Aerostar Maintenance International Ltd & Anor v Wilson & Ors

A director who diverts to himself or his company a business opportunity pursued by his company breaches his fiduciary duties where he acts without informed corporate consent. A person who knowingly and dishonestly induces that diversion may be liable for inducing breach of contract, unlawful-means conspiracy and dishonest assistance.

A business opportunity and contracts obtained through its diversion may constitute trust property or its traceable proceeds for knowing-receipt purposes. Compensation for the lost opportunity depends on the assessed chance that the company would have obtained the contracts. A director ordinarily accounts only for his own profits. Control of the recipient company alone does not justify treating its profits as his through piercing the corporate veil.

The first claimant employed its managing director to negotiate aircraft-maintenance contracts with a customer and a Romanian maintenance company. While still a director and employee, he helped establish Avman Limited and diverted the proposed contracts to that company. Another defendant encouraged and facilitated the diversion.

The first claimant alleged breach of fiduciary duty and contract, inducing breach of contract, unlawful-means conspiracy, dishonest assistance and knowing receipt. The court determined liability and causation but deferred the quantification of profits, equitable compensation and damages.

Separate claims alleged that the director and the fourth defendant had improperly diverted sums received from Globespan Airways Ltd by the claimants. The central issues were the defendants’ liability for diverting the contractual opportunity, the remedies available, and whether the claimants had proved entitlement to the Globespan monies.

1. The main claims succeeded. Mr Wilson breached his fiduciary duties as a director and his contractual duties as an employee. While acting for AMIL, he diverted to Avman the opportunity to contract with Galaxy and Romaero. He acted in conflict with AMIL’s interests, sought personal profit, failed to act in good faith and used information obtained through his employment. Disclosure to one director did not amount to informed corporate consent: paras [155]–[160].

2. Mr Ashfield induced Mr Wilson’s breach of contract. He knew of the substance of Mr Wilson’s obligations and realised that the proposed conduct would breach them. His pressure upon Mr Wilson, incorporation of Avman, arrangement of its banking and communications, and payment of Mr Wilson’s secured debt materially induced the breach: paras [163]–[166].

3. Mr Ashfield and Avman were also liable for conspiracy to injure by unlawful means. The court proceeded on the basis that breaches of fiduciary duty and contract could constitute unlawful means. Those breaches were the means by which AMIL lost the opportunity. The defendants intended benefits for themselves whose necessary counterpart was injury to AMIL: paras [167]–[177], [187]–[191].

4. Mr Ashfield dishonestly assisted the fiduciary breach. Dishonesty is assessed objectively in light of the defendant’s actual knowledge. A defendant cannot adopt a personal standard of honesty. The contemporaneous communications showed that Mr Ashfield appreciated the impropriety of the diversion: paras [178]–[186]. Avman likewise dishonestly assisted because Mr Wilson’s knowledge and dishonesty were attributable to it: paras [197]–[199].

5. Avman knowingly received trust property. The diverted business opportunity was AMIL’s property, and the resulting contracts were that property or its traceable proceeds. Avman received them for its benefit with imputed knowledge making retention unconscionable: paras [192]–[196].

6. AMIL could elect between an account and equitable compensation. Each wrongdoer had to account for its own profits. Avman’s profits were not Mr Wilson’s personal profits because sole ownership and control did not justify piercing the corporate veil. Avman had not been used to conceal from AMIL that Mr Wilson was personally receiving its profits: paras [200]–[208].

7. Without the wrongdoing, AMIL had an 80% chance of securing equivalent contracts. Equitable compensation and common-law damages were therefore recoverable for the loss of that chance, subject to later quantification: paras [209]–[222].

8. The two Globespan claims were dismissed. The claimants failed to prove that the disputed sums beneficially belonged to them or had been wrongfully taken from them: paras [223]–[240].

not stated in the judgment.