Bhullar v Bhullar [2003] EWCA Civ 424

Facts: The company, Bhullar Bros Ltd, primarily operated retail grocery stores, but it also owned a commercial property which was let to tenants. Bhullar brothers who were the directors of Bhullar Bros Ltd, caused another company which was controlled by them to buy an adjacent property for their self-administered pension schemes, without telling the other directors of Bhullar Bros Ltd.

Held: They were under a duty to communicate the opportunity to Bhullar Bros Ltd because it would have been ‘worthwhile’ for that company to acquire the adjacent property. They were ordered to transfer the property from their own company to Bhullar Bros Ltd for the price which their company had paid for it and to account to Bhullar Bros Ltd for profits made from the property.

Thus, there is a breach of fiduciary duty if a director of a company pursues for his or her own benefit a business opportunity which would be regarded in equity as belonging to the company. Here, the deciding factor was: would it have been worthwhile for the company to have acquired the property which the directors acquired for themselves? The answer was” yes” – therefore, it’s breach of duty!

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