HOME

TheInfoList



OR:

is a leading
UK company law British company law regulates corporations formed under the Companies Act 2006. Also governed by the Insolvency Act 1986, the UK Corporate Governance Code, European Union Directive (European Union), Directives and court cases, the company is th ...
case on the principle that directors must avoid any possibility of a conflict of interest, particular relating to corporate opportunities. It was not decided under, but is relevant to, section 175 of the
Companies Act 2006 The Companies Act 2006 (c. 46) is an act of the Parliament of the United Kingdom which forms the primary source of UK company law. The act was brought into force in stages, with the final provision being commenced on 1 October 2009. It largel ...
.


Facts

Bhullar Bros Ltd was owned by families of two brothers. Each side owned 50% of ordinary shares. The directors were Mr Mohan Bhullar, his son Tim, Mr Sohan Bhullar and his sons Inderjit and Jatinderjit. The company had a
grocery A grocery store (American English, AE), grocery shop or grocer's shop (British English, BE) or simply grocery is a retail store that primarily retails a general range of food Product (business), products, which may be Fresh food, fresh or Food p ...
store at 44 Springwood Street,
Huddersfield Huddersfield is a town in the Metropolitan Borough of Kirklees in West Yorkshire, England. It is the administrative centre and largest settlement in the Kirklees district. The town is in the foothills of the Pennines. The River Holme's confl ...
. It also owned an investment property called Springbank Works, Leeds Road, which was
lease A lease is a contractual arrangement calling for the user (referred to as the ''lessee'') to pay the owner (referred to as the ''lessor'') for the use of an asset. Property, buildings and vehicles are common assets that are leased. Industrial ...
d to a
bowling alley A bowling alley (also known as a bowling center, bowling lounge, bowling arena, or historically bowling club) is a facility where the sport of bowling is played. It can be a dedicated facility or part of another, such as a clubhouse or dwelling ...
business called UK Superbowl Ltd. In 1998 the families began to fall out. Mohan and Tim told the board they wished for the company to buy no further investment properties. Negotiations began to split up the company, but they were unsuccessful. In 1999, Inderjit went bowling at the UK Superbowl Ltd alley. He noticed that the carpark next door (called White Hall Mill) was on sale.nb UK Superbowl Ltd was also leasing the carpark property, but was not the owner. He set up a company called Silvercrest Ltd (owned by him and Jatinderjit) and bought, but did not tell Bhullar Bros Ltd. But Mohan and Tim found out and brought an unfair prejudice claim (now s 994
Companies Act 2006 The Companies Act 2006 (c. 46) is an act of the Parliament of the United Kingdom which forms the primary source of UK company law. The act was brought into force in stages, with the final provision being commenced on 1 October 2009. It largel ...
) on the basis that Inderjit and Jatinderjit had breached their fiduciary duty of loyalty to the company.


Judgment

Jonathan Parker LJ held that there was a clear breach of the rule that directors must avoid a conflict of interest. Brooke LJ and Schiemann LJ concurred.


See also

*''
Keech v Sandford is a foundational case, deriving from English trusts law, on the fiduciary duty of loyalty. It concerns the law of trusts and has affected much of the thinking on directors' duties in company law. It holds that a trustee owes a strict duty of ...
'' EWHC Ch J76
*''Whelpdale v Cookson">726
EWHC Ch J76
*''Whelpdale v Cookson'' (1747) 1 Ves Sen 9; 27 ER 856 *''Aberdeen Railway Co v Blaikie Brothers'' [1843–60] All ER Rep 252, self dealing case *''Parker v McKenna'' (1874–75) LR 10 Ch App 96, per James LJ that the rule is necessary for "the safety of mankind" *''Bray v Ford'' [1896] AC 44 at 51-52, per Lord Herschell, the no possibility of conflict rule is "based upon the consideration that, human nature being what it is, there is danger of the person holding a fiduciary position being swayed by interest rather than duty…." *''
Regal (Hastings) Ltd v Gulliver {{Infobox court case , name = Regal (Hastings) Ltd v Gulliver , court = House of Lords , image = Weissenhorn Stadttheater.jpg , date decided = 20 February 1967 , full name = , citations = 9671 All ER 378, 9672 AC 134, 942UKHL 1 , judges ...
'' 9672 AC 134n *''
Boardman v Phipps ''Boardman v Phipps'' [1966UKHL 2is a landmark English trusts law case concerning the duty of loyalty and the duty to avoid conflicts of interest. Facts Tom Boardman, Baron Boardman, Mr Tom Boardman was the solicitor of a family trust.See the c ...
'' 9672 AC 46 *''Industrial Development Consultants v Cooley'' [1972] 1 WLR 443 *''Canadian Aero Service Ltd. v. O'Malley'' (1973) 40 DLR (3d) 371


Notes

{{reflist, 2


References

*


External links

*Obituary
'Sohan Singh Bhullar Founder of thriving business and community leader'
(9.9.2008) Huddersfield Daily Examiner United Kingdom company case law Court of Appeal (England and Wales) cases 2003 in United Kingdom case law British Indian history