Peskin v Anderson
Directors owe their fiduciary duties to the company, not to the shareholders individually, unless there is a special factual relationship that gives rise to a duty to them.
Facts
The Royal Automobile Club was a members' club owned by a company. Former members, who had resigned before the club's motoring services business was sold for a large sum, so that they received nothing, sued the directors. They claimed that the directors had owed them a duty to disclose that a sale was being considered, which would have caused them to stay as members.
Legal principle
The Court of Appeal held that the directors owed no such duty. Mummery LJ said that the fiduciary duties of directors are owed to the company, not to the shareholders. In some circumstances, a director may owe a fiduciary duty to shareholders, where there is a special factual relationship between them, for example where the director has dealt directly with the shareholders in a transaction, but there was no such relationship here. The directors had not deliberately misled the members, and had no duty to disclose a proposal that was not yet formulated.
Related cases on directors' duties: powers, judgment and care
- Bamford v Bamford [1970] Ch 212
- Re Barings plc (No 5) [1999] 1 BCLC 433
- BTI 2014 LLC v Sequana SA [2022] UKSC 25, [2024] AC 211
- Re City Equitable Fire Insurance Co Ltd [1925] Ch 407
- Re D'Jan of London Ltd [1994] 1 BCLC 561
- Dorchester Finance Co Ltd v Stebbing [1989] BCLC 498
- Eclairs Group Ltd v JKX Oil & Gas plc [2015] UKSC 71
- Hogg v Cramphorn Ltd [1967] Ch 254
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This summary is for study and revision and is not legal advice. Although our case summaries are checked for accuracy, we do not guarantee that they are free from errors or omissions. Always read the full judgment for the court's reasoning.
