Foster Bryant Surveying Ltd v Bryant [2007] EWCA Civ 200

Mr Bryant resigned as director after being effectively forced out by his co-director Mr Foster. During his notice period, a major client offered Mr Bryant future work through his own company. The Court of Appeal held there was no breach of fiduciary duty as his resignation was innocent, he did not solicit business, and merely accepted a customer-led proposal.

Facts

Mr Bryant and Mr Foster were co-directors and shareholders of Foster Bryant Surveying Ltd, a company providing surveying services primarily to Alliance Leisure Services Limited. Following a breakdown in their relationship, largely precipitated by Mr Foster’s hostile conduct and his unilateral decision to make Mrs Bryant redundant, Mr Bryant resigned. At the time of his resignation, Mr Bryant intended to seek employment elsewhere and had no plans to work for Alliance. However, during his notice period, Alliance’s managing director, Mrs Watts, approached Mr Bryant and proposed that he continue to service Alliance’s projects after his departure through his own company on a retainer basis. Mr Bryant eventually agreed to this arrangement. Alliance had already indicated it would not continue working exclusively with the company once the exclusivity agreement expired. The claimant company alleged Mr Bryant breached his fiduciary duties by agreeing to work for Alliance before his resignation took effect.

Issues

Did Mr Bryant breach his fiduciary duties as a director by agreeing during his notice period to work for Alliance after his departure?

If so, was Mr Bryant liable to account for profits earned by him or his new company, Savernake?

Judgment

The Court of Appeal dismissed the appeal, upholding the trial judge’s finding that Mr Bryant had not breached his fiduciary duties. Rix LJ delivered the leading judgment, emphasising that the case was highly fact-sensitive. The Court noted that Mr Bryant’s resignation was not motivated by any ulterior purpose to exploit company business; he had been effectively forced out. His acceptance of Alliance’s offer was a response to a customer-led initiative, not active solicitation or diversion of a maturing business opportunity. The Court accepted the judge’s findings that Mr Bryant had been excluded from his role as director after his resignation and continued to perform his employee duties conscientiously.

“In the particular circumstances of the present case it seems to me that Mr Bryant was not guilty of a breach of his fiduciary duties to the Company by going along with the suggestions of Mrs Watts that he should establish his own company and then undertake such work as Alliance was minded to give him.” (HHJ Seymour QC, para 147)

Rix LJ observed that the jurisprudence demonstrates flexibility in the application of fiduciary principles to retiring directors, depending on circumstances such as the innocence of the resignation, whether there was active competition or exploitation of company property, and the director’s good faith conduct.

“All that Mr Bryant did was to agree to be retained by Alliance after his resignation became effective. He did nothing more. His resignation was not planned with an ulterior motive. He did not seek employment, or a retainer, or any business from Alliance. It was offered to him, it might be said pressed upon him.” (Rix LJ, para 87)

The Court also found that even if there had been a breach, no loss was suffered by the company because Alliance would not have given the company more work than Mr Foster could personally handle, and Mr Foster rejected the work that was offered.

Implications

This decision clarifies that the application of fiduciary duties to departing directors requires a fact-sensitive approach. Directors who resign innocently and without ulterior motive are not necessarily precluded from accepting offers of future employment from former clients during notice periods, particularly where the initiative comes from the client rather than the director. The case emphasises that not every acceptance of a post-resignation opportunity constitutes a breach of fiduciary duty, especially where there is no active solicitation, diversion of maturing business opportunities, or disloyalty while still serving as a director. The judgment also underscores that equitable principles should not be applied in a manner that causes injustice or permits unjust enrichment.

Verdict: Appeal dismissed. No breach of fiduciary duty was established. The respondent director was not liable to account for any profits.

Source: Foster Bryant Surveying Ltd v Bryant [2007] EWCA Civ 200