D was director of surveying company. The other director (and majority shareholder) sacked D’s wife from company; as result D resigned his directorship. However before D’s resignation took effect, company who had previously contracted with surveying company approached D to ask him to work for them. D agreed. Held:
When is Resigning Director Liable?
· Director who has resigned his directorship may be liable under where after his resignation he exploits property of former company.
· Property of former company may be either:
i) business opportunity
ii) or information/trade secrets of former company
· Business opportunity may constitute either:
i) existing work carried out by company
- i.e. where D solicits customers of former company
- this is an ‘intangible asset’ of former company
ii) or a ‘maturing business opportunity’
- i.e. an developing opportunity which D came across in his position of director, and which was thus property of company
· Whether D is liable for use of maturing business opportunity depends on:
a. Ripeness of opportunity
b. How long after resignation D takes up opportunity
c. Circumstances of termination of D’s directorship
· Clear that D was forced out of company by behaviour of other director.
· However here, given that C was still a director at time of taking up opportunity he still had duty not to put himself in position of conflict whilst he remained director.
Ø This is case even though it was former company’s customers which approach him (and not vice-versa)
· Had D made any profit out of contract with other company, would have been liable to account for profits.