Summary

A company and one of its directors had breached fiduciary duties owed to a company for whom it found properties to acquire and develop as licensed premises. Two other directors had dishonestly assisted in the breach in respect of certain transactions.

Facts

The claimant (J) brought two actions against the defendants arising out of an arrangement with the first defendant (V) under which V found properties for J to acquire and develop as licensed premises. V counterclaimed for wrongful termination of the arrangement. J claimed that V had diverted to a competitor the opportunity to purchase the freehold of five properties that were suitable for development by J, and that V had failed to advise it to purchase available freehold interests in seven properties and instead had advised it to enter into leasehold transactions that were disadvantageous. J alleged that there was an implied term that V use reasonable diligence in identifying potentially suitable properties for consideration by J, to bring such properties to J's attention, and not to act as a property finder for anyone else. J also alleged that V owed implied fiduciary duties not to make a profit out of its position other than by way of fees, not to put itself in a position where its duty and interest might conflict, and not to engage in competition. J also alleged that V's three directors, CB, RH and GA, owed a direct personal duty to J. The defendants claimed that the transactions in the second action were statute barred.

Held

(1) There was no evidence to justify implying an exclusivity agreement. (2) It was clear from the evidence of the relationship between J and V that there was a special relationship of trust and confidence between J's chairman and CB. V was CB's vehicle for discharging that relationship. CB owed a direct fiduciary duty to J. Although RH and GA had been directors of V for a period, they had not assumed a personal responsibility to J and its chairman so as to create a special relationship as required to make a director personally liable for wrongs done by a company. (3) An attempt had been made to divert to a competitor one of the properties that J had been in negotiations to acquire. That was in conflict with its duty of good faith and was a breach of V and CB's fiduciary duty that had justified J terminating the arrangement. That was sufficient to dispose of V's counterclaim. (4) In respect of three of the properties, V and CB had diverted the opportunity to acquire the freeholds to a former employee. J had then purchased the properties at increased prices. V and CB had acted fraudulently in deliberate and conscious breach of their fiduciary duty and preferred their own interests or the interests of others to the detriment of J. In respect of two further properties V and CB had acted dishonestly and in breach of fiduciary duty in interposing a third party company to buy the freehold and grant a leasehold to J. CB had also passed on J's confidential information to certain purchasers in breach of duty. In another four cases V and CB had diverted the freehold purchase to a third party. In one case V had been in negligent breach of duty that had resulted in a lost opportunity to negotiate a lower rent. (5) As V and CB were in breach of fiduciary duty, it was necessary to consider whether RH and GA were liable for dishonestly assisting in those breaches. The test for dishonest assistance was an objective one, but took into account the characteristics of the individual in question, Attorney General of Zambia v Meer Care & Desai (A Firm) (2007) EWHC 952 (Ch) applied. An accessory could only be liable if he had been personally dishonest, Satnam Investments Ltd v Dunlop Heywood & Co Ltd (1999) 3 All ER 652 CA (Civ Div) followed. There was no requirement for there to be trust property but if that was wrong then the Court of Appeal in Satnam had held that confidential information was capable of being trust property. In three of the property transactions RH had acted dishonestly and was liable for dishonestly assisting V and CB in their dishonest breaches of fiduciary duty. He had fallen short of the standards expected of him given his status and experience. He had known that the transactions were dishonest, had embraced the lies told by CB about it and persisted in that stance in the proceedings. GA was liable for dishonest assistance in respect of three different property transactions. (6) The fiduciary relationship owed by V and CB fell within the Limitation Act 1980 s.21(1)(a) as an action in respect of trust property and so the limitation period was disapplied. Further, s.32 applied to postpone the limitation period because the action was based on fraud that had been deliberately concealed by V, CB, RH and GA. So the claims for breach of fiduciary duty and dishonest assistance were not statute barred. (7) In long trials the court should consider holding the parties strictly to their time estimate. If the trial ran over it should be stopped and refixed to continue later or be started again. The size of written submissions should be limited to 250 pages for an opening or closing.

Judgment for claimant