CMS Dolphin Ltd v Simonet
A director who resigns in order to take a maturing business opportunity of the company for himself is liable to account for the profits he makes from it.
Facts
Mr Simonet was the managing director of CMS Dolphin, an advertising agency. He resigned suddenly, without notice, and set up a new business, which was joined by most of the company's staff and took over many of its clients. CMS Dolphin sued him for breach of fiduciary duty.
Legal principle
Lawrence Collins J held that Mr Simonet was liable. He said that a director's power to resign from office is not a fiduciary power, and he is entitled to resign even if his resignation might have a disastrous effect on the business of the company. But where a director resigns and then exploits, for his own benefit, a maturing business opportunity of the company, which he learned of while he was a director, he is in breach of his fiduciary duty. Mr Simonet had diverted the company's business to his new company, and he was liable to account for the profits.
Related cases on directors' duties: conflicts of interest
- Aberdeen Railway Co v Blaikie Brothers (1854) 1 Macq 461
- Bhullar v Bhullar [2003] EWCA Civ 424, [2003] 2 BCLC 241
- 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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