Christopher Charles Fisher v Colin Laverock Dinwoodie

The court considered whether a fiduciary relationship arose between the appellant (Mr Fisher) and the respondent (Mr Dinwoodie) which entitled the respondent to beneficial interests in shares held in various companies. The judge below found (i) that the parties had earlier carried on a partnership-like business which was continued via two companies (the BEM companies), (ii) that fiduciary duties arose from the prior relationship and the parties' mutual expectations and reliance, and (iii) that those duties were breached by Mr Fisher so as to produce equitable remedies including an express trust and a constructive trust claim in relation to certain "DA" company shares (Pallant v Morgan principles being considered). The appellate court upheld the trial judge's factual findings and his conclusion that fiduciary duties were established and breached, and therefore dismissed the appeal on liability. The court allowed the appeal in part in relation to relief, holding that the broad, open-ended injunction restraining the appellant from competing was not justified without appropriate temporal or purposive limits and was set aside (subject to possible further argument limited to narrowly framed relief to protect realised joint-venture assets).

This appeal concerned claims by the respondent that he was entitled to beneficial interests in shares legally held by the appellant, and an injunction preventing the appellant competing with the business. The respondent advanced three bases for proprietary relief: (1) beneficial interests arising from a fiduciary relationship between the men sustained after an informal partnership was commercialised through companies; (2) an express trust in favour of the respondent in relation to shares in the "DA" companies; and (3) a constructive trust of the Pallant v Morgan type in respect of those DA shares.

The trial judge (HHJ Monty KC) found that the parties had been in business together from before incorporation of the BEM companies, that a partnership-like relationship and mutual 50:50 expectation survived into the corporate arrangements, and that the appellant acted as the party entrusted with corporate formalities and shareholdings. The judge concluded that fiduciary duties of loyalty and good faith existed, that the appellant breached those duties by retaining and reorganising legal title in ways adverse to the respondent, and that the respondent was therefore entitled to equitable relief. The judge also found an express trust and a constructive trust (invoking Pallant v Morgan principles) in respect of the DA company shares and granted an injunction restraining the appellant from competing with certain companies.

The appellate court applied principles governing review of evaluative factual findings and fiduciary-law principles (including Bristol & West v Mothew and authorities about joint ventures and close commercial relationships). It concluded:

• (i) the primary factual findings (partnership-like relationship, reliance and vulnerability, repeated representations of joint ownership, and conduct in relation to company filings) were open to the trial judge and not plainly wrong;
• (ii) those findings supported the existence of fiduciary duties (a duty of loyalty and to act in good faith in relation to shareholding matters) and a breach by the appellant;
• (iii) an express trust finding was supportable on the judge's factual findings; and
• (iv) the judge had not established a Pallant v Morgan constructive trust on the specific findings because there was insufficient positive evidence of reliance or the precise arrangement at the time of acquisition, though the judge had been correct to highlight the close relationship between fiduciary principles and many such constructive trusts.

On remedy the appellate court found the open-ended non-competition injunction excessive. The court held that loyalty-based restraints typically endure only while the relationship giving rise to them subsists and that the judge had not justified a perpetual or indefinite personal restraint of competition. Accordingly the appeal was dismissed on liability but allowed in part to set aside the broad injunction; the court left open a limited remit to consider narrowly drawn relief to protect misappropriated joint-venture assets if argued further.

Appeal allowed in part. The court dismissed the appellant’s challenges to the trial judge’s factual findings and his conclusions that a fiduciary relationship existed and was breached (the respondent therefore entitled to equitable relief and, on the judge’s findings, an express trust in relation to the DA shares). However the court concluded the open-ended personal injunction restraining the appellant from competing was excessive and unjustified without temporal or purposive limits and allowed the appeal in respect of that relief, setting it aside (with leave to seek narrowly tailored relief focused on preventing exploitation of joint-venture assets).

Appeal from the judgment of HHJ Monty KC at first instance in the Chancery Division (trial judgment and consequentials). No separate prior neutral citation for the first-instance judgment is given in the judgment under appeal.