Lloyd's Maritime and Commercial Law Quarterly
FIDUCIARY DUTIES OWED TO SHAREHOLDERS: THE COURT OF APPEAL APPLIES THE BRAKES
Peskin
v. Anderson
The de-mutualization of the Royal Automobile Club has allowed the Court of Appeal to reconsider the extent to which directors owe fiduciary duties directly to shareholders. The general principle is, of course, that directors owe their fiduciary duties to the company and not to individual shareholders.1
However, fiduciary duties may arise between a director and individual shareholders where the shareholders appoint the directors as their agents in any matter or where the special circumstances of a particular transaction place the directors in a fiduciary position in relation to the shareholders.2
The development of this area of law, dominated for years by the judgment of Swinfen Eady, J., in Percival
v. Wright,
3
has accelerated recently with the decision of the New South Wales Court of Appeal in Brunninghausen
v. Glavanics.
4
In Brunninghausen
the court unanimously declined to follow Percival
v. Wright,
following the lead of the New Zealand courts in Coleman
v. Myers.
5
Although this does not disturb the general principle that a director’s fiduciary duties are normally owed to the company alone,6
the decision shows an increasing willingness to impose fiduciary obligations on the director-
1. Percival
v. Wright
[1902] 2 Ch. 421.
2. For example Allen
v. Hyatt
(1914) 30 T.L.R. 444; Briess
v. Woolley
[1954] A.C. 333; Coleman
v. Myers
[1977] 2 N.Z.L.R. 225; Re Chez Nico (Restaurants) Ltd
[1992] B.C.L.C. 192; Platt
v. Platt
[1999] 2 B.C.L.C. 745.
3. [1902] 2 Ch. 421.
4. (1999) 32 A.C.S.R. 294. See R. Goddard, “Percival
v. Wright:
the end of a remarkable career?” (2000) 116 L.Q.R. 197; and A. Walters, “The last rites for Percival
v. Wright
?” (2000) 21 Co. Law 261.
5. [1977] 2 N.Z.L.R. 225. At first instance Mahon, J., declined to follow Percival
v. Wright,
although the New Zealand Court of Appeal preferred simply to distinguish it.
6. The court expressly accepted this established rule, behind which there are “good reasons” (particularly avoiding a multiplicity of actions): (1999) 46 N.S.W.L.R. 538, 547 and 549.
CASE AND COMMENT
457