Director breached his duty when using borrowed equipment
The Court of Appeal has upheld a ruling that a director breached his fiduciary duty when he made personal use of some equipment that had been loaned to his company.
Fiduciary commitments simply mean that a director must act in the company’s best interest and avoid any conflict between his personal interests and his duty to the company.
In this case, a waste management company was loaned some equipment by one of its customers. The equipment was old and dilapidated but the director was able to use it when renovating a property he owned.
The equipment was not made available by the director for the company to use for its business purposes.
When the matter came to light several years later, the company issued proceedings against the director for breach of duty.
The judge held that the director should account to the company for the six-month period that he had the equipment.
That decision has now been upheld by the Court of Appeal. It held that fiduciary duties included an obligation not to make a secret profit.
In this case, the no conflict duty extended to preventing the director from depriving the company of the opportunity to use the loaned equipment for its own purposes.
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