Bhullar v Bhullar
Directors who acquired a property next to the company's premises for themselves, without telling the company, were liable to account, because it was an opportunity the company might have been interested in.
Facts
A family company, which ran a property business, was owned by two families who had fallen out and were negotiating to split the company's assets. The company had decided not to buy any more property. Two of the directors, from one of the families, discovered that a property next to one of the company's properties was for sale, and bought it through a company of their own, without telling the other directors. The other family claimed that they should account for it to the company.
Legal principle
The Court of Appeal held that the directors held the property on trust for the company. Jonathan Parker LJ said that the test was whether reasonable men looking at the facts would think there was a real sensible possibility of conflict between the directors' interest and their duty to the company. The opportunity was one that the company might have wanted, because of its location next to the company's property, and it was the directors' duty to tell the company about it. It did not matter that the directors had learned of the opportunity by chance, or that the company had decided not to buy more property.
Related cases on directors' duties: conflicts of interest
- Aberdeen Railway Co v Blaikie Brothers (1854) 1 Macq 461
- CMS Dolphin Ltd v Simonet [2001] 2 BCLC 704
- Cook v Deeks [1916] 1 AC 554
- Foster Bryant Surveying Ltd v Bryant [2007] EWCA Civ 200
- Fulham Football Club Ltd v Cabra Estates plc [1994] 1 BCLC 363
- Guinness plc v Saunders [1990] 2 AC 663
- Imageview Management Ltd v Jack [2009] EWCA Civ 63, [2009] Bus LR 1034
- Industrial Development Consultants Ltd v Cooley [1972] 1 WLR 443
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