Breach of Fiduciary Duties

Killen v Horseworld Ltd, Horseworld Holdings Ltd, Vintcent & Worrall [2012] EWHC 363 (QB) (HHJ Robinson)

The Claimant sued for a quantum meruit exceeding £400,000 arising out of her dealings with the Defendants who were seeking to develop an equestrian theme park in the Midlands. The Defendants denied liability and the corporate Defendants counterclaimed for breach of fiduciary duty.

One week before trial the Claimant discontinued the Claim but the Counterclaim continued to trial. The Judge concluded that the Claimant had breached the duties she owed under the Companies Act 2006 in 2 ways.

Firstly, she tried to divert to herself the media rights of the corporate Defendants by setting up a BVI company into which those rights would be transferred, which company would be 99.8% owned by her (and from the ownership of which all of the Defendants would be excluded).

Secondly, after her scheme had been uncovered and she had been dismissed by the corporate Defendants, she purchased another company (Horse and Country TV Ltd) and competed with them, using that company, for the internet streaming rights to the Badminton Horse Trials which she had (as director of the corporate Defendants) been involved in covering the previous year.

Consequently she was obliged to deliver up the relevant BVI company documents and to give an account of any profits made as a result of her actions.

The Defendants were awarded their costs of both the Claim and the Counterclaim. The Third and Fourth Defendants submitted that the order provided for on discontinuance under Part 38.6 overturned the costs orders made against them in their unsuccessful Part 24 application (and appeal).

This was based upon the dicta of Pill LJ in Safeway v Twigger [2010] EWCA Civ 1472 at 54-60.

The Judge decided that Pill LJ’s comments did not bind him and appeared difficult to reconcile with the need not to discourage those considering discontinuing proceedings by imposing on them regimes harsher than that facing a litigant who pursued his case and lost at trial.

It is believed that this is the first case in which the point has been the subject of a decision in the High Court.

William McCormick QC, instructed by Ian Carson of Tollers, Northampton, represented the First, Second and Third Defendants.

William Evans, instructed by Roger Billens of Davenport Lyons, represented the Fourth Defendant.

28th February 2012