Northampton Regional Livestock Centre Co Ltd v Cowling & Anor (Court of Appeal, June 2015)

The defendants, Mr Cowling and Mr Lawrence, traded as a property consultancy partnership, MCL, which was instructed in relation to the marketing and sale of a property from about 2002 onwards. Mr Lawrence resigned from MCL with purported effect from 4 July 2005, but continued to act in relation to the property and introduced the ultimate buyer of the property. The buyer (without the knowledge of Mr Cowling or the seller) agreed:

To pay Mr Lawrence one-third of any uplift it received on a subsequent sale of the property to a third party That Mr Lawrence would continue to act in relation to such onward sale of the property On the day the sale completed, the buyer simultaneously sold the property to a third party for about GBP 2.75m more than it had paid. Northampton pursued a claim against both Mr Cowling and Mr Lawrence, arguing that the property had been sold at an undervalue.

At first instance the Court held that Mr Lawrence, whilst not negligent, had acted in a position of conflict and in breach of fiduciary duty, and was therefore liable to account to Northampton for the commission received (some GBP 740,000). MCL was also held not to have been negligent, and Mr Cowling's conduct was held to have been both reasonable and non-negligent. Further, Mr Cowling was held not to be vicariously liable for Mr Lawrence's breach of fiduciary duty, as his conduct was sufficiently divorced from the ordinary business of MCL that it should not be considered to have been in the ordinary course of the partnership...