Del Bosque Limited v Amir Shafie & Ors

A director breaches the duty to promote a company’s success where he causes it to engage a related business on undisclosed and commercially disadvantageous terms, assists that business to obtain work or increased charges, or conceals conflicts. Companies Act 2006 section 177 requires full disclosure of all material facts to the board; informal, piecemeal disclosure is insufficient. Dishonest assistance requires a primary breach, factual assistance and dishonesty assessed by the two-stage knowledge-and-ordinary-standards test. A suspended director cannot use company access to extract confidential data for personal purposes. Unauthorised copying may provide unlawful means, but conspiracy also requires an intention to cause damage. Section 40 protects good-faith dealings with directors as a body, not automatically dealings authorised by one director. Relief under section 1157 requires honesty and objective reasonableness.

Del Bosque Limited v Amir Shafie & Ors concerned a claim by a construction project-management company against a director, his father, a colleague and an IT company. The claimant alleged that its director appointed a family-connected supplier without disclosure, assisted it to charge undisclosed mark-ups, disclosed confidential material, caused unauthorised computer access, and was responsible for an email outage and loss of domain credentials.

The High Court considered directors’ duties, dishonest assistance, unlawful means conspiracy, confidence, computer access, copyright, statutory relief and damages. The central questions were which breaches were proved, whether the other defendants assisted dishonestly, whether the data extraction was unlawful, and what loss was recoverable.

The claim succeeded in part. Mr Shafie was liable for breaches of his statutory duties, and the other defendants were liable for dishonest assistance to the extent found.

1. Directors’ duties. Mr Shafie’s appointment and dealings with the IT supplier breached sections 172, 174, 175 and 177 of the Companies Act 2006. The appointment created an objectively real and sensible possibility of conflict. Section 177 required full disclosure of the material facts to the board; informal or piecemeal disclosure would not suffice. Section 40 did not allow a person dealing with a single director to assume that the director had authority to bind the company.
2. Dishonest assistance. Applying the test in Ivey v Genting Casinos [2018] UKSC 67, Farshid Shafie, Infinite and Mr Mal were liable for particular assistance involving undisclosed mark-ups and attempts to obtain or justify further business. They were not liable for merely receiving confidential material where they had not assisted the relevant acts.
3. Data extraction and conspiracy. Mr Mal’s access to and copying of company data at Mr Shafie’s instruction during suspension was unauthorised. The material was confidential applying Coco v A N Clark (Engineers) Ltd [1969] RPC 41. Following Magical Marking Ltd v Holly [2008] EWHC 2428 (Ch), Mr Shafie lacked actual or ostensible authority to authorise the access. The copying infringed section 16 of the Copyright, Designs and Patents Act 1988. It was unnecessary to decide whether offences under the Computer Misuse Act 1990 or Data Protection Act 2018 had been committed. The unlawful means conspiracy failed because an intention to cause damage was not proved.
4. Relief and other claims. Relief under section 1157 of the Companies Act 2006 was refused because the breaches were deliberate and unreasonable. Infinite was not liable for the email failure, did not control the domain name, and the domain-name claim was not pursued.
5. Damages. The concluding schedule stated liabilities of £53,086.13 against Mr Shafie, £24,791.80 against Farshid Shafie, £8,792.01 against Infinite and £6,838.23 against Mr Mal, with the stated joint-and-several liabilities. No award was made for the handover invoices, software costs or management time.