LEADING law firm Dickinson Dees has won a landmark case in the Court of Appeal on behalf of Durham-based Premier Waste Management.
Premier Waste Management had sued a former director for taking an unapproved and undisclosed loan of equipment from one of its clients to renovate his property. When the client invoiced the company for use of the equipment, and subsequently claimed non-payment of these invoices, Premier Waste Management alleged breach of duty by the director.
The court found the director liable to compensate the company for the benefit he received in connection with the loan, but the defendant then appealed the decision. The Court of Appeal dismissed the appeal, upholding the original decision.
Ged Flanagan, a litigator based at Dickinson Dees' Thornaby office, represented Premier Waste Management in the High Court and then in the Court of Appeal.
Mr Flanagan explained: “The Court of Appeal found that by not disclosing to the company that he had been offered the use of this equipment, the director had prevented the company from assessing whether this opportunity should instead be exploited by the company. The duties of directors in this regard were strict and had been breached by the director.”
The Court of Appeal looked at whether the director’s personal position may have conflicted with the company’s.
It was decided this ‘no-conflict’ duty covered not just where a director deprives the company of the ability to exploit a particular business opportunity, but also where a director deprived the company of the ability to even consider whether it objected to the diversion of such an opportunity.
Mr Flanagan said: “This landmark case has clearly demonstrated the serious consequences of a director receiving benefits from a third party and failing to disclose transactions in which they are interested - even if the ‘value’ of those benefits or transactions is small.”
Mark Stouph, a director at Premier, said: “The company is extremely pleased with the decision and is grateful for the professional services provided by Dickinson Dees.”