Directors Duties: A Strict Reminder

The recent Court of Appeal judgment in Towers v Premier Waste Management Ltd serves as a stark warning to directors who are not strictly compliant and wholly knowledgeable of their duties.

The Facts

A director of a waste management company, accepted a free of charge loan of plant and equipment to renovate his house from one of the company's customers without disclosing it to the company. He argued that the arrangement was "private, informal, ad hoc and amongst friends".

The Decision

The Court of Appeal held that the director had breached his fiduciary duties (particularly the duty of loyalty and the duty to avoid conflicts of interest). The director was ordered to pay to the company an amount representing what it would have cost him to hire the equipment on the open market, along with the costs of the action.