“Where a party has had many months to consider how he wants to put his case and where it is not by virtue of some new factor appearing from some disclosure only recently made, why, one asks rhetorically, should he be entitled to cause the trial to be delayed so far as his opponent is concerned, and why should he be entitled to cause inconvenience to other litigants? The only answer which can be given and which, counsel has suggested, applies in the instant case is that without the amendment, a serious injustice may be done because the new case is the only way the case can be argued and it raises the true issue between the parties which justice requires should be decided. We accept that, at the end of the day, a balance has to be struck. The court is concerned with doing justice, but justice to all litigants and thus, where a last-minute amendment is sought with the consequences indicated, the onus will be a heavy one on the amending party to show the strength of the new case and why justice, both to him, his opponent and other litigants, requires him to be able to pursue it.”
“As de factor and/or shadow directors, the Barclay Brothers owed fiduciary and/or statutory duties to the Company being those now codified in sections 171-177 of theCompanies Act 2006 and various equitable duties commonly associated with those occupying a fiduciary position.”
“(3) The general duties are based on certain common law rules and equitable principles as they apply in relation to directors and have effect in place of those rules and principles as regards the duties owed to a company by a director. “(4) The general duties shall be interpreted and applied in the same way as common law rules or equitable principles, and regard shall be had to the corresponding common law rules and equitable principles in interpreting and applying the general duties. (5) The general duties apply to shadow directors where, and to the extent that, the corresponding common law rules or equitable principles so apply.”
“The purpose of the legislation is to identify those, other than professional advisers, with real influence in the corporate affairs of the company. But it is not necessary that such influence should be exercised over the whole field of its corporate activities.”
“To establish that a defendant is a shadow director of a company it is necessary to allege and prove: (1) who are the directors of the company, whether de facto or de jure; (2) that the defendant directed those directors how to act in relation to the company or that he was one of the persons who did so; (3) that those directors acted in accordance with such directions; and (4) that they were accustomed so to act. What is needed is, first, a board of directors claiming and purporting to act as such; and, secondly, a pattern of behaviour in which the board did not exercise any discretion or judgment of its own, but acted in accordance with the directions of others.”
“….. the chief executive of a group of companies who openly gives directions to the board of a subsidiary on which he does not sit.”
“For myself I think it may be difficult to postulate any one decisive test. I think that what is involved is very much a question of degree. The court takes into account all the relevant factors. Those factors include at least whether or not there was a holding out by the company of the individual as a director, whether the individual used the title, whether the individual had proper information, (e.g. management accounts) on which to base decisions, and whether the individual had to make major decisions and so on. Taking all these factors into account, one asks, ‘was this individual part of the corporate governing structure’, answering it as a kind of jury question. In deciding this, one bears very much in mind why one is asking the question. That is why I think the passage I quoted from Millett J is important. There would be no justification for the law making a person liable to misfeasance or disqualification proceedings unless they were truly in a position to exercise the powers and discharge the functions of a director. Otherwise they would be made liable for events over which they had no real control, either in fact or in law.”
“I do not understand Jacob J in the first part of that passage to be enumerating tests which must all be satisfied if de facto directorship is to be established. He is simply drawing attention to some (but not all) of the relevant factors, recognising that the crucial issue is whether the individual in question has assumed the status and functions of a company director so as to make himself responsible under the 1986 Act as if he were a de jure director.”
“It is possible to obtain some guidance by looking at the purpose of the section. As Millett J said in the Hydrodam case, the liability is imposed on those who were in a position to prevent damage to creditors by taking proper steps to protect their interests. As he put it, those who assume to act as directors and who thereby exercise the powers and discharge the functions of a director, whether validly appointed or not, must accept the responsibilities of the office. So one must look at what the person actually did to see whether he assumed those responsibilities in relation to the subject company.”
“It does not follow that a ‘de facto director’ must be given the same meaning in all of the different contexts in which a ‘director’ may be liable. It seems to me that in the present context of the fiduciary duty of a director not to dispose wrongfully of the company’s assets, the crucial question is whether the person assumed the duties of a director.”
“In Fayers Legal Services Ltd v Day (unreported) 11April 2001, a case relating to breach of fiduciary duty, Patten J, rejecting a claim that the defendant was a de facto director of the company and had been in breach of fiduciary duty, said that in order to make him liable for misfeasance as a de facto director the person must be part of the corporate governing structure, and the claimants have to prove that he assumed a role in the company sufficient to impose on him a fiduciary duty to the company and to make him responsible for the misuse of its assets. It seems to me that that is the correct formulation in a case of the present kind.”
“Now that Morritt LJ [that being a reference to the Deverell case] has explained that the role of a shadow director does not necessarily extend over the whole range of the company’s activities, it seems to me that there is no conceptual difficulty in concluding that a person can be both a shadow director and a de facto director simultaneously. He may, for example, assume the functions of a director as regards one part of the company’s activities, say marketing, and give directions to the board as regards another, say, manufacturing and finance. In each case, it is necessary to examine the facts, bearing in mind that, as Morritt LJ explained, the purpose of the legislation is ‘to identify those, other than professional advisers, with real influence in the corporate affairs of the company.”
“As set out in paragraph 33A and 37 above, from the appointment of Mr. Faber in late January 2011 onward, the Barclay Interests had control of the board of the Company due to their ‘alliance’ with Mr. Quinlan, and Mr. Faber described the position as such to third parties. It is to be inferred that such control was exerted by Mr. Faber continuing to seek guidance from the Barclay Brothers, and act in accordance with their direction and instruction, and passing on those directions and instructions to Mr. Murphy and Mr. Quinlan, or by Mr. Murphy and Mr. Quinlan adopting the position taken by Mr. Faber.”
“We are 100% committed to you and so who owns our debt will NEVER be an issue between us. You do NOT need our debt to tell us what to do. We will ALWAYS do that anyway.”
“Shortly after being appointed a director, Mr. Faber sought to insist that the Company cease taking any steps in relation to the possible sale of the Company and the provision of information to third parties in that regard, and asked that a board meeting be convened on31 January 2011 in order that the board could review the position. Mr. Murphy (on behalf of Mr. Quinlan) immediately supported that request.”
“This decision would first be taken at a board level and if approved this would then require a shareholder vote. As demonstrated above, both matters are currently under the control of the Barclay family.”
“The positions that Mr. Faber, Mr. Seal and Mr. Mowatt took in relation to Company matters were consistent with the objective of promoting the interests of the Barclay Brothers alone rather than the interests of the Company, including, for example, the decision to close the Company’s data room referred to in paragraph 37(a) above, the resistance on their part to permitting JQ2 to be registered as a shareholder in the Company as set out in paragraph 49 above, and the matters set out in paragraph 58 above. In determining what the Barclay Brothers’ interests were and before acting to implement their wishes it is to be inferred that Mr. Faber, Mr. Seal and Mr. Mowatt obtained instructions from the Barclay Brothers (who also control Ellerman at board level) and complied with those instructions.”
“8.5. Each of the Shareholders agrees that: 8.5.1. during the continuance of this Agreement all transactions entered into between any of them or any company controlled by them on the one hand and the Group on the other shall be conducted in good faith and on the basis set out or referred to in this Agreement or, if not provided for in this Agreement may as be agreed by the parties and in the absence of such agreement on any arm’s length basis; 8.5.2. each of them shall at all times act in good faith towards the others and shall use all reasonable endeavours to ensure the observance of the terms of this Agreement; 8.5.3. no party will seek to increase its profit or reduce its loss at the expense of another; and 8.5.4. each of them will do all things or desirable to give effect to the spirit and intention of this Agreement.”
“In the circumstances, Mr McKillen has been wrongfully excluded from management of the Company, contrary to his legitimate expectations and the express provisions of the Shareholders’ Agreement and Articles. Mr McKillen will further contend that the matters complained of in paragraphs 22 to 58 above contravene Mr McKillen’s entitlements vis-à-vis the other shareholders of the Company under each of clauses 8.5.2, 8.5.3 and 8.5.4 of the Shareholders’ Agreement.”
“(a) of loyalty inter se: (b) not to profit at the expense of the other shareholders of the Company; (c) to avoid and to disclose any conflict between that shareholder’s interests and his duty to the other shareholders; (d) to disclose material facts relating to the quasi-partnership and the relations between the shareholders; (e) not to misuse their position as shareholders (and appointors of representatives to the Company’s board) or any information obtained thereby to gain an advantage for themselves at the expense of other shareholders.”
“In the above, and other, respects, the relationship between the shareholders from time to time of the Company was one of quasi-partnership, involving obligations of trust, confidence and good faith. As explained further below, Mr. McKillen’s role in the partnership included being actively involved in the management of the Company’s business, in contrast to his fellow shareholders.”
“The provisions of this Agreement and the rights and remedies of the parties under this Agreement are cumulative and are without prejudice and in addition to any rights or remedies a party may have at law or in equity. No exercise by a party of any one right or remedy under this Agreement or at law or in equity shall, save to the extent if any provided, expressly in this Agreement, or at law or in equity, operate, so as to hinder or prevent the exercise by it of any such right or remedy.”
“Fiduciary relationships, such as agency, involve duties of trust, confidence and loyalty. Those duties are, in general, attracted by and attached to a person who undertakes or who, depending on all the circumstances, is treated as having assumed responsibility to act on behalf of or for the benefit of another person. That other person may have entrusted or, depending on all the circumstances, may be treated as having entrusted the care of his property, affairs, transactions or interests to him.”
“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. They are the defining characteristics of the fiduciary. As Dr. Finn pointed out in his classic work Fiduciary Obligations (1977), p.2, he is not subject to fiduciary obligations because he is a fiduciary; it is because he is subject to them that he is a fiduciary.”
“That contractual and fiduciary relationships may co-exist between the same parties has never been doubted. Indeed, the existence of a basic contractual relationship has in many situations provided a foundation for the erection of a fiduciary relationship. In these situations it is the contractual foundation which is all important because it is the contract that regulates the basic rights and liabilities of the parties. The fiduciary relationship, if it is to exist at all, must accommodate itself to the terms of the contract so that it is consistent with, and conforms to, them. The fiduciary relationship cannot be superimposed upon the contract in such a way as to alter the operation which the contact was intended to have according to its true construction.”
“Thus, in the present case, the scope of the fiduciary duties owed by the defendants to the plaintiff (and in particular the alleged duty not to put themselves in a position where their duty and their interest conflicted) are to be defined by the terms of the contract of agency.”
“The relationship between them was a classic one in which the Claimants reposed trust and confidence in Mr Al-Saraj by virtue of their relative and respective positions.”
“Shareholders (including Mr. Quinlan and Ellerman) are under an implied obligation under the Articles and the Shareholders Agreement and/or an obligation under clauses 6.23, 8.5.2 and 8.5.4 of the Shareholders Agreement to notify the Company and its directors and (at least as regards the obligations under clauses 6.23, 8.5.2 and 8.5.4 and fiduciary obligations) their fellow Shareholders of any occasion on which Shareholder Security becomes enforceable, promptly upon discovery by them that they security has become enforceable, in order that a determination may be made.”