England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEEN'S BENCH DIVISION (Commercial Court)
HHJ Seymour QC (sitting has a High Court Judge)

		Royal Courts of Justice Strand, London, WC2A 2LL
		13th March 2007

Lord Justice Rix :

Introduction

1. This is an appeal about the alleged breach of a director's fiduciary duties during a period of notice after he had resigned as a director but when his resignation had not yet taken effect. The director, Mr Graham Bryant, here respondent and defendant below, had been effectively forced out of the company by his business partner and co-director, who was the majority shareholder in the company, Mr Mark Foster, here appellant and claimant below. The defining moment came when Mr Foster unilaterally announced to Mr Bryant that Mr Bryant's wife, whom the company employed, was to be made redundant. It is not a case therefore where Mr Bryant resigned in order to attempt to take work or clients from the company. Nevertheless, during the notice period, the company's major, if not only, client (Alliance Leisure Services Limited ("Alliance"), whose managing director was Mrs Watts) pressed Mr Bryant to continue to play a role for that client after his departure from the company. The client, in its own interests, was anxious for continuity in its ongoing or future projects. Mr Bryant, who in the meantime had looked around for other employment, agreed to fall in with the client's wishes. The role envisaged for Mr Bryant by the client was essentially an employee's role, so that he would spend his time exclusively on the client's affairs, but it was decided that the form which this arrangement would take would be that he would provide his services to the client through a new company of his own. The client would pay all the expenses of the new company and in addition a "salary". Thus Mr Bryant's or the company's remuneration was not to be project or fee based. Mr Bryant's new company was formed a few days before his resignation took effect. When it took effect, he started to work for the client. Previously, the client had channelled all its work exclusively to the company, under an exclusivity contract which had expired without renewal a few weeks before the resignation took effect.
2. The other director, Mr Foster, knew that the client wanted Mr Bryant to work for it, but sought to persuade the client that the company could provide continuity by contracting in outside support to service the client. In effect, the company wanted to contract out, or sub-contract, its work. The client, however, did not want that. It was more than satisfied with the personal, professional surveying work which the two co-directors had been performing for it. It wanted to continue with each director continuing to provide that personal service which it desired and for which it had rewarded the company in the past with its custom. If the two directors were no longer to be able to work together in the same company, then existing or future project work would have to be shared out between them, so as effectively to occupy each of them for 100% of their time. That was the proposal which the client made to each of them. Mr Bryant was prepared to agree, but Mr Foster was not. He rejected the proposal, insisting on wanting to cover the client's work through an outside agency, and being unwilling to continue to perform merely as much work for the client as he could personally deliver. There was a final breach between company and client when the company sued the client. It also sued the resigning director. Company and client have settled their dispute, but the litigation between the former co-directors continues. It must be a disaster for both.
3. The judge, HHJ Richard Seymour QC, found that there had been no breach of Mr Bryant's fiduciary duties. He also found that he had been excluded from his role as director after his resignation. He further found that even if he had been in breach of fiduciary duty (or otherwise of the shareholders' agreement in contract), the company had suffered no loss by way of damages as a result. If there had been a breach of fiduciary duty and an account was appropriate, the period for such an account would have been one year following Mr Bryant's departure from the company.
4. The judge's critical findings are summed up in these passages from his judgment:

"141…It was not a case of Mr Foster identifying a maturing business opportunity, or even a possible business opportunity, and trying to divert it to himself secretly. Rather it was a case of a customer-led initiative with a view to the identification of a solution to the problem arising from the departure from the Company of Mr and Mrs Bryant which was acceptable to the customer, Alliance. It was a very unusual situation…

144…If one regarded the Alliance work as a package as an asset of the Company (which it fact it was not), the intention of Mrs Watts at that stage was to divide it more or less equally between the two major participants in the Company. The only reason, as I find, why that did not happen, was the truculent attitude of Mr Foster and his decision to seek to extract a very substantial sum from Alliance by way of compensation…

147. In the particular circumstances of the present case it seems to me that Mr Bryant was not guilty of a breach of his fiduciary duties to the Company by going along with the suggestions of Mrs Watts that he should establish his own company and then undertake such work as Alliance was minded to give him. This aspect of the claims in this action therefore fails…

160. Alliance did in fact offer to provide Mr Foster with as much work as he could handle. Mrs Watts told me that she was not prepared to entrust all of Alliance's work to the Company if the Company was going to sub-contract what Mr Foster could not deal with personally. I accept that evidence. I find that the maximum amount of work which Alliance was prepared to offer to the Company, in a situation in which Mr and Mrs Bryant had left and Mr Foster remained the only employee of the Company able to offer professional services, was that which was in fact offered to him, but which he did not in fact get because of his reaction to Alliance's position.

168…On my findings there would have been no loss, because after the departure of Mr and Mrs Bryant, Alliance was never going to place with the Company more work than Mr Foster as an individual could cope with. That amount of work was offered, but came to nothing for reasons which I have explained.

169. Thus, so far as damages are concerned, had it been necessary to consider what damage the Company or Mr Foster had sustained as a result of some breach of fiduciary duty or breach of the Shareholders' Agreement on the part of Mr Bryant, I should have found that no damage had been suffered."

5. On this appeal the company nevertheless submits that despite these findings the judge was wrong not to recognise that what Mr Bryant did during his notice period between resignation and departure was a classic breach of fiduciary duty. The judge's principal error was to find that Mr Bryant had been excluded from discharging his role as a director of the company as from his resignation. That finding was unjustified: all that had happened were the normal consequences of a parting of the ways. If the judge had not made that error, he would probably have found a breach of fiduciary duty. In any event, the facts, namely Mr Bryant's willingness to fall in with the client's proposal while he was still a director, spoke for themselves. There was no escaping a finding of breach of fiduciary duty. Once that breach is established, then a duty to account is inevitable. Such a duty does not depend on the need to establish any loss, but on the existence of a profit connected with the breach. The judge ought therefore to have ordered an account. Such an account could be required both of Mr Bryant himself and of his new company, Savernake Property Consultants Limited, the second respondent ("Savernake").
6. Mr Bryant submits, on the other hand, that the judge was right for the reasons that he gave, and was entitled to come to the findings of fact which he made. Indeed there were even further matters which the judge might well have mentioned (raised in a respondent's notice). There had been no dispute about the principles of law. On the judge's express findings, Mr Bryant had had no intention to accept any work from Alliance at the time of his resignation. He did not solicit the business of Alliance nor attempt to entice it. He did no more than respond to the suggestions of Mrs Watts who was herself acting, as she was entitled to do, in the best interests of Alliance and its own clients. Moreover, the judge was also right to say that Mr Bryant had been excluded from his role as director. As for loss, on the judge's findings there could be no liability in damages. As for an account, there had to be some connection between breach and profit, and there was none.
7. It may be observed that in their pleaded case and in their case at trial, the claimants accused Mr Bryant of serious dishonesty: of soliciting Alliance to transfer its custom under the exclusivity agreement to him and of resigning in order to achieve such a transfer, all behind the back of Mr Foster and the company, and in order to earn a secret profit out of his directorship. All those allegations of dishonesty failed at trial, and have not been resurrected on this appeal.

The law on a director's fiduciary duties

8. At trial it was common ground between the parties that the synthesis of principles expounded by Mr Livesey QC, sitting as a deputy judge of the high court, in Hunter Kane Limited v. WAtkinss [2002] EWHC 186 (Ch) (unreported, 24 January 2003), which Mr Livesey had himself taken largely from the judgment of Mr Justice Lawrence Collins in CMS Dolphin Limited v. Simonet [2001] 2 BCLC 704 and the authorities there cited and discussed, accurately stated the law. In this court in In Plus Group Ltd v. Pyke [2002] 2 BCLC 201 Brooke LJ described the Simonet analysis as "valuable" (at para 71). Mr Livesey said:

"1. A director, while acting as such, has a fiduciary relationship with his Company. That is he has an obligation to deal towards it with loyalty, good faith and avoidance of the conflict of duty and self-interest.

2. A requirement to avoid a conflict of duty and self-interest means that a director is precluded from obtaining for himself, either secretly or without the informed approval of the Company, any property or business advantage either belonging to the Company or for which it has been negotiating, especially where the director or officer is a participant in the negotiations.

3. A director's power to resign from office is not a fiduciary power. He is entitled to resign even if his resignation might have a disastrous effect on the business or reputation of the Company.

4. A fiduciary relationship does not continue after the determination of the relationship which gives rise to it. After the relationship is determined the director is in general not under the continuing obligations which are the feature of the fiduciary relationship.

5. Acts done by the directors while the contract of employment subsists but which are preparatory to competition after it terminates are not necessarily in themselves a breach of the implied term as to loyalty and fidelity.

6. Directors, no less than employees, acquire a general fund of skill, knowledge and expertise in the course of their work, which is plainly in the public interest that they should be free to exploit it in a new position. After ceasing the relationship by resignation or otherwise a director is in general (and subject of course to any terms of the contract of employment) not prohibited from using his general fund of skill and knowledge, the 'stock in trade' of the knowledge he has acquired while a director, even including such things as business contacts and personal connections made as a result of his directorship.

7. A director is however precluded from acting in breach of the requirement at 2 above, even after his resignation where the resignation may fairly be said to have been prompted or influenced by a wish to acquire for himself any maturing business opportunities sought by the Company and where it was his position with the Company rather than a fresh initiative that led him to the opportunity which he later acquired.

8. In considering whether an act of a director breaches the preceding principle the factors to take into account will include the factor of position or office held, the nature of the corporate opportunity, its ripeness, its specificness and the director's relation to it, the amount of knowledge possessed, the circumstances in which it was obtained and whether it was special or indeed even private, the factor of time in the continuation of the fiduciary duty where the alleged breach occurs after termination of the relationship with the Company and the circumstances under which the breach was terminated, that is whether by retirement or resignation or discharge.

9. The underlying basis of the liability of a director who exploits after his resignation a maturing business opportunity 'of the Company is that the opportunity is to be treated as if it were the property of the Company in relation to which the director had fiduciary duties. By seeking the exploit the opportunity after resignation he is appropriating to himself that property. \he is just as accountable as a trustee who retires without properly accounting for trust property.

10. It follows that a director will not be in breach of the principle set out as point 7 above where either the Company's hope of obtaining the contract was not a 'maturing business opportunity' and it was not pursuing further business orders nor where the director's resignation was not itself prompted or influenced by a wish to acquire the business for himself.

11. As regards breach of confidence, although while the contract of employment subsists a director or other employee may not use confidential information to the detriment of his employer, after it ceases the director/employee may compete and may use know-how acquired in the course of his employment (as distinct from trade secrets – although the distinction is sometimes difficult to apply in practice)."

9. In the present proceedings the principles with which we are most concerned are 1, 2, 4, 5, 7, 8, 9 and 10.
10. It seems to me that this restatement, as to which the parties are in agreement, will suffice at present to form the legal background to my consideration of the facts, which I will take very largely from the judgment of the judge. It will be necessary to look at some of the underlying (or more recent) authorities in due course.

The facts (1): the parties' relationship and its breakdown

11. Mr Foster and Mr Bryant are by profession chartered surveyors, members of RICS. In early 2002 both were employed by separate firms of surveyors. Alliance was a client of Mr Foster's firm. Alliance was formed in 1992, and has been led since that date by Mrs Watts, its managing director. It is successful as a facilitator and manager of leisure projects, such as the construction and equipping of sports centres, swimming pools, gymnasia and the like, principally by local authorities. Alliance dealt with Mr Foster at the firm where he was employed. Mr Foster approached Mrs Watts to ask her if she would support him with Alliance's project management work if he left his employment and set up his own business. She said she would. So he left his employers and in May 2002 set up Foster Surveying Consultancy Ltd, as the first appellant was then called (the "company"). Even before that time Mr Foster had asked Mr Bryant, whom he knew, if he would like to join him in such a venture, but Mr Bryant then declined.
12. At first Alliance supported Mr Foster's company on an ad hoc basis, but Mrs Watts was clearly satisfied with the service provided for in January 2003 she agreed to Mr Foster's proposal for a two year period (calendar 2003 and 2004) in which the company would obtain all Alliance's surveying and project management work on an exclusive basis (the "exclusivity agreement"). It provided for a review upon the expiry of the two year period. It was subject to the company "maintaining adequate levels of resources to manage projects effectively and maintain a high standard of service".
13. Meanwhile in late October 2002 Mr Foster had approached Mr Bryant again to propose a "partnership agreement", under which Mr Bryant would join the company in February 2003 and receive 40% of its shares (in return for working for 5 months without salary), with the prospect of moving up to 50% if the company prospered (eg if the company annual fee income rose to £200,000). At that time the company's only other employee was Mrs Foster, who undertook secretarial and administrative tasks. On this occasion Mr Bryant was attracted by the proposal which matured into a Shareholders' Agreement executed (some considerable time later) on 20 December 2003. In the meantime he had started work with the company in February 2003 and had worked without salary for nearly 5 months to earn his shares, as proposed. In June 2003 the company changed its name to Foster Bryant Surveying Ltd.
14. The Shareholders' Agreement was clearly based at least in part upon a partnership form and provided in essence that Mr Foster and Mr Bryant should be the only two directors for their joint lives, subject to a right of voluntary retirement. The relevant clause permitted retirement on the giving of four months notice in writing. Control and management and the conduct of the company's affairs were to be in the hands of the directors only. There was to be a directors' meeting held on the first Tuesday of each month. There was a Competition clause inter alia as follows:

"He will not within a period of one year from his Succession Date either on his own account or jointly or in conjunction with or on behalf of any other person firm or company whether directly or indirectly solicit business entice clients or interfere with the relationship between the company and its clients or any of them in each case for any services supplied by the company at any time during the period of three years prior to his Succession Date."

15. The judge found that there had been no breach of that clause. There is no appeal from that finding, nor from any claim which Mr Foster made personally based on the Shareholders' Agreement.
16. The business of the company increased, but Alliance remained by far its biggest client. In January 2004, Mr Bryant's fiancée, shortly to become his wife, also a chartered surveyor, joined the company. In 2003 most of the work for Alliance was done by Mr Foster, but as the work from that quarter kept on growing, both Mr and Mrs Bryant began to do an increasing part of it.
17. Mr Bryant developed two new clients for the company, although in the end they turned to dust. One was Innspired Pubs Plc, but that work was lost when it was taken over by Punch Taverns. The other was Aludel, which ran a chain of health clubs, but in August 2004 it went into receivership. The company lost money because of Aludel's failure.
18. Mr Foster blamed Mr Bryant for delay in submitting invoices to Aludel. He appears to have overstated the company's loss however. Mr Foster also made other complaints, at any rate at trial, about Mr Bryant's conduct, but the judge observed that at the time they did not feature prominently. Be that as it may, on 17 October 2004 Mr Foster sent Mr Bryant a long e-mail which began "Thanks for ruining my weekend!!!" and continued with pages of complaints, amongst them that the Aludel story had given Mr Foster "grave concerns and makes me extremely nervous with your ability to control payments/finance effectively". Mr Foster questioned Mr Bryant's commitment, eg to working at the weekend. He said that there had not been enough face to face discussion (each of them worked from their respective homes). He said that Mr Bryant's support on Alliance projects "has proved extremely important and has strengthened this area of the business", but complained of the need to focus on generating new custom.
19. Mr Bryant said at trial that the e-mail came as a bolt from the blue, and that its contents were totally unwarranted. He was upset, but it led to a meeting of the two directors on 23 October 2004. In preparation for that meeting Mr Foster sent Mr Bryant another e-mail on 20 October listing a whole range of matters which "need to be resolved", including current levels of communication, the company's financial situation and cash flow, Mr Bryant's "Time commitment to developing the company", and a review of the share split. Any "underlying tensions between us" would need to be addressed and resolved. Then on 22 October Mr Foster instructed the company's bankers to block the company's account so that Mr Bryant could not operate it. Mr Foster was hard put in cross-examination to articulate the explanation of this conduct as his fear that Mr Bryant would draw expenses to which he was not entitled. As was, however, clear from that cross-examination, Mr Foster had completely lost confidence in Mr Bryant.
20. When the blocking of the account was revealed by Mr Foster to Mr Bryant at their meeting on 23 October, Mr Bryant was very distressed, "Not unnaturally" commented the judge. It was agreed that the account should be unblocked, and it was. Mr Bryant said that the whole meeting was very emotional. The blocking of the account called his honesty in question. From that point, Mr Bryant began to suspect that his future with the company was in doubt.
21. On 1 November, the directors held their monthly management meeting. It was to be their last such meeting. On 9 November they had a discussion about their shareholdings. Mr Bryant wanted to explore obtaining 50% on an accelerated basis, but Mr Foster was unhappy with the idea of their holdings ever being equal. On 10 November Mr Foster sent Mr Bryant another long e-mail. Although he professed his genuine desire to resolve current grievances and said that there were no ulterior motives to remove Mr Bryant from the company (which must have reflected themes at the previous day's meeting), he stated his dissatisfaction with Mr Bryant's ability to develop new clients and his handling of administrative procedures and that he felt increasingly uncomfortable with the prospect of an equal share split. The judge observed that the nature of the discussions at the 9 November meeting led Mr Bryant to think seriously about leaving the company. He printed off the internet details of a vacancy in a local office of chartered surveyors, WS Atkins at Oxford. On 22 November he applied for that job. On the same day he had received an e-mail from Mrs Foster querying his and his wife's telephone expenses. The queries grew out of a change from his paying their telephone bills on a monthly rather than quarterly basis. At trial Mr and Mrs Foster suggested that the claims were dishonest, whereas the truth was that there was simply some confusion engendered by the change. The judge was critical of this aspect of the Fosters' evidence. He pointed out that the telephone expenses issue had been unpleaded, and that the Fosters had clearly cast around for anything apparently disadvantageous to Mr Bryant for the purpose of deploying it in the action.
22. Mr Foster and Mr Bryant met again on 25 November. Mr Bryant had expected the meeting to deal with the subject of marketing the company to new clients, one of the concerns which Mr Foster had been expressing. However, Mr Foster wanted to talk about only two topics: making Mrs Bryant redundant, and a statement of Mr Bryant's commitment to the company. As to the former, Mr Foster produced a draft letter to give Mrs Bryant 8 days notice of termination of her employment, stating that she was to leave work that day: the reason given was the loss of the Aludel and Innspired accounts. Mr Bryant asked for the chance to break the news to his wife slowly, but Mr Foster declined. Mr Bryant was upset. As to the latter, Mr Bryant responded that if Mr Foster wanted an answer there and then, there was only one answer, that he was resigning. Mr Foster disputed that at trial: but the judge found that Mr Bryant resigned on the spot. As the judge observed: it was unsurprising that Mr Foster's lack of tact over the matter of the redundancy of Mrs Bryant should have provoked Mr Bryant finally to decide that he had had enough and that he should resign. He had no intention of entering into any relationship with Alliance. He had in mind that he would simply return to employment with a firm of chartered surveyors.
23. The following day, 26 November, Mr Bryant telephoned Mrs Watts to tell her about his resignation and Mrs Bryant's dismissal. The judge said that he was completely satisfied that the motivation of that call was entirely the desire to behave in a proper professional manner, because the Bryants had been engaged on current Alliance projects. Mrs Watts was not there, but she returned his call. He gave her the information and had no other relevant conversation with her. Nothing was said on that occasion about the possibility of Mr Bryant working for Alliance. However, Mrs Watts was shocked by the news. Her first thought was how Alliance was going to deliver on the projects on which the Bryants had been working for Alliance. She was concerned for Alliance and its clients.

The facts (2): the aftermath of Mr Bryant's resignation

24. 26 November was a Friday. Mrs Watts pondered the problem over the weekend. On Monday, 29 November she telephoned Mr Bryant. She was concerned that Mr Foster could not handle everything himself. She asked Mr Bryant what his plans were for the future. He said that he would sign up with a recruitment agency. She asked him whether he would be interested in continuing to deliver projects for Alliance if he was to join another consultancy practice, or even if he might like to work for Alliance. He said that he would think about it. His intention then was still to seek employment with WS Atkins in Oxford.
25. On 30 November Mr Foster had a meeting arranged with Mrs Watts. Before he left for that meeting Mr Bryant called him to arrange to meet in Marlborough for handing over Mr Bryant's formal letter of resignation. At the meeting with Mrs Watts, Mr Foster told her of the situation in the company. Mrs Watts said she knew of it from Mr Bryant. Mr Foster said that he would use another firm to provide additional resources to the company, but Mrs Watts was not satisfied with that. She explained that Alliance's clients were very complimentary about the service provided by the Bryants. Mr Foster tried to bully her into accepting that everything was fine. She said that she would need to consider her options. Matters were left that they would have another meeting on 16 December when Mr Foster would tell her how the projects could be resourced.
26. On 3 December Mr Bryant arranged to attend an interview with W S Atkins on 14 December.
27. On 6 December Mr Bryant and Mrs Watts had a meeting following a nearby project call. They discussed her proposal that Alliance engage Mr Bryant on a retainer basis, as distinct from a fee earning basis, once both the exclusivity agreement was over and Mr Bryant had left the company. She asked him for his proposal as to what services he could provide and what value he could add.
28. On 8 December Mr Bryant responded in an e-mail in which it was envisaged that Mr Bryant would set up his own company, but at Alliance's expense, and that in addition to paying all the expenses of the new company Alliance would pay Mr Bryant a "salary". This followed Mrs Watts's suggestion. She explained that she would have liked to have employed Mr Bryant, but could not obtain professional indemnity insurance for him on that basis. The proposed structure was intended to replicate as closely as possible the position which would have obtained if Mr Bryant had been an employee. The proposal suggested an annual "salary expectation" of £50,000 plus fringe benefits amounting, with VAT on top, to £6,527 per month. He contrasted this with the current fee structure on some specific projects. He said that he was very excited about the opportunity.
29. On 15 December, following his interview at W S Atkins on the previous day, Mr Bryant informed Mrs Watts that he would accept her proposal to work for Alliance under a retainer arrangement.
30. On 16 December, Mr Foster and Mrs Watts had their second meeting. Mr Foster brought to the meeting a representative of a firm of quantity surveyors. Mr Foster proposed a direct link with that representative on Alliance projects. Mrs Watts was not happy with that proposal: she had no knowledge or relationship with the representative or his firm (she was surprised that Mr Foster had brought him to their meeting); she did not want to pay an additional margin on work she could contract directly; and the exclusivity agreement had stipulated that the company should maintain adequate levels of resource. She told Mr Foster that his proposal was unacceptable. He was angry and told her that she had made the wrong decision.
31. On 21 December Mr Foster signed and submitted a Form 288b notifying the Registrar of Companies that Mr Bryant had ceased to be a director of the company on 30 November. Although Mr Bryant continued to work at the company until his departure (by agreement) on 28 January 2005, and did so as the judge found conscientiously and efficiently, he played no further role as a director in the management of the company from the time of his resignation. For instance, there were no monthly management meetings at the beginning of December and January; there were no discussions as to a dividend paid in January upon which Mr Foster decided unilaterally; there were no discussions as to how Alliance would resource the Alliance work in the future. Formally, however, under the Shareholders' Agreement, Mr Foster's retirement as a director did not take effect until 28 January.
32. Also on 21 December Mr Foster sent a Christmas greeting e-mail to a personal friend, which came forward on discovery. The judge did not mention it, but it has been drawn to our attention by Mr Lord on behalf of the appellants. It reveals an intimate insight into Mr Bryant's thinking. He mentioned his wife's redundancy and his own resignation. He referred to job opportunities, including an offer from W S Atkinss, but said that he had opted to start his own business (Savernake) on the back of a very attractive offer from Alliance: to work exclusively for them on a retainer basis for 12 months. That would enable him to continue to work at home and to continue with project management, all of which he enjoyed. He added:

"It does, however, put me into direct conflict with Mark as Alliance helped him to set up the business initially and so I would be taking work off of him. I understand that he is not happy but all-in-all he has brought it on himself. There is not a lot he can do about it either as Alliance approached me and so I did not solicit them for work."

33. On 7 January Mr Foster had a further meeting with Mr Duncan Black, a director of Alliance who had accompanied Mrs Watts to the meeting on 16 December. The meeting was to discuss which of the then current Alliance projects would remain with the company after Mr Bryant had left and which would not. (That meeting had been anticipated by a meeting in late December which Mr Bryant remembered taking place with Mr Black at which Mr Black made his own decisions as to how projects would be allocated. The judge did not mention that meeting.) There is no finding by the judge that Mr Bryant played any role in these allocations. Mr Foster followed up with an e-mail to Mrs Watts dated 11 January which set out his understanding of the arrangements. He listed a number of projects which would be removed, and a number which would remain. The e-mail contained the following:

"3) It is ALS's intention not to continue working with FBS on an exclusive basis and also to remove the many projects listed above committed with FBS as a direct result of Graham Bryant's recent resignation from FBS and ALS's intention to employ him direct on a capped retainer basis.

4) It is not currently ALS's intention to use parties other than Graham or FBS in connection with future projects…

6) FBS will provide details of a new framework agreement and also terms of appointment for individual projects, as agreed, including a schedule of fees for future potential project works. Duncan also confirmed that it is not the intention of ALS to negotiate fees down by comparing fee levels against employment costs of Graham under a capped retainer…"

34. Mr Black responded by e-mail of the same date. He appended his own list of projects, correcting certain points about individual projects, eg that some of those said to have been removed had simply passed from the speculative to the abandoned, or had been lost to Alliance. He confirmed that subject to satisfactory agreement and continued professional service it remained Alliance's intention to continue to work only with Mr Bryant (referred to as "our retained in house QS") and the company. He also confirmed that Alliance was happy to provide a committed volume of projects to the company with a contract of appointment to each project at the earliest stage so as to provide security to the company.
35. Mrs Watts also replied personally to Mr Foster's e-mail, by letter dated 24 January. She confirmed Alliance's intention to ensure that both Mr Foster and Mr Bryant received a full order book of work, but reserved the possibility that if the level of work grew beyond what the two could service, then supplementary arrangements might have to be considered. She acknowledged Mr Foster's disappointment at the decision to remove some projects from the company, but sought to explain Alliance's thinking at some length. She looked forward to a new framework agreement with the company.
36. The judge found that Mrs Watts' decision to give to Mr Foster as much on-going work as he could personally handle was sincere and based upon the interests of Alliance and its clients. Unfortunately, Mr Foster thought otherwise, and formulated a very substantial claim against Alliance. The judge found that it was solely for that reason that no further work was placed with the company by Alliance.
37. The judge also found that even if Mr Bryant had not left the company, there would have been no renewal of the exclusivity agreement. In case it was relevant he assessed the chance of such a renewal at only 10%. Once, however, Mrs Watts knew that the Bryants were leaving, there was no chance of such a renewal.
38. The incorporation of Savernake, Mr Bryant's new company, took place on 18 January.

The judge's disposal of the claims

39. The judge was concerned at trial with many issues and claims which have not survived into this appeal. Savernake was alleged to have procured and dishonestly assisted in breaches by Mr Bryant, who was in turn alleged to have breached his obligations under the Shareholders' Agreement, his duties as an employee, and his fiduciary duties as a director. In turn, Mr Bryant alleged that Mr Foster had repudiated the Shareholders' Agreement. All those claims failed. On this appeal, the only claim which is effectively pursued is that of breach of fiduciary duty, and in consequence for an account. It is acknowledged that claims for breach of duty as an employee or under the Shareholders' Agreement add nothing. It is not formally acknowledged that no claim in damages has survived the findings of the judge, but Mr Lord has had to submit that the judge's finding that Mr Foster was responsible for the claimants' loss was perverse.
40. As for the claim of breach of fiduciary duty, the pleaded particulars emphasised allegations that Mr Bryant had approached Alliance without the knowledge or consent of the claimants with the intention of diverting the whole of the company's custom from Alliance to himself and Savernake; that Mr Bryant's resignation letter and early departure on 28 January were prompted or influenced by that intention; and that there were further breaches of fiduciary duty after Mr Bryant had ceased to be a director of the company in agreeing with Alliance a retainer for one year from about 21 February 2005.
41. None of those particulars have survived the judge's findings into this appeal. In essence, the case made by Mr Lord on this appeal is on behalf of the company, for an account of Mr Bryant's and/or Savernake's profits for a year, simply arising out of Mr Bryant's agreement before his resignation took effect to go along with Alliance's offer of a retainer and its allocation of projects in respect of which his continued services were desired. Mr Lord has not sought to challenge any of the primary findings of the judge, but rather the legal deductions which the judge drew from his findings. In this connection, it is relevant to observe that the judge was very impressed by both Mr Bryant and Mrs Watts as witnesses, and he accepted their evidence without reservation. He described Mr Bryant as transparently honest and straightforward. He described Mrs Watts as dedicated to providing a good service to her clients and dealing with them in an honourable fashion. She liked to trust and be trusted, and the judge said that trust in her would not be misplaced. The judge was unfortunately unable to make like findings about Mr Foster. He said that the Fosters' evidence was motivated by hostile feelings towards Mr Bryant which led them to present evidence in which they did not genuinely believe. He said that Mr Foster's hostility –

"was not eased by the knowledge, which I am confident Mr Foster nursed in his heart, that if he had been more conciliatory towards Mrs Watts at the beginning of 2005 the Company would still have had as much Alliance business as would have kept Mr Foster personally occupied full-time" (at para 129).

42. In the circumstances, I shall limit my further consideration of the judge's judgment below to his treatment of the issue of breach of fiduciary duty. In the light of his detailed findings, he dealt with that issue relatively briefly, as follows:

"145. As I have indicated, the authorities to which I have been referred all emphasise that in relation to the issue whether in particular circumstances a director of a company has acted in breach of his fiduciary duties to the company is fact-sensitive. The circumstances of the present case are very individual. After Mr Bryant told Mr Foster on 25 November 2004 that he was resigning as a director of the Company Mr Foster ceased to treat him as a director in the manner in which he had before. There were no more management meetings of directors and no discussions between them about matters which would otherwise have been considered appropriate to be discussed between directors, such as the proposal to sub-contract Alliance work to Mr Binnie or the issue of whether a sum on account of dividend should be paid to shareholders in January 2005. Mr Foster simply made his own decisions on behalf of the Company on these questions. He treated Mr Bryant as having ceased to be a director of the Company as from 30 November 2004, as shown by the Form 288b dated 21 December 2004 which he completed and despatched to the Registrar of Companies. After this action had been commenced, and no doubt in the light of a consideration of the possible implications of that notification, a so-called "amending" Form 288b dated 13 July 2005 showing the date of termination of the appointment of Mr Bryant as a director of the Company as 28 January 2005 was submitted to the Registrar of Companies by the solicitors acting for the claimants in this action. However, an indication of the real understanding of Mr Foster was to be found in the annual report and accounts of the Company for the period ended 30 June 2005, signed by Mr Foster on 8 March 2006, in which, in the report of the Directors to the Members of the Company, Mr Bryant was recorded as having resigned on 30 November 2004. As from 30 November 2004, as I find, Mr Bryant was excluded from discharging his role as a director of the Company and for practical purposes continued his association with the Company only as an employed chartered surveyor. As I have said, he performed the latter role conscientiously and efficiently. In other words, although prevented from acting as a director, he continued as a loyal and effective servant of the Company in relation to the discharge of the day-to-day tasks of his employment.

146. For the reasons which I have explained, the idea of accepting any work from Alliance was not that of Mr Bryant, but that of Alliance. There was no plan to take any such work at the time when Mr Bryant resigned as a director and not even any thought that it might be possible. When a plan did emerge, so far as Alliance was concerned it was not one to divert all of the Alliance work to Mr Bryant's new company, but one to share the work between the individuals who had previously largely carried it out in such proportions as would ensure that each was fully occupied with the relevant work. The matter was not dealt with in secret. Although Mr Foster and the Company were not employed in the negotiation of commercial terms proposed, Mr Foster and the Company did appreciate that negotiations of some sort were taking place or would take place between Mr Bryant and Alliance and they realised they would have to counter the commercial initiative. They endeavoured to do that first at the meeting between Mr Foster and Mr Watts on 30 November 2004 and then at the meeting on 16 December 2004 at which the presentation was made. In essence, therefore, the Company's complaint is that its counter-measures taken to resist the commercial threat from Mr Bryant were not as successful as it would have wished, in that Mrs Watts was not prepared to leave all of Alliance's business with the Company, but only that amount which Mr Foster as an individual could handle. That could have been the outcome in the event of any competition for the business of Alliance once the exclusivity had expired. In the circumstances the only way in which a better outcome for the Company would have been if Mr Bryant had declined to entertain the prospect of doing any work for Alliance at all. Thus that is precisely the step which Mr Woolgar submitted due performance by Mr Bryant of his fiduciary duties to the Company required.

147. In the particular circumstances of the present case it seems to me that Mr Bryant was not guilty of a breach of his fiduciary duties to the Company by going along with the suggestions of Mrs Watts that he should establish his own company and then undertake such work as Alliance was minded to give him. This aspect of the claims in this action therefore fails."

43. I also refer to the central findings of the judge recorded at para 4 above.
44. As for loss and damage, the judge had to consider the submission made on behalf of the company that existing projects already assigned to it were transferred to Mr Bryant's new company Savernake for completion and that in this way the company had been deprived of fees which ought to have been paid to it. The judge reasoned that even if liability had been established, and if the factual premise that existing work of the company had been removed to Savernake with a loss of fees to the company had been made out, the amount of such lost fees could have been recoverable from Alliance (for breach of the exclusivity agreement) but not from either Mr Bryant or Savernake. It was that breach, not any breach of duty or contract on the part of Mr Bryant which would have caused the relevant loss (para 161). The judge clearly considered therefore that any breach of duty or contract on the part of Mr Bryant would in any event have been of the most technical nature, and that the real and only cause of loss, subject to his further finding that Mr Foster was the author of his and the company's own loss, if any, would have been Alliance's decision to award work to Mr Bryant via his new company.
45. As for the factual premise that the company had lost work to Savernake, the judge said that the matter was but little investigated before him, and was ultimately unclear. The judge considered various possible categories of projects, such as those which never went ahead at all, or were only in the "prospecting stage", or were entirely unknown to Mr Bryant (as the judge accepted), or were awarded directly to Savernake by a client other than Alliance in circumstances where Alliance did not obtain the project, or only came into existence for the first time after the exclusivity agreement had terminated or Mr Bryant had left the company, or had already been completed by that time and were simply in the defects liability period and therefore, as the judge considered, in any event fell outside the exclusivity agreement. The judge said that it was unclear whether any work already entrusted to the company was in fact removed to Savernake. He made a number of findings against the company, and none in its favour. As it was, the judge ultimately did not have to make up his mind about such matters, because, as he stressed, there would have been no loss in any event, both because Alliance was never going to place more work with the company than Mr Foster as an individual could cope with, which work he was offered, and because that work was declined by Mr Foster's preference to choose instead to sue Alliance (at paras 162/169).
46. Finally, the judge considered the period over which an account should be taken if, contrary to his view, there was something to account for. He held that it should be no longer than one year, until 26 January 2006. But he clearly thought that in any event, even if there had been a breach of duty, there was no liability to account. He reasoned the matter thus:

"172…Perhaps the single most important [material factor] is that Mr Foster and the Company by their own actions deprived themselves of the work which Alliance was otherwise prepared to put in their direction. It would, as it seems to me, be totally inequitable for Mr Bryant and Savernake to be held accountable for profits made on work which came to them only because Mr Foster and the Company in effect rejected it. Alliance was only ever at best going to place with the Company as much work as Mr Foster as an individual could handle. The balance of Alliance's work, had Mr Bryant ruled himself out as some one to do it, would not have come to him, but it would not have gone to the company either. The significance of that is that in Warman International Ltd v. Dwyer the High Court of Australia emphasised that the rule requiring a fiduciary to account for profits should not be applied in a manner which makes it a vehicle for unjust enrichment of the claimant…"

47. However, in the final analysis the judge also held that, if he had found in favour of the claimants on the question of liability, justice would have required a separate hearing in relation to matters of remedy, because the claimants had not yet elected for their remedy, an account of profits or damages to compensate them for their loss. Although there had been no order for a split trial, the trial had been conducted in effect "as a trial of liability only, with limited findings being sought in respect of matters relevant to damages and an account" (at para 177).

The authorities

48. I refer to the respective submissions of the parties set out at paras 5 and 6 above. Those submissions require some consideration of the underlying jurisprudence. It may be observed that the factual situation presented by this case falls uneasily between the scenarios dealt with in that jurisprudence. This is not a case where a director has used corporate property. It is not a case where a director has resigned in order to make use of a corporate opportunity. It is not a case where a director has solicited corporate business in competition with his company. It is not a case where a director has acted in bad faith, deceitfully or clandestinely. It is, however, at any rate arguably, a case where, by agreeing, while still a director, to work for Alliance after he ceased to be a director, Mr Bryant was still obtaining for himself a business opportunity, possibly even existing business, of the company, or putting himself in a position of conflict with the company, before he was free to do so. Moreover, these events happened at a time of transition, after a forced resignation but before the resignation had taken contractual effect, in circumstances where both parties might be said to be in need of protection. It is possibly above all when a director is leaving that a company needs the protection which the law relating to directors' fiduciary duties provides. But it is also when a director is forced out of his own company that he needs the protection that the law allows to someone who has thereafter to earn his living. Many of these considerations are discussed in the jurisprudence, but not in our particular setting.
49. Regal (Hastings) Ltd v. Gulliver [1942] 1 All ER 378, [1967] 2 AC 134n is perhaps in many ways still the leading case. It was decided in the war and not reported otherwise than in the All England Reports until it was printed in the Law Reports as a note to Boardman v. Phipps [1967] 2 AC 46. It is well described in Gower and Davies' Principles of Modern Company Law, 7^th ed, 2003 at 417/418, where the observation is made that the decision illustrates the extreme severity of the law but also that it possibly carries equitable principles to an inequitable conclusion. The case concerned a board of directors acting together, albeit honestly (see at 144/145), to make use for their own profit, as well as that of their company, of a successful corporate opportunity which the company could not have seized without the financial support and personal participation of its directors. They subscribed for shares in a subsidiary company formed by their own company. It was irrelevant that, for the very reason that it would not have been able to go ahead by itself, the company suffered no loss, or that the directors had been acting honestly (as the courts below had found). As Lord Eldon LC had said in Ex parte James 8 Ves 337 at 345 (cited by Lord Russell of Killowen at 145 and by Lord Porter at 159) –

"…the purchase is not permitted in any case however honest the circumstances; the general interests of justice requiring it to be destroyed in every instance; as no court is equal to the examination and ascertainment of the truth in much the greater number of cases."

And in the words of James LJ speaking in Parker v. McKenna 10 Ch App 96 at 124/125 (cited by Lord Wright at 155) –

"…the rule is an inflexible rule and must be applied inexorably by this court which is not entitled, in my judgment, to receive evidence, or suggestion, or argument as to whether the principal did or did not suffer any injury in fact by reason of the dealing of the agent; for the safety of mankind requires that no agent shall be able to put his principal to the danger of such an inquiry as that."

50. The profit, about which there was no dispute, was regarded as a secret profit on the ground that the directors' participation had not been assented to by the shareholders. Therefore, all the law's dislike of secret profits (which the law does regard as dishonestly obtained, see Boston Deep Sea Fishing & Ice Co v. Ansell (1888) 39 Ch D 339, cited by Lord Wright at 155) was applied to the instant case. It would thus seem that even though the directors had in fact been proved to have been acting honestly, and even though it had been in fact proved that the company had suffered no loss, the position must in law be regarded, for the safety of mankind, as though they had been acting secretly and dishonestly, to the loss of their company, and no inquiry otherwise was to be permitted.
51. In other respects, however, that was a straightforward case where the directors had acquired their personal profits by reason of and in the course of acting as directors of their company. As Viscount Sankey said (at 139E): "At all material times they were directors and in a fiduciary position, and they used and acted upon their exclusive knowledge acquired as such directors". Lord Russell pointed out that they acquired their shares "by reason and in course of their office of directors" (at 145F, see also at 149F). Lord Macmillan said that the critical findings of fact which the claimant company had to establish were "(i) that what the directors did was so related to the affairs of the company that it can properly be said to have been done in the course of their management and in utilisation of their opportunities and special knowledge as directors; and (ii) that what they did resulted in a profit to themselves" (at 153F). Lord Wright said that the stringent rule was that a director must account to his company "for any benefit which he obtains in the course of and owing to his directorship" (at 156C). Lord Porter said that the shares were obtained by the directors "by reason of their position as directors" (at 158C) and that the relevant rule was that "one occupying a position of trust must not make a profit which he can acquire only by use of his fiduciary position" (at 158F).
52. Twenty five years later a majority of the House of Lords applied Regal (Hastings) Ltd v. Gulliver to a somewhat similar situation in Boardman v. Phipps, save that the defendants there were a trustee and the solicitor of a trust rather than directors of a company, and the shares bought by the defendants were bought from third parties. The defendants obtained a profit for themselves as well as for their beneficiaries in buying shares where the trust would not have been able or willing to do so, and had acted openly and honourably albeit mistakenly. On this occasion, however, their Lordships, although agreed on the principle to be applied, were divided in its application. Lord Cohen said that information was not property in the strict sense and that it did not follow that because an agent acquired information and opportunity while acting in a fiduciary capacity he is accountable to his principals for any profit that comes his way as the result of the use he makes of that information and opportunity; that must depend on the facts of the case; but here in buying the shares the defendants were acting on behalf of the trust and its beneficiaries and they had put themselves in a position of conflict or possible conflict with the interests of those whom they were bound to protect (at 102/104). Lord Hodson thought that information could properly be described as property, albeit each case must be decided on its own facts (at 107). Lord Guest thought the same (at 115). However, Viscount Dilhorne and Lord Upjohn saw the matter differently, although they were agreed on the great principles at stake.
53. In both those cases, what happened was that the defendants obtained a profit for themselves out of property of their trust while acting as fiduciaries. However, the application of the underlying principles, that fiduciaries must not profit from their role nor put themselves in a position of conflict of interest, has raised problems in circumstances where a director resigns and reaps his profit after resignation. A number of cases, considered by the judge below, have illustrated the problems.
54. In Industrial Development Consultants v. Cooley [1972] 1 WLR 443 the defendant director had resigned in order to obtain for himself, as he did, a business opportunity for which he, as managing director and the person in his company concerned with procuring new business, had been previously negotiating on behalf of his company. He resigned on the deceitful representation that he was in ill-health, and succeeded in obtaining the project for himself on the basis of the work he had done while still a director. He was negotiating for himself at the same time as he remained a director. He was ordered to account for his profits, even though there was only a 10% chance that the company would have obtained the contract itself. Roskill J said (at 454B/C):

"…Mr Brown put the point well when he said that what the defendant did in May, June and July [ie while still a director] was to substitute himself as an individual for the company of which he was the managing director and to which he owed a fiduciary duty. It is upon the ground I have stated that I rest my conclusion in this case. Perhaps it is permissible to say that I have less reluctance in reaching that conclusion on the application of this basic principle of equity since I know that what happened was enabled to happen because a release was obtained by the defendant from a binding contractual obligation by the dishonest and untrue misrepresentations…"

55. Canadian Aero Service Ltd v. O'Malley (1973) 40 DLR (2d) 371 ("Canaero") is a decision of the Canadian Supreme Court which has had some impact on English jurisprudence in this field and was itself influenced by English cases including IDC v. Cooley. In Canaero the defendant directors or senior managers had again resigned in order to take the benefit of a project for which they had been negotiating on behalf of his company. They too were obliged to account for their profits, which they had obtained through a new company which they had incorporated. It would seem that Laskin J, who gave the judgment of the Court, considered that the defendant's fiduciary duties in these circumstances survived their resignations (at 390/391).
56. In a passage which has been cited in subsequent English cases he went on to say this (at 391):

"In holding that on the facts found by the trial Judge, there was a breach of fiduciary duty by O'Malley and Zarzycki which survived their resignations I am not to be taken as laying down any rule of liability to be read as if it were a statute. The general standards of loyalty, good faith and avoidance of a conflict of duty and self-interest to which the conduct of a director or senior officer must conform, must be tested in each case by many factors which it would be reckless to attempt to enumerate exhaustively. Among them are the factor of position or office held, the nature of the corporate opportunity, its ripeness, its specificness and the director's or managerial officer's relation to it, the amount of knowledge possessed, the circumstances in which it was obtained and whether it was special or, indeed, private, the factor of time in the continuation of fiduciary duty where the alleged breach occurs after termination of the relationship with the company, and the circumstances under which the relationship was terminated, that is whether by retirement or resignation or discharge."

57. The defendants were castigated as "faithless fiduciaries". It was again irrelevant that the company might not have obtained the contract, for the defendants' liability was their gain rather than the company's loss. Gower & Davies comment (at 420) that in that passage Laskin J seems to have favoured a flexibility greater than English case law allows. However, the decision on the facts appears best encapsulated in the following extract from his judgment (at 382):

"An examination of the case law…shows the pervasiveness of a strict ethic in this area of the law. In my opinion, this ethic disqualifies a director or senior officer from usurping for himself or diverting to another person or company with whom or with which he is associated a maturing business opportunity which the company is actively pursuing; he is also precluded from so acting even after his resignation where the resignation may fairly be said to have been prompted or influenced by a wish to acquire for himself the opportunity sought by the company, or where it was his position with the company rather than a fresh initiative that led him to the opportunity which he later acquired." [emphasis added]

58. It appears that Laskin J saw the rule, strict as it might be, in somewhat flexible and merit-based terms.
59. In Island Export Finance Ltd v. Umunna [1986] BCLC 460, Hutchison J considered the case of a director who had resigned because of his dissatisfaction with his company, and not in order to appropriate for himself its business. He subsequently obtained an order from a client of that company. There was no breach of fiduciary duty. Canaero was extensively cited, but Hutchison J observed that if Laskin J had intended to say (in the passage cited above at 382) (which he, Hutchinson J, did not think he did) that the mere fact that a defendant's position as a director led him to a post-resignation opportunity was sufficient to found a breach of his duty, the proposition was too widely stated. (In CMS Dolphin Ltd –v- Simonet [2001] 2 BCLC 704 at para 91 Lawrence Collins J was to agree, saying that Laskin J's "or" highlighted above was probably meant to be "and"; see para 68 below.). Hutchinson J also said (at 482b) that

"It would, it seems to me, be surprising to find that directors alone, because of the fiduciary nature of their relationship with the company, were restrained from exploiting after they had ceased to be such any opportunity of which they had acquired knowledge while directors. Directors, no less than employees, acquire a general fund of knowledge and expertise in the course of their work, and it is plainly in the public interest that they should be free to exploit it in a new position."

60. Balston Limited v. Headline Filters Limited [1990] FSR 385 illustrates another decision in this area which went against liability. The defendant was both a director and employee of the claimant company. On 17 March he gave notice qua employee: that notice expired on 11 July. On 18 April he resigned as director, with immediate effect. Despite preparatory steps to set up a company of his own in anticipation of competing activities, Falconer J held that there had been no maturing business opportunity which the defendant had resigned in order to acquire and no breach of fiduciary duty prior to 18 April. However, the defendant had breached his fiduciary duty as an employee by active competition from 8 May onwards in the form of successful tendering for the business of a client of the claimant. Falconer J said this (at 412):

"In my judgment an intention by a director of a company to set up business in competition with the company after his directorship has ceased is not to be regarded as a conflicting interest within the context of the principle, having regard to the rules of public policy as to restraint of trade, nor is the taking of preliminary steps to investigate or forward that intention so long as there is no actual competitive activity, such as, for instance, competitive tendering or actual trading, while he remains a director."

61. A third case in which no liability for breach of fiduciary duty was found is Framlington Group plc v. Anderson [1995] 1 BCLC 475, a decision of Blackburne J. There the defendant directors resigned on 3 January 1992 and promptly took up employment with a competing company, Rathbone, to whom their own company, Framlington, had sold a fund management business, in which they had previously played a leading role, in anticipation of just such an event, viz their future departure to Rathbone. Under their previous contracts of employment they were free, if they ceased to be employed by Framlington, to set up or join a competing business and to take with them or to solicit Framlington's clients. Framlington's complaint, however, was that it was unaware that as part of their arrangements with Rathbone the directors would receive benefits related to the value of the managed funds transferred to Rathbone. That was said to be in conflict with their fiduciary duty, before the transfer and their own resignations, to assist Framlington to obtain the best possible price for what was sold to Rathbone. However, Blackburne J considered that there had been no breach of duty. The directors had been instructed to play no role in the negotiations for the sale. There was no duty to inform Framlington of their own arrangements; they were free to negotiate whatever price they could from Rathbone for their future services; there was no question of a secret bribe or commission; they had not diverted some kind of maturing business opportunity. The judge reasoned as follows (at 497j/498b):

"Nor do I consider that the negotiations by the three with Mr Ingall, at a time when the group was in negotiation with Rathbone, of the remuneration package that they could expect to receive on joining Rathbone was in itself, with or without disclosure to FIM, a breach of any general duty of good faith owed by them to FIM. In the absence of some special circumstance (for example a prohibition in a service contract) a director commits no breach of his fiduciary duty to the company of which he is a director merely because, while a director, he takes steps so that, on ceasing to be a director (and, if he is one, an employee of the company), he can immediately set up business in competition with that company or join a competitor of it. Nor is he obliged to disclose to that company that he is taking those steps. See Balston Ltd v Headline Filters Ltd [1990] FSR 385 at 412."

62. Blackburne J had previously drawn attention (at 494/495) to Lord Upjohn's speech in Boardman v. Phipps at 123, observing that although Lord Upjohn had there dissented his statement of the principles at play had not been doubted. He emphasised a concluding passage of the citation, where Lord Upjohn had said –

"The phrase "possibly may conflict" requires consideration. In my view it means that the reasonable man looking at the relevant facts and circumstances of the particular case would think that there was a real sensible possibility of conflict; not that you could imagine some situation arising which might, in some conceivable possibility in events not contemplated as real sensible possibilities by any reasonable person, result in a conflict."

63. Blackburne J went on to say that that passage echoed another in Upjohn LJ's earlier judgment in the court of appeal in Boulting v. Association of Cinematograph, Television and Allied Technicians [1963] 2 QB 606 at 637/638 where he said –

"However, a broad rule like this must be applied with common sense and with an appreciation of the sort of circumstances in which, over the last two hundred years and more it has been applied and thrived. It must be applied realistically to a state of affairs which discloses a real conflict of duty and interest, and not to some theoretical or rhetorical conflict."

64. Blackburne J also cited, with reference to the scope of a director's fiduciary duty, what Hoffmann J had said in Bishopsgate Investment Management Ltd (in liq) v. Maxwell (No 2) [1994] 1 All ER 261 at 264 to the effect that what precisely a director's duty is within a company must depend "upon how the particular company's business is organised and the part which the director could reasonably have been expected to play".
65. In other words, although general principle is not in doubt, the extent of a director's duty in particular situations may depend on the circumstances.
66. In CMS Dolphin Ltd v. Simonet [2001] 2 BCLC 704 the relevant jurisprudence was carefully considered by Lawrence Collins J, as he then was. The director there resigned (without any notice) in order to profit from the claimant company's business. Having made plans in advance of resignation, after his departure he immediately set up in competition, first in partnership and subsequently through a new company. He approached the claimant's staff and clients, to draw them both to him. Before long, the claimant had no staff and no clients. The director was found to be in breach of fiduciary duty and liable to account. By resigning, he had exploited the maturing business opportunities of the claimant, which were to be regarded as its property. The case made by the claimant and accepted by Lawrence Collins J was that the director had been prompted or influenced to resign by a wish to acquire for himself or his company the business opportunities which he had previously obtained or was actively pursuing with the claimant's clients and had now actually diverted to his own profit.
67. Lawrence Collins J considered the legal principles at paras 84/97. Having referred to Regal (Hastings) v. Gulliver, he said that the case before him concerned the question of how far the principle of that case, which concerned directors who were in office at the time of acquisition of the shares, extended to –

"a director who resigns his office to take advantage of a business opportunity of which he has knowledge as a result of his having been a director" (at para 87).

68. Turning to IDC v. Cooley, he underlined the fact that Roskill J had there emphasised Mr Cooley's breaches of fiduciary duty prior to his release from the company (at para 90). He cited at length from Canaero. He agreed with Hutchinson J's gloss (see para 59 above) in Island Export v. Umanna on Laskin J's judgment, saying that it is likely that Laskin J's "or" was probably meant as an "and". He explained (at para 91) –

"There must be some relevant connection or link between the resignation and the obtaining of the business."

He concluded:

"95. In English law a director's power to resign from office is not a fiduciary power. A director is entitled to resign even if his resignation might have a disastrous effect on the business or reputation of the company. So also in English law, at least in general, a fiduciary obligation does not continue after the determination of the relationship which gives rise to it (see A-G v Blake (Jonathan Cape Ltd, third party) [1998] 1 All ER 833 at 841, [1998] Ch 439 at 453, varied on other grounds [2000] 4 All ER 385, [2001] 1 AC 268 (HL)). For the reasons given in Island Export Finance Ltd v Umanna a director may resign (subject, of course, to compliance with his contract of employment) and he is not thereafter precluded from using his general fund of skill and knowledge, or his personal connections, to compete.

96. In my judgment the underlying basis of the liability of a director who exploits after his resignation a maturing business opportunity of the company is that the opportunity is to be treated as if it were property of the company in relation to which the director had fiduciary duties."

69. In my judgment, Lawrence Collins J was not saying that the fiduciary duty survived the end of the relationship as director, but that the lack of good faith with which the future exploitation was planned while still a director, and the resignation which was part of that dishonest plan, meant that there was already then a breach of fiduciary duty, which resulted in the liability to account for the profits which, albeit subsequently, but causally connected with that earlier fiduciary breach, were obtained from the diversion of the company's business property to the defendant's new enterprise.
70. In Plus Group Ltd v. Pyke, a rare case in this court, presents a somewhat novel position. There the claimant company sought over a period of many months, but without success, to force the defendant director to resign following a bout of severe illness. The relationship between him and his partner in the company completely broke down, and he was deprived of any remuneration or information; he was also refused the repayment of his loans to the company. But he steadfastly refused to resign. In this state, but while still a director, the defendant set up his own company and began competing with the claimant, even to the extent of working for its major client. Both trial court and this court held that there was no breach of fiduciary duty. There was no completely rigid rule that a director could not be involved in a competing business (London and Mashonaland Exploration Co Ltd v. New Mashonaland Exploration Co Ltd [1891] WN 165, approved and applied by Lord Blanesborough in Bell v. Lever Bros Ltd [1932] AC 161 at 193/196, despite the unease, shared by Sedley LJ, of some modern textbook writers about that decision (at paras 72/75 and 79/84). However, the members of this court agreed that the instant facts were sufficiently unusual to make it unnecessary to resolve that controversy. Brooke LJ concluded:

"76. In the present case Mr Pyke, who was a sick man following his stroke, had been effectively expelled from the companies of which he was a director more than six months before any of the events occurred of which the claimants now make complaint. Although he had invested a large sum of money in the first and second claimants on interest free loan accounts, he was not being permitted to withdraw any of it. At the same time he was being denied any remuneration from the companies. When he entered into business with Constructive in the autumn of 1997 he was not using any of the claimants' property for the purpose of that business. Nor was he making use of any confidential information which had come to him as a director of any of the companies.

77. In these circumstances I consider that the judge was right when he held that Mr Pyke committed no breach of fiduciary duty in trading with Constructive. I do not think it is necessary to go any further than this in the present case."

71. Jonathan Parker LJ agreed. He said:

"94. The unusual circumstances of the instant case, as recounted by Brooke LJ, seem to me to lead inescapably to the conclusion that the claim based on fiduciary duty fails. As Sedley LJ says, for all the influence Mr Pyke had, he might as well have resigned as a director. Had Mr Pyke formally resigned as a director in late 1996 or early 1997, his resignation would have done no more than reflect what had in practice already happened."

72. Sedley LJ had greater difficulties than his brethren on the court. He considered that there had been successful poaching on Mr Pyke's part (at 226g). He rejected as irrelevant the trial judge's finding that the client had made it known that it would no longer work with the claimant (at 226d). He said (at para 86)-

"The proposition [that a fiduciary must not place himself in a position where his duty and his interest may conflict] can, I think be amplified in two respects. First, the fiduciary must not only not place himself in such a position: if, even accidentally, he finds himself in such a position he must regularise or abandon it. Secondly, an objectionable position is not only one in which duty conflicts with interest but one in which duty conflicts with duty or interest with interest. Each is objectionable because it is capable of leading to a breach of fiduciary duty."

73. However, he held that the effective exclusion of the defendant from the company eliminated the duality of interest or duty. The defendant's duty to the company "had been reduced to vanishing point by the acts (explicable and even justifiable as they may have been) of his sole fellow director" (at para 90).
74. Finally, there have been two further cases in which the essence of the finding of a breach of fiduciary duty has consisted in what the directors had done while directors, rather than in post-resignation competition. Thus in British Midland Tool Ltd v. Midland International Tooling Ltd [2003] EWHC 466 (Ch), [2003] 2 BCLC 523, the director who merely resigned in order to compete was not in breach, but his three former colleague directors who remained and thereafter conspired with him to poach the claimant's employees were in breach (Hart J, whose recent death is much mourned). And in Shepherds Investments Ltd v. Walters [2006] EWHC 836, [2006] All ER (D) 213 the directors were found to have breached their fiduciary duties by reason of what they did while still directors in anticipation of the competition they planned after their resignations. In the latter case, Etherton J said –

"108. What the cases show, and the parties before me agree, is that the precise point at which the preparations for the establishment of the competing business by a director become unlawful will depend on the actual facts of any particular case. In each case, the touchstone for what, on the one hand, is permissible, and what, on the other hand, is impermissible unless consent is obtained from the company or employer after full disclosure, is what, in the case of a director, will be in breach of the fiduciary duties to which I have referred or, in the case of an employee, will be in breach of the obligation of fidelity. It is obvious, for example, that merely making a decision to set up a competing business at some point in the future and discussing such an idea with friends and family would not of themselves be in conflict with the best interests of the company and the employer. The consulting of lawyers and other professionals may, depending on the circumstances, equally be consistent with a director's fiduciary duties and the employee's obligation of loyalty. At the other end of the spectrum, it is plain that soliciting customers of the company and the employer or the actual carrying on of trade by a competing business would be in breach of the duties of the director and the obligations of the employee. It is the wide range of activity and decision making between the two ends of the spectrum which will be fact sensitive in every case. In that context, Hart J [in British Midland Tool] may have been too prescriptive in saying, at paragraph [89] of his judgment, that the director must resign once he has irrevocably formed the intention to engage in the future in a competing business and, without disclosing his intentions to the company, takes any preparatory steps. On the facts of British Midland Tool, Hart J was plainly justified in concluding, in paragraph [90] of his judgment, that the preparatory steps had gone beyond what was consistent with the directors' fiduciary duty in circumstances where the directors were aware that a determined attempt was being made by a potential competitor to poach the company's workforce and they did nothing to discourage, and at worst actively promoted, the success of that process, whereas their duty to their company required them to take active steps to thwart the process."

75. Etherton J then proceeded in ensuing paragraphs to list all the things that the directors had done while still directors, not merely to prepare for but actively to promote the competing business which was waiting in the wings, including going after an investment in whole life policies, which was itself a maturing business opportunity under consideration by the claimant company. The direct conflict involved was recognised in the evidence of one of the defendants when he said that he found it difficult to promote the claimant's product at the same time as developing his own (at para 127).
76. The parties are content that Mr Livesey's summary of the law in Hunter Kane v. WAtkinss (see at para 7 above) accurately restates it. The jurisprudence which I have considered above demonstrates, I think, that the summary is perceptive and useful. For my part, however, I would find it difficult accurately to encapsulate the circumstances in which a retiring director may or may not be found to have breached his fiduciary duty. As has been frequently stated, the problem is highly fact sensitive. Perhaps for this reason, appeals have been rare in themselves, and, of all the cases put before us, only Regal (Hastings) v. Gulliver (not a case about a retiring director) demonstrates success on appeal. There is no doubt that the twin principles, that a director must act towards his company with honesty, good faith, and loyalty and must avoid any conflict of interest, are firmly in place, and are exacting requirements, exactingly enforced. Whether, however, it remains true to say, as James LJ did in Parker v. McKenna (cited in Regal (Hastings) v. Gulliver) that the principles are (always) "inflexible" and must be applied "inexorably" may be in doubt, at any rate in this context. Such an inflexible rule, so inexorably applied might be thought to have to carry all before it, in every circumstance. Nevertheless, the jurisprudence has shown that, while the principles remain unamended, their application in different circumstances has required care and sensitivity both to the facts and to other principles, such as that of personal freedom to compete, where that does not intrude on the misuse of the company's property whether in the form of business opportunities or trade secrets. For reasons such as these, there has been some flexibility, both in the reach and extent of the duties imposed and in the findings of liability or non-liability. The jurisprudence also demonstrates, to my mind, that in the present context of retiring directors, where the critical line between a defendant being or not being a director becomes hard to police, the courts have adopted pragmatic solutions based on a common-sense and merits based approach.
77. In my judgment, that is a sound approach, and one which reflects the equitable principles at the root of these issues. Where directors are firmly in place and dealing with their company's property, it is understandable that the courts are reluctant to enquire into questions such as whether a conflict of interest has in fact caused loss. Even so, considerations that equitable principles should not be permitted to become instruments of inequity have been voiced: see for instance Murad v. Al-Saraj [2005] EWCA Civ 959, [2005] WTLR 1573 at paras 82/84, 121/123, 156/158; and see the solutions discussed in Gower & Davies at 420/421. Where, however, directors retire, the circumstances in which they do so are so various, as the cases considered above illustrate, that the courts have developed merits based solutions. At one extreme (In Plus Group v.Pyke) the defendant is director in name only. At the other extreme, the director has planned his resignation having in mind the destruction of his company or at least the exploitation of its property in the form of business opportunities in which he is currently involved (IDC, Canaero, Simonet, British Midland Tool). In the middle are more nuanced cases which go both ways: in Shepherds Investments v. Walters the combination of disloyalty, active promotion of the planned business, and exploitation of a business opportunity, all while the directors remained in office, brought liability; in Umanna, Balston, and Framlington, however, where the resignations were unaccompanied by disloyalty, there was no liability.
78. On which side of the line does Mr Bryant fall?

Discussion

79. Mr Bryant's resignation had no ulterior purpose. In human terms, and even though there was no repudiation of the shareholders' agreement, it was forced on him by Mr Foster's hostile and truculent manner and the sacking of Mrs Bryant. As soon as he was told that his wife was to be made redundant, Mr Bryant, not unreasonably, reacted by announcing his resignation. At that time his intention was to find employment with a firm of chartered surveyors, in other words to retrace his steps. In this important aspect, Mr Bryant's case has no connection or similarity with, for instance, Canaero's "faithless fiduciaries".
80. During the notice period thereafter, the judge regarded Mr Bryant as having been excluded from his role as a director by Mr Foster. He found that Mr Bryant "for practical purposes continued his association with the Company only as an employed chartered surveyor" and was "prevented from acting as a director" (at para 145). Mr Lord has criticised that finding, especially as a basis of non-liability. He has submitted that that finding was not open to the judge or at any rate wrong; that in any event during a notice period a retiring director is unlikely to show interest in the management and direction of his company; that the judge wrongly focused on the fact that Mr Foster signed and sent off the Form 288b registering Mr Bryant's resignation as of 30 November 2004, when that was not done until 21 December 2004; that a fortiori the annual report and accounts of the company for the year ending 30 June 2005, which also recorded Mr Bryant's resignation as of 30 November 2004, came too late to be of any relevance; and that In Plus Group v. Pyke, on its special facts, could not properly be made the basis of the judge's finding or conclusion of non-liability.
81. I am in no doubt that In Plus Group v. Pyke was on its own facts, to which I have referred above, a different case. The acts of exclusion were more positive, more severe and longer standing, and in particular they preceded the competitive acts of Mr Pyke of which complaint was made. In the present case, at any rate by the time Mr Foster had signed and returned the Form 288b on 21 December 2004, Mr Bryant had already spoken to Mrs Watts, met her (on 6 December), responded to her offer of a retainer with his salary and expenses ideas (on 8 December), and informed her that he would accept her proposal (on 15 December). Moreover, there is no finding that Mr Bryant knew of the manner in which Mr Foster dealt with the Form 288b. And it cannot be said in the abstract that a director ceases to be a director, and ceases as a director to owe any of his fiduciary duties, just because another director wrongly anticipates the effective date of his retirement in registering a Form 288b.
82. However, the judge, while citing In Plus Group v. Pyke among other authorities in his review of the law, did not refer to it in his conclusions under the heading of "breach of fiduciary duty". Nor do I consider that he based his conclusion of non-liability by resting essentially albeit silently on that authority. Nor did he state that his conclusion was based on the fact of exclusion, so as to say that there could be no breach of fiduciary duty because Mr Bryant had owed no duties as a fiduciary at all. Rather he made his findings on this topic of exclusion and then passed on to other findings. Having done so, he returned to his final decision on the question of "breach of fiduciary duty". I draw attention to that heading, which assumes the existence of fiduciary duty. So does the language of his final decision, in words which I will repeat (from the end of para 146 and the beginning of para 147):

"146…In the circumstances the only way in which a better outcome could have been obtained for the Company would have been if Mr Bryant had declined to entertain the prospect of doing any work for Alliance at all. Thus this is precisely the step which Mr Woolgar submitted due performance of his fiduciary duties to the Company required.

147. In the particular circumstances of the present case it seems to me that Mr Bryant was not guilty of a breach of his fiduciary duties to the Company by going along with the suggestions of Mrs Watts that he should establish his won company and then undertake such work as Alliance was minded to give him. This aspect of the claims in this action therefore fails." [Emphasis added]

83. That conclusion will therefore have to be reviewed on the judge's wider findings and reasoning. For the moment I am still dealing with the submission that the judge's finding of exclusion was not open to him or was wrong. I can see no reason to accept that submission. There was certainly evidence which permitted such a finding, and the judge refers to it at para 145 of his judgment (see at para 41 above). Among that evidence, but only cited as material supporting the judge's view about the facts on the ground at all times after the critical meeting between Mr Foster and Mr Bryant on 25 November, are the matters of the Form 288b and the 2005 report and accounts. I can see no reason for saying that the judge's findings here were perverse or even wrong, or that his reasoning was flawed. I can find no proper basis on which it would be right to overturn those findings, which have been based in part on the oral testimony of the two main protagonists. On the contrary, it is exactly what one might expect of the underlying situation. This was a small company, with only two directors. Those directors worked from home. One director, with a majority of the shares, lost confidence in his co-director, and effectively forced him to resign. There were no more director meetings, even though they should have taken place at the beginning of each of December 2004 and January 2005. Mr Foster never consulted Mr Bryant about the proposal to sub-contract the Alliance work out to another firm, nor about the payment of a dividend in January 2005. Even if the Form 288b was in error in stating the date of Mr Bryant's ceasing to be a director as 30 November, Mr Foster's treatment of that Form was evidence of how he had been treating Mr Bryant, as someone who had ceased to be a director at the time of his written notice of resignation. That error and its significance were repeated in the company's subsequent report and accounts.
84. In the meantime Mr Bryant remained, at least formally, a director until 28 January 2005, and also an employee. As an employee, the judge's findings (at para 145) also bear repeating:

"and for practical purposes continued his association with the Company only as an employed chartered surveyor. As I have said, he performed the latter role conscientiously and efficiently. In other words, although prevented from acting as a director, he continued as a loyal and effective servant of the Company in relation to the discharge of the day-to-day tasks of his employment."

85. Mr Lord submits that those findings were wrong as well. He submits that they must be wrong because, whether viewed as a director or merely as an employee, for relevant purposes Mr Bryant owed the same duties of loyalty, honesty and good faith, and had broken them by his dalliance with Alliance. And as a director, there was also the obligation not to allow himself to be in a position of conflict of interest.
86. I come therefore to the crux of the matter. On the facts as found, was the judge entitled to conclude that there had been no breach of Mr Bryant's fiduciary duties? Unless the law dictates that a breach was inevitable, I am unable to see how this court could easily or should say that the judge was wrong. In my judgment, the judge was not wrong. I think he was right.
87. All that Mr Bryant did was to agree to be retained by Alliance after his resignation became effective. He did nothing more. His resignation was not planned with an ulterior motive. He did not seek employment, or a retainer, or any business from Alliance. It was offered to him, it might be said pressed upon him. It seems to me that in his situation, where his resignation had already been tendered and was irrevocable, his acceptance of Mrs Watts' proposal was no different from (at worst) setting in train preparations for potential competition after his resignation had become fully effective and he had ceased any relationship or employment with the company. On all the authorities, that would not have been enough to render him liable to account. He did not seek any particular business with Alliance. It was left to Alliance to decide what it might offer him. The financial proposal which he accepted was neutral as to any particular projects on which he might work, so that he would receive the same income whatever work he was given, even if he was given no work at all. The judge found as a fact that he did not seek to divert to himself any maturing business opportunity or even a possible business opportunity. It was rather a customer-led initiative to find a solution to the problem caused to that customer by the departure of the Bryants from the company.
88. Moreover, in considering the claim for loss and damage, the judge was unable to identify any existing projects which had actually been subsequently transferred to Mr Bryant or his new company, even though the judge had before him the lists of projects which had passed between Mr Foster and Mr Black in January 2005: see paras 43/44 above. He said that although it had been suggested that there had been such a transfer of existing projects, the matter had been "but little investigated before me". The factual premise had not been made out: what the facts were as to whether any work already entrusted to the company had been removed to Savernake "was unclear". The judge considered various categories of projects to which his attention was drawn by claimants' counsel, but was unable to make any positive findings. On the contrary, such findings as he made were by way of rejecting the claimants' submissions. There was therefore no finding of any transferred work, and no finding of any profit made by Mr Bryant or his new company in respect of which there was any liability to account. In these circumstances, although I accept the position in law that, if he or his company had profited from any breach by him of his fiduciary duties, then they would be liable to account, even if the claimant company had itself suffered no loss (and if the judge suggested otherwise, he was in error), nevertheless there is simply no finding of any profit connected with any assumed breach (see Mr Justice Lawrence Collins' requirement in Simonet of "some relevant connection or link between the resignation and the obtaining of the business" (at 731f): moreover there the resignation spoken of was one planned towards the exploitation of such business, which is not the case here).
89. Therefore the resignation was innocent of any disloyalty or conflict of interest; the acceptance of an offer of future employment was likewise innocent; and there is no finding of any property or maturing business opportunity taken or exploited by Mr Bryant.
90. What is said on the other side? Essentially, that Mr Bryant should have refused the offer of future employment. He should have said that he could not discuss the matter until his notice period had expired. On that basis, logic would suggest that he should even have pressed Mrs Watts to maintain all her business with the claimant company. He would thus have been able to distance himself still further from Mr Black's division of labour. It is also suggested that Mr Bryant's e-mail to his friend of 21 December 2004 taints him, because in it he acknowledges that the Alliance offer puts him "in direct conflict with Mark…and so I would be taking work off him" but assumes that that is all right because there had been no solicitation by him. It is submitted that that is to concentrate solely on the position under clause 19 of the Shareholders' Agreement and simply to overlook the role of his fiduciary duty as a director.
91. The judge did not mention the e-mail. We therefore do not know whether there was any cross-examination about it, whether it was relied on below, or what Mr Bryant might have said about it. In any event, it seems to me that the e-mail acknowledges no more than that to the extent that Mr Bryant handled Alliance work in the future, that is work that could, or even would, have gone to Mr Foster. (In fact he was wrong about that. Alliance was unwilling to give Mr Foster more work than he could handle within his own company.)
92. The judge rejected this narrow basis upon which liability should be founded, and I agree. It seems to me to be unrealistic. Mr Bryant sought nothing for himself. He took nothing for himself. He was prepared to work for Alliance in the future, which he could see might make competitive inroads into the company's work, but that by itself is not a basis of liability. He was not disloyal. The judge praised his conscientiousness. Everything Alliance planned was done openly. The submission that Mr Bryant should in all honesty have pressed Mrs Watts to deal exclusively with Mr Foster and the company seems to me to be unreal. It might in one sense be claimed that to agree to work for Alliance in the future put Mr Bryant in a situation where there was a conflict of interest, or of duty and interest: but on examination that claim says no more than that he anticipated by this stage that after his resignation he would be working for Alliance – just as any retiring director might be preparing to compete in the future. There is simply nothing in any of the jurisprudence about retiring directors which comes anywhere close to these facts, or to imposing a liability to account on such a basis.
93. For these purposes, I am prepared to assume (a) that there was no diminution in any of Mr Bryant's fiduciary duties; (b) that the innocence of his resignation, while a factor, is not a critical factor; and (c) that there may well have been some reassignment to Mr Bryant of projects on which he had previously worked at the company. Even so, the judge's conclusion seems to me to be one to which he was entitled to come and to be an acceptable conclusion, in accordance with the authorities. Each of those assumptions, however, is, in my judgment, likely to be unnecessarily unfavourable to Mr Bryant. As for the extent of his fiduciary duties, it seems to me that the judge's realistic findings as to the position within the company after Mr Bryant's resignation makes it very arguable that, so long as he remained honest and neither exploited nor took any property of the company, his duties extended no further than that. To demand more while he is excluded from his role as a director appears to me to be unrealistic and inequitable. As for the innocence of his resignation, although the matter may not be free of doubt, it again seems well arguable on the authorities that it is critically opposed to liability to account, where there is no active competition or exploitation of company property while a defendant remains a director. And as for a reassignment of projects, I have already pointed out that the judge was unable to find that any existing company projects had been reassigned.

The respondents' notice

94. In the circumstances, it is unnecessary to determine the respondents' notice. I would briefly observe that Mr Douthwaite submitted that there were three further factual matters that the judge could and should have taken directly into account as supporting his conclusions. The first, was the temporary blocking of the company account and its indication that Mr Foster doubted Mr Bryant's honesty. This was destructive of the relationship between them. The second, was that the relationship between the directors was essentially that of partners, as the Shareholders' Agreement itself demonstrated. Therefore, when their relationship collapsed, that was indicative of the end or limitation of fiduciary duties. The third, was that the RICS (Royal Institute of Chartered Surveyors) Rules were incorporated into the company's memorandum of association and that the Rules of Conduct 2004 paragraph 3(2) provided that a member "…in the course of carrying out any work…shall not act in a manner which compromises or impairs or is likely to compromise of impair…(f) a person's freedom to instruct a Member of his choice". It was said that this meant that there could in any event be no property in any work. It is sufficient to say that, if I had felt that the facts of this case mandated a conclusion of a liability to account for breach of fiduciary duty, these three further factors, whatever their value, would not have saved the day.

Shareholders' Agreement

95. It is also unnecessary to consider further Mr Lord's parallel or analogous submissions by reference to the claims against Mr Bryant for breach of duty as an employee or under the Shareholders' Agreement: see para 38 above. In any event, on the judge's findings, which in my judgment cannot be said to be perverse, the claimants had suffered no loss in terms of damages for breach.

Conclusion

96. I do not consider that the findings of the judge, or any further findings that he was inevitably called upon to make, required him to hold that Mr Bryant had been in breach of his fiduciary duties or liable to account. I would dismiss the appeal.

Lord Justice Moses:

97. I agree with both judgments. But it is, perhaps, worth acknowledging, that the oft- repeated reminder that, resolution of issues of breach of fiduciary duty by a director are "fact-sensitive" or "fact specific" tend to make one almost nostalgic for the days when there were inflexible rules, inexorably enforced by judges who would have shuddered at the re-iteration of the noun-adjective.
98. There seem to me two key circumstances which lead to the conclusion that Mr Bryant did not act in breach of his fiduciary duty, when he accepted Mrs Watts' proposal. Firstly, he accepted, but did not act upon, Alliance's proposal at a time when he was effectively forced to resign (see Rix LJ at paragraph 83). Secondly, he did not divert any business opportunity from Foster Bryant to himself, but rather acquiesced in Alliance's solution to the problem caused to its business by the departure of the Bryants (see paragraph 87).

Lord Justice Buxton:

99. I respectfully agree with Rix LJ that in this case we cannot interfere with the decision of the judge. I add only two footnotes to my Lord's survey of the facts and issues.
100. First, as Sedley LJ emphasised in his judgment in In Plus Group Ltd v Pyke, summarised in §72 above, the mere fact that a fiduciary has not sought to place himself in a position where his interest conflicts with his duty does not exonerate him from the obligation to perform that duty. Accordingly, it cannot be in any way conclusive that it was Mrs Watts who offered Mr Bryant the opportunity, indeed pressed it on him, rather than that he resigned in order to be free for that purpose, or asked for the opportunity once he had resigned. At the same time, however, even where the fiduciary duty continues in place the decision as to whether the duty has been broken is, as Sedley LJ said in his §90, fact-specific. And as the judge said in his §145, the circumstances of the present case are very individual. I agree that it is unreal to contend that, faced with Mrs Watts' proposal, Mr Bryant should have gone out of his way to seek to deter her from it: an exercise that in any event the evidence suggested would not be successful. The judge was entitled to find, and to find conclusive, that, as he said in his §141, Mrs Watts' approach was

a customer-led initiative with a view to the identification of a solution to the problem arising from the departure from the Company of Mr and Mrs Bryant which was acceptable to the customer, Alliance. It was a very unusual situation.

101. Secondly, I would wish specifically to record my respectful agreement with my Lord, in his §88, that a fiduciary is liable to account for profits connected with or arising from a breach of duty even if there is not loss proved by the beneficiary. However, as my Lord also points out, on the facts of this case that principle and the limits on it do not arise for decision.