Sunday, January 13, 2019

Regal Hastings v Gulliver case brief

Regal Hastings v Gulliver case brief summary

  1. Regal negotiated for the purchase of two cinemas in Hastings and for that purpose incorporated a subsidiary, Hastings Amalgamated Cinemas Ltd.
  2. It was alleged that the directors and the solicitor had used their position to acquire shares in Amalgamated for themselves with a view to selling them at a very substantial profit. They had obtained their profits using their offices as directors and they were therefore accountable for it to Regal.
  3. They used their position to acquire shares in amalgamated for themselves, with a view to enabling them at once to sell them at a substantial profit.
  4. Trial court
    1. Plaintiffs failed to prove malafide, or that there was any plot or arrangement between directors to divert valuable investment of the company.
  5. Holding
    1. Equity prohibits a trustee from making any profit by his management directly or indirectly.
    2. Rule of equity – anybody who uses fiduciary duty to make a profit will be liable for that profit. His liability will not depend upon fraud, absence of bonafide or other considerations such as his profits should have gone to the plaintiffs etc.
    3. The liability arises from the mere fact of a profit being made. The profiteer however honest and intentioned, cannot escape.  
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