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All England Law Law Reports/1942/Volume Reports/1942/Volume 1 /Regal /Regal (Hastings) Ltd Ltd !ullier and and "t#ers $ %1942& %1942& 1 All All ER ' %1942] 1 All ER 378
Regal (Hastings) Ltd v Gulliver and Others HO!E O" LOR#! $%!&O' !A'E*+ LOR# R!!ELL O" %LLO,E'+ LOR# -A&-%LLA'+ LOR# ,R%GH A'# LOR# .ORER
14+ 17+ 18+ 2/+ 21+ 24 'O$E-0ER 1941+ 2/ "E0RAR* 1942 Companies - Directors - Sale of shares in subsidiary company - Fiduciary relationship - Right of company to profit on sale. *#e appellant +ompan, were t#e owners o- a +inema in Hastings. it# a iew to t#e sale o- t#e propert, ot#e +ompan, as a going +on+ern t#e, were an0ious to a+uire two ot#er +inemas in Hastings. or t#is purpose t#e, -ormed a su3sidiar, +ompan, wit# a +apital o- 56777 in 1 s#ares. *#e, were o--ered a lease o- t#e two +inemas6 3ut t#e landlord reuired a guarantee o- t#e rent 3, t#e dire+tors unless t#e paid$up +apital o- t#e su3sidiar, +ompan, was 56777. *#e intention o- t#e dire+tors o- t#e appellant +ompan, was t#at t#e appellant +ompan, s#ould #old all t#e s#ares in t#e su3sidiar, +ompan,6 and6 sin+e t#e appellant +ompan, at t#at time was una3le to proide more t#an 267776 it seemed t#at t#e dire+tors would 3e o3liged to gie t#e reuired guarantee. *#e dire+tors wis#ed to aoid giing t#is guarantee6 and t#e matter was arranged in t#is wa,. *#e appellant +ompan, was to ta8e up 26777 s#ares at par t#e +#airman o- t#e dire+tors promised to -ind 577 t#e ot#er dire+tors promised to do t#e same and !arton6 w#o was t#e soli+itor to t#e appellant +ompan,6 also promised to proide 577. *#is arrangement was made at a 3oard meeting to w#i+# t#e dire+tors and !arton were +alled 3, two noti+es6 one o- a 3oard meeting o- t#e appellant +ompan, and t#e ot#er o- a 3oard meeting o- t#e su3sidiar, +ompan,. :ot# meetings were to 3e #eld at t#e same time and pla+e. ;n -ul-ilment o- t#e arrangement 26777 s#ares were allotted to t#e appellant +ompan, 577 to ea+# o- t#e dire+tors and !arton6 3ut t#e s#ares in respe+t o- t#e 577 <-ound< 3, t#e +#airman o- t#e dire+tors were allotted to and paid -or 3, two +ompanies and one priate indiidual6 so t#at t#e +ompanies and t#e indiidual too8 as 3ene-i+ial owners and not as nominees o- t#e +#airman. =ltimatel, t#e transa+tion was not +arried t#roug# 3, t#e sale o- t#e propert, o- t#e +ompan, as a going +on+ern6 3ut 3, t#e sale o- all t#e s#ares in t#e appellant +ompan, and in t#e su3sidiar, +ompan,. *#e '6777 s#ares in t#e su3sidiar, +ompan, w#i+# were allotted to or o n 3e#al- o- t#e dire+tors o- t#e appellant +ompan, and !arton were sold at a pro-it o- 2 1>s 1> s 1d 1d per per s#are. ;t was -ound as a -a+t t#at all t#e transa+tions were bona fide?$$ fide?$$ Held $ Held $ (i) in t#e +ir+umstan+es6 t#e dire+tors6 ot#er t#an t#e +#airman6 were in a -idu+iar, relations#ip to t#e appellant +ompan, and lia3le6 t#ere-ore6 to repa, to it t#e pro-it t#e, #ad made on t#e sale o- t#e s#ares6 (ii) t#e +#airman o- t#e dire+tors6 sin+e #e did not ta8e t#e s#ares 3ene-i+iall,6 was not lia3le to repa, t#e pro-it made 3, t#ose w#o too8 t#e s#ares -rom #im6 as t#e latter were not in a -idu+iar, relations#ip to t#e +ompan,. [194! 1 "ll #R #R $%& at $%9 (iii) sin+e !arton was not a dire+tor o- t#e appellant +ompan, #e was not in a -idu+iar, relations#ip to it6 and was not lia3le to ma8e an, repa,ment. @oreoer6 #e too8 t#e s#ares at t#e e0press reuest o- t#e dire+tors o- t#e appellant a ppellant +ompan,.
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'tes *#e importan+e o- t#is +ase lies in t#e modern pra+ti+e o- +arr,ing on 3usiness 3, means o- a num3er o+ompanies eit#er asso+iated toget#er or some su3sidiar, to one prin+ipal +ompan,. ;t s#ows t#at t#e dire+tors o- t#e +ompan, must #ae regard to t#e interest o- t#e s#are#olders in all t#eir dealings wit# t#e propert, o- t#e +ompan,. *#e prin+iple applied in t#is +ase was enun+iated as earl, as 12>6 long 3e-ore t#ere were limited lia3ilit, +ompanies6 and was originall, restri+ted to trustees. ;t #as 3een applied to agents6 partners and6 lastl,6 to dire+tors. As As t#e opinions in t#is +ase state6 t#e lia3ilit, o- dire+tors is not uite t#e same as t#at o- trustees6 3ut t#e general prin+iple remains t#at an, person in a -idu+iar, +apa+it, is not allowed to ma8e a pro-it out o- propert, in regard to w#i+# t#e -idu+iar, relations#ip e0ists. *#is euita3le prin+iple or do+trine #as 3een surrounded wit# man, #ig#$sounding p#rases and terms6 and w#ile it is no dou3t one o- t#e great do+trines o- euit, and a er, alua3le remed, in t#e +ase o- improper dealings 3, persons in -idu+iar, relations#ips6 it is a prin+iple w#i+# +an in-li+t +onsidera3le #ards#ip6 espe+iall, in t#e administration o- small estates. ;n t#e +ase #ere reported t#e result is not altoget#er euita3le6 -or6 o- t#e si0 persons +on+erned in t#e transa+tion impugned6 -our #ae 3, t#e operation o- t#e do+trine 3een o3liged to gie up a pro-it made wit# per-e+t good -ait#6 w#ile t#e remaining two6 3, w#at seems no more t#an t#e mere +#an+e o- +ir+umstan+e6 #ae 3een allowed to retain t#eir s#are o- t#e pro-it. As t#eir Lords#ips point out6 no uestion as to t#e rig#t to retain t#is pro-it +ould #ae arisen i- t#e respondents #ad ta8en t#e pre+aution oo3taining t#e approal o- t#e appellant +ompan, in general meeting6 and t#is would #ae 3een a mere matter o- -orm6 sin+e t#e, dou3tless +ontrolled t#e oting. As to idu+iar, idu+iar, Position o- ire+tor6 see Hals3ur, (Hails#am (Hails#am Edn)6 Vol Vol 56 pp '19$'256 '19$'256 paras 5''$5' and -or Bases6 see igest6 Vol 96 pp 491$57'6 Cos '224$''71. &ases reerred t 'eech ( Sandford (12>) (12>) Del Bas B# >1 4' Digest >''6 >''6 %) . #* p +ames (17') +ames (17') Ves Ves '' 4' Digest 96 96 19$. 19$. ,amilton ( right (142) (142) 9 Bl in 111 4' Digest >46 >46 $1) . "berdeen Ry Co ( /lai0ie /rothers /rothers (154) (154) 1 @a+ 4>1 17 Digest 11>6 11>6 &$$96 &$$96 2 E Rep 1216 2' L*"D '15. mperial ,ydropathic ,otel Co /lac0pool ( ,ampson (12) ,ampson (12) 2' B# 1 9 Digest >>6 >>6 4446 4446 49 L* 157. Re Forest of Dean Coal 2ining Co (1) Co (1) 17 B# 457 9 Digest 4'6 4'6 $1%$6 $1%$6 47 L* 2. Re Faure #lectric "ccumulator Co (1) Co (1) 47 B# 141 9 Digest 16 16 11$16 11$16 5 LFB# 46 59 L* 91. 3ar0er ( 2c'enna (14) 2c'enna (14) 17 B# App 9> 9 Digest 49'6 49'6 $4) 6 44 LFB# 4256 '1 L* '9. mperial 2ercantile Credit "ssocn 5i6uidators7 ( Coleman (1') Coleman (1') LR > HL 19 9 Digest 4916 4916 $ 6 42 LFB# >446 29 L* 16 re(ersing > > B# App 55. ,untington Copper Co ( ,enderson (7777) ,enderson (7777) 4 R (Bt o- Dess) 294.
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/oston Deep Sea Fishing 8 ce Co ( "nsell (1) '9 B# ''9 9 Digest 526 $49) 6 59 L* '45. 5ister 8 Co ( Stubbs (197) 45 B# 1 1 Digest 426 1$6 59 LFB# 576 >' L* 5. Re :orth "ustralian ;erritory Co "rcher
1 LFB# 1296 >5 L* 77. Aeal Appeal 3, Regal Hastings Ltd -rom an order o- t#e Bourt o- Appeal6 dated 15 e3ruar, 19416 dismissing an appeal -rom an order o- rottesle, F6 dated '7 August 1947. *#e appeal was 3roug#t 3, spe+ial leae o- t#e Appeal Bommittee6 granted on 2 April 1941. *#e -a+ts and arguments are -ull, set out in t#e opinion o- Lord Russell o- Gillowen. " ; 2iller 'C and F /eney for the appellants. Cart=right Sharp 'C and C / >uthrie for the respondent >arton. , ynn 3arry 'C and 3 / 2orle for the respondents other than >arton. 2/ "eruar5 19426 he lling inins ere delivered6
$%!&O' !A'E*6 @, Lords6 t#e appellants were t#e plainti--s in t#e a+tion and are re-erred to as Regal t#e respondents were t#e de-endants. *#e a+tion was 3roug#t 3, Regal against t#e -irst -ie respondents6 w#o were -ormer dire+tors o- Regal6 to re+oer -rom t#em sums o- mone, amounting to 6717 s 4d 6 3eing pro-its made 3, t#em upon t#e a+uisition and sale 3, t#em o- s#ares in t#e su3sidiar, +ompan, -ormed 3, Regal and 8nown as Hastings [194! 1 "ll #R $%& at $&) Amalgamated Binemas Ltd. *#is +ompan, is re-erred to as Amalgamated. *#e a+tion was 3roug#t against t#e de-endant6 !arton6 w#o was Regals -ormer soli+itor6 to re+oer t#e sum o- 16472 1s d 6 3eing pro-its made 3, #im in similar dealing in t#e said s#ares. *#ere were alternatie +laims -or damages and mis-easan+e and -or negligen+e. *#e a+tion was 3ased on t#e allegation t#at t#e dire+tors and t#e soli+itor #ad used t#eir position as su+# to a+uire t#e s#ares in Amalgamated -or t#emseles6 wit# a iew to ena3ling t#em at on+e to sell t#em at a er, su3stantial pro-it6 t#at t#e, #ad o3tained t#at pro-it 3, using t#eir o--i+es as dire+tors and soli+itor and were6 t#ere-ore6 a++ounta3le -or it to Regal6 and also t#at in so a+ting t#e, #ad pla+ed t#emseles in a position in w#i+# t#eir priate interests were li8el, to 3e in +on-li+t wit# t#eir dut, to Regal. *#e -a+ts were o- a +ompli+ated and unusual +#ara+ter. ; #ae #ad t#e adantage o- reading and ; agree wit# t#e statement as to t#em prepared 3, m, no3le and learned -riend6 Lord Russell o- Gillowen. ;t will 3e su--i+ient -or m, purpose to set t#em out er, 3rie-l,. ;n t#e summer o- 19'5 t#e dire+tors o- Regal6 wit# a iew to t#e -uture deelopment or sale o- t#eir +ompan,6 were an0ious to e0tend t#e sp#ere o- its operations 3, t#e a+uisition o- ot#er +inemas. ;n Hastings and Dt Leonards t#ere were two small ones +alled t#e Elite and t#e e Lu0e. Cegotiations 3egan 3ot# -or t#eir a+uisition or +ontrol 3, lease or ot#erwise and -or t#e disposal o- Regal itsel-. Part o- t#e ma+#iner, -or t#e purpose was t#e +reation 3, Regal o- a su3sidiar, +ompan,6 t#e Amalgamated. ;t was registered on 2> Deptem3er 19'56 wit# a +apital o- 56777 in 1 s#ares. *#e dire+tors were t#e same as t#ose o- Regal wit# t#e addition o- !arton. ;t was t#oug#t t#at onl, 26777 o- t#e +apital was to 3e issued and t#at it would 3e
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su3s+ri3ed 3, Regal6 w#o would +ontrol it. *#en di--i+ulties 3egan wit# t#e Elite and t#e e Lu0e as to a lease6 amongst ot#ers w#et#er t#e dire+tors o- Amalgamated would guarantee t#e rent. *#e dire+tors were not willing to do so. At last all di--i+ulties were surmounted at a +ru+ial meeting o- 2 "+to3er 19'5. ;t was a pe+uliar meeting. *#e dire+tors 3ot# o- Regal and Amalgamated were summoned to attend at t#e same pla+e and at t#e same time. *#e, did so6 3ut6 alt#oug# separate minutes were su3seuentl, attri3uted to ea+# +ompan,6 it is not eas, to sa, -rom t#e eiden+e at an, parti+ular moment -or w#i+# +ompan, a parti+ular dire+tor was appearing. ;t was resoled t#at Regal s#ould appl, -or 26777 s#ares in Amalgamated. ;t was agreed t#at 26777 was t#e total sum w#i+# Regal +ould -ind. *#e alue o- t#e leases o- t#e two +inemas was ta8en at 156777. *#e dra-t lease was approed. Ea+# o- t#e Regal dire+tors6 e0+ept !ullier6 t#e +#airman6 agreed to appl, -or 577 s#ares6 !ullier sa,ing #e would -ind people to ta8e up 577. *#e Regal dire+tors reuested !arton to ta8e up 577. ; will deal later wit# parti+ular eiden+e appl,ing to !ullier and !arton6 w#o deliered separate de-en+es. *#us6 t#e +apital o- Amalgamated was -ull, su3s+ri3ed6 Regal ta8ing 26777 s#ares6 t#e -ie respondents ta8ing 577 s#ares ea+#6 and t#e persons -ound 3, !ullier t#e remaining 577. *#e s#ares were dul, paid -or and allotted. ;n t#e -inal transa+tion s#ortl, a-terwards t#ese s#ares were sold at su3stantial pro-it6 and it is t#is pro-it w#i+# Regal as8s to re+oer in t#is a+tion. *#e dire+tors gae eiden+e and were seerel, +ross$e0amined as to t#eir good -ait#. *#e trial Iudge said? All t#is su3seuent #istor, does not #elp me to de+ide w#et#er t#e a+tion o- t#e dire+tors o- t#e plainti-- +ompan, and t#eir soli+itor on "+t. 2 was bona fide in t#e interests o- t#e +ompan, and not mala fide and in 3rea+# o- t#eir dut, to t#e +ompan, ... ; must ta8e it t#at6 in t#e realisation o- t#ose -a+ts6 it means t#at ; +annot a++ept w#at #as to 3e esta3lis#ed 3, t#e plainti--6 and t#at is t#at t#e de-endants #ere a+ted in ill -ait# ... inall,6 ; #ae to remind m,sel-6 were it ne+essar,6 t#at t#e 3urden o- proo-6 as in a +riminal +ase6 is t#e plainti--s6 w#o must esta3lis# t#e -raud t#e, allege. "n t#e w#ole6 ; do not t#in8 t#e plainti-- +ompan, su++eeds in doing t#at and6 t#ere-ore6 t#ere must 3e Iudgment -or t#e de-endants.
*#is latter statement was +riti+ised in t#e Bourt o- Appeal 3, du Par+ LF6 w#o said? *o an,one w#o #as read t#e pleadings6 3ut not -ollowed t#e +ourse o- t#e trial6 t#at would seem a remar8a3le statement6 3e+ause it is +ommon ground t#at t#ere is no allegation o- -raud in t#e pleadings w#ateer ... 3ut t#e +ourse w#i+# t#e +ase #as ta8en ma8es t#e learned Iudges statement uite appre#ensi3le6 3e+ause it does appear to #ae 3een put 3e-ore #im as6 in t#e main at an, rate6 a +ase o- -raud.
[194! 1 "ll #R $%& at $&1 ;t must 3e ta8en6 t#ere-ore6 t#at t#e respondents a+ted bona fide and wit#out -raud. ;n t#e Bourt o- Appeal6 Lord !reene @R said? ;- t#e dire+tors in +oming to t#e +on+lusion t#at t#e, +ould not put up more t#an 26777 o- t#e +ompan,s mone, #ad 3een a+ting in 3ad -ait#6 and i- t#at restri+tion o- t#e +ompan,s mone, #ad 3een done -or t#e dis#onest purpose ose+uring -or t#emseles pro-it w#i+# not onl, +ould 3ut w#i+# oug#t to #ae 3een pro+ured -or t#eir +ompan,6 ; appre#end t#at not onl, +ould t#e, n ot #old t#at pro-it -or t#emseles i- t#e +ontemplated transa+tion #ad 3een +arried out6 3ut t#e, +ould not # ae #eld t#at pro-it -or t#emseles een i- t#at transa+tion was a3andoned and anot#er pro-ita3le transa+tion was +arried t#roug# in w#i+# t#e, did in -a+t realise a pro-it t#roug# t#e s#ares ... 3ut on+e t#e, #ae admittedl, bona fide +ome to t#e de+ision to w#i+# t#e, +ame in t#is +ase6 it seems to me t#at t#eir o3ligation to re-rain -rom a+uiring t#ese s#ares +ame to an end. ;n -a+t6 loo8ing at i t as a matter o- 3usiness6 i- t#at was 3, t#e eiden+e -rom a 3usiness point o- iew6 t#en t#ere was onl, one wa, le-t o- raising t#e mone,6 and t#at was putting it up t#emseles ... *#at 3eing so6 t#e onl, wa, in w#i+# t#ese dire+tors +ould se+ure t#at 3 ene-it -or t#e +ompan, was 3, putting up t#e mone, t#emseles. "n+e t#at de+ision is #eld to 3e a bona fide one and -raud drops out o- t#e +ase6 it seems to me t#ere is onl , one +on+lusion6 namel,6 t#at t#e appeal must 3e dismissed wit# +osts.
;t seems t#ere-ore t#at t#e a3sen+e o- -raud was t#e reason o- t#e de+ision. ;n t#e result6 t#e Bourt o- Appeal dismissed t#e appeal and -rom t#eir de+ision t#e present appeal is 3roug#t.
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*#e appellants sa, t#e, are entitled to su++eed? (i) 3e+ause t#e respondents se+ured -or t#emseles t#e pro-its upon t#e a+uisition and sale o- t#e s#ares in Amalgamated 3, using t#e 8nowledge a+uired as dire+tors and soli+itors respe+tiel, o- Regal and 3, using t#eir said respe+tie positions and wit#out t#e 8nowledge or +onsent o- Regal (ii) 3e+ause t#e do+trine laid down wit# regard to trustees is euall, appli+a3le to dire+tors and soli+itors. Alt#oug# 3ot# in t#e +ourt o- -irst instan+e and t#e Bourt o- Appeal t#e uestion o- -raud was t#e prominent -eature6 t#e appellants +ounsel in t#is House at on+e stated t#at it was no part o- #is +ase and uite irreleant to #is arguments. His +ontention was t#at t#e respondents were in a -idu+iar, +apa+it, in relation to t#e appellants and6 as su+#6 a++ounta3le in t#e +ir+umstan+es -or t#e pro-it w#i+# t#e, made on t#e sale o- t#e s#ares. As to t#e duties and lia3ilities o- t#ose o++up,ing su+# a -idu+iar, position6 a num3er o- +ases were +ited to us w#i+# were not 3roug#t to t#e attention o- t#e trial Iudge. ;n m, iew6 t#e respondents were in a -idu+iar, position and t#eir lia3ilit, to a++ount does not depend upon proo- o- mala fides. *#e general rule o- euit, is t#at no one w#o #as duties o- a -idu+iar, nature to per-orm is allowed to enter into engagements in w#i+# #e #as or +an #ae a personal interest +on-li+ting wit# t#e interests o- t#ose w#om #e is 3ound to prote+t. ;- #e #olds an, propert, so a+uired as trustee6 #e is 3ound to a++ount -or it to #is cestui 6ue trust . *#e earlier +ases are +on+erned wit# trusts o- spe+i-i+ propert,? 'eech ( Sandford 6 per Lord Ging LB *#e rule6 #oweer6 applies to agents6 as6 -or e0ample6 soli+itors and dire+tors6 w#en a+ting in a -idu+iar, +apa+it,. *#e #eadnote to #* p +ames6 reads as -ollows? Pur+#ase o- a 3an8rupts estate 3, t#e soli+itor to t#e +ommission set aside. *#e Lord B#an+ellor would not permit #im to 3id upon t#e resale6 dis+#arging #imsel- -rom t#e +#ara+ter o- soli+itor6 wit#out t#e preious +onsent o- t#e persons interested6 -reel, gien6 upon -ull in-ormation.
;n t#at +ase Lord Eldon LB said6 at p '45? *#e do+trine as to pur+#ase 3 , trustees6 assignees6 and persons #aing a +on-idential +#ara+ter6 stands mu+# more upon general prin+iple t#an upon t#e +ir+umstan+es o- an, indiidual +ase. ;t rests upon t#is t#at t#e pur+#ase is not permitted in an, +ase6 #oweer #onest t#e +ir+umstan+es t#e general interests o- Iusti+e reuiring it to 3e destro,ed in eer, instan+e as no +ourt is eual to t#e e0amination and as+ertainment o- t#e trut# in mu+# t#e greater num3er o+ases.
;n ,amilton ( right t#e #eadnote reads? A trustee is 3ound not to do an,t#ing w#i+# +an pla+e #im in a position in+onsistent wit# t#e interests o- #is trust6 or w#i+# +an #ae a tenden+, to inter-ere wit# #is dut, in dis+#arging it. Ceit#er t#e trustee nor #is representatie +an 3e allowed to retain an adantage a+uired in iolation o- t#is rule.
At p 1246 Lord :roug#am said? *#e 8nowledge w#i+# #e a+uires as trustee is o- itsel- su--i+ient ground o- dis$
[194! 1 "ll #R $%& at $& uali-i+ation6 and o- reuiring t#at su+# 8nowledge would not 3e +apa3le o- 3eing used -or #is own 3ene-it to inIure t#e trust. *#e ground o- disuali-i+ation is not merel, 3e+ause su+# 8nowledge ma, ena3le #im a+tuall, to o3tain an undue adantage oer ot#ers.
;n "berdeen Ry Co ( /lai0ie6 t#e #eadnote reads? *#e dire+tor o- a railwa, +ompan, is a trustee6 and6 as su+#6 is pre+luded -rom dealing6 on 3e#al- o- t#e +ompan,6 wit# #imsel-6 or wit# a -irm o- w#i+# #e is partner.
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At p 416 Lord Branwort# LB said? A +orporate 3od, +an onl, a+t 3, agents6 and it is o- +ourse t#e dut, o- t#ose agents so to a+t as 3est to promote t#e interests o- t#e +orporation w#ose a--airs t#e, are +ondu+ting. Du+# agents #ae duties to dis+#arge o- a -idu+iar, nature towards t#eir prin+ipal. And it is a rule o- uniersal appli+ation t#at no one #aing su+# duties to dis+#arge s#all 3e allowed to enter into engagements in w#i+# #e #as6 or +an #ae6 a personal interest +on-li+ting6 or w#i+# possi3l, ma, +on-li+t6 wit# t#e interests o- t#ose w#om #e is 3ound to prote+t.
;t is not6 #oweer6 ne+essar, to dis+uss all t#e +ases +ited6 3e+ause t#e respondents admitted t#e generalit, o- t#e rule as +ontended -or 3, t#e appellants6 3ut were +on+erned rat#er to +on-ess and aoid it. *#eir +ontention was t#at6 in t#is +ase6 upon a true perspe+tie o- t#e -a+ts6 t#e, were under no euit, to a++ount -or t#e pro-its w#i+# t#e, made. ; will deal -irst wit# t#e respondents6 ot#er t#an !ullier and !arton. e were re-erred to mperial ,ydropathic ,otel Co /lac0pool ( ,ampson6 w#ere :owen LF6 at p 126 drew attention to t#e di--eren+e 3etween dire+tors and trustees6 3ut t#e +ase is not an aut#orit, -or +ontending t#at a dire+tor +annot +ome wit#in t#e general rule. Co dou3t t#ere ma, 3e e0+eptions to t#e general rule6 as6 -or e0ample6 w#ere a pur+#ase is entered into a-ter t#e trustee #as diested #imsel- o- #is trust su--i+ientl, long 3e-ore t#e pur+#ase to aoid t#e possi3ilit, o- #is ma8ing use o- spe+ial in-ormation a+uired 3, #im as trustee (see t#e remar8s o- Lord Eldon6 in #* p +ames at p '52) or w#ere #e pur+#ases wit# -ull 8nowledge and +onsent o#is cestui 6ue trust. mperial ( ,ampson ma8es no e0+eption to t#e general rule t#at a soli+itor or dire+tor6 ia+ting in a -idu+iar, +apa+it,6 is lia3le to a++ount -or t#e pro-its made 3, #im -rom 8no wledge a+uired w#en so a+ting. ;t was t#en argued t#at it would #ae 3een a 3rea+# o- trust -or t#e respondents6 as dire+tors o- Regal6 to #ae inested more t#an 26777 o- Regals mone, in Amalgamated6 and t#at t#e transa+tion would neer #ae 3een +arried t#roug# i- t#e, #ad not t#emseles put up t#e ot#er '6777. :e it so6 3ut it is impossi3le to maintain t#at6 3e+ause it would #ae 3een a 3rea+# o- trust to adan+e more t#an 26777 -rom Regal and t#at t#e onl, wa, to -inan+e t#e matter was -or t#e dire+tors to adan+e t#e 3alan+e t#emseles6 a situation arose w#i+# 3roug#t t#e respondents outside t#e general rule and permitted t#em to retain t#e pro-its w#i+# a++rued to t#em -rom t#e a+tion t#e, too8. At all material times t#e, were dire+tors and in a -idu+iar, position6 and t#e, used and a+ted upon t#eir e0+lusie 8nowledge a+uired as su+# dire+tors. *#e, -ramed resolutions 3, w#i+# t#e, made a pro-it -or t#emseles. *#e, soug#t no aut#orit, -rom t#e +ompan, to do so6 and6 3, reason o- t#eir position and a+tions6 t#e, made large pro-its -or w#i+#6 in m, iew6 t#e, are lia3le to a++ount to t#e +ompan,. ; now pass to t#e +ases o- !ullier and !arton. *#eir lia3ilit, depends upon a +are-ul e0amination o- t#e eiden+e. !ulliers +ase is t#at #e did not ta8e an, s#ares and did not ma8e an, pro-it 3, selling t#em. His eiden+e6 w#i+# is su3stantiated 3, t#e do+uments6 is as -ollows. At t#e 3oard meeting o- 2 "+to3er #e was not an0ious to put an, mone, o- #is own into Amalgamated. He t#oug#t #e +ould -ind su3s+ri3ers -or 577 3ut was not an0ious to do so. He did6 #oweer6 -ind su3s+ri3ers$$277 3, Dout# own Land Bompan,6 177 3, a @iss !eering and 277 3, Degulia A!6 a Dwiss +ompan,. *#e pur+#ase pri+e was paid 3, t#ese t#ree6 eit#er 3, +#eue or in a++ount6 and t#e s#ares were dul, allotted to t#em. *#e s#ares were #eld 3, t#em on t#eir own a++ount. #en t#e s#ares were sold6 t#e mone,s went to t#em6 and no part o- t#e mone,s went into !ulliers po+8et or into #is a++ount. ;n t#ese +ir+umstan+es6 and 3earing in mind t#at !ulliers eiden+e was a++epted6 it is +lear t#at #e made no pro-its -or w#i+# #e is lia3le to a++ount. *#e +ase made against #im rig#tl, -ails6 and t#e appeal against t#e de+ision in #is -aour s#ould 3e dismissed. [194! 1 "ll #R $%& at $&$ !artons +ase is t#at in ta8ing t#e s#ares #e a+ted wit# t#e 8nowledge and +onsent o- Regal6 and t#at +onseuentl, #e +omes wit#in t#e e0+eption to t#e general rule as to t#e lia3ilit, o- t#e person a+ting in a -idu+iar, position to a++ount -or pro-its. At t#e meeting o- 2 "+to3er6 !ullier6 t#e +#airman o- Regal6 and #is +o$dire+tors were present. He was as8ed in +ross$e0amination a3out w#at #appened as to t#e pur+#ase ot#e s#ares 3, t#e dire+tors. *#e uestion was?
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id ,ou sa, to @r. !arton6 <ell6 !arton6 ,ou #ae 3een +onne+ted wit# :entle,s -or a long time6 will ,ou not put up 577J<
His answer was? ; t#in8 ; +an put it #ig#er. ; inited @r. !arton to put t#e 577 and to ma8e up t#e '6777.
*#is was +on-irmed 3, !arton in e0amination in +#ie-. ;n t#ese +ir+umstan+es6 and 3earing in mind t#at t#is eiden+e was a++epted6 it is +lear t#at #e too8 t#e s#ares wit# t#e -ull 8nowledge and +onsent o- Regal and t#at #e is not lia3le to a++ount -or pro-its made on t#eir sale. *#e appeal against t#e de+ision in #is -aour s#ould 3e dismissed. *#e appeal against t#e de+ision in -aour o- t#e respondents ot#er t#an !ullier and !arton s#ould 3e allowed6 and ; agree wit# t#e order to 3e proposed 3, m, no3le and learned -riend6 Lord Russell o- Gillowen as to amounts and +osts. *#e appeal against t#e de+ision in -aour o- !ullier and !arton s#ould 3e dismissed wit# +osts.
LOR# R!!ELL O" %LLO,E'6 @, Lords6 t#e er, spe+ial -a+ts w#i+# #ae led up to t#is litigation reuire to 3e stated in some detail6 in order to ma8e plain t#e point w#i+# arises -or de+ision on t#is appeal. *#e appellant is a limited +ompan, +alled Regal (Hastings) Ltd6 and ma, +onenientl, 3e re-erred to as Regal. Regal was in+orporated in t#e ,ear 19'' wit# an aut#orised +apital o- 276777 diided into 16577 pre-eren+e s#ares o- 1 ea+# and 576777 ordinar, s#ares o- one s#illing ea+#. ;ts issued +apital +onsisted o6957 pre-eren+e s#ares and 576777 ordinar, s#ares. ;t owned6 and managed er, su++ess-ull,6 a -ree#old +inema t#eatre at Hastings +alled t#e Regal. ;n Ful, 19'56 its 3oard o- dire+tors +onsisted o- one alter :entle, and t#e respondents !ullier6 :o33,6 !ri--it#s and :assett. ;ts s#are#olders were twent, in num3er. *#e respondent !arton a+ted as its soli+itor. ;n or a3out t#at mont#6 t#e 3oard o- Regal -ormed a s+#eme -or a+uiring a lease o- two ot#er +inemas (iK6 t#e Elite at Hastings6 and t#e Binema de Lu0e at Dt Leonards)6 w#i+# were owned and managed 3, a +ompan, +alled Elite Pi+ture *#eatres (Hastings :ristol) Ltd. *#e s+#eme was to 3e +arried out 3, o3taining t#e grant o- a lease to a su3sidiar, limited +ompan,6 w#i+# was to 3e -ormed 3, Regal6 wit# a +apital o- 56777 1 s#ares6 o- w#i+# Regal was to su3s+ri3e -or 26777 in +as#6 t#e remainder 3eing allotted to Regal or its nominees as -ull, paid -or seri+es rendered. *#e w#ole 3ene-i+ial interest in t#e lease would6 it#is s+#eme were +arried out6 enure solel, to t#e 3ene-it o- Regal and its s#are#olders6 t#roug# t#e s#are#olding o- Regal in t#e su3sidiar, +ompan,. *#e respondent !arton6 on t#e instru+tions o- Regal6 negotiated -or t#e a+uisition o- t#e lease6 wit# t#e result t#at an o--er to ta8e a lease -or '5 or 42 ,ears at a rent o- 46>77 -or t#e -irst ,ear6 rising in t#e se+ond and t#ird ,ears up to 56777 in t#e -ourt# and su3seuent ,ears6 was a++epted on 3e#al- o- t#e owners on 21 August 19'56 su3Ie+t to mutual approal o- t#e -orm ot#e lease. Du3seuentl,6 t#e owners o- t#e two +inemas reuired t#e rent under t#e proposed lease to 3e guaranteed. "n 11 Deptem3er 19'56 alter :entle, died and on 1 Deptem3er 19'56 #is son6 t#e respondent :entle,6 w#o was one o- #is e0e+utors6 was appointed a dire+tor o- Regal. ;t s#ould now 3e stated t#at6 +on+urrentl, wit# t#e negotiations -or t#e a+uisition o- a lease o- t#e two +inemas6 Regal was +ontemplating a sale o- its own +inema6 toget#er wit# t#e lease#old interest in t#e two +inemas w#i+# it was proposing to a+uire. "n 1 Deptem3er 19'56 at a 3oard meeting o- Regal6 t#e respondent !arton was instru+ted t#at t#e dire+tors were
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prepared to gie a Ioint guarantee o- t#e rent o- t#e two +inemas6 until t#e su3s+ri3ed +apital o- t#e proposed su3sidiar, +ompan, amounted to 56777. He was -urt#er instru+ted to deal wit# all o--ers re+eied -or t#e pur+#ase o- Regals own assets. "n 2> Deptem3er 19'56 t#e proposed su3sidiar, +ompan, was registered under t#e name Hastings Amalgamated Binemas Ltd6 w#i+# ma,6 -or 3reit,6 3e re-erred [194! 1 "ll #R $%& at $&4 to as Amalgamated. ;ts dire+tors were t#e -ie dire+tors o- Regal6 and in addition t#e respondent !arton. Harr, :entle,6 w#o #ad 3een appointed a dire+tor o- Regal onl, on 1 Deptem3er6 at t#e end o- t#e 3oard meeting o- t#at date6 inuired -rom !arton t#e position as regards t#e new +ompan,6 Amalgamated. ;n repl,6 #e re+eied a letter dated 2> Deptem3er 19'56 in w#i+# t#e position6 as at t#at date6 is set out 3, !arton. A-ter stating t#at t#e +apital o- Amalgamated is 567776 o- w#i+# 26777 is 3eing su3s+ri3ed 3, Regal6
"n 2 "+to3er 19'56 an o--er was re+eied -rom would$3e pur+#asers o--ering a net sum o- 926577 -or t#e Regal +inema and t#e lease o- t#e two +inemas. "- t#is sum 6577 was allotted as t#e pri+e o- Regals +inema6 and 156777 as t#e pri+e o- t#e two lease#old +inemas. *#is splitting o- t#e pri+e seems to #ae 3een done 3, t#e pur+#asers at t#e reuest o- t#e respondent !arton 3ut it must 3e assumed in -aour ot#e Regal dire+tors t#at t#e, were satis-ied t#at 6577 was not too low a pri+e to 3e paid -or t#eir +ompan,s +inema6 wit# t#e result t#at 156777 +annot 3e ta8en to #ae 3een in e0+ess o- t#e alue o- t#e lease w#i+# Amalgamated was a3out to a+uire. "n t#e a-ternoon o- 2 "+to3er6 t#e si0 respondents met at >26 D#a-tes3ur, Aenue6 London6 t#e registered o--i+es o- Regal. Various matters were mentioned and dis+ussed 3etween t#em6 and t#e, +ame to +ertain de+isions. Du3seuentl,6 minutes were prepared w#i+# re+ord t#e di--erent matters as #aing 3een transa+ted at two separate and distin+t 3oard meetings6 iK6 a meeting o- t#e 3oard o- Regal6 and a meeting o- t#e 3oard o- Amalgamated. *#e respondent !ullier stated in #is eiden+e t#at two separate meetings were #old6 t#at o- t#e Amalgamated 3oard 3eing #eld and +on+luded 3e-ore t#at o- t#e Regal 3oard was 3egun. "n t#e ot#er #and6 t#e respondent :entle, sa,s? ;t was more or less #eld in one lump6 3e+ause we were tal8ing a3out selling t#e t#ree properties.
*#e respondent !arton states t#at6 a-ter it was de+ided t#at Regal +ould onl, a--ord to put up 26777 in Amalgamated6 w#i+# was purel, a matter -or t#e +onsideration o- t#e Regal 3oard6 t#e ne0t matter dis+ussed was one w#i+# -igures in t#e minutes o- t#e Amalgamated 3oard meeting. @oreoer6 3ot# meetings are re+orded in t#e minutes as #aing 3een #eld at ' pm. #ateer ma, 3e t#e trut# as to t#is6 t#e matters dis+ussed and de+ided in+luded t#e -ollowing? (i) Regal was to appl, -or 26777 s#ares in Amalgamated (ii) t#e o--er o- 6577 -or t#e Regal +inema and 156777 -or t#e two lease#old +inemas was a++epted (iii) t#e soli+itor reporting t#at +ompletion o- t#e lease was e0pe+ted to ta8e pla+e on "+to3er6 it was resoled t#at t#e seal o- Amalgamated 3e a--i0ed to t#e engrossment w#en aaila3le and (i) t#e respondent !ullier #aing o3 Ie+ted to guaranteeing t#e rent it was resoled ... t#at t#e dire+tors 3e inited to su3s+ri3e -or 577 s#ares ea+# and t#at su+# s#ares 3e allotted a++ordingl,.
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"n "+to3er 19'56 a lease o- t#e two +inemas was e0e+uted in -aour o- Amalgamated6 -or t#e term o- '5 ,ears -rom 29 Deptem3er 19'56 in a++ordan+e wit# t#e agreement preiousl, +ome to. *#e s#ares o Amalgamated were all issued6 and were allotted as -ollows? 26777 to Regal6 577 to ea+# o- t#e respondents :o33,6 !ri--it#s6 :assett6 :entle, and !arton6 and (3, t#e dire+tion o- t#e respondent !ullier) 277 to a Dwiss +ompan, +alled Degulia A!6 277 to a +ompan, +alled Dout# owns Land Bo Ltd6 and 177 to a @iss !eering. ;n -a+t6 t#e proposed sale and pur+#ase o- t#e Regal +inema and t#e two lease#old +inemas -ell t#roug#. Anot#er proposition6 #oweer6 too8 its pla+e6 iK6 a proposal -or t#e pur+#ase -rom t#e indiidual s#are#olders o- t#eir s#ares [194! 1 "ll #R $%& at $& in Regal and Amalgamated. *#is proposal +ame to maturit, 3, agreements dated 24 "+to3er 19'56 as a result o- w#i+# t#e '6777 s#ares in Amalgamated #eld ot#erwise t#an 3, Regal were sold -or a sum o- ' 1>s 1d per s#are6 or in ot#er words at a pro-it o- 2 1>s 1d per s#are oer t#e issue pri+e o- par. As a seuel to t#e sale o- t#e s#ares in Regal6 t#at +ompan, +ame under t#e management o- a new 3oard o- dire+tors6 w#o +aused to 3e issued t#e writ w#i+# initiated t#e present litigation. :, t#is a+tion Regal see8 to re+oer -rom its -ie -ormer dire+tors and its -ormer soli+itor a sum o- 6142 17s eit#er as damages or as mone, #ad and re+eied to t#e plainti--s use. *#e a+tion was tried 3, rottesle, F6 w#o entered Iudgment -or all t#e de-endants wit# +osts. An appeal 3, t#e plainti--s to t#e Bourt o- Appeal was dismissed wit# +osts. @, Lords6 t#ose are t#e releant -a+ts w#i+# #ae led up to t#e de3ate in ,our Lords#ips House6 and ; now pro+eed to +onsider w#et#er t#e appellants are entitled to su++eed against an, and w#i+# o- t#e respondents. *#e +ase #as6 ; t#in86 3een +ompli+ated and o3s+ured 3, t#e presentation o- it 3e-ore t#e trial Iudge. ;- a +ase o- wil-ul mis+ondu+t or -raud on t#e part o- t#e respondents #ad 3een made out6 lia3ilit, to ma8e good to Regal an, damage w#i+# it #ad t#ere3, su--ered +ould6 no dou3t6 #ae 3een esta3lis#ed and e--orts were apparentl, made at t#e trial6 3, +ross$e0amination and ot#erwise6 to -ound su+# a +ase. ;t is6 #oweer6 due to t#e respondents to ma8e it +lear at t#e outset t#at t#is attempt -ailed. *#e +ase was not so presented to us #ere. e #ae to +onsider t#e uestion o- t#e respondents lia3ilit, on t#e -ooting t#at6 in ta8ing up t#ese s#ares in Amalgamated6 t#e, a+ted wit# bona fides6 intending to a+t in t#e interest o- Regal. Ceert#eless6 t#e, ma, 3e lia3le to a++ount -or t#e pro-its w#i+# t#e, #ae made6 i-6 w#ile standing in a -idu+iar, relations#ip to Regal6 t#e, #ae 3, reason and in +ourse o- t#at -idu+iar, relations#ip made a pro-it. *#is aspe+t o- t#e +ase was undou3tedl, raised 3e-ore t#e trial Iudge6 3ut6 in so -ar as #e deals wit# it in # is Iudgment6 #e deals wit# it on a wrong 3asis. Haing stated at t#e outset uite trul, t#at w#at #e +alls
"t#er passages in #is Iudgment indi+ate t#at6 in addition to t#is <+orrupt< a+tion 3, t#e dire+tors6 or6 per#aps6 alternatiel,6 t#e plainti--s in order to su++eed must p roe t#at t#e de-endants a+ted mala fide6 and not bona fide in t#e interests o- t#e +ompan,6 or t#at t#ere was a plot or arrangement 3etween t#em to diert -rom t#e +ompan, to t#emseles a alua3le inestment. Howeer releant su+# +onsiderations ma, 3e in regard to a +laim -or damages resulting -rom mis+ondu+t6 t#e, are irreleant to a +laim against a person o++up,ing a
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-idu+iar, relations#ip towards t#e plainti-- -or an a++ount o- t#e pro-its made 3, t#at person 3, reason and in +ourse o- t#at relations#ip. ;n t#e Bourt o- Appeal6 upon t#is +laim to pro-its6 t#e iew was ta8en t#at in order to su++eed t#e plainti-- #ad to esta3lis# t#at t#ere was a dut, on t#e Regal dire+tors to o3tain t#e s#ares -or Regal. *wo e0tra+ts -rom t#e Iudgment o- Lord !reene @R s#ow t#is. A-ter mentioning t#e +laim -or damages6 #e sa,s? *#e +ase is put on an alternatie ground. ;t is said t#at6 in t#e +ir+umstan+es o- t#e +ase6 t#e dire+tors must 3e ta8en to #ae 3een a+ting in t#e matter o- t#eir o--i+e w#en t#e, too8 t#ose s#ares and t#at a++ordingl, t#e, are a++ounta3le -or t#e pro-its w#i+# t#e, #ae made ... *#ere is one matter w#i+# is +ommon to 3ot# t#ese +laims w#i+#6 unless it is esta3lis#ed6 appears to me to 3e -atal. ;t must 3e s#own t#at in t#e +ir+umstan+es o- t#e +ase it was t#e dut, o- t#e dire+tors to o3tain t#ese s#ares -or t#eir +ompan,.
Later in #is Iudgment #e uses t#is language? :ut it is said t#at t#e pro-it realised 3, t#e dire+tors on t#e sale o- t#e s#ares must 3e a++ounted -or 3, t#em. *#at proposition inoles t#at on "+t. 26 w#en it was
[194! 1 "ll #R $%& at $& de+ided to a+uire t#ese s#ares6 and at t#e moment w#en t#e, were a+uired 3, t#e dire+tors6 t#e dire+tors were ta8ing to t#emseles somet#ing w#i+# properl, 3elonged to t#eir +ompan,.
"t#er portions o- t#e Iudgment appear to indi+ate t#at upon t#is +laim to pro-its6 it is a good de-en+e to s#ow bona fides or a3sen+e o- -raud on t#e part o- t#e dire+tors in t#e a+tion w#i+# t#e, too86 or t#at t#eir a+tion was 3ene-i+ial to t#e +ompan,6 and t#e Iudgment ends t#us? *#at 3eing so6 t#e onl , wa, in w#i+# t#ese dire+tors +ould se+ure t#at 3ene-it -or t#eir +ompan, was 3, putting up t#e mone, t#emseles. "n+e t#at de+ision is #eld to 3e a bona fide one6 and -raud drops out o- t#e +ase6 it seems to me t#ere is onl, one +on+lusion6 namel,6 t#at t#e appeal must 3e d ismissed wit# +osts.
@, Lords6 wit# all respe+t ; t#in8 t#ere is a misappre#ension #ere. *#e rule o- euit, w#i+# insists on t#ose6 w#o 3, use o- a -idu+iar, position ma8e a pro-it6 3eing lia3le to a++ount -or t#at pro-it6 in no wa, depends on -raud6 or a3sen+e o- bona fides or upon su+# uestions or +onsiderations as w#et#er t#e pro-it would or s#ould ot#erwise #ae gone to t#e plainti--6 or w#et#er t#e pro-iteer was under a dut, to o3tain t#e sour+e ot#e pro-it -or t#e plainti--6 or w#et#er #e too8 a ris8 or a+ted as #e did -or t#e 3ene-it o- t#e plainti--6 or w#et#er t#e plainti-- #as in -a+t 3een damaged or 3ene-ited 3, #is a+tion. *#e lia3ilit, arises -rom t#e mere -a+t o- a pro-it #aing6 in t#e stated +ir+umstan+es6 3een made. *#e pro-iteer6 #oweer #onest and well$intentioned6 +annot es+ape t#e ris8 o- 3eing +alled upon to a++ount. *#e leading +ase o- 'eech ( Sandford is an illustration o- t#e stri+tness o- t#is rule o- euit, in t#is regard6 and o- #ow -ar t#e rule is independent o- t#ese outside +onsiderations. A lease o- t#e pro-its o- a mar8et #ad 3een deised to a trustee -or t#e 3ene-it o- an in-ant. A renewal on 3e#al- o- t#e in-ant was re-used. ;t was a3solutel, uno3taina3le. *#e trustee6 -inding t#at it was impossi3le to get a renewal -or t#e 3ene-it o- t#e in-ant6 too8 a lease -or #is own 3ene-it. *#oug# #is dut, to o3tain it -or t#e in-ant was in+apa3le oper-orman+e6 neert#eless #e was ordered to assign t#e lease to t#e in-ant6 upon t#e 3are ground t#at6 i- a trustee on t#e re-usal to renew mig#t #ae a lease -or #imsel-6 -ew renewals would 3e made -or t#e 3ene-it o- cestuis 6ue trust . Lord Ging LB said6 at p >2? *#is ma, seem #ard6 t#at t#e trustee is t#e onl, person o- all man8ind w#o mig#t not #ae t#e lease? 3ut it is er, proper t#at t#e rule s#ould 3e stri+tl, pursued6 and not in t#e least rela0ed ...
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"ne ot#er +ase in euit, ma, 3e re-erred to in t#is +onne+tion6 iK6 #* p +ames6 de+ided 3, Lord Eldon LB. *#at was a +ase o- a pur+#ase o- a 3an8rupts estate 3, t#e soli+itor to t#e +ommission6 and Lord Eldon LB6 re-ers to t#e do+trine t#us6 at p '45? *#is do+trine as to pur+#ases 3, trustees6 assignees6 and persons #aing a +on-idential +#ara+ter6 stands mu+# more upon general prin+iples t#an upon t#e +ir+umstan+es o- an, indiidual +ase. ;t rests upon t#is? t#at t#e pur+#ase is not permitted in an, +ase #oweer #onest t#e +ir+umstan+es t#e general interests o- Iusti+e reuiring it to 3e destro,ed in eer, instan+e as no +ourt is eual to t#e e0amination and as+ertainment o- t#e trut# in mu+# t#e greater num3er o+ases.
Let me now +onsider w#et#er t#e essential matters6 w#i+# t#e plainti-- must proe6 #ae 3een esta3lis#ed in t#e present +ase. As to t#e pro-it 3eing in -a+t made t#ere +an 3e no dou3t. *#e s#ares were a+uired at par and were sold t#ree wee8s later at a pro-it o- 2 1>s 1d per s#are. id su+# o- t#e -irst -ie respondents as a+uired t#ese er, pro-ita3le s#ares a+uire t#em 3, reason and in +ourse o- t#eir o--i+e o- dire+tors oRegalJ ;n m, opinion6 w#en t#e -a+ts are e0amined and appre+iated6 t#e answer +an onl, 3e t#at t#e, did. *#e a+tual allotment no dou3t #ad to 3e made 3, t#emseles and !arton (or some o- t#em) in t#eir +apa+it, as dire+tors o- Amalgamated 3ut t#is was merel, an e0e+utie a+t6 ne+essitated 3, t#e alteration o- t#e s+#eme -or t#e a+uisition o- t#e lease o- t#e two +inemas -or t#e sole 3ene-it o- Regal and its s#are#olders t#roug# Regals s#are#olding in Amalgamated. *#at s+#eme +ould onl, 3e altered 3, or wit# t#e +onsent ot#e Regal 3oard. Bonsider w#at in -a+t too8 pla+e on 2 "+to3er 19'5. *#e position immediatel, 3e-ore t#at da, is stated in !artons letter o- 2> Deptem3er 19'5. *#e dire+tors were willing to guarantee t#e rent until t#e su3s+ri3ed +apital o- Amalgamated rea+#ed 56777. Regal was to +ontrol Amalgamated and own t#e w#ole o- its s#are +apital6 [194! 1 "ll #R $%& at $&% wit# t#e +onseuen+e t#at t#e Regal s#are#olders would re+eie t#eir proportion o- t#e sale pri+e o- t#e two new +inemas. *#e respondents t#en meet on 2 "+to3er 19'5. *#e, #ae 3e-ore t#em an o--er to pur+#ase t#e Regal +inema -or 65776 and t#e lease o- t#e two +inemas -or 156777. *#e o--er is a++epted. *#e dra-t lease is approed and a resolution -or its sealing is passed in anti+ipation o- +ompletion in -ie da,s. Dome o- t#ose present6 #oweer6 s#, at giing guarantees6 and a++ordingl, t#e s+#eme is +#anged 3, t#e Regal dire+tors in a ital respe+t. ;t is agreed t#at a guarantee s#all 3e aoided 3, t#e si0 respondents 3ringing t#e su3s+ri3ed +apital up to 56777. ; will +onsider t#e eiden+e and t#e minute in a moment. *#e result o- t#is +#ange o- s+#eme (w#i+# onl, t#e Regal dire+tors +ould 3ring a3out) ma, not #ae 3een appre+iated 3, t#em at t#e time 3ut its e--e+t upon t#eir +ompan, and its s#are#olders was stri8ing. ;n t#e -irst pla+e6 Regal would no longer +ontrol Amalgamated6 or own t#e w#ole o- its s#are +apital. *#e a+tion o- its dire+tors #ad depried it (a+ting t#roug# its s#are#olders in general meeting) o- t#e power to a+uire t#e s#ares. ;n t#e se+ond pla+e6 t#e Regal s#are#olders would onl, re+eie a largel, redu+ed proportion o- t#e sale pri+e o- t#e two +inemas. *#e Regal dire+tors and !arton would re+eie t#e mone,s o- w#i+# t#e Regal s#are#olders were t#us depried. *#is ital alteration was 3roug#t a3out in t#e -ollowing +ir+umstan+es$$; re-er to t#e eiden+e o- t#e respondent !arton. He was as8ed w#at was suggested w#en t#e guarantees were re-used6 and t#is is #is answer? @r. !ullier said <e must -ind it some#ow. ; am willing to -ind 577. Are ,ou willing6< turning to t#e ot#er -our dire+tors o- Regal6
Alt#oug# t#is matter is re+orded in t#e Amalgamated minutes6 t#is was in -a+t a de+ision +ome to 3, t#e dire+tors o- Regal6 and t#e su3seuent allotment 3, t#e dire+tors o- Amalgamated was a mere +arr,ing into e--e+t o- t#is de+ision o- t#e Regal 3oard. *#e resolution re+orded in t#e Amalgamated minute runs t#us? A-ter dis+ussion it was resoled t#at t#e dire+tors 3e i nited to su3s+ri3e -or 577 s#ares ea+#6 and t#at su+# s#ares 3e allotted a++ordingl,.
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As ; read t#at resolution6 and m, reading agrees wit# !artons eiden+e6 t#e initation is to t#e dire+tors oRegal6 and is made -or t#e purpose o- e--e+tuating t#e de+ision w#i+# t#e -ie dire+tors o- Regal #ad made6 t#at ea+# s#ould ta8e u p 577 s#ares in t#e Amalgamated. *#e dire+tors o- Amalgamated were not +one,ing an
Later6 a-ter pointing out t#at traders #ae a dis+retion w#et#er t#e, s#all sue [194! 1 "ll #R $%& at $&& -or a de3t6 w#i+# dis+retion is not ested in trustees o- a de3t under a settlement6 #e said6 at p 4 5'? Again dire+tors are +alled trustees. *#e, are no dou3t trustees o- assets w#i+# #ae +ome to t#eir #ands6 or w#i+# are under t#eir +ontrol6 3ut t#e, are not trustees o- a de3t due to t#e +ompan, ... A dire+tor is t#e managing partner o- t#e +on+ern6 and alt#oug# a de3t is due to t#e +on+ern ; do not t#in8 it rig#t to +all #im a trustee o- t#at de3t w#i+# remains unpaid6 t#oug# #is lia3ilit, in respe+t o- it ma, in +ertain +ases and in some respe+ts 3e analogous to t#e lia3ilit, o- a trustee.
*#e position o- dire+tors was +onsidered 3, Ga, F6 in Re Faure #lectric "ccumulator Co. *#at was a +ase w#ere dire+tors #ad applied t#e +ompan,s mone, in pa,ment o- an improper +ommission6 and a +laim was made -or t#e loss t#ere3, o++asioned to t#e +ompan,. ;n re-erring to t#e lia3ilit, o- dire+tors6 t#e Iudge pointed out t#at dire+tors were not trustees in t#e sense o- trustees o- a settlement6 t#at t#e nearest analog, to t#eir position would 3e t#at o- a managing agent o- a mer+antile #ouse wit# large powers6 3ut t#at t#ere was no analog, w#i+# was a3solutel, per-e+t and #e added6 at p 151? Howeer6 it is uite o3ious t#at to appl, to dire+tors t#e stri+t rules o- t#e Bourt o- B#an+er, wit# respe+t to ordinar, trustees mig#t -etter t#eir a+tion to an e0tent w#i+# would 3e e0+eedingl, disadantageous to t#e +ompanies t#e, represent.
;n addition a passage -rom t#e Iudgment o- :owen LF6 in mperial ,ydropathic ,otel Co ( ,ampson ma, 3e use-ull, re+alled. He said6 at p 152? ; s#ould wis# ... to 3egin 3, remar8ing t#is6 t#at w#en persons w#o are dire+tors o- a +ompan, are -rom time to time spo8en o- 3, Iudges as agents6 trustees6 or managing partners o- t#e +ompan,6 it is essential to re+olle+t t#at su+#
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e0pressions are not used as e0#austie o- t#e powers and responsi3ilities o- t#ose persons6 3ut onl, as indi+ating use-ul points o- iew -rom w#i+# t#e, ma, -or t#e moment and -or t#e parti+ular purpose 3e +onsidered$$points o- iew at w#i+# -or t#e moment t#e, seem to 3e +utting t#e +ir+le6 or -alling wit#in t#e +ategor, o- t#e suggested 8ind. ;t is not meant t#at t#e, 3elong to t#e +ategor,6 3ut t#at it is use-ul -or t#e purpose o- t#e moment to o3sere t#at t#e, -all pro tanto wit#in t#e prin+iples w#i+# goern t#at parti+ular +lass.
*#ese t#ree +ases6 #oweer6 were not +on+erned wit# t#e uestion o- dire+tors ma8ing a pro-it 3ut t#at t#e euita3le prin+iple in t#is regard applies to d ire+tors is 3e,ond dou3t. ;n 3ar0er ( 2c'enna6 a new issue os#ares o- a Ioint sto+8 3an8 was o--ered to t#e e0isting s#are#olders at a premium. *#e dire+tors arranged wit# one Dto+8 to ta8e6 at a larger premium6 t#e s#ares not ta8en up 3, t#e e0isting s#are#olders. Dto+86 3eing una3le to -ul-il #is +ontra+t6 reuested t#e dire+tors to reliee #im o- some. *#e, did so6 and made a pro-it. *#e, were #eld a++ounta3le -or t#e pro-it so made. Lord Bairns LB said6 at p 11? *#e +ourt will not enuire and is not in a position to as+ertain6 w#et#er t#e 3an8 #as or #as not lost 3, t#e a+ts o- t#e dire+tors. All t#e +ourt #as to do is to e0amine w#et#er a pro-it #as 3een made 3, an agent6 wit#out t#e 8nowledge o#is prin+ipal6 in t#e +ourse and e0e+ution o- #is agen+,6 and t#e +ourt -inds6 in m, opinion6 t#at t#ese agents in t#e +ourse o- t#eir agen+, #ae made a pro-it6 and -or t#at pro-it t#e, must6 in m, opinion6 a++ount to t#eir prin+ipal.
;n t#e same +ase Fames LF stated #is iew in t#e -ollowing terms6 at pp 1246 125? ... it appears to me er, important t#at we s#ould +on+ur in la,ing down again and again t#e general prin+iple t#at in t#is +ourt no agent in t#e +ourse o- #is a gen+,6 in t#e matter o- #is agen+,6 +an 3e allowed to ma8e an, pro-it wit#out t#e 8nowledge o- #is prin+ipal t#at t#e rule is an in-le0i3le rule6 and must 3e applied ine0ora3l, 3, t#is +ourt6 w#i+# is not entitled6 in m, Iudgment6 to re+eie eiden+e6 or suggestion6 or argument6 as to w#et#er t#e prin+ipal did or did not su--er an, inIur, in -a+t6 3, reason o- t#e dealing o- t#e agent -or t#e sa-et, o- man8ind reuires t#at no agent s#all 3e a3le to put #is prin+ipal to t#e danger o- su+# an inuir, as t#at.
;n mperial 2ercantile Credit "ssocn ( Coleman6 one Boleman6 a sto+83ro8er and a dire+tor o- a -inan+ial +ompan,6 #ad +ontra+ted to pla+e a large amount o- railwa, de3entures -or a +ommission o- 5 per +ent. He proposed t#at #is +ompan, s#ould underta8e to pla+e t#em -or a +ommission o- 11/2 per +ent. *#e 5 per +ent +ommission was in due +ourse pa id to t#e dire+tor6 w#o paid oer t#e 11/2 per +ent to t#e +ompan,. He was #eld lia3le to a++ount -or t#e '1/2 per +ent6 3, @alins V$B6 w#o said6 at p 5>'? ;t is o- t#e #ig#est importan+e t#at it s#ould 3e distin+tl, understood t#at it is t#e dut, o- dire+tors o- +ompanies to use t#eir 3est e0ertions -or t#e 3ene-it o- t#ose w#ose interests are +ommitted to t#eir +#arge6 and t#at t#e, are 3ound to disregard t#eir own priate interests w#eneer a regard to t#em +on-li+ts wit# t#e proper dis+#arge o- su+# dut,.
[194! 1 "ll #R $%& at $&9 His de+ree was reersed 3, Lord Hat#erle, on t#e ground t#at t#e transa+tion was prote+ted under t#e +ompan,s arti+les o- asso+iation. our Lords#ips House6 #oweer6 t#oug#t t#at in t#e +ir+umstan+es o- t#e +ase t#e arti+les o- asso+iation gae no prote+tion6 and restored t#e de+ree wit# unimportant ariations. *#e lia3ilit, was 3ased on t#e iew6 w#i+# was not disputed 3, Lord Hat#erle,6 t#at t#e dire+tor stood in a -idu+iar, relations#ip to t#e +ompan,. *#at relations#ip 3eing esta3lis#ed6 #e +ould not 8eep t#e pro-it w#i+# #ad 3een earned 3, t#e -unds o- t#e +ompan, 3eing emplo,ed in ta8ing up t#e de3entures. *#e +ourts in D+otland #ae treated dire+tors as standing in a -idu+iar, relations#ip towards t#eir +ompan, and6 appl,ing t#e euita3le prin+iple6 #ae made t#em a++ounta3le -or pro-its a++ruing to t#em in t#e +ourse and 3, reason o- t#eir dire+tors#ips. ;t will 3e su--i+ient to re-er to ,untington Copper Co ( ,enderson6 in w#i+# t#e Lord President +ites wit# approal t#e -ollowing passage -rom t#e Iudgment o- t#e Lord "rdinar,? #eneer it +an 3e s#own t#at t#e trustee #as so arranged matters as to o3tain an adantage w#et#er in mone, or mone,s wort# to #imsel- personall, t#roug# t#e e0e+ution o- #is trust6 #e will not 3e permitted to retain6 3ut 3e +ompelled to ma8e it oer to #is +onstituent.
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;n t#e result6 ; am o- opinion t#at t#e dire+tors standing in a -idu+iar, relations#ip to Regal in regard to t#e e0er+ise o- t#eir powers as dire+tors6 and #aing o3tained t#ese s#ares 3, reason and onl, 3, reason o- t#e -a+t t#at t#e, were dire+tors o- Regal and in t#e +ourse o- t#e e0e+ution o- t#at o--i+e6 are a++ounta3le -or t#e pro-its w#i+# t#e, #ae made out o- t#em. *#e euita3le rule laid down in 'eech ( Sandford and #* p +ames6 and similar aut#orities applies to t#em in -ull -or+e. ;t was +ontended t#at t#ese +ases were distinguis#a3le 3, reason o- t#e -a+t t#at it was impossi3le -or Regal to get t#e s#ares owing to la+8 o- -unds6 and t#at t#e dire+tors in ta8ing t#e s#ares were reall, a+ting as mem3ers o- t#e pu3li+. ; +annot a++ept t#is argument. ;t was impossi3le -or t#e cestui 6ue trust in 'eech ( Sandford to o3tain t#e lease6 neert#eless t#e trustee was a++ounta3le. *#e suggestion t#at t#e dire+tors were appl,ing simpl, as mem3ers o- t#e pu3li+ is a traest, o- t#e -a+ts. *#e, +ould6 #ad t#e, wis#ed6 #ae p rote+ted t#emseles 3, a resolution (eit#er ante+edent or su3seuent) o- t#e Regal s#are#olders in general meeting. ;n de-ault o- su+# approal6 t#e lia3ilit, to a++ount must remain. *#e result is t#at6 in m, opinion6 ea+# o- t#e respondents :o33,6 !ri--it#s6 :assett and :entle, is lia3le to a++ount -or t#e pro-it w#i+# #e made on t#e sale o- #is 577 s#ares in Amalgamated. *#e +ase o- t#e respondent !ullier6 #oweer6 reuires some -urt#er +onsideration6 -or #e #as raised a separate and distin+t answer to t#e +laim. He sa,s? <; neer promised to su3s+ri3e -or s#ares in Amalgamated. ; neer did so su3s+ri3e. ; onl, promised to -ind ot#ers w#o would 3e willing to su3s+ri3e. ; onl, -ound ot#ers w#o did su3s+ri3e. *#e s#ares were t#eirs. *#e, were neer mine. *#e, re+eied t#e pro-it. ; re+eied none o- it.< ;- t#ese are t#e true -a+ts6 #is answer seems +omplete. *#e eiden+e in m, opinion esta3lis#es #is +ontention. *#roug#out #is eiden+e !ullier insisted t#at #e onl, promised to -ind 5776 not to su3s+ri3e it #imsel-. *#e 577 was paid 3, two +#eues in -aour o- Amalgamated6 one a +#eue -or 277 signed 3, !ullier as dire+tor and on 3e#al- o- t#e Dwiss +ompan, Degulia6 t#e ot#er a +#eue -or '77 signed 3, !ullier as managing dire+tor o- Dout# owns Land Bo Ltd. *#e, were en+losed in a letter o- ' "+to3er 19'56 -rom !ullier to !arton6 in w#i+# !ullier as8s t#at t#e s#are +erti-i+ates 3e issued as -ollows6 277 s#ares in t#e name o- #imsel-6 B#arles !ullier6 277 s#ares in t#e name o- Dout# owns Land Bo Ltd6 and 177 s#ares in t#e name o- @iss D !eering. *#e mone, -or @iss !eerings s#ares was apparentl, in+luded in Dout# own Land Bos +#eue. *#e +erti-i+ates were made out a ++ordingl,6 t#e 277 s#ares in !ulliers name 3eing6 #e sa,s6 t#e s#ares su3s+ri3ed -or 3, t#e Dwiss +ompan,. #en t#e sale and pur+#ase o- t#e Amalgamated s#ares was arranged6 t#e agreement -or t#e sale and pur+#ase was signed on 3e#al- o- t#e endor s#are#olders (ot#er t#an t#e respondent :entle,) 3, !arton Bo and in a letter o- 1 "+to3er 19'56 !ullier sent to !arton (w#o #eld t#e t#ree +erti-i+ates) t#ree trans-ers6 iK a trans-er o- 277 s#ares e0e+uted 3, Dout# owns Land Bo Ltd6 a trans-er o- 277 s#ares e0e+uted 3, #imsel-6 and a trans-er o- 177 s#ares e0e+uted 3, @iss !eering. #en t#e pur+#ase mone, was paid +#eues were drawn as -ollows? a +#eue -or '>7 in -aour o- @iss !eering6 a [194! 1 "ll #R $%& at $9) +#eue -or 27 in -aour o- Dout# owns Land Bo Ltd6 and a +#eue -or t#e same amount in -aour o!ullier. :, letter o- 24 "+to3er 19'56 written 3, !ullier to t#e Cational Proin+ial :an86 t#ese +#eues were paid into t#e respe+tie a++ounts o- @iss !eering6 Dout# owns Land Bo Ltd6 and Degulia6 A!. rom t#e eiden+e o- !ullier it appeared t#at @iss !eering is a -riend w#o -rom time to time ma8es inestments on #is adi+e t#at t#e issued +apital o- Dout# owns Land Bo Ltd6 is 16777 in 1 s#ares6 #eld 3, some 11 or 12 s#are#olders6 o- w#om !ullier is one and #olds 177 s#ares and t#at in t#e Dwiss +ompan, !ullier #olds 5 out o- 577 s#ares. ;t is o- t#e -irst importan+e on t#is part o- t#e +ase to 3ear in mind t#at t#ese d ire+tors #ae 3een a+uitted oall suggestion o- mala fides in regard to t#e a+uisition o- t#ese s#ares. *#e, #ad no reason to 3eliee t#at t#e, +ould 3e +alled to a++ount. #, t#en s#ould !ullier go to t#e ela3orate pains o- #aing t#e s#ares put into t#e names o- Dout# owns Land Bo and @iss !eering6 and o- #aing t#e pro+eeds o- sale paid into t#e respe+tie a++ounts 3e-ore mentioned6 i- t#e s#ares and pro+eeds reall, 3elonged to #imJ #* hypothesi #e #ad no reason -or +on+ealment and no uestion was raised against t#e transa+tion until mont#s a-ter t#e
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pro+eeds o- sale #ad 3een paid into t#e 3an8ing a++ounts o- t#ose w#om !ullier asserts to #ae 3een t#e owners o- t#e s#ares. ; +an see no reason -or dou3ting t#at t#e s#ares neer 3elonged to !ullier6 and t#at #e made no pro-it on t#e sale t#ereo-. Bounsel -or t#e appellant6 #oweer6 +ontended t#at t#e trial Iudge #ad -ound as a -a+t t#at !ullier was t#e owner o- t#e s#ares and #e relied on +ertain s+attered passages in t#e Iudgment6 t#e strongest o- w#i+# seems to me to 3e t#e one in w#i+# t#e Iudge said? ; ma, sa, t#is wit# regard to @r. !ullier6 t#at ; #ae not 3een misled in an, wa, or led to de+ide in #is -aour 3, t#e -a+t t#at #e #anded oer #is s#ares to #is nominees 3ut rat#er t#e reerse.
; +annot regard t#at as a -inding 3, t#e Iudge t#at t#e s#ares were su3s+ri3ed -or 3, !ullier under aliases6 and t#at t#e s#ares and t#e pro+eeds o- sale in -a+t 3elonged to #im. ;t is euall, sus+epti3le o- t#e meaning t#at #e allowed ot#ers to su3s+ri3e -or t#e s#ares w#i+# #e +ould #ae o3tained -or #imsel- #ad #e so wis#ed. ;- it 3e +laimed as a -inding o- -a+t in t#e -ormer sense6 all ; +an sa, is t#at t#ere is no eiden+e w#i+# in m, opinion would Iusti-, su+# a -inding. ;t was -urt#er argued t#at6 een i- t#e s#ares and t#e pro+eeds o- sale did not 3elong to !ullier6 #e is neert#eless lia3le to a++ount to Regal -or t#e pro-it made 3, t#e owners o- t#e s#ares6 and t#at upon t#e aut#orit, o- mperial 2ercantile Credit "ssocn 5i6uidators7 ( Coleman6 to w#i+# ; #ae alread, re-erred. "ne o- t#e +ontentions put -orward t#ere 3, Boleman was t#at #is transa+tion was a transa+tion -or t#e 3ene-it oa partners#ip in t#e pro-its o- w#i+# #e was onl, interested to t#e e0tent o- a #al-6 and t#at a++ordingl, #e +ould onl, 3e made a++ounta3le to t#at e0tent. *#at +ontention was disposed o- 3, Lord Bairns in t#e -ollowing terms6 at p 27? @, Lords6 ; t#in8 t#ere is no -oundation -or t#is argument. *#e pro-it on t#e transa+tion was o3tained 3, @r. Boleman6 and6 in t#e iew t#at ; ta8e6 was o3tained 3, #im as a dire+tor o- t#e asso+iation. #et#er #e desired or w#et#er #e determined to resere it all to #imsel- or to s#are it wit# #is -irm appears to me to 3e per-e+tl, immaterial. *#e sour+e -rom w#i+# t#e pro-it is deried is @r. Boleman. ;t is onl, t#roug# #im t#at #is -irm +an +laim. He is lia3le -or t#e w#ole o- t#e pro-its w#i+# were o3tained and it is not t#e +ourse -or a Bourt o- Euit, to enter into t#e +onsideration o- w#at a-terwards would #ae 3e+ome o- t#ose pro-its.
; am una3le to see #ow t#is aut#orit, #elps Regal i- it 3e assumed t#at neit#er t#e s#ares nor t#e pro-it eer 3elonged to !ullier. ;t was -urt#er said t#at !ullier must a++ount -or w#ateer pro-its #e ma, #ae made indire+tl, t#roug# #is s#are#olding in t#e two +ompanies6 and t#at an inuir, s#ould 3e dire+ted -or #is purpose. As to t#is6 it is su--i+ient to sa, t#at t#ere is no eiden+e upon w#i+# to ground su+# an inuir,. ;ndeed6 t#e eiden+e so -ar as it goes6 s#ows t#at neit#er +ompan, #as distri3uted an, part o- t#e pro-it. inall,6 it was said t#at !ullier must a++ount -or t#e pro-it on t#e 277 s#ares as to w#i+# t#e +erti-i+ate was in #is name. ;- in -a+t t#e s#ares 3elonged 3ene-i+iall, to t#e Dwiss +ompan, (and t#at is t#e assumption -or t#is purpose)6 t#e pro+eeds osale did not 3elong to !ullier6 and were rig#tl, paid into t#e [194! 1 "ll #R $%& at $91 Dwiss +ompan,s 3an8ing a++ount. !ullier a++ordingl, made no pro-it -or w#i+# #e is a++ounta3le. As regards !ullier6 t#is appeal s#ould6 in m, opinion6 3e dismissed. *#ere remains to +onsider t#e +ase o- !arton. He stands on a di--erent -ooting -rom t#e ot#er respondents in t#at #e was not a dire+tor o- Regal. He was Regals legal adiser 3ut6 in m, opinion6 #e #as a s#ort 3 ut e--e+tie answer to t#e plainti--s +laim. He was reuested 3, t#e Regal dire+tors to appl, -or 577 s#ares. *#e, arranged t#at t#e, t#emseles s#ould e a+# 3e responsi3le -or 577 o- t#e Amalgamated +apital6 and t#e, appealed6 3, t#eir +#airman6 to !arton to su3s+ri3e t#e 3alan+e o- 577 w#i+# was reuired to ma8e up
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t#e '6777. ;n law #is a+tion6 w#i+# #as resulted in a pro-it6 was ta8en at t#e reuest o- Regal6 and ; 8now ono prin+iple or aut#orit, w#i+# would Iusti-, a de+ision t#at a soli+itor must a++ount -or pro-it resulting -rom a transa+tion w#i+# #e #as entered into on #is own 3e#al-6 not merel, wit# t#e +onsent6 3ut at t#e reuest o#is +lient. @, Lords6 in m, opinion t#e rig#t wa, in w#i+# to deal wit# t#is appeal is (i) to dismiss t#e appeal as against t#e respondents !ullier and !arton wit# +osts6 (ii) to allow it wit# +osts as against t#e ot#er -our respondents6 and (iii) to enter Iudgment as against ea+# o- t#ese -our respondents -or a sum o- 16472 1s d wit# interest at 4 per +ent -rom 25 "+to3er 19'56 as to 16'77 part t#ereo- and -rom 5 e+em3er 19'56 as to t#e 3alan+e. As regards t#e lia3ilit, o- t#ese -our respondents -or +osts6 ; #ae read t#e s#ort#and notes ot#e eiden+e at t#e trial6 and it is +lear to me t#at t#e +osts were su3stantiall, in+reased 3, t#e suggestions o- mala fides and -raud wit# w#i+# t#e +ross$e0amination a3ounds6 and -rom w#i+# t#e, #ae 3een e0onerated. ;n m, opinion a proper order to ma8e would 3e to order t#ese -our respondents to pa, onl, t#ree$uarters o- t#e appellants ta0ed +osts o- t#e a+tion. *#e ta0ed +osts o- t#e appellants in t#e Bourt o Appeal and in t#is House t#e, must pa, in -ull. "ne -inal o3seration ; desire to ma8e. ;n #is Iudgment Lord !reene @R stated t#at a de+ision aderse to t#e dire+tors in t#e present +ase inoled t#e proposition t#at6 i- dire+tors bona fide de+ide not to inest t#eir +ompan,s -unds in some proposed inestment6 a dire+tor w#o t#erea-ter em3ar8s #is own mone, t#erein is a++ounta3le -or an, pro-its w#i+# #e ma, derie t#ere-rom. As to t#is6 ; +an onl, sa, t#at to m, mind t#e -a+ts o- t#is #,pot#eti+al +ase 3ear 3ut little resem3lan+e to t#e stor, wit# w#i+# we #ae #ad to deal.
LOR# -A&-%LLA'6 @, Lords6 t#e real uestion -or de+ision in t#is appeal seems un-ortunatel, to #ae 3een somew#at o3s+ured 3, t#e +ourse o- t#e arguments 3e-ore t#e trial Iudge and to some e0tent also in t#e Bourt o- Appeal. *#e issue6 as it was -ormulated 3e-ore ,our Lords#ips6 was not w#et#er t#e dire+tors o- Regal (Hastings) Ltd6 #ad a+ted in 3ad -ait#. *#eir bona fides was not uestioned. Cor was it w#et#er t#e, #ad a+ted in 3rea+# o- t#eir dut,. *#e, were not said to #ae done an,t#ing wrong. *#e sole ground on w#i+# it was soug#t to render t#em a++ounta3le was t#at6 3eing dire+tors o- t#e plainti-- +ompan, and t#ere-ore in a - idu+iar, relation to it6 t#e, entered in t#e +ourse o- t#eir management into a transa+tion in w#i+# t#e, utilised t#e position and 8nowledge possessed 3, t#em in irtue o- t#eir o--i+e as dire+tors6 and t#at t#e transa+tion resulted in a pro-it to t#emseles. *#e point was not w#et#er t#e dire+tors #ad a dut, to a+uire t#e s#ares in uestion -or t#e +ompan, and -ailed in t#at dut,. *#e, #ad no su+# dut,. e must ta8e it t#at t#e, entered into t#e transa+tion law-ull,6 in good -ait# and indeed aowedl, in t#e interests o- t#e +ompan,. Howeer6 t#at does not a3sole t#em -rom a++ounta3ilit, -or an, pro-it w#i+# t#e, made6 i- it was 3, reason and in irtue o- t#eir -idu+iar, o--i+e as dire+tors t#at t#e, entered into t#e transa+tion. *#e euita3le do+trine ino8ed is one o- t#e most deepl, rooted in our law. ;t is ampl, illustrated in t#e aut#oritatie de+isions w#i+# m, no3le and learned -riend Lo rd Russell o- Gillowen #as +ited. ; s#ould li8e onl, to add a passage -rom Prin+iples o- Euit,6 3, Lord Games w#i+# puts t#e w#ole matter in a senten+e ('rd Edn 16 ol 26 p )?
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t#emseles. *#e -irst o- t#ese propositions is +learl, esta3lis#ed 3, t#e anal,sis o- t#e w#ole +ompli+ated +ir+umstan+es -or w#i+# t#e House is inde3ted to m, no3le and learned -riend w#o #as pre+eded me. *#e se+ond proposition is admitted6 e0+ept in t#e +ase o- !ullier6 in w#ose +ase ; agree t#at6 on t#e eiden+e6 #e is not proed to #ae made an, pro-it personall,. *#e +onditions are6 t#ere-ore6 in m, opinion6 present w#i+# pre+lude t#e -our dire+tors w#o made a personal pro-it 3, t#e transa+tion -rom retaining su+# pro-it. *#e position o- t#e respondent !arton is uite di--erent. He was t#e soli+itor o- t#e plainti-- +ompan, and in no sense a trustee -or it. *rue6 #e made a pro-it6 as did t#e -our dire+tors6 3ut #e su3s+ri3ed -or #is s#ares not onl, wit# t#e 8nowledge6 3ut at t#e e0press reuest6 o- #is +lients6 and ; 8now o- no prin+iple on w#i+# #e +ould 3e #eld a++ounta3le to t#em -or an, resultant pro-it to #imsel-. ; s#ould #ae 3een +ontent simpl, to e0press m, +on+urren+e wit# t#e iews e0pounded 3, m, no3le and learned -riend Lord Russell o- Gillowen6 wit# w#i+# ; w#oll, agree6 3ut -or t#e -a+t t#at we are di--ering -rom t#e Bourt o- Appeal. or t#at reason ; #ae t#oug#t it proper to state 3rie-l, t#e grounds o- m, +on+urren+e.
LOR# ,R%GH6 @, Lords6 o- t#e si0 respondents6 two6 !ullier and !arton6 stand on a di--erent -ooting -rom t#e ot#er -our. ;t is in regard to t#e latter t#at t#e important uestion o- prin+iple 3roug#t into issue 3, t#e de+isions orottesle, F6 and t#e Bourt o- Appeal +all -or determination. *#at uestion +an 3e 3rie-l, stated to 3e w#et#er an agent6 a dire+tor6 a trustee or ot#er person in an analogous -idu+iar, position6 w#en a demand is made upon #im 3, t#e person to w#om #e stands in t#e -idu+iar, relations#ip to a++ount -or pro-its a+uired 3, #im 3, reason o- #is -idu+iar, position6 and 3, reason o- t#e opportunit, and t#e 8nowledge6 or eit#er6 resulting -rom it6 is entitled to de-eat t#e +laim upon an, ground sae t#at #e made pro-its wit# t#e 8nowledge and assent o- t#e ot#er person. *#e most usual and t,pi+al +ase o- t#is nature is t#at o- prin+ipal and agent. *#e rule in su+# +ases is +ompendiousl, e0pressed to 3e t#at an agent must a++ount -or net pro-its se+retl, (t#at is6 wit#out t#e 8nowledge o- #is prin+ipal) a+uired 3, #im in t#e +ourse o- #is agen+,. *#e aut#orities s#ow #ow mani-old and arious are t#e appli+ations o- t#e rule. ;t does not depend on -raud or +orruption. *#e +ourts 3elow #ae #eld t#at it does not appl, in t#e present +ase6 -or t#e reason t#at t#e pur+#ase o- t#e s#ares 3, t#e respondents6 t#oug# made -or t#eir own adantage6 and t#oug# t#e 8nowledge and opportunit, w#i+# ena3led t#em to ta8e t#e adantage +ame to t#em solel, 3, reason o- t#eir 3eing dire+tors o- t#e appellant +ompan,6 was a pur+#ase w#i+#6 in t#e +ir+umstan+es6 t#e respondents were under no dut, to t#e appellant to ma8e6 and was a pur+#ase w#i+# it was 3e,ond t#e appellants a3ilit, to ma8e6 so t#at6 it#e respondents #ad not made it6 t#e appellant would #ae 3een no 3etter o-- 3, reason o- t#e respondents a3staining -rom reaping t#e adantage -or t#emseles. it# t#e uestion so stated6 it was said t#at an, ot#er de+ision t#an t#at o- t#e +ourts 3elow would inole a dog$in$t#e$manager poli+,. #at t#e respondents did6 it was said6 +aused no damage to t#e appellant and inoled no negle+t o- t#e a ppellants interests or similar 3rea+# o- dut,. Howeer6 ; t#in8 t#e answer to t#is reasoning is t#at6 3ot# in law and euit,6 it #as 3een #eld t#at6 i- a person in a -idu+iar, relations#ip ma8es a se+ret pro-it out o- t#e relations#ip6 t#e +ourt will not inuire w#et#er t#e ot#er person is damni-ied or #as lost a pro-it w#i+# ot#erwise #e would #ae got. *#e -a+t is in itsel- a -undamental 3rea+# o- t#e -idu+iar, relations#ip. Cor +an t#e +ourt adeuatel, inestigate t#e matter in most +ases. *#e -a+ts are generall, di--i+ult to as+ertain or are solel, in t#e 8nowledge o- t#e person w#o is 3eing +#arged. *#e, are matters o- surmise t#e, are #,pot#eti+al 3e+ause t#e inuir, is as to w#at would #ae 3een t#e position i- t#at part, #ad not a+ted as #e d id6 or w#at #e mig#t #ae done i- t#ere #ad not 3een t#e temptation to see8 #is o wn adantage6 i-6 in s#ort6 interest #ad not +on-li+ted wit# dut,. *#us6 in 'eech ( Sandford 6 a +ase in w#i+# t#e -idu+iar, relations#ip was t#at o- trustee and cestui 6ue trust 6 t#e trustee was #eld lia3le to assign a lease to t#e in-ant cestui 6ue trust 6 t#oug# [194! 1 "ll #R $%& at $9$ t#e lessor #ad re-used to renew to t#e in-ant. Lord Ging LB6 said6 at p >2?
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*#is ma, seem #ard6 t#at t#e trustee is t#e onl, person o- all man8ind w#o mig#t not #ae t#e lease ...
;t did not matter t#at t#e in-ant +ould not #imsel- #ae got it and t#at #e was not damaged 3, t#e trustee ta8ing it -or #imsel-. "ne reason w#, t#e rule is stri+tl, pursued is gien 3, Lord Eldon in #* p +ames6 at p '45? ... no +ourt is eual to t#e e0amination and as+ertainment o- t#e trut# in mu+# t#e greater num3er o- +ases.
;n 3ar0er ( 2c'enna6 a most instru+tie +ase6 t#e rule is so admira3l, stated 3, Fames LF6 t#at ; +annot resist repeating #is language6 t#oug# m, no3le and learned -riend Lord Russell o- Gillowen6 in #is spee+# Iust deliered6 w#i+# ; #ae #ad t#e opportunit, o- reading in print6 and wit# w#i+# ; agree +ompletel,6 #as alread, uoted it to ,our Lords#ips. *#e words o- Fames LF6 w#i+# ; emp#asise6 are (pp 1246 125)? ... t#at t#e rule is an in-le0i3le rule and must 3e applied ine0ora3l, 3, t#is +ourt w#i+# is not entitled6 in m, Iudgment6 to re+eie eiden+e6 or suggestion6 or argument as to w#et#er t#e prin+ipal aid or did not su--er an, inIur, in -a+t 3, reason o- t#e dealing o- t#e agent for the safety of man0ind re6uires that no agent shall be able to put his principal to the danger of such an in6uiry as that .
*#e itali+s are mine. ; need not multipl, +itations to t#e same e--e+t6 or illustrations o- t#e di--erent +ir+umstan+es in w#i+# t#e rule #as 3een applied. ;n t#e present +ase t#e -our respondents were a+ting in t#e matter as agents -or t#e appellant +ompan, in t#eir +apa+it, o- dire+tors6 t#at is6 6 '>? ... t#e law implies a use6 t#at is to sa,6 t#ere is an implied +ontra+t6 i- ,ou put it as a legal proposition$$t#ere is an euita3le rig#t6 i- ,ou treat it as a matter o- euit,$$as 3etween t#e prin+ipal and agent t#at t#e agent s#ould pa, it oer6 w#i+# renders t#e agent lia3le to 3e sued -or mone, #ad and re+eied6 and t#ere is an euita3le rig#t in t#e master to re+eie it6 and to ta8e i t out o- t#e #ands o- t#e agent6 w#i+# gies t#e prin+ipal a rig#t to relie- in euit,.
As it was #eld in 5ister 8 Co ( Stubbs6 t#e relations#ip in su+# a +ase is t#at o- de3tor and +reditor6 not trustee and cestui 6ue trust . @an, instan+es +an 3e uoted -rom t#e 3oo8s o- t#e stringen+, wit# w#i+# t#e +ourts #ae en-or+ed t#e rule t#at a dire+tor must a++ount to #is +ompan, -or an, 3ene-it w#i+# #e o3tains in t#e +ourse o- and owing to #is dire+tors#ip6 een t#oug# t#e 3ene-it +omes -rom a t#ird person and inoles no loss to t#e +ompan,. ; +ite as one e0ample Re :orth "ustralian ;erritory Co "rcher
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*#ere is no dou3t t#e, (t#e respondents) did ta8e up in t#eir own names s#ares w#i+# onl, a-ter a -ew da,s and +ertainl, onl, a-ter a wee8 or two t#e, were a3le to sell at a er, large pro-it indeed. *#ere is no dou3t t#at it was onl, 3e+ause t#e, were dire+tors and soli+itor respe+tiel, o- t#e plainti-- +ompan, t#at t#is stro8e o- -ortune +ame in t#eir wa,.
[194! 1 "ll #R $%& at $94 He de+ided against t#e appellant +ompan, 3e+ause #e -i0ed #is attention on #is iew t#at t#e appellant su--ered no loss 3, t#e respondents +ondu+t6 instead o- -i0ing attention on t#e +ru+ial -a+t t#at t#e respondents made a se+ret pro-it out o- t#eir agen+,. ; do not t#in8 t#at an, di--erent iew was ta8en on t#is aspe+t o- t#e +ase 3, t#e Bourt o- Appeal6 or t#at it was uestioned 3, t#at +ourt t#at t#e opportunit, oma8ing t#e pro-its +ame to t#e -our respondents 3, reason o- t#eir -idu+iar, position as dire+tors. *#e Bourt o- Appeal #eld t#at6 in t#e a3sen+e o- an, dis#onest intention6 or negligen+e6 or 3rea+# o- a spe+i-i+ dut, to a+uire t#e s#ares -or t#e appellant +ompan,6 t#e respondents as dire+tors were entitled to 3u, t#e s#ares t#emseles. "n+e6 it was said6 t#e, +ame to a bona fide de+ision t#at t#e appellant +ompan, +ould not proide t#e mone, to ta8e up t#e s#ares6 t#eir o3ligation to re-rain -rom a+uiring t#ose s#ares -or t#emseles +ame to an end. it# t#e greatest respe+t6 ; -eel 3ound to regard su+# a +on+lusion as dead in t#e teet# o- t#e wise and salutar, rule so stringentl, en-or+ed in t#e aut#orities. ;t is suggested t#at it would #ae 3een mere ui0oti+ -oll, -or t#e -our respondents to let su+# an o++asion pass w#en t#e appellant +ompan, +ould not aail itsel- o- it 3ut Lord Ging LB -a+ed t#at er, position w#en #e a++epted t#at t#e person in t#e -idu+iar, position mig#t 3e t#e onl, person in t#e world w#o +ould not aail #imsel- o- t#e opportunit,. ;t is6 #oweer6 not true t#at su+# a person is a3solutel, 3arred6 3e+ause #e +ould 3, o3taining t#e assent o- t#e s#are#olders #ae se+ured #is -reedom to ma8e t#e pro-it -or #imsel-. ailing t#at6 t#e onl, +ourse open is to let t#e opportunit, pass. *o admit o- an, ot#er alternatie would 3e to e0pose t#e prin+ipal to t#e dangers against w#i+# Fames LF6 in t#e passage ; #ae uoted uttered #is solemn warning. *#e rule is stringent and a3solute6 3e+ause
LOR# .ORER6 @, Lords6 ; #ae #ad an opportunit, o- reading t#e spee+# w#i+# #as 3een deliered 3, m, no3le and learned -riend6 Lord Russell o- Gillowen6 and #ad we not 3een di--ering -rom t#e iew o- t#e Bourt o- Appeal ; s#ould not desire to add to w#at #e #as said. As we are reersing t#e Iudgment o- 3ot# t#e +ourt o- -irst instan+e and t#e Bourt o- Appeal ; desire6 out o- respe+t -or t#e opinions e0pressed in t#em6 to state in t#e 3rie-est possi3le +ompass t#e grounds -or t#e iew w#i+# ; #old. @, Lords6 ; am +ons+ious o- +ertain possi3ilities w#i+# are inoled in t#e +on+lusion w#i+# all ,our Lords#ips #ae rea+#ed. *#e a+tion is 3roug#t 3, t#e Regal +ompan,. *e+#ni+all,6 o- +ourse6 t#e -a+t t#at an unloo8ed -or adantage ma, 3e gained 3, t#e s#are#olders o- t#at +ompan, is immaterial to t#e uestion at issue. *#e +ompan, and its s#are#olders are separate entities. "ne +annot #elp remem3ering6 #oweer6 t#at in -a+t t#e s#ares #ae 3een pur+#ased 3, a -inan+ial group w#o were willing to a+uire t#ose o- t#e Regal and t#e Amalgamated at a +ertain pri+e. As a result o- ,our Lords#ips de+ision t#at group will6 ; t#in86 re+eie in one #and part o- t#e sum w#i+# #as 3een paid 3, t#e ot#er. or t#e s#ares in Amalgamated t#e, paid ' 1>s 1d per s#are6 ,et part o- t#at sum ma, 3e returned to t#e group6 t#oug# not ne+essaril, to t#e indiidual s#are#olders 3, reason o- t#e en#an+ement in alue o- t#e s#ares in Regal$$an en#an+ement 3roug#t a3out as a result o- t#e re+eipt 3, t#e +ompan, o- t#e pro-it made 3, some o- its -ormer dire+tors on t#e sale o Amalgamated s#ares. *#is6 it seems6 ma, 3e an une0pe+ted wind-all6 3ut w#et#er it 3e so or not6 t#e prin+iple t#at a person o++up,ing a -idu+iar, relations#ip s#all not ma8e a pro-it 3, reason t#ereo- is o- su+#
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ital importan+e t#at t#e possi3le +onseuen+e in t#e present +ase is in -a+t as it is in law an immaterial +onsideration. *#e plainti--6 t#e Regal +ompan,6 3, its p leadings6 +laimed (i) damages -or negligen+e6 (ii) alternatiel,6 t#e pro-it o3tained on t#e sale o- t#e s#ares in Amalgamated as mone, #ad and re+eied 3, t#e de-endants to t#e plainti--s use6 and (iii) in t#e -urt#er alternatie damages -or mis-easan+e. Co +laim -or [194! 1 "ll #R $%& at $9 -raud was suggested6 and t#e trial Iudge e0pressl, e0onerated t#e de-endants -rom an , lia3ilit, -or negligen+e or mis-easan+e. :e-ore ,our Lords#ips House t#e +laim -or mone, #ad and re+eied was alone persisted in. *#e alternatie +laim -or mis-easan+e6 #oweer6 seems also to #ae 3een presented to t#e Bourt o- Appeal6 3ut to #ae 3een reIe+ted 3, t#em6 and in +ommon wit# t#e rest o- ,our Lords#ips ; unreseredl, a++ept t#e -indings o- 3ot# +ourts. ;t remains6 t#ere-ore6 to +onsider t#e +laim t#at (in t#e words o- Lord !reene @R)? ... in t#e +ir+umstan+es o- t#e +ase t#e dire+tors must 3e ta8en to #ae 3een a+ting in t#e matter o- t#eir o--i+e w#en t#e, too8 t#ose s#ares and t#at6 a++ordingl,6 t#e, are a++ounta3le -or t#e pro-its6 w#i+# t#e, #ae made.
*#at t#e s#ares were o3tained 3, t#e de-endants 3, reason o- t#eir position as dire+tors o- Regal is6 ; t#in86 plain. *#e original proposition6 w#en t#e -ormation o- t#e su3sidiar, +ompan, was suggested6 was t#at t#e w#ole o- t#e s#ares s#ould 3e issued to t#e Regal +ompan,6 partl, -or +as# and partl, -or seri+es rendered6 and t#is proposition was dis+ussed and a++epted at 3oard meetings o- t#at +ompan,. ;t was onl, a-terwards6 w#en t#e ne+essit, -or -inding 56777 +as# arose6 t#at t#e issue to an, one ot#er t#an t#e +ompan, was +onsidered6 and t#en t#e dire+tors turned to t#emseles. <*#ere is no dou3t it was onl, 3e+ause t#e, were dire+tors and soli+itor respe+tiel, o- t#e plainti-- +ompan, t#at t#is stro8e o- -ortune +ame t#eir wa,6< sa,s rottesle, F6 and ; agree wit# #is o3seration. ;n t#ese +ir+umstan+es6 it is to m, mind immaterial t#at t#e dire+tors saw no wa, o- raising t#e mone, sae -rom amongst t#emseles and -rom t#e soli+itor to t#e +ompan,6 or6 indeed6 t#at t#e mone, +ould in -a+t #ae 3een raised in no ot#er wa,. *#e legal proposition ma,6 ; t#in86 3e 3roadl, stated 3, sa,ing t#at one o++up,ing a position o- trust must not ma8e a pro-it w#i+# #e +an a+uire onl, 3, use o- #is -idu+iar, position6 or6 i- #e does6 #e must a++ount -or t#e pro-it so made. or t#is proposition t#e +ases o- 'eech ( Sandford and #* p +ames are su--i+ient aut#orit,. rottesle, F and t#e mem3ers o- t#e Bourt o- Appeal appear to #ae adopted a narrower outloo8 wit# w#i+#6 wit# all respe+t6 ; -ind m,sel- una3le to a gree. rottesle, F said? ;n order to su++eed t#e plainti-- +ompan, must s#ow t#at t#e de-endants 3ot# oug#t to #ae +aused and +ould #ae +aused t#e plainti-- +ompan, to su3s+ri3e -or t#ese s#ares and t#at t#e negle+t to do so +aused a loss to t#e plainti-+ompan,.
;n t#e Bourt o- Appeal6 Lord !reene @R said? ;t must 3e s#own t#at in t#e +ir+umstan+es o- t#e +ase it was t#e dut, o- t#e dire+tors to o3tain t#ese s#ares -or t#eir +ompan, ... *#e position o- t#e Regal +ompan, would #ae 3een er, mu+# strengt#ened 3, #aing all t#ese s#ares in t#e two +ompanies in t#e same #ands wit# t#e possi3ilit, o- one +ontrol. *#at 3eing so6 t#e onl, wa, in w#i+# t#ese dire+tors +ould se+ure t#at 3ene-it -or t#eir +ompan, was 3, putting up t#e mone, t#emseles. "n+e t#at de+ision is #eld to 3e a bona fide one6 and -raud drops out o- t#e +ase6 it seems to me t#ere is onl, one +on+lusion6 namel,6 t#at t#e appeal must 3e dismissed wit# +osts.
*o treat t#e pro3lem in t#is wa, is6 in m, iew6 to loo8 at it as inoling a +laim -or negligen+e or mis-easan+e and to negle+t t#e wider aspe+t. ire+tors6 no dou3t6 are not trustees6 3ut t#e, o++up, a -idu+iar, position
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towards t#e +ompan, w#ose 3oard t#e, -orm. *#eir lia3ilit, in t#is respe+t does not depend upon 3rea+# odut, 3ut upon t#e proposition t#at a dire+tor must not ma8e a pro-it out o- propert, a+uired 3, reason o- #is relations#ip to t#e +ompan, o- w#i+# #e is dire+tor. ;t matters not t#at #e +ould n ot #ae a+uired t#e propert, -or t#e +ompan, itsel-$$t#e pro-it w#i+# #e ma8es is t#e +ompan,s6 een t#oug# t#e propert, 3, means o- w#i+# #e made it was not and +ould not #ae 3een a+uired on its 3e#al-. Adopting t#e words oLord Eldon LB6 in #* p +ames6 at p '45? ... t#e general interests o- Iusti+e reuire it to 3e destro,ed in eer, instan+e as no +ourt is eual to t#e e0amination and as+ertainment o- t#e trut# in mu+# t#e greater num3er o- +ases.
@, Lords6 t#ese o3serations appl, generall, to t#e a+tion6 3ut t#e +ases o- !ullier and !arton stand on a somew#at di--erent -ooting. As to t#em6 t#ere are additional and spe+ial +onsiderations to 3e 8ept in mind. ; need not set t#em out or re-er to t#em -urt#er t#an 3, sa,ing t#at ; -ind m,sel- in agreement wit# t#e reasoning and +on+lusion o- m, no3le and learned -riend6 Lord Russell [194! 1 "ll #R $%& at $9 o- Gillowen6 and would su3mit wit# #im t#at t#e appeal s#ould 3e allowed so -ar as +on+erns t#e de-endants :o33,6 !ri--it#s6 :assett and :entle,6 and s#ould 3e dismissed in t#e +ase o- !ullier and !arton. ; also +on+ur in t#e order as to +osts w#i+# #e suggests. "ppeal dismissed as against the respondents >ulli(er and >arton. "ppeal allo=ed as against the other respondents. Solicitors? , S right 8 ebb for the appellants7@ /oyce #(ans 8 Sheppard for the respondents /obbyA >riffiths 8 /assett7@ ;ac0ley Fall 8 Read for the respondent /entley7@ ,ugh B ,arra=ay 8 Son for the respondent >ulli(er7@ nder=ood 8 Co for the respondent >arton7.
B Dt F Ci+#olson Es :arrister.
