Christopher Fisher v Colin Dinwoodie

On an account of profits for breach of fiduciary duty, receipts obtained through the fiduciary’s wrongful control may constitute benefits even if they are described as fees or interest. Proper expenses may be deducted, but the fiduciary’s labour is ordinarily considered through an equitable allowance rather than by excluding the receipts from the profits inquiry.

The relevant connection is whether the benefit owed its existence to a significant extent to an advantage obtained through the fiduciary position or to activity which the fiduciary duty required the fiduciary to avoid. Summary determination is permissible where the evidence is sufficiently clear, but disputed and plausible evidence requiring testing should be resolved at trial. An equitable allowance is exceptional, but not subject to an exceptionally stringent test; culpability is relevant, though not an absolute bar.

The appeal concerned an order made by HHJ Monty KC in the County Court at Central London on 17 December 2024 following an account arising from earlier findings that Christopher Fisher owed fiduciary duties to Colin Dinwoodie, had breached them, and held shares on trust for him. Mr Fisher had disclosed payments received from companies connected with their former joint venture. The judge ordered payment of £220,364, including a disputed £30,700, without allowing deductions for fees, interest or expenses and refused an equitable allowance for Mr Fisher’s work.

Mr Fisher challenged the procedure, the treatment of the receipts as profits, the nexus with the fiduciary breach, and the refusal of an equitable allowance.

1. Disposition. The appeal was allowed in relation to the disputed £30,700 and the refusal of an equitable allowance. It was otherwise dismissed. The equitable-allowance issue was remitted to the County Court.
2. Procedure and summary determination. The hearing had developed into an application for judgment on the evidence, and it was not procedurally unfair for the judge to consider the merits. However, the £30,700 discrepancy was supported by a plausible explanation that could not properly be rejected summarily. It required testing at trial. By contrast, the evidence concerning the alleged interest and expenses was insufficient to justify a further trial. On a summary judgment application, factual assertions going to the defence should generally be treated as true unless plainly untrue on sound evidence or sufficiently implausible: Easyair Ltd v Opal Telecom [2009] EWHC 339 (Ch).
3. Profits and nexus. Profit in this context means the net benefit flowing from the breach, after proper deductions. Fees received through wrongful control may be benefits even though work was performed. Interest is capable of being a benefit where the loan was made during the breach, subject to consideration through the allowance inquiry. Genuine reimbursement of expenses is not profit, but the evidence did not establish that the disputed sums had that character.
4. The applicable connection was whether the benefits owed their existence to a significant extent to the application of property, information or another advantage obtained through the fiduciary position, or to activity which the fiduciary duty required the fiduciary to avoid. Mr Fisher’s failure to transfer the shares enabled him to assume exclusive control of the companies and draw the payments. That provided the necessary nexus.
5. Equitable allowance. The court has a discretion to allow a defaulting fiduciary a reasonable allowance for skill, labour and risk. The jurisdiction is exceptional in the sense that an allowance is not usual or a matter of right, but it is not confined to rare cases. The ultimate question is whether it would be inequitable for the beneficiary to take the profits without paying for the work producing them. Culpability is relevant but not an absolute bar. The evidence and procedural history did not justify finally rejecting the claim summarily.
6. The briskness of the lower court’s approach, together with earlier adverse credibility findings, did not establish actual or apparent bias.

• High Court: HHJ Monty KC ordered payment following an account of profits in a judgment delivered on 4 November 2024 and an order dated 17 December 2024.
• High Court (appeal): The appeal was allowed on the £30,700 issue and the equitable-allowance issue, otherwise dismissed, with the latter issue remitted to the County Court.