The case of fassihi v item software uk limited twelve years ago appeared to impose on a director a further duty to disclose his own misconduct to the company. Alexander fox and clare arthurs look at the implications of ghlm trading v maroo newey j held that much as a trustee must show what he has done with trust property, it is incumbent on a director to explain what has become of company property in his hands. However, whatever the basis, the duty of disclosure of any facts which give rise to a conflict necessarily means that the duty is more onerous. Item software uk ltd v fassihi 2004 ewca civ 1244 2005 icr 450. Item software uk ltd v fassihi and others university of. Type document page start 346 page end 346 is part of book title. Item software uk ltd v fassihi and others university. Appeal from fassihim, liddiardrams, international ltd, isograph ltd v item software uk ltd. Mary howarth arden, baroness mance, dbe born 23 january 1947, known professionally as lady arden of heswall, is an english judge she currently serves as a justice of the supreme court of the united kingdom. Jan 29, 2007 in item software uk ltd v fassihi, the court of appeal held that it was incumbent upon a fiduciary to disclose his own participation in the setting up of a rival company as such activities did not constitute legitimate entrepreneurial activities. Item software uk ltd v fassihi and ors, ca 2004 emplaw. Directors fiduciary duty to disclose wrongdoing and. Fiduciary loyalty, inside and out article by stephen r. The court of appeal so held, dismissing an appeal by the defendant, kouroush fassihi, from a decision of mr nicholas strauss, qc sitting as a deputy judge of the chancery division 2003 2 bclc 1 that he was in breach of a duty to disclose his own misconduct as a director of the claimant, item software ltd, in diverting items business to.
Whilst this is considered to be an extension of the fundamental duty to promote what the director considers, in good faith, to be the interests of the company, the decision created. Fassihi, the court of appeal considered two issues. Goldtrail travel ltd v aydin and others 2014 ewhc 1587 ch. Fassihi was employed by item software as a sales and marketing directorthe employment contract expressly provided that fassihi should not use confidential information belonging to the company for his own purposeitem softwares main source of business was distributing software made by isograph. Item software uk ltd v fassihi 2004, the court held that a director who breaches a fiduciary duty will be required to disclose breach of duty to the company if the duty to act in the interests of the company requires such disclosure. Appeal from item software uk ltd v fassihi and others chd bailii, 2002 ewhc 3116 ch, 2003 bcc 858, 2003 2 bclc 1, 2003 irlr 769 enforcement of confidentiality clause in contract of employment on termination. Item is a supplier of reliability software, which is concerned with the management and prevention of the risks of equipment failure. Item software uk ltd v fassihi 2004 ewca 1244 kings. We would like to show you a description here but the site wont allow us.
The department of state health services maintains this web page, but the 84th legislature made structural changes to the health and human services system including transferring some dshs functions to the health and human services commission hhsc. Secret profit section 33 secondly, every partner must account to the firm for any benefit derived by him without the consent of the other partners from any transaction concerning the partnership or from any use. These negotiations failed and isograph terminated its contract with item software. Corporate governance and directors duties are hot topics at the moment. Shepherds investments ltd v walters employment and hr uk. Firstly, it determined whether or not a company director was in breach of his fiduciary duty of loyalty by failing to disclose his own misconduct to the company, and secondly, if an employee was entitled to claim his remuneration to the date of his dismissal notwithstanding the fact that. The cambridge law journal the duty of loyalty of company. The claims against the other defendants have been settled. Directors fiduciary duty duty of disclosure duty of loyalty good faith entitlement to salary after dismissal apportionment act 1870. If this is correct, it is not necessary to decide whether bell v. Item software is an acknowledged world leader in the supply of reliability engineering and safety analysis software. Facts and judgement for item software v fassihi 2004 ewca civ 1244. Lever bros ltd is distinguishable for the additional reason that mr fassihi was a director of item as well as an employee, which is the issue on which different views were expressed by glidewell j and robert goff lj.
If your business is involved with reliability, availability, maintainability and safety rams evaluation, or risk assessment, you need to contact item software. In item software uk ltd v fassihi and others the court of appeal holds that a company director has a fiduciary duty to disclose his own misconduct and to account for secret profits. Per arden lj in item software v fassihi 2005 icr 540 the duty arises as an incidient of the duty of good faith. Item software ltd uk claimant distributed software products and at the relevant time, a major part of the item s business was the distribution of software products to isograph ltd. Fassihi,2 in which the english court of appeal held that a director owes a positive duty to disclose his own misconduct to the company, the breach of which would give rise to a claim for remedies. Effect of companies act 2006 on director conflict of interest. Directors duty to disclose misconduct george green. At the relevant time a major part of item s business was the distribution of software products for a company called isograph ltd isograph. Home employment item software uk ltd v fassihi and others. A major part of items business was the distribution of software products for isograph ltd. However, in case the matter goes further, in my opinion mr. If your business is involved with reliability, availability, maintainability and safety rams evaluation, or risk assessment, our products are an essential part of your software solutions.
In assessing a directors good faith, item software uk ltd v fassihi illustrated the courts use of objective measure to determine whether the director could reasonably have taken that decision in good faith. Cms dolphin ltd v simonet and another 2001 all er 294. You can change your cookie settings at any time but if you do, you may lose some functionality on our website. They are duties imposed by law, and cannot be excluded by the companys articles of association. Unknown to his employer, he was intending to set up a new company and had made a proposal to one of his employers customers that they should transfer an. Mr dehghani was managing director and mr fassihi was the sales and marketing director. Fassihim, liddiardrams, international ltd, isograph ltd v. Examination of the esv approach as a positive modern approach. View all articles and reports associated with item software uk ltd v fassihi 2002 ewhc 3116 ch. Fassihi, the sales and marketing director of item software, secretly approached isograph with a view to diverting isographs contract with item software to his own company, and he also encouraged item software to negotiate with isograph for improved terms. Feb 03, 2005 fassihi, the sales and marketing director of item software, secretly approached isograph with a view to diverting isographs contract with item software to his own company, and he also encouraged item software to negotiate with isograph for improved terms. Directors obligations are founded on principles of good faith, fidelity and honesty, which.652 284 741 1001 515 1368 809 726 538 1196 1125 1505 1533 1338 446 619 43 1441 455 923 780 1196 919 720 388 663 952 1468 1203 1240 774 1246 754 423 968 706 211