Carey Street Investments Limited (in liquidation) & Anor v Grant Timothy Brown & Anor
[2024] EWCA Civ 571
Kenneth Davies v Stephen Ford & Ors.
17 February 2023
[2023] EWCA Civ 167
Court of Appeal
A businessman claimed his business partners stole his skip hire company and started a rival. The court agreed the partners were wrong, but decided how much they had to pay back based on what they actually did, not everything they could have done. The court also rejected arguments they should pay even more.
Key Facts
- •Kenneth Davies (claimant/appellant) alleged that Stephen Ford and Richard Monks (defendants/respondents), directors of Greenbox Recycling Limited (GBR), dishonestly diverted Davies' business to Greenbox Recycling (Kent) Limited (GBRK).
- •A split trial was held, with the liability trial finding Monks liable for breach of director's duties and GBRK liable for knowing receipt.
- •Davies elected for equitable compensation instead of an account of profits.
- •The quantum trial assessed the amount of equitable compensation and other remedies.
- •The appeal concerned various aspects of the quantum order.
Legal Principles
General duties of directors under Companies Act 2006 (CA 2006), sections 170-177, including duty to promote success (s. 172) and duty to avoid conflicts of interest (s. 175).
Companies Act 2006
Equitable compensation can be assessed on a reparative basis (making good the loss) or a substitutive basis (replacing the lost asset).
AIB Group (UK) PLC v Mark Redler & Co Solicitors [2014] UKSC 58
Liability in knowing receipt requires receipt of trust property subject to a pre-existing and continuing trust; the transaction itself must be a breach of trust or fiduciary duty.
Byers v Saudi National Bank [2022] EWCA Civ 43
An equitable allowance may be granted to a dishonest fiduciary, but not in a way that encourages breaches of duty.
Guinness PLC v Saunders [1990] 2 AC 663
Limitation Act 1980 (LA 1980) section 21(1)(a) and (b) disapply limitation periods for dishonest breaches of trust.
Limitation Act 1980
Outcomes
Davies' appeal dismissed.
The Liability Judge's findings of breach of duty were considered exhaustive; GBRK's liability in knowing receipt was limited to pre-existing trust property; other claims failed due to lack of causation, time-bar, or inappropriateness of remedies.
Monks' and GBRK's cross-appeal dismissed.
The Judge's valuation of GBRK was supported by evidence and within his discretion; there were no grounds to interfere with his factual findings.
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