Clearview International Ltd & Ors v PWH Com Ltd & Ors

Directors who hold positions in competing companies must address conflicts of interest openly and obtain informed consent before diverting a corporate opportunity. An opportunity arising through a company directorship remains the company’s opportunity even if the company cannot immediately fund or exploit it. Directors must account for benefits obtained without consent.

Company property cannot be distributed informally among directors. An unauthorised transfer of company assets may be incapable of ratification where it is beyond the company’s purposes and creditors’ interests predominate. A company’s confidential customer database cannot be transferred to a third party without proper authority. Derivative claims succeeded in protecting the company’s assets and obtaining inquiries and declarations; Clearview’s personal claims failed.

Clearview International Ltd was owned by two of the individual claimants, who were also directors and shareholders of Polaris World Holidays Ltd. The other shareholders and directors were the individual defendants. The companies’ relationship broke down over banking arrangements, a furniture venture, shares in a Spanish subsidiary, and the transfer of customer information.

Because the company was deadlocked, the two claimant directors obtained permission to pursue derivative claims on its behalf. The court considered whether corporate opportunities and assets had been diverted, whether fiduciary and confidentiality duties had been breached, and whether Clearview itself had any proprietary or fiduciary claim.

1. Corporate opportunities and conflicts. Directors of two companies owed duties to each. The furniture opportunity arose through their positions in both companies. Without informed consent, they had to obtain it for the Company or decline it. The opportunity became the Company’s venture once the parties agreed to develop it through the Company.
2. Blue Chip shares. The shares were held beneficially for the Company. The informal agreement to divide them 50/50 was an incomplete gift and did not bind the Company. It was also a breach of fiduciary duty and beyond the directors’ powers, incapable of ratification because the Company was insolvent and creditors’ interests predominated. The later three-way transfer was likewise unauthorised and ineffective.
3. Farnell’s investment. The later acquisition of shares in Inside Right Espana arose from the prior corporate opportunity and the director’s head start. The Company’s inability or unwillingness to fund the venture did not release him from his duty. Without free and informed consent, he held the beneficial interest on constructive trust for the Company. This applied established equitable principles recognised in Keech v Sandford [1726] Sel.Cas t. King (Macnaghten) 175, Phipps v Boardman [1967] 2 AC 46 and CMS Dolphin Ltd v Simonet [2001] 2 BCLC 7.
4. Database and banking arrangements. The Company’s database was its property. Its transfer to Inside Right required a board decision and was an unauthorised breach of duty and confidence. The court ordered inquiries as to loss. Electronic payments made in breach of the banking mandate justified an account and inquiry, but no loss arose where genuine company liabilities had been discharged, subject to any preferential recoupments.
5. Outcome. The Company obtained declarations, injunctions, mandatory orders and inquiries against the relevant defendants. Clearview’s claims were dismissed. The conspiracy allegation added nothing to the relief already available.