Key Facts
- •Dolphin Capital Partners Ltd (C) acted as investment manager for DCI Advisors Ltd (D), managing a portfolio of hospitality assets.
- •D terminated their Investment Management Agreement (IMA) alleging C's non-disclosure of a share call option (Call Option) in an Amanzoe sale.
- •C claims unpaid fees and damages for wrongful termination; D counterclaims for returned payments and an account of profits related to the Call Option.
- •The central dispute is whether C disclosed the Call Option at a July 2018 board meeting.
- •C's case rests on implicit consent through D's non-objection to disclosed aspects of the Amanzoe sale, supported by witness testimony.
- •D argues the Call Option was not disclosed and that disclosure to D's solicitors is insufficient for fully informed consent.
- •The case involves analysis of fiduciary duty, fully informed consent, and imputation of knowledge through solicitors.
Legal Principles
An agent/fiduciary must show the principal gave fully-informed consent to any benefit earned by the agent.
Snell’s Equity (34th ed.) at 7-015; Bowstead & Reynolds on Agency (23rd ed.) at 6-039
Fully-informed consent requires specific disclosure; materiality and counterfactual behaviour are not the deciding factors.
Case law discussed in sections 19-20
Where a principal knows a fiduciary will receive remuneration from a third party, the duty to disclose the full amount may be lessened or negated, but consent remains crucial.
Medsted Associates v Canaccord Genuity Wealth International [2019] EWCA Civ 83
Disclosure to a solicitor acting for the principal might not always be imputed to the principal for fully informed consent.
Parks of Hamilton (Holdings) Ltd. v. Colin Campbell [2014] CSIH 36
Outcomes
D's application for summary judgment was dismissed.
C has a real prospect of success on the factual issue of whether D gave fully-informed consent, specifically regarding the disclosure of the Call Option at the board meeting. The court found that the witness testimony for C, while subject to potential challenges, created a material dispute of fact that precluded summary judgment.
Parts of D's counterclaim seeking strike-out of parts of C's Particulars of Claim were granted in part.
Certain pleas of apparent authority and constructive knowledge were deemed unsustainable. However, other aspects of C's pleadings were deemed acceptable for trial.