)(b) because the fact that commission would be paid by a third party was known and the amount could have been discovered with reasonable diligence simply by asking. Further, although the agent had been a fiduciary, having regard to the business context, the scope of the fiduciary duty did not require the agent to advise the principal of the amount of the commission in the absence of a request for that information, the principal was regarded as having given informed consent to the payment of commission, and the case did not involve dishonesty to establish accessory liability.
4/10/23
HOTEL PORTFOLIO II LIMITED (IN LIQUIDATION) V RUHAN [2023] EWCA Civ 1120
A defaulting fiduciary can be liable to pay equitable compensation for loss suffered by the beneficiary or, at the beneficiary’s election, to provide an account of profits made in the same transaction. A person who dishonestly assists the defaulting fiduciary can be jointly and severally liable with the defaulting fiduciary to pay equitable compensation or to provide an account of any profits which the dishonest assistant personally made, but he is not liable to account for profits made by the defaulting fiduciary. So in a case where a company suffered no loss from a director’s breach of fiduciary duty, the company could seek from a nominee who dishonestly assisted the director, profits made by the nominee personally but not profits made by the director.
18/6/20
LIV BRIDGING FINANCE LTD v EAD SOLICITORS LTD (IN ADMINISTRATION) [2020] EWHC 1590 (Ch)
The claimant sought summary judgment on claims that the defendant solicitors had paid away monies without obtaining security for loans advanced by the claimant. The court summarised the principles to be applied on applications for summary judgment [18] and principles governing the assessment of equitable compensation for breach of fiduciary duty [22]. The solicitors paid out the money in the knowledge that this was contrary to the conditions on which it was held so as to give rise to a breach of trust [33]. Equitable compensation was limited to losses falling within the scope of the firm’s duty to obtain a first charge [35]. In relation to loans where there was no evidence of any likely repayment and the court was satisfied that no loss would have been suffered if security had been provided, summary judgment was given for the full amount of the advances [36]. The court refused summary judgment in relation to loans where there was evidence that more than the sums advanced had been repaid [37] because claims for arrangement fees and interest required investigation at trial [38].
11/2/19
BREWER v IQBAL [2019] EWHC 182 (Ch)
The court reviewed the fiduciary duties of administrators of companies [37] and their duties of care [52]. On the facts an administrator had sold the company's assets at an undervalue to a company incorporated by the company's directors. He had breached his fiduciary duty by failing to act with single-minded loyalty to the company and by failings in his decision-making. He had not relied on suitably qualified or competent professional advice. Compensation in equity was to be measured by the objective value of the property lost, determined at the date when the account was taken, and with the benefit of hindsight but was discounted to reflect the fact that there would be a buyers’ market for the property [112].
20/2/15
BREITENFIELD UK LTD v HARRISON [2015] EWHC 399 (Ch)
Between them, a company director and others were liable for breach of contract, breach of fiduciary duty, unlawful means conspiracy and dishonest assistance in setting up a rival company.
4/7/14
NOVOSHIP (UK) LTD v NIKITIN [2014] EWCA Civ 908
If an agent or employee receives a bribe which he then shares with another, he is in breach of his fiduciary duty in then negotiating other transactions with that other person for as long as he has not disclosed the matter to his principal [54]. A defendant found to have dishonestly assisted another’s breach of fiduciary duty in this way has the same responsibilities as an express trustee and can be ordered to provide an account of profits [92]. That is so even if the dishonest assistance does not involve the misapplication of trust property [93]. Although causation of loss is not required to be established when seeking an account of profits for breach of fiduciary duty, causation is required in a claim for an account of profits from a dishonest assistant who is not himself a fiduciary [107]. This requires more than “but for” causation [108]. Although the defendant had obtained the use of certain vessels by such dishonest assistance, the effective cause of his profit had been an unexpected change in the market [115], so causation was not made out in this respect. In addition, the remedy of an account against a dishonest assistant who is not a fiduciary is discretionary [119] and it would be disproportionate in relation to the defendant’s use of the vessels. The judge had been entitled to award interest on the judgment (expressed in US$) at 2.5% over 3 month $ LIBOR.
5/7/13
ODL SECURITIES LTD v MCGRATH [2013] EWHC 1865 (Comm)
An employee who acted beyond the scope of his authority in making loans from his employer to third parties was liable for breach of the terms of his employment contract requiring him to act with skill, care and in good faith. The employee had also acted in breach of the fiduciary duty requiring him to act in his employer’s best interests and to disclose matters which his employer should have known, including his own misconduct. The employer was entitled to damages or equitable compensation.
25/4/13
WALSH v SHANAHAN [2013] EWCA Civ 411
When an agency terminated the former agent ceased to owe fiduciary duties so the principal ceased to be entitled as of right to an account of profits made thereafter by the agent by misuse of the principal’s confidential information. That was a tort and the judge had been right to hold that he had a discretion whether to order an account of profits as the remedy rather than damages. On the facts the judge’s decision to award damages and to refuse an account of profits as disproportionate, was unimpeachable.
29/1/13
FHR EUROPEAN VENTURES LLP v MANKARIOUS [2013] EWCA Civ 17
A secret commission paid by the seller of an hotel to the buyer’s agent was held on constructive trust for the buyer. It could not be traced into the agent’s hands, because when the seller paid the purchase price it had intended the buyer to obtain legal and beneficial title to the money. But the agent had been a fiduciary and had taken advantage of an opportunity belonging to the buyer, because the buyer might have delayed contracting if it had known that the commission was to be paid to the agent from the purchase money, or the buyer might have negotiated down the fee it paid to the agent thereby reducing the overall cost of the transaction to the buyer.
30/10/12
CROCS EUROPE BV v ANDERSON [2012] EWCA Civ 1400
The duties of agents in the Commercial Agents (Council Directive) Regs 1993 do not create contractual conditions breach of which automatically justify termination. Although a commercial agency is a fiduciary relationship, not all breaches necessarily amount to a repudiation. The question is how serious in all the circumstances was the conduct. Applying general contractual principles, and as in the employment context, there will be a repudiation if a party conducts himself in a way which, viewed objectively, is likely to destroy or seriously damage the relationship. On the facts the judge had been entitled to find that the posting of derogatory comments on the internet had not been sufficiently serious to be a repudiatory breach justifying termination.
25/4/12
E-CLEAR (UK) PLC v ELIA [2012] EWHC 1256 (Ch)
The claimant company was entitled to summary judgment on its claim against the defendant director for breach of fiduciary duty in misusing the company’s funds to purchase a property. It was unlikely that the defendant had a cross-claim against the company for repayment of an alleged loan, but in any event a personal claim for repayment could not be set-off against the company’s claim. A claim by the defendant’s mother to have an interest in a property acquired with the misused funds could not take priority because the company’s claim arose first in time.
21/2/12
GRIMALDI v CHAMELEON MINING NL (NO. 2) [2012] FCAFC 6 (Fed Ct (Aus)
Considered claims against de facto director for breach of fiduciary duty and accepting secret commissions, and against third parties dealing with the company for knowing receipt and assistance.
25/1/12
ROSS RIVER LTD v WAVELEY COMMERICAL LTD [2012] EWHC 81 (Ch)
Contains a useful summary at [235] – [256] of the principles to be applied in determining whether one party owes a fiduciary duty to another. On the facts a party to a joint venture agreement owed a fiduciary duty to act in good faith in the operation of the joint venture and in accounting to the other party for its share of profits, as well as a fiduciary duty not to do anything which favoured itself to the disadvantage of the other party when handling joint venture revenues.