JD Wetherspoon Plc v Van De Berg & Co Ltd & Ors

A fiduciary relationship does not necessarily impose contractual exclusivity. It does require loyalty, avoidance of conflicts and full, express informed consent before a fiduciary exploits an opportunity or confidential information for a competitor. A corporate agent and the individual who personally undertook the special relationship may owe direct fiduciary duties. Employees or directors do not automatically do so merely by holding office. Dishonest assistance is assessed objectively, taking account of what the defendant knew and the defendant’s experience, intelligence and reasons for acting. Liability does not require trust property where the defendant dishonestly assists a breach of fiduciary duty.

JD Wetherspoon Plc brought two High Court actions against Van de Berg & Co Ltd, Christian Braun, Richard Harvey and, in the second action, George Aldridge. The claims concerned property-acquisition services, alleged diversion of freehold opportunities, conflicts of interest, misuse of confidential information, fraud, breach of contract, breach of fiduciary duty and dishonest assistance.

The first action principally concerned alleged diversion of opportunities to companies associated with competitors. The second concerned thirteen transactions, mostly between 1994 and 1997, in which JDW alleged that it was advised to take leasehold interests while freeholds were diverted to third parties. The trial concerned liability only, together with limitation issues.

1. Fiduciary duties and exclusivity. There was no express or implied contractual term requiring Van de Berg to act exclusively for JDW. The negotiations for a written agreement in 1994, and the parties’ knowledge that Van de Berg undertook some non-JDW work, were inconsistent with exclusivity. That conclusion did not remove the fiduciary duties arising from the relationship.
2. Van de Berg owed fiduciary duties. Braun also owed JDW a direct fiduciary duty because the evidence established a special personal relationship of trust and confidence between him and JDW’s chairman. Harvey and Aldridge were employees who later became directors, but did not assume the special personal responsibility necessary to owe direct fiduciary duties.
3. Van de Berg and Braun could not properly act for Barracuda, a major competitor, using JDW’s confidential information or opportunities without full disclosure to and informed consent from JDW. Disclosure of material to lawyers, surveyors or other employees was insufficient. The necessary disclosure had to be made expressly by Braun to the chairman.
4. The court found dishonest breaches of fiduciary duty in the Ferrari transactions and in the Bournemouth, Rotherham, Portsmouth, Burton and Canterbury 2 transactions. The Sidcup transaction in the first action also involved a breach. Leamington Spa involved negligence by Van de Berg, but not a fiduciary breach. Chingford was not proved.
5. The claims against Harvey for direct fiduciary breach failed, but he dishonestly assisted breaches concerning Folkestone, Canterbury 1 and Canterbury 2. Aldridge dishonestly assisted breaches concerning Rotherham, Burton and Bedford. The applicable test was objective, while taking account of the individual’s knowledge, experience, intelligence and reasons for acting.
6. Dishonest assistance did not require trust property. The court declined to follow the contrary first-instance reasoning in Goose v Wilson Sandford & Co. The surviving claims were not statute-barred. Section 21 of the Limitation Act 1980 applied to the fraudulent breaches by Van de Berg and Braun, and section 32 applied to the fraud and deliberate concealment, including the misleading August 1998 correspondence.
7. The first action succeeded against Van de Berg and Braun in respect of Sidcup, and was dismissed against Harvey. The second action succeeded against Van de Berg and Braun except in respect of Chingford, with negligence only in respect of Leamington Spa. Harvey and Aldridge were liable for dishonest assistance as stated above. The counterclaim for wrongful termination failed.