“….the inflexible rule that, except under the authority of a provision in the articles of association, no director shall obtain for himself a profit by means of a transaction in which he is concerned on behalf of the company unless all the material facts are disclosed to the shareholders and by resolution a general meeting approves of his doing so or all the shareholders acquiesce. An undisclosed profit which a director so derives from the execution of his fiduciary duties belongs in equity to the company. It is no answer to the application of the rule that the profit is of a kind which the company itself could not have obtained, or that no loss is caused to the company by the gain of the director. It is a principle resting upon the impossibility of allowing the conflict of duty and interest which is involved in the pursuit of private advantage in the course of dealing in a fiduciary capacity with the affairs of the company. If, when it is his duty to safeguard and further the interests of the company, he uses the occasion as a means of profit to himself, he raises an opposition between the duty he has undertaken and his own self interest, beyond which it is neither wise nor practicable for the law to look for a criterion of liability. The consequences of such a conflict are not discoverable. Both justice and policy are against their investigation.”
“A claim for breach of trust is a claim in equity, and the application of the law of limitation to claims in equity is extremely complex. Limitation at common law is simply a question of statute: the claim is either caught by the relevant limitation period or it is not. Equity, by contrast, has both a judge-made system of limitation rules, known as “laches”, and a statutorily-based set of rules. And to make the matter worse, these statutory rules apply either directly, i.e. where express provision is made in the statute for their application to an equitable claim, or “by analogy”, i.e. where no express mention of the equitable claim appears but is treated by the courts as analogous to one barred by the statute at common law.”
“(i) Is this an action to which there is an express statutory time limit on the bringing of claims? (ii) If not, is this an action to which a court will apply a statutory time limit by analogy? (iii) If not, is this an action nevertheless barred by the doctrine of laches?”
“….none of the three questions can be answered without a knowledge of the history of the subject…”
“An action for an account shall not be brought after the expiration of any time limit under this Act which is applicable to the claim whichis the basis of the duty to account.”
“(1) No period of limitation prescribed by this Act shall apply to an action by a beneficiary under a trust, being an action- (a) in respect of any fraud or fraudulent breach of trust to which the trustee was a party or privy; or (b) to recover from the trustee trust property or the proceeds of trust property in the possession of the trustee, or previously received by the trustee and converted to his use. (2) [omitted as immaterial] (3) Subject to the preceding provisions of this section, an action by a beneficiary to recover trust property or in respect of any breach of trust, not being an action for which a limitation period is prescribed by any other provision of this Act, shall not be brought after the expiration of six years from the date on which the right of action accrued.”
“The expression ‘fiduciary duty’ is properly confined to those duties which are peculiar to fiduciaries and the breach of which attracts legal consequences differing from those consequent upon the breach of other duties. Unless the expression is so limited it is lacking in practical utility. In this sense it is obvious that not every breach of duty by a fiduciary is a breach of fiduciary duty….” ( p 16) He distinguished duties, such as the duty of care, which, though owed by fiduciaries, are no different in principle than equivalent duties in common law. He continued: “This leaves those duties which are special to fiduciaries and which attract those remedies which are peculiar to the equitable jurisdiction and are primarily restitutionary or restorative rather than compensatory. A fiduciary is someone who has undertaken to act for or on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence. The distinguishing obligation of a fiduciary is the obligation of loyalty. The principal is entitled to the single-minded loyalty of his fiduciary. This core liability has several facets. A fiduciary must act in good faith; he must not make a profit out of his trust; he must not place himself in a position where his duty and his interest may conflict; he may not act for his own benefit or the benefit of a third person without the informed consent of his principal. This is not intended to be an exhaustive list, but it is sufficient to indicate the nature of fiduciary obligations….”
“The first covers those cases already mentioned, where the defendant, though not expressly appointed as trustee, has assumed the duties of a trustee by a lawful transaction which was independent of and preceded the breach of trust and is not impeached by the plaintiff. The second covers those cases where the trust obligation arises as a direct consequence of the unlawful transaction which is impeached by the plaintiff.”
"...it was there laid down that there is a distinction between a trust which arises before the occurrence of the transaction impeached and cases which arises only by reason of that transaction."
"The law on this subject has been settled for more than a hundred years. An action for an account brought by a principal against his agent is barred by the statutes of limitation unless the agent is more than a mere agent but is a trustee of the money which he received… A claim for an account in equity, absent any trust, has no equitable element; it is based on legal, not equitable rights… Where the agent's liability to account was contractual equity acted in obedience to the statute… Where, as in Knox v Gye, there was no contractual relationship between the parties, so that the liability was exclusively equitable, the court acted by analogy with the statute. Its power to do so is implicitly preserved by s 36 of the 1980 Act…"
“… Millett LJ explained how the statute of limitations would be applied by analogy so as to bar a proprietary claim against a "constructive trustee" (improperly so called as he would say) alleged to be such by virtue of his conduct where no pre-existing fiduciary relationship existed; whereas it would not be applied in relation to a proprietary claim against a constructive trustee (properly so called as he would say) where the constructive trusteeship flowed from a pre-existing fiduciary or trust relationship.” (Waller LJ’s emphasis) In Waller LJ’s view: “…it is fundamentally to misunderstand the judgment of Millett LJ to suggest that he would have approved the view that a claim for damages brought against a fiduciary, even alleging a dishonest breach of that duty, would be free from limitation altogether.”
“…(i) that a company incorporated under the Companies Acts is not trustee of its own property; it is both legal and beneficial owner of that property; (ii) that the property of a company so incorporated cannot lawfully be disposed of other than in accordance with the provisions of its memorandum and articles of association; (iii) that the powers to dispose of the company’s property, conferred upon the directors by the articles of association, must be exercised by the directors for the purposes, and in the interests of, the company; and (iv) that, in that sense, the directors owe fiduciary duties to the company in relation to those powers and a breach of those duties is treated as a breach of trust.”
“26.It follows from the principle that directors who dispose of the company’s property in breach of their fiduciary duties are treated as having committed a breach of trust that a person who receives the property with knowledge of breach of duty is treated as holding it upon trust for the company. He is said to be a constructive trustee of the property…. 27. It follows, also, from the principle that directors who dispose of the company’s property in breach of their fiduciary duties are treated as having committed a breach of trust that a director who is himself the recipient of the property holds it upon a trust for the company…”
“I regret to have to say that I approach the fact finding exercise on the basis that I am satisfied that Mr Koshy has shown himself to be a dishonest man….”
“GVDC submitted that Mr Koshy breached his fiduciary duties in spades. I agree. His scheme was simple. First, almost from the outset, he had a prospective beneficial interest in Lasco, an interest which would in due course give him control of it. He was also a director of Lasco. There is some evidence that certain of the GVDC board may have known that he had some sort of interest in Lasco, but the evidence on this is unclear. The formal picture, at least until September 1987, was that Lasco was wholly owned by Lasco USA, a company controlled, if not wholly owned, by Lummus. Down to September 1997, Mr Koshy appears to have kept his prospective beneficial interest in Lasco a secret. He lied to DEG about it. There is no evidence that he ever made a formal disclosure of his interest in Lasco to GVDC. And even after September 1987 he lied to IFC about it, signing an investment agreement with IFC which described Lasco as a wholly owned subsidiary of Lasco USA. Having said this, however, I also find that the GVDC board was aware that, for some not very obvious reasons, Mr Koshy acted for Lasco virtually from the start. The oddity about this is because his interest at that stage was ostensibly as an HZL employee, whereas Lasco was a Lummus company. But no-one appears to have regarded his activities for Lasco as requiring any explanation.”
“At no point in any of that did Mr Koshy volunteer either his interest in Lasco or explain the massive profit which those transactions would give Lasco and - whether via Haze or otherwise - would also give him. At no point did he suggest that, because of his interest in the transactions, he should take no part in the decision as to whether GVDC should recognise the various liabilities to Lasco. At no point did he suggest that, in order to ensure that GVDC's interests were properly respected, the terms of the proposed GVDC/Lasco agreements should be the subject of negotiation between someone on behalf of GVDC who was independent of Lasco, and someone on behalf of Lasco who was independent of GVDC.”
“272… In my view, it is clear that Mr Koshy concealed from GVDC matters which it was obviously in its interests to know before committing itself to the Lasco agreements. A full knowledge of the facts would have enabled it to consider whether or not it did in fact wish to deal with Lasco on such terms; whether it might be able to negotiate better terms; or whether it might be in its interests instead to raise money itself on the pipeline. I find that the reason Mr Koshy concealed the information from GVDC is because he was concerned that its revelation might spoil his plans. How he would have responded had he ever been asked the direct question of what Lasco's cost of the kwacha has been, I do not know. I do not exclude the possibility that he would have given an untruthful answer. I find that his decision to conceal the information from GVDC was not because he genuinely regarded it as simply of no interest. It was a deliberate, and dishonest, decision arrived at by reason of the fact that he was preferring Lasco's interests to GVDC's. I find that he was dishonest in the sense that he was pursuing a particular course of action in his own interests, either knowing that it was contrary to the interests of GVDC, or recklessly indifferent as to whether it was (see Armitage v. Nurse and Others[1998] Ch. 241 , at 251, per Millett L.J.).”
“It is the duty of a trustee to manage the trust property and deal with it in the interests of the beneficiaries. If he acts in a way which he does not honestly believe is in the interests of the beneficiaries then he is acting dishonestly.”
“ The principle is well settled that where there has been no misdirection on an issue of fact by the trial judge the presumption is that his conclusion on issues of fact is correct. The Court of Appeal will only reverse the trial judge on an issue of fact when it is convinced that his view is wrong. In such a case, if the Court of Appeal is left in doubt as to the correctness of the conclusion, it will not disturb it.”
“When a party, holding a fiduciary relationship, commits a breach of his duty by non-disclosure of material facts, which his constituent is entitled to know in connection with the transaction, he cannot be heard to maintain that disclosure would not have altered the decision to proceed with the transaction, because the constituent’s action would be solely determined by some other factor, such as the valuation by another party of the property proposed to be mortgaged. Once the Court has determined that the non-disclosed facts were material, speculation as to what course the constituent, on disclosure would have taken is not relevant.”
“An account be taken of all profits received by the first defendant out of the provision to GVDC by lasco of the pipeline loan of k 56.4 million”
Showing the 50 most senior of 72.