Snapshot: Supreme Court Holds No Attribution Where Director's "Secret" Profits In Issue

• Published date: 29 November 2021
• Subject Matter: Corporate/Commercial Law, Litigation, Mediation & Arbitration, Corporate and Company Law, Directors and Officers, Trials & Appeals & Compensation
• Law Firm: Ogier
• Author: Christopher Levers and Jordan Constable

The United Kingdom's Supreme Court has recently delivered helpful guidance on the principles to be applied when dealing with attribution of knowledge between a company and its wrongdoing directors; particularly in the context of breaches of duty by directors in exploiting corporate opportunities belonging to the company to receive secret profits.

It is well settled that, where an agent makes a secret profit by virtue of a principal-agent relationship, the profit is automatically held on constructive trust for the principal. In the corporate context, a director who has breached a fiduciary duty, and received secret profit, will hold that profit on constructive trust for the company.

However, the question before the Supreme Court...