''Industrial Development Consultants Ltd v Cooley''

972 Year 972 ( CMLXXII) was a leap year starting on Monday (link will display the full calendar) of the Julian calendar. Events By place Byzantine Empire * Spring – Emperor John I Tzimiskes divides the Bulgarian territories, recent ...

1 WLR 443 is a

UK company law The United Kingdom company law regulates corporations formed under the Companies Act 2006. Also governed by the Insolvency Act 1986, the UK Corporate Governance Code, European Union Directives and court cases, the company is the primary lega ...

case on the corporate opportunities doctrine, and the duty of loyalty from the law of trusts. It is also applicable for fiduciary duty of an agent under agency law which states that an agent has a fiduciary relationship with his principal. This is a position which is similar to that of a trustee.

Facts

Mr Cooley was an architect employed as managing director of Industrial Development Consultants Ltd., part of IDC Group Ltd. The

Eastern Gas Board The area gas boards were created under the provisions of the Gas Act 1948 enacted by Clement Attlee's post-war Labour government. The Act nationalised the British gas industry and also created the Gas Council. History From the early 19th century ...

had a lucrative project pending, to design a depot in

Letchworth Letchworth Garden City, commonly known as Letchworth, is a town in the North Hertfordshire district of Hertfordshire, England. It is noted for being the first garden city. The population at the time of the 2011 census was 33,249. Letchwort ...

. Mr. Cooley was told that the gas board did not want to contract with a firm, but directly with him. Mr. Cooley then told the board of IDC Group that he was unwell and requested he be allowed to resign from his job on early notice. They acquiesced and accepted his resignation. He then undertook the Letchworth design work for the gas board on his own account. Industrial Development Consultants found out and sued him for breach of his duty of loyalty.

Judgment

Roskill J. held that even though there was no chance of IDC getting the contract, if they had been told they would not have released him. So he was held accountable for the benefits he received. He rejected the argument that because he made it clear in his discussions with the Gas Board that he was speaking in a private capacity, Mr. Cooley was under no fiduciary duty. He had ‘one capacity and one capacity only in which he was carrying on business at that time. That capacity was as managing director of the plaintiffs.’ All information which came to him should have been passed on. Roskill J, quoted, ''Parker v. MacKenna'' (1874) 10 Ch.App. 96, James L.J. said, at p. 124:

“I do not think it is necessary, but it appears to me very important, that we should concur in laying down again and again the general principle that in this court no agent in the course of his agency, in the matter of his agency, can be allowed to make any profit without the knowledge and consent of his principal; that that rule is an inflexible rule, and must be applied inexorably by this court, which is not entitled, in my judgment, to receive evidence, or suggestion, or argument as to whether the principal did or did not suffer any injury in fact by reason of the dealing of the agent; for the safety of mankind requires that no agent shall be able to put his principal to the danger of such an inquiry as that.”

Throughout the last century, and also in the present century, courts of the highest authority have always strictly applied this rule.

Notes

{{law United Kingdom company case law High Court of Justice cases 1972 in case law 1972 in British law

Facts

Judgment

See also

Notes