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Gwembe Valley Development Company Ltd v Koshy [2004] EWCA Civ 1048

By Oxbridge Law TeamUpdated 04/01/2024 07:02

Judgement for the case Gwembe Valley Development Company Ltd v Koshy

  • Director did not disclose his interest in a loan transaction to other directors.

  • Company entered into loan transaction, and director made a personal profit. Company found out and sued.

  • Defendant argued that he was not liable for account of profits, as the liability of any director for an account of profits for self-dealing transactions was exempted by one of Articles of company.

Equitable Compensation

  • Where director dishonestly fails to disclose his interest in a transaction, equitable compensation is available as a remedy.

  • Liability of directors for loss caused by non-disclosure of an interest in proposed transaction is strict

    • As soon as director conceals his interest, is breach of duty

  • However where company would still have entered transaction even if director had disclosed interest, can be no claim for equitable compensation.

    • I.e. as company has suffered no loss

Exemption

  • The self-dealing rule itself cannot be excluded.

  • Thus Defendant was only exempted from liability if he actually disclosed his interest to the directors.

Facts

  • Is probable that company would have entered transaction nonetheless had they known of Defendant’s interest.

  • Therefore equitable compensation is not appropriate remedy.

  • Better remedy is account of profits received by Defendant.

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For Further Study on Gwembe Valley Development Company Ltd v Koshy

Company law Notes
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1071 purchased

Company law notes fully updated for recent exams in the UK. These notes...

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Company law Notes
805 total pages
1071 purchased

Company law notes fully updated for recent exams in the UK. These notes...