Committee of board of directors formed to
deal with takeover bid company was making.
Defendant was director and also member of committee.
Committee agreed to pay defendant £5m for
his services in connection with take-over bid.
Following successful completion of bid,
money was paid.
But company then claimed recovery of money
Argued defendant had received payment in
breach of his fiduciary duty as director –
Had not disclosed his interest in the agreement
to board of directors as required by Companies Act 1985, s317.
Court of Appeal upheld claim –
Requirements of disclosure were not fulfilled by
disclosure to a committee of directors.
W was in breach of his fiduciary duty and was thus
constructive trustee for the sum for company.
Defendant then appealed to House of Lords,
who upheld decision on different grounds.
Defendant argued that under company’s articles of association, a committee
of board had power to make such a payment.
Alternatively he made a claim in quantum meruit for
payment for services.
House of Lords held interpretation placed on company’s articles
by defendant was erroneous.
Only board of directors had power to award special
remuneration to fellow director.
Also, defendant’s claim in quantum meruit failed under
principle that a trustee could not profit from trust deed unless such profit
expressly was provided for (in this case was not).