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Fiduciary Duties

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[Thanks to Kathleen Donnelly of Henderson Chambers for preparing this case summary]

The Court of Appeal has handed down its decision in Philip Towers v Premier Waste Management Limited concerning the fiduciary duties of a company director. The director, Mr Towers, had taken an undisclosed loan of equipment from one of the company's customers. When the matter came to light, the company claimed he was liable to account to the company. Mr Towers argued that the loan was a private arrangement between friends and the value of benefit was negligible (the equipment was old and dilapidated).

Lord Justice Mummery giving the judgment of the Court of Appeal held that:

  • the director's no conflict duty extended to preventing Mr Tower from disloyally depriving the company of the ability to consider whether it objected to the diversion of the opportunity offered to the company;
  • the strict loyalty and no conflict duties were breached on the facts;
  • the absence of evidence that the company would in fact have taken the opportunity or suffered any loss were not relevant.

The judgment also includes dicta of wider application to any appeal concerning the adequacy of reasons: see paragraph 53, "Brevity is a compliment to the judge" and "A judge should not feel obliged to be a legal windbag".