Monday 3 November 2014

UK: England and Wales: company directors - no implied duty to deliver up documents on termination

Judgment was given last Friday in Eurasian Natural Resources Corporation Ltd v Judge [2014] EWHC 3556 (QB). The case concerned an application by Sir Paul Judge, a former director of ENRC, for summary judgment of, and/or strike out, of several claims made against him by ENRC in which various breaches of duty were alleged. Sir Paul's application was rejected by the trial judge (Mrs Justice Swift) in respect of all the claims except for one: the claim based on a purported term (whether implied in contract, or as part of his fiduciary duties) requiring the delivery up within a reasonable time (or on demand) of all hard copy documents belonging to ENRC and any other documents, whether hard copy or in electronic format, containing confidential information and which had been provided for the purposes of performing his duties as director. In rejecting the existence of this duty, Mrs Justice Swift observed (para. [73]):
I can see no grounds for finding that [Sir Paul] was subject to an implied term requiring delivery up of the confidential documents after termination of his appointment. Had it been the "obvious but unexpressed intention of the parties", one would have expected it to be incorporated into [Sir Paul's] contract, as was done in Brandeaux. Moreover, I have been shown no legal authority, Code of Practice, Guidance or other evidence that would suggest that such a requirement is the norm for directorships. I can well understand that there would be difficulties in complying with such a duty, especially for those individuals who take on multiple directorships. The difficulty is particularly acute where, as here, company documents are sent to a number of email addresses, some personal to the director and others maintained by other private and publicly listed companies with which the director is associated. It is difficult to see how 'business efficacy" would be achieved by an implied term to deliver up. It would potentially involve a considerable amount of work for those subject to it - to very little purpose."

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