Peskin v Anderson
| Peskin v Anderson | |
|---|---|
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| Court | Court of Appeal of England and Wales |
| Full case name | (1) Bruce Peskin (2) Kevin Milner John Anderson & Others |
| Decided | December 14, 2000 |
| Citation(s) | [2000] EWCA Civ 326, [2001] 2 BCLC 1 |
| Case opinions | |
| Mummery LJ | |
| Court membership | |
| Judge(s) sitting |
Simon Brown LJ Mummery LJ Latham LJ |
| Keywords | |
| Directors' duties | |
Peskin v Anderson [2000] EWCA Civ 326 is a UK company law case concerning directors' duties under English law.
Former members of the Royal Automobile Club (RAC) sued the directors for failing to disclose that they had plans to demutualise. They claimed that they could have received £35,000 had they stayed in the club, but had given up their membership. They claimed that the directors had breached a duty owed to them as shareholders to inform them of the upcoming demutualisation plan.
The RAC applied to have the claims struck out as having no prospect of success as directors did not owe a duty to individual shareholders. The RAC succeeded in having the claims struck out at first instance before Neuberger J, and the claimants appealed to the Court of Appeal.
The Court of Appeal dismissed the appeal. The only judgment was given by Mummery LJ.
Although there were several grounds in the appeal, the main proposition for which the judgment is traditionally cited is that directors do not owe a general duty to shareholders, although they may owe a specific duty to a shareholder if there has been an assumption of responsibility. In this case there was no suggestion of such an assumption of responsibility, and so the claims were struck out.
Counsel for the claimants accepted that the fiduciary duties owed by the directors to RAC do not necessarily extend to the individual members, and that, in general, directors do not, solely by virtue of the office of director, owe fiduciary duties to the shareholders, either collectively or individually. The court cited with approval the headnote in Percival v Wright [1902] 2 Ch 421 that:
In his judgment Mummery LJ noted that the apparently unqualified width of the ruling had, over the course of the previous century, been subjected to increasing judicial, academic and professional critical comment. But that, as a general rule, it was right that directors should not be over-exposed to the risk of multiple legal actions by dissenting minority shareholders.
The existence of fiduciary duties owed by the directors to the company do not however necessarily preclude, in special circumstances, the co-existence of additional duties owed by the directors to individual shareholders. In such cases individual shareholders may bring a direct action (as distinct from a derivative action) against the directors for breach of such duty. The court relied upon Stein v Blake [1998] 1 All ER 724 (at 727D and 729G per Millett LJ) for the principle that a duality of duties may exist. In addition to requiring special circumstances to give rise to such a duty, for a shareholder to have a valid claim breach of such a duty must have caused loss to the shareholder directly (eg. by being induced by a director to part with his shares in the company at an undervalue), as distinct from loss sustained by him by a diminution in the value of his shares (eg. by reason of the misappropriation by a director of the company's assets).
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