Breach Of Duty Where Director Accepted Undisclosed Loan Of Equipment From Customer

Towers v Premier Waste Management Ltd [2011] EWCA Civ923

Towers was a director of Premier. One of its customers, Mr Ford, lent Towers a second hand excavator and dumper for use by him in renovating a dilapidated farm house belonging to him. The loan was arranged not directly with Towers, but through Mr Rafter, one of the managers who worked for Towers. Rafter made it clear to Ford that there was nothing in it for Ford. The equipment was used for six months and then, stayed on Towers' property for five years until Mr Ford asked for it back. The equipment was in poor condition. Towers did some remedial work at his own expense, but a major repair was put though the accounts of Premier by Rafter, who were then later reimbursed by Ford. Towers reprimanded Rafter for putting that cost through Premier.

The Court of Appeal, upholding the High Court, found that Towers was in breach of his fiduciary duty to Premier and the duty to observe the no conflict principle. It did not matter that there was no evidence that Premier would have taken the opportunity of the free loan for itself nor that it had suffered any loss, nor that Towers or Ford had any corrupt motive nor that if there had been no...