Ultraframe (UK) Ltd v Fielding & Ors [2005] EWHC 1638 (Ch)

Lewison J

When is director liable?

• 2 principles are clear:

  1. For application of no-conflict rule, no need for company to have ‘proprietary interest’ in opportunity diverted

  2. However after director leaves office, may be liable under:

     1. No profit rule

     2. If business opportunity is treated as ‘property’ of the company

Competing Directorships

• Even if competing directorships give rise to potential conflict of interest, can be remedied by consent of boards of both companies

Where profit from breach goes to company

• CMS Dolphin is WRONG.

• No such thing as joint liability for breach of trust.

  1. Where director himself receives profit from breach of duty and puts it into a company, director is liable for knowing receipt.

     • Plus company potentially liable for knowing receipt.

  2. Where profits from a director’s breach of duty are paid directly to a company:

     1. If company is alter ego of director, Court will pierce corporate veil

        • Thus third party company liable to director’s original company

     2. If director owns large number of shares in company but it is not a mere alter ego,

        • Director is not personally liable to account for profits made

        • Company may be liable for knowing receipt

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