When an employee or director owes fiduciary duties over and above contractual ones, and what follows from breach. University of Nottingham v Fishel; Item Software (UK) Ltd v Fassihi.
Employment; disclosure of own misconduct; mistake. Executives who had secretly speculated in cocoa on their own account received substantial severance payments; the employer, discovering the misconduct that would have justified summary dismissal, sought to unwind the agreements. The House of Lords held an ordinary employee is under no general duty to disclose his own misconduct: a contract of employment is not uberrimae fidei. Also the leading authority on common mistake in contract. Contrast the fiduciary director's position under Item Software v Fassihi, as confirmed in Saxon Woods v Costa. [Summary not yet checked against the judgment.]
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References found in the judgments’ text, with the number of paragraphs in which each case is mentioned. Not a classification: how a case was treated is recorded under Later history.
Directors' duties; business judgment. Directors exercising a discretion must act bona fide in what they consider, not what a court may consider, is in the interests of the company, and not for any collateral purpose. The classic statement of the subjective approach to directors' business judgment, now read subject to Saxon Woods v Costa: the deference attaches to the judgment itself, not to covert or disloyal conduct in pursuit of it. [Summary not yet checked against the judgment.]
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References found in the judgments’ text, with the number of paragraphs in which each case is mentioned. Not a classification: how a case was treated is recorded under Later history.
Ch 117 - Contract; confidentiality; trade secrets are protected post-employment, but general skill and knowledge are not. [Summary checked against a practitioner text, not the judgment.]
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References found in the judgments’ text, with the number of paragraphs in which each case is mentioned. Not a classification: how a case was treated is recorded under Later history.
Fiduciary duties; definition. Millett LJ's classic exposition: a fiduciary is someone who has undertaken to act for or on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence, and the distinguishing obligation of a fiduciary is the obligation of loyalty. Not every breach of duty by a fiduciary is a breach of fiduciary duty: duties of care and skill are not fiduciary in character. The foundation of the fidelity/loyalty distinction relied on in employment cases such as Fishel and Ranson. [Summary not yet checked against the judgment.]
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References found in the judgments’ text, with the number of paragraphs in which each case is mentioned. Not a classification: how a case was treated is recorded under Later history.
Employment; fiduciary duties. An employment relationship is not of itself fiduciary. Elias J: it is necessary to identify with care the particular duties undertaken by the employee and to ask whether in all the circumstances he has placed himself in a position where he must act solely in the interests of his employer. The university's scientific director breached a specific fiduciary duty only in respect of directing junior embryologists he controlled to work abroad for his own benefit; his own undisclosed outside work was a matter of contract, not fiduciary obligation. The leading authority on the threshold question for fiduciary claims against employees. [Summary checked against a practitioner text, not the judgment.]
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References found in the judgments’ text, with the number of paragraphs in which each case is mentioned. Not a classification: how a case was treated is recorded under Later history.
Directors' duties; subjective test. The question whether a director acted in breach of the duty to act in the company's best interests is whether he honestly believed that his act or omission was in the interests of the company; the issue is his state of mind, not whether the court would have reached the same view. Applied by the trial judge in Saxon Woods v Costa; the Supreme Court confirmed the test governs the merits of a business decision but does not shield covert or deceptive conduct in its execution. [Summary checked against a practitioner text, not the judgment.]
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References found in the judgments’ text, with the number of paragraphs in which each case is mentioned. Not a classification: how a case was treated is recorded under Later history.
Directors' duties; disclosure of own misconduct; Apportionment Act 1870. A director who secretly approached his company's supplier to take its distribution contract for his own new company, while encouraging the company to press the supplier for better terms, was in breach of duty in not disclosing that misconduct [4], [44]. Arden LJ held that a fiduciary owes no separate and independent duty to disclose his own misconduct: the obligation is an application of the director's fundamental duty to act in what he in good faith considers to be the best interests of the company [41]. Bell v Lever Brothers does not hold otherwise for a director; how far an employee must disclose his own misconduct was left undecided [60], [62]. Appeal on disclosure dismissed [68]. Appeal on apportionment allowed: an employee dismissed part way through a pay period can claim time-apportioned salary under the 1870 Act [82], [122]. Relied on by the Supreme Court in Saxon Woods Investments Ltd v Costa [2026] UKSC 21 at [46].
Approved by Saxon Woods Investments Ltd v Costa [2026] UKSC 21 (2026-07-14)
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References found in the judgments’ text, with the number of paragraphs in which each case is mentioned. Not a classification: how a case was treated is recorded under Later history.
Directors' duties; competing venture; preparatory steps. Two directors and a third defendant found to owe fiduciary duties took steps before resigning to set up a competing business [2], [129], [165]. The point at which preparations to compete become unlawful turns on the facts: deciding to compete and discussing it with family is permissible, soliciting customers or trading is not; the range between is fact sensitive [108]. British Midland Tool was preferred to Balston, though Hart J may have been too prescriptive about when a director must resign [105], [108]. There is no separate duty of disclosure. The touchstone is the director's duty to act in good faith in the company's best interests: the breach is carrying out acts of promotion without first disclosing the intention and obtaining permission [132]. The defendants were in breach from the date they formed an irrevocable intention to compete and kept taking steps [127]. No loss was proved; an account of profits was ordered [165].
Approved by Saxon Woods Investments Ltd v Costa [2026] UKSC 21 (2026-07-14)
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References found in the judgments’ text, with the number of paragraphs in which each case is mentioned. Not a classification: how a case was treated is recorded under Later history.
Employment; fiduciary duties; preparing to compete. The Court of Appeal reversed a finding that a divisional manager who prepared a competing business before and during his notice period was in breach of a contractual duty of fidelity and a fiduciary duty of loyalty [1]-[2], [75]. An employee does not assume fiduciary obligations merely by being an employee, and it is dangerous to reason by analogy from cases about directors [22], [24]. The content of the duty of fidelity, and the existence and content of any fiduciary duty, are determined in the first instance by the terms of the contract of employment [35]. The employment duty of loyalty is not the fiduciary's single-minded loyalty: the court endorsed University of Nottingham v Fishel [41], [54]. An obligation to disclose one's own wrongdoing must arise out of the contract [55]. Mr Ranson had no duty, contractual or fiduciary, to report a contact outside his job or his plan to compete [68], [73].
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References found in the judgments’ text, with the number of paragraphs in which each case is mentioned. Not a classification: how a case was treated is recorded under Later history.
Dishonesty; objective test; cheating at gambling. A gambler's claim for winnings obtained by edge-sorting failed: cheating carries the same meaning for the implied contractual term as under s.42 Gambling Act 2005 [38]; dishonesty is not a necessary legal element of it [43], [49]; taking positive steps to fix the deck was cheating [50]. Had dishonesty been an element it would have been satisfied [75]. The court held that the second leg of Ghosh does not correctly represent the law [74]. The fact-finder ascertains the defendant's actual (subjective) state of knowledge or belief as to the facts, then determines whether his conduct was dishonest by the (objective) standards of ordinary decent people; there is no requirement that the defendant appreciate that his conduct was dishonest by those standards [74]. Appeal dismissed [76]. In Saxon Woods v Costa the Supreme Court held that where a fiduciary duty of loyalty applies, that duty supplies the analytical framework and the Ivey elaboration is unnecessary.
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References found in the judgments’ text, with the number of paragraphs in which each case is mentioned. Not a classification: how a case was treated is recorded under Later history.
Directors' duties; good faith; s.172(1) Companies Act 2006. The Supreme Court held that the requirement of good faith in s.172(1) governs a director's conduct, not merely his state of mind. A director who covertly subverts a strategy resolved upon by the board, concealing his course of action and misleading his fellow directors, acts in bad faith towards the company notwithstanding a genuine belief that he is serving its best interests. Respect for business judgment (Re Smith and Fawcett; Regentcrest) attaches to the merits of a decision, not the manner of its covert pursuit. Where a fiduciary duty of loyalty applies, the duty itself supplies the analytical framework and elaboration by reference to Ivey dishonesty is unnecessary. Expressly approves Item Software v Fassihi and Shepherds Investments v Walters on disclosure as an aspect of the loyalty duty.
“A duty not covertly or otherwise to subvert the management of the company's affairs by the board as a whole is not expressly mentioned in section 172 or elsewhere in Chapter 2 as being, or being part of, one of the general duties. But in my view it is best regarded as part of the section 172 general duty, rather than something completely separate from it.”Lord Briggs (Lord Sales DP, at [42]
Cites
References found in the judgments’ text, with the number of paragraphs in which each case is mentioned. Not a classification: how a case was treated is recorded under Later history.