Bhullar & Ors v Bhullar & Anor [2003] EWCA Civ 424 (31 March 2003)

Bhullar & Ors v Bhullar & Anor [2003] EWCA Civ 424 (31 March 2003)

The directors breached their fiduciary duty by acquiring for themselves, without disclosure or consent, a property that was a potential business opportunity for the company and within its line of business, creating a real sensible possibility of conflict of interest. The strict equitable rule applies regardless of whether the company was actively pursuing the opportunity.

Citation
[2003] EWCA Civ 424
Parties
Petitioners/respondents: Mohan Singh Bhullar & Ors; Respondents/appellants: Inderjit Singh Bhullar & Anor
Jurisdiction
England and Wales
Judgment Date
31 March 2003
Procedural Posture
Company Law Petition Under Companies Act 1985 S.459 / Appeal From Chancery Division, Leeds District Registry to Court of Appeal
Outcome
Appeal dismissed
Legal Topics
Directors' Fiduciary Duties, Conflict of Interest, Unfair Prejudice, Constructive Trust, Business Opportunity Doctrine
Company Law Equity Directors' Fiduciary Duties Conflict of Interest Unfair Prejudice Constructive Trust Business Opportunity Doctrine

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Parties

Mohan Singh Bhullar & Ors

Petitioners/respondents

Inderjit Singh Bhullar & Anor

Respondents/appellants

Procedural Posture

Company Law Petition Under Companies Act 1985 S.459 / Appeal From Chancery Division, Leeds District Registry to Court of Appeal

Legal Issues

  1. 1 Whether directors breached fiduciary duty by acquiring for themselves a property that could have been a business opportunity for the company without disclosure or consent
  2. 2 Whether the acquisition of the property was unfairly prejudicial to shareholders under s.459 Companies Act 1985

Ratio Decidendi

The directors breached their fiduciary duty by acquiring for themselves, without disclosure or consent, a property that was a potential business opportunity for the company and within its line of business, creating a real sensible possibility of conflict of interest. The strict equitable rule applies regardless of whether the company was actively pursuing the opportunity.

Court Disposition

Appeal dismissed

Orders

  • Silvercrest Trading (GB) Ltd holds the property on trust for Bhullar Bros Ltd
  • Appellants to procure transfer of the property to Bhullar Bros Ltd at the price paid