Analysis
Judgment was handed down following a trial of a claim against a former director for breach of fiduciary duty through unauthorised remuneration. The claim was found to be established in judgment given on 15 November 2016. On 19 December 2016 there was a hearing to deal with consequential matters including the terms of order. The order made provided for judgment for equitable compensation in respect of the unauthorised remuneration.
The claimant then applied for an interim payment. The defendant objected on the basis that it was far from certain that the claimant had suffered any loss. It was submitted that the remuneration received did not exceed the market value of the services provided and no loss had been suffered. At a hearing on 7 February 2017 the claimant submitted that equitable compensation was not confined to compensation for losses but included the recovery of compensation for money or assets disbursed without authority.
The judge concluded that, both as a general proposition and in the context of the December order, equitable compensation meant compensation for losses. A claimant was required to choose between a loss-based remedy and a gains-based remedy. By seeking an order for the assessment of equitable compensation it had elected for compensation of loss. The claimant appealed.
Held:
Equitable compensation was apt to include a payment made to restore to a claimant the value of assets removed without authority by a fiduciary such as a director. It could also include reparation for losses suffered. However, it was not restricted to reparation for losses. To the extent the judge referred to the December order as compensation for loss as a result of the general meaning of the remedy of equitable compensation, he was wrong. The submissions of counsel for the claimant to the judge did not narrow the ambit of the order for the assessment of equitable compensation. There was no basis for restricting the December order to compensation for loss.
JUDGMENT DAVID RICHARDS LJ: [1] This appeal concerns the meaning and effect of an order for the assessment of equitable compensation made by Morgan J following the trial of claims for breach of fiduciary duty. The claims were made by the appellant company (ITC) against a former director, the respondent Jonathan Ferster. The respondent has …Continue reading "Interactive Technology Corporation Ltd v Ferster [2021] WTLR 561"