Gencor ACP Ltd & Ors v Dalby & Ors [2000] EWHC 1560 (Ch) (27 July 2000)

Gencor ACP Ltd & Ors v Dalby & Ors [2000] EWHC 1560 (Ch) (27 July 2000)

Mr Dalby, as a director, diverted business opportunities and profits properly belonging to ACP to himself and Burnstead, a company wholly owned and controlled by him, without shareholder consent. The use of Burnstead does not shield him from liability; both he and Burnstead are accountable to ACP for the profits, subject to allowable credits. The strict equitable principle applies regardless of whether ACP could or would have taken the opportunities. Summary judgment is appropriate as there is no real prospect of the defendants successfully defending these claims at trial.

Citation
[2000] EWHC 1560 (Ch)
Parties
Claimant: Gencor ACP Limited; Claimant: Gencor ACP Holdings Limited; Claimant: ACP Technical Services (Australia) Pty Limited; Defendant: Glenn Dalby; Defendant: Brett Dalby; Defendant: Kevin Meehan; Defendant: Burnstead Limited; Defendant: Swallow International Limited; Defendant: Wingspan Enterprises Limited; Defendant: Pacific Holdings Limited; Defendant: Roadmec Limited; Defendant: Roadmec International Limited; Defendant: Recycling Equipment International Limited; Defendant: Intermek Limited; Defendant: Metaphor Limited
Jurisdiction
England and Wales
Judgment Date
27 July 2000
Procedural Posture
Civil / Summary Judgment Application Under Part 24 Cpr, Alternatively Interim Payment Under Part 25
Outcome
Summary judgment granted in part for the claimants against Mr Dalby and Burnstead for an account of profits and repayment of misapplied funds, subject to allowable credits; other claims to proceed to trial or be subject to further accounting.
Legal Topics
Director's Duties, Breach of Fiduciary Duty, Constructive Trust, Corporate Veil, Summary Judgment, Account of Profits
Company Law Equity Fiduciary Duties Director's Duties Breach of Fiduciary Duty Constructive Trust Corporate Veil Summary Judgment +1 more

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Parties

Gencor ACP Limited

Claimant

Gencor ACP Holdings Limited

Claimant

ACP Technical Services (Australia) Pty Limited

Claimant

Glenn Dalby

Defendant

Brett Dalby

Defendant

Kevin Meehan

Defendant

Burnstead Limited

Defendant

Swallow International Limited

Defendant

Wingspan Enterprises Limited

Defendant

Pacific Holdings Limited

Defendant

Roadmec Limited

Defendant

Roadmec International Limited

Defendant

Recycling Equipment International Limited

Defendant

Intermek Limited

Defendant

Metaphor Limited

Defendant

Procedural Posture

Civil / Summary Judgment Application Under Part 24 Cpr, Alternatively Interim Payment Under Part 25

Legal Issues

  1. 1 Whether Mr Dalby and Burnstead are liable to account to ACP for profits made from business opportunities diverted from ACP;
  2. 2 Whether the use of a creature company (Burnstead) shields a director from liability for breach of fiduciary duty;
  3. 3 Whether credits and offsets should be allowed in calculating the profit for which the defendants are accountable;

Ratio Decidendi

Mr Dalby, as a director, diverted business opportunities and profits properly belonging to ACP to himself and Burnstead, a company wholly owned and controlled by him, without shareholder consent. The use of Burnstead does not shield him from liability; both he and Burnstead are accountable to ACP for the profits, subject to allowable credits. The strict equitable principle applies regardless of whether ACP could or would have taken the opportunities. Summary judgment is appropriate as there is no real prospect of the defendants successfully defending these claims at trial.

Court Disposition

Summary judgment granted in part for the claimants against Mr Dalby and Burnstead for an account of profits and repayment of misapplied funds, subject to allowable credits; other claims to proceed to trial or be subject to further accounting.

Orders

  • Mr Dalby and Burnstead to account to ACP for profits from specified transactions, subject to credits for certain payments.
  • Repayment of £24,575 by Mr Dalby and Burnstead to ACP.