Industrial Development Consultants Ltd v Cooley
A managing director who obtained a contract for himself, which came to him because of his position, was liable to account for the profits, even though the company could not have obtained the contract.
Facts
Mr Cooley was the managing director of Industrial Development Consultants. He was approached by the Eastern Gas Board, which wanted him to carry out design work, but made it clear that it would not give the contract to the company. Mr Cooley obtained release from his contract with the company by falsely claiming that he was ill, and then took the contract for himself. The company sued him for his profits.
Legal principle
Roskill J held that Mr Cooley was liable to account to the company for the profits he made from the contract. He had obtained information about the opportunity while acting as managing director, and he had a duty to pass it on to the company. It was irrelevant that the company would not have obtained the contract itself. His fiduciary duty to the company meant that he could not use for his own benefit an opportunity that came to him in his capacity as director.
Related cases on fiduciary duties
- Attorney General for Hong Kong v Reid [1994] 1 AC 324
- Boardman v Phipps [1967] 2 AC 46
- Bray v Ford [1896] AC 44
- Bristol and West Building Society v Mothew [1998] Ch 1
- Re Duke of Norfolk's Settlement Trusts [1982] Ch 61
- FHR European Ventures LLP v Cedar Capital Partners LLC [2014] UKSC 45, [2015] AC 250
- Guinness plc v Saunders [1990] 2 AC 663
- Holder v Holder [1968] Ch 353
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