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Unauthorised
payment by company director in breach of fiduciary duties because he
had not acted honestly and reasonably he was not entitled to relief.
Brocks
Mount, was a vehicle for a property development venture between Bryan
Fugler, a solicitor, and the defendant, Beasant, who was a builder.
Relations between the two men soured, in part because Fugler suspected
that Beasant was diverting funds from the joint venture to his own company,
Chantry. An agreement was therefore entered into between the parties
clarifying their respective rights. Shortly afterwards Beasant transferred
nearly £150 000 to Chantry's bank account, just prior to the company
being wound up by the Inland Revenue. Brocks Mount sought to recover
the money.
Brocks
Mount had to prove that Beasant had acted in breach of fiduciary duty;
but once a prima facio case had been made the eidential burden was on
Beasant to prove that he had not. There was no evidence that Brocks
Mount was indebted to Chantry. It was also clear on the evidence that
the payment had been made covertly and without consultation or the sanction
of the shareholders. No reasonable director could have held the view
that the benefit of the payment from Chantry's point of view outweighed
the detriment caused to Brocks Mount. Accordingly, Beasant could not
be granted relief against his liability to Brocks Mount pursuant to
s. 727 (1) Companies Act 1985 - a general provision under which an officer
of a company or an auditor can be granted relief from negligence and
breach of duty if he or she has acted honestly and reasonably.
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