Moulin Global Eyecare Holdings Limited v. Olivia Lee Sin Mei (2014) 17 HKCFAR 466 gives a rare opportunity to our highest court to explore these questions.
The case arose out of insolvency of an eyecare manufacturer, Moulin Global. Olivia was a director. The company, acting by its liquidators, sued Olivia for breach of director’s duties.
One of the allegations was that Olivia had failed to alert the board and the stock exchange of the massive insolvency of the company. The liquidators argued that this was in breach of Oliva’s duty ‘to act bona fide in the company’s interests’. Was this a ‘fiduciary’ duty?
Gummow NPJ answered ‘No’. He preferred to use the ‘equitable’ language. He described the (positive) duty to act bona fide in the interests of the company as an ‘equitable’ duty. It is ‘non-proscriptive’ (ie non-negative). And so it is non-fiduciary ‘in its strict sense’ (at [35], [36]). The only ‘fiduciary’ duty is the proscriptive (negative) no-conflict and no-profit rules (at [36]):
The obligations enforced by the fiduciary duties identified by Millett LJ in Bristol are proscriptive, and concern avoidance of conflict between duty and personal interest and liability to account for improperly derived gains. The proscriptive duties are, as the decision of the House of Lords in Regal (Hastings) Ltd v. Gulliver [1942] 1 All ER 378 [[1942] UKHL 1, 1967] 2 AC 134] memorably showed, strictly enforced, even in the absence of the conscious wrongdoing. Where what is at stake is liability for failure by a director to discharge a non-proscriptive duty, such as that to act to bona fide in the interests of the company, a court of equity may be reluctant to intervene in the absence of sharp practice by the director.
On the facts, it was found that none of the four claims against Olivia involved a breach of a ‘proscriptive fiduciary duty’ (at [37]), and so there was no breach of ‘fiduciary’ duty. A breach of her ‘equitable’ (positive) duty to act bona fide in the company’s interests, the court would award equitable compensation (at [37]).
Can the decision be justified? How can it be reconciled with the weight of authorities (such as Item Software (UK) Ltd v. Fassihi [2004] EWCA Civ 1244 ) on positive duty of disclosure?
August 2024
Dr. Anthony Lai, Dr. Rita Cheung, Mr. Jonathan Tong
Comentários