O'Donnell v Shanahan
The no profit rule applies to any opportunity that comes to a director in his capacity as director, even if it is outside the scope of the company's business.
Facts
The company provided financial advice, but did not invest in property. Two of its three directors, while acting for a client of the company, learned of an opportunity to buy a building, and bought it themselves, without telling the third director. The third director, who was also a shareholder, brought an unfair prejudice petition, claiming that they should have offered the opportunity to the company.
Legal principle
The Court of Appeal held that the directors were liable to account for the profits. Rimer LJ said that the no profit rule is not limited to opportunities that fall within the scope of the company's business. The opportunity had come to the directors in their capacity as directors of the company, while acting for its client, so they were in breach of their fiduciary duty by taking it for themselves without the informed consent of the company. The case applies the strict approach of Regal (Hastings) v Gulliver.
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
- 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
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