Bhullar v Bhullar
Encyclopedia
Bhullar v Bhullar [2003] EWCA Civ 424 is a leading UK company law 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 for, s 175 Companies Act 2006
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. It also owned an investment property called Springbank Works, Leeds Road, which was lease
d to a bowling alley 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. 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 CA 2006) on the basis that Inderjit and Jatinderjit had breached their fiduciary duty of loyalty to the company.
Brooke LJ and Schiemann LJ concurred.
Companies Act 2006
The Companies Act 2006 is an Act of the Parliament of the United Kingdom which forms the primary source of UK company law. It had the distinction of being the longest in British Parliamentary history: with 1,300 sections and covering nearly 700 pages, and containing 16 schedules but it has since...
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Facts
Bhullar Bros Ltd was owned by families of two brothers. Each side owned 50% of ordinary shares. The directors were Mr Mohan Bullar, his son Tim, Mr Sohan Bhullar and his sons Inderjit and Jatinderjit. The company had a grocery store at 44 Springwood Street, HuddersfieldHuddersfield
Huddersfield is a large market town within the Metropolitan Borough of Kirklees, in West Yorkshire, England, situated halfway between Leeds and Manchester. It lies north of London, and south of Bradford, the nearest city....
. It also owned an investment property called Springbank Works, Leeds Road, which was lease
Lease
A lease is a contractual arrangement calling for the lessee to pay the lessor for use of an asset. A rental agreement is a lease in which the asset is tangible property...
d to a bowling alley 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. 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 CA 2006) 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 [1726] EWHC Ch J76
- Whelpdale v CooksonWhelpdale v CooksonWhelpdale v Cookson 1 Ves Sen 9; 27 ER 856 is an English trusts law case on the duty of loyalty owed by a trustee to beneficiaries of the trust.-Reported decision:...
(1747) 1 Ves Sen 9; 27 ER 856 - Aberdeen Ry Co v Blaikie Brothers [1843–60] All ER Rep 252, self dealing case
- Parker v McKennaParker v McKennaParker v McKenna LR 10 Ch App 96 is a UK company law case, concerning the rule against having any conflict of interest.-Facts:Mr McKenna was one of four directors of the National Bank of Ireland, a joint stock bank. In 1864 resolutions were passed to increase the capital by issuing 20,000 £50 shares...
(1874-75) LR 10 Ch App 96, per James LJ that the rule is necessary for "the safety of mankind" - Bray v FordBray v FordBray v Ford [1896] AC 44 is an English defamation law case, which also concerns some principles of conflict of interest relevant for trusts and company law.-Facts:...
[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 [1967] 2 AC 134n
- Boardman v Phipps [1967] 2 AC 46
- Industrial Development Consultants v Cooley [1972] 1 WLR 443
- New Zealand Netherlands Society 'Oranje' Inc v Kuys [1973] 1 WLR 1126
- Canadian Aero Services v O'Malley (1973) 40 DLR (3d) 371
- Island Export v Umunna [1986] BCLC 460
- Movitex Ltd v Bulfield [1988] BCLC 104
- Paragon Finance plc v Thackerar [1999] 1 All ER 400, [1998] EWCA 1249, constructive trustee case
External links
- Obituary, 'Sohan Singh Bhullar Founder of thriving business and community leader' (9.9.2008) Huddersfield Daily Examiner