Bhullar v Bhullar & Ors

Bhullar v Bhullar & Ors

Jatinderjit Singh Bhullar acted in breach of his fiduciary duties as director by causing company funds to be paid to Torex Developments Limited without proper authority, disclosure, or terms. The Duomatic principle does not apply because there was no unanimous, informed consent of all shareholders, particularly Inderjit Singh Bhullar. The claim for equitable compensation is not statute-barred under s.21(1)(b) Limitation Act 1980. Relief under s.1157 Companies Act 2006 is not appropriate as Jatinderjit Singh Bhullar did not act reasonably.

Parties
Claimant: Inderjit Singh Bhullar; First Defendant: Jatinderjit Singh Bhullar; Second Defendant: Bhullar Developments Limited; Third Defendant: Bhullar Brothers Limited
Jurisdiction
England and Wales
Judgment Date
02 March 2017
Procedural Posture
Derivative Claim / Judgment After Trial
Outcome
Claim for equitable compensation for breach of fiduciary duty allowed; claim for account of profits and further relief refused.
Legal Topics
Directors' Fiduciary Duties, Derivative Actions, Conflict of Interest, Ratification of Director Conduct, Limitation of Actions
Company Law Equity and Trusts Directors' Fiduciary Duties Derivative Actions Conflict of Interest Ratification of Director Conduct Limitation of Actions

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Parties

Inderjit Singh Bhullar

Claimant

Jatinderjit Singh Bhullar

First Defendant

Bhullar Developments Limited

Second Defendant

Bhullar Brothers Limited

Third Defendant

Procedural Posture

Derivative Claim / Judgment After Trial

Legal Issues

  1. 1 Whether Jatinderjit Singh Bhullar breached fiduciary duties as director by causing company funds to be paid to Torex Developments Limited without proper authority or disclosure
  2. 2 Whether the Duomatic principle applies to excuse the breach
  3. 3 Whether the claim is statute-barred under the Limitation Act 1980

Ratio Decidendi

Jatinderjit Singh Bhullar acted in breach of his fiduciary duties as director by causing company funds to be paid to Torex Developments Limited without proper authority, disclosure, or terms. The Duomatic principle does not apply because there was no unanimous, informed consent of all shareholders, particularly Inderjit Singh Bhullar. The claim for equitable compensation is not statute-barred under s.21(1)(b) Limitation Act 1980. Relief under s.1157 Companies Act 2006 is not appropriate as Jatinderjit Singh Bhullar did not act reasonably.

Court Disposition

Claim for equitable compensation for breach of fiduciary duty allowed; claim for account of profits and further relief refused.

Orders

  • Jatinderjit Singh Bhullar to repay the net indebtedness of Torex Developments Limited to Bhullar Brothers Limited and Bhullar Developments Limited, with interest at the rate applicable to the company accounts over the relevant periods.