Re Bhullar Brothers [2003] EWCA Civ 424

• Two brothers, along with their sons, were directors of a family company of grocery stores and investment property.

• Two halves of family fell out, and began to divide up assets of company. However sons of one of brothers became aware that land adjoining a bowling alley owned by company was for sale; this discovery was completely fortuitous (had seen a ‘for sale’ sign whilst bowling).

• Sons wanted to buy land; asked their solicitor whether there were any legal difficulties, and he said no.

• Bought land in their own names, and other half of family brought claim.

Parker LJ

• No need to show that company would have made use of information:

  • Here, information was relevant to company - i.e. purchase of land would have been commercially attractive

• Thus sons were under duty to communicate information to company

• Thus is irrelevant that company would almost certainly not have taken the opportunity.

• Thus was breach of fiduciary duty by sons, as they had used information that was in interests of company to make personal profit

Relevant Factors

• At time sons purchased property, they were only carrying on business in their capacity as directors of company capacity alone, and not in any personal capacity

• At time of purchase, company was still trading (albeit with negotiations for its break-up)

• Sons had asked solicitor whether there were any legal reasons they could not purchase land for their own benefit

  • Thus is clear they felt there might be a conflict of interests

  • This seems to be key factor in decision.