Christopher Charles Fisher v Colin Laverock Dinwoodie

A joint venture or corporate relationship does not automatically create fiduciary duties. The question is fact-sensitive and objective. Duties may arise where one party has undertaken responsibility for another’s interests, or has been entrusted with rights or powers affecting them, such that the other is entitled to expect loyalty and good faith.

The introduction of a corporate structure does not inevitably displace fiduciary obligations arising from an earlier informal relationship. A duty may be confined to a particular matter, such as securing an agreed shareholding. A failure to perform such an absolute duty constitutes a breach even if careless rather than deliberate.

A non-competition injunction founded on fiduciary loyalty normally ends when the underlying relationship ends. It should not be used indefinitely or as an in terrorem measure to police other breaches.

Mr Dinwoodie claimed beneficial interests in shares legally held by Mr Fisher in several companies. He relied on an alleged partnership, fiduciary duties, an express trust and a constructive trust based on Pallant v Morgan principles.

HHJ Monty KC upheld the claims and granted an injunction restraining Mr Fisher from competing with the businesses. Mr Fisher appealed against the findings of partnership, fiduciary duty and trust, and against the scope and duration of the injunction.

The central issues were whether the parties’ informal business relationship, continuing after incorporation, gave rise to fiduciary duties; whether the share arrangements created trusts; and whether the competition injunction was justified after the relationship had broken down.

1. Appeal on liability. The appeal was dismissed in relation to the findings of partnership, fiduciary duty and express trust.
2. Partnership. The finding that the parties had carried on business in common was evaluative. The judge below had the relevant statutory ingredients in mind, and the conclusion was not plainly wrong.
3. Fiduciary duties. Fiduciary duties are not a homogeneous package. The court must identify the particular relationship and the specific duty said to arise. A joint venture is not itself a settled fiduciary category, but fiduciary duties may arise where the facts justify them. The earlier partnership, the parties’ continuing understanding of equal ownership, their close relationship, and Mr Dinwoodie’s reliance on Mr Fisher to deal with share formalities justified a duty of good faith and loyalty concerning the shareholdings.
4. The corporate structure did not inevitably terminate the fiduciary relationship. Mr Fisher had assumed responsibility for ensuring that Mr Dinwoodie received his agreed shares. His failure to do so was a breach of an absolute duty and did not require proof of deliberate non-compliance.
5. Section 125 of the Companies Act 2006 provided a remedy for rectification; it did not displace or create the underlying rights. The fiduciary claim therefore remained available.
6. The express trust finding concerning the DA companies’ shares was sufficiently supported by the findings and the Skype communications. The appeal on that ground failed.
7. The Pallant v Morgan constructive trust finding was unsustainable because there were insufficient findings of a positive arrangement and reliance. The issue whether such an equity can arise after acquisition was largely sterile. A constructive trust may instead arise under general principles where the circumstances make it unconscionable for the legal owner to deny another’s beneficial interest.
8. Injunction. The competition injunction was too wide and effectively open-ended. The duty not to compete continued while the venture continued, but the informal relationship could be terminated unilaterally. After termination, any continuing duties concerned matters such as the proper use or winding-up of joint venture assets, not competition per se. The injunction was set aside, subject to possible further argument about a narrowly framed order protecting assets or completing an orderly winding-up.

High Court (Chancery Division, Business List): HHJ Monty KC found in favour of Mr Dinwoodie on the partnership, fiduciary duty and trust claims and granted a competition injunction. On appeal, Sir Anthony Mann dismissed the appeal on liability but allowed it in relation to the injunction, subject to possible further argument or remission.