Christopher Charles Fisher v Colin Laverock Dinwoodie
[2023] EWHC 1279 (Ch)
Recovery Partners GP Limited & Anor. v Irakli Rukhadze & Ors.
21 March 2023
[2023] EWCA Civ 305
Court of Appeal
Some guys stole a business opportunity. The court said they had to give back all the money they made, minus 25% for their work. The court didn't believe their excuses about a prior agreement or that the people they stole from waited too long to complain.
Key Facts
- •Defendants breached fiduciary duties to SCPI (assigned to Claimants) by appropriating a business opportunity to provide recovery services to the family of a deceased billionaire.
- •Claimants pursued an account of profits, seeking all proceeds from the opportunity.
- •Defendants argued for a pre-existing 50/50 profit-sharing agreement, limiting their liability.
- •Claimants argued against the profit-sharing agreement and challenged the equitable allowance awarded to Defendants.
- •Defendants also argued for a temporal limitation on the account due to unconscionable delay by Claimants.
Legal Principles
A fiduciary must account for all unauthorized profits; this rule is stringent and has a deterrent effect.
Gray v Global Energy Horizons Corporation [2020] EWCA Civ 1668; Regal (Hastings) Ltd v Gulliver [1967] 2 AC 134; Murad v Al-Saraj [2005] EWCA Civ 959
Courts have the power to make an equitable allowance for a fiduciary's work and skill in generating profits.
Boardman v Phipps [1967] 2 AC 46; O’Sullivan v Management Agency and Music Ltd [1985] QB 428
Unconscionable delay can limit, but not necessarily bar, an account of profits. This requires unreasonable delay AND factors rendering it unjust to grant full relief.
Clegg v Edmondson (1857) 8 De G M & G 787; Warman International v Dwyer (1995) 182 CLR 544; Grundt v Great Boulder Pty Gold Mines Ltd [1937] 59 CLR 641; Murdoch v Mudgee [2022] NSWCA 12
Outcomes
Appeal regarding the pre-existing profit-sharing agreement dismissed.
No binding agreement existed; even if it had, it wouldn't have limited SCPI's interest in the profits.
Appeal regarding unconscionable delay dismissed.
Judge's factual findings showed the delay was reasonable; defendants did not face significant material risks.
Cross-appeal regarding the equitable allowance dismissed.
Judge's 25% allowance was within her discretion; the defendants' contribution and the deterrent principle were considered.
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