[1988–89 CILR 195]
GRAND COURT (Harre, J.): November 24th, 1988
Companies—managers—breach of fiduciary duties—fiduciary duty of senior manager with major responsibilities same as director—liable to account for benefit of private contract obtained with third party in breach of fiduciary duties even though no prospect of contract being given to employer’s company
    The plaintiff company sought an order in the Grand Court that the defendants account for all fees, remuneration and profit received under certain contracts and pay the sums found owing to the plaintiff.
    The plaintiff had had for nearly 10 years a series of contracts with the Government of the Cayman Islands and Cayman Airways for information services, public relations and sales promotion. For two years it had employed the first defendant as managing director. He was responsible for all the day-to-day operations of the bureau including managing and directing the staff, acting as liaison between clients and the bureau’s overseas offices, promoting the interests of its clients through public relations and other types of promotional programmes, fulfilling its contractual obligations and budgeting for all its activities in relation to these. Specifically in relation to the chairman and principal shareholder of the bureau—Mr. Davies—the first defendant acted as adviser on all matters of importance concerning the clients and the Cayman Islands generally.
    In keeping with his duties, the first defendant was required to advise Mr. Davies on the 1987 budget proposal which was to be submitted to the Government pending the annual renewal of its contract with the plaintiff company. At some stage before this proposal was submitted, he discovered that the Government had decided not to renew the contract due to its dissatisfaction with Mr. Davies. He did not inform Mr. Davies of this but instead, at the request of the Government, submitted in May 1986 his own proposal, in which he alluded to the fact that he intended to set up his own company, which would employ some of Mr. Davies’ key staff. He also offered the services of the proposed company at a cost considerably lower than the plaintiff company’s budget for the current year and stated that he expected an increase in the charges of that company for 1987.
    Some time later in July 1986, he submitted the 1987 budget proposal to Mr. Davies indicating that a 5–10% increase over and above the costs for 1986 would be appropriate. In the meantime, he had negotiated with Mr. Davies the renewal of his contract of employment (back-dated to May) for another 12 months, after which time either party could give three months’ notice.

1988–89 CILR 196
    Up to this point the first defendant had given no indication to Mr. Davies that the Government would be terminating its contract with his company. In September, Mr. Davies was informed and the contract was awarded to the second defendant, a company of which the first defendant and his wife were the beneficial owners. The first defendant then sought to tender his resignation to the plaintiff company but was dismissed for misconduct with immediate effect.
    The plaintiff then instituted the present proceedings seeking an order that the defendants account for all fees, remuneration and profits received or payable under the contracts and that the plaintiffs be paid all sums found due and owing. Interlocutory proceedings to decide whether the plaintiff was allowed to proceed by originating summons and whether the plaintiff could obtain summary judgment against the defendants are reported at 1986–87 CILR 370 and 1988–89 CILR 56 respectively.
    In the present proceedings, the plaintiff submitted that (a) the first defendant was in breach of his fiduciary duty to it and (b) both defendants were trustees for the plaintiff of the benefit of the contracts entered into with the Government and Cayman Airways.
    The defendants submitted in reply that they could not be held accountable to the plaintiff as the first defendant had not acted in breach of his fiduciary duty to nor had he taken advantage of his position as managing director of the plaintiff.
    Held, granting the orders sought:
    As a senior officer of the plaintiff company with major responsibilities, the first defendant’s fiduciary obligations towards the plaintiff company were the same as those of a director or trustee, requiring the observance of the general standards of loyalty, good faith and the avoidance of a conflict of duty and self-interest. It followed that he had been in breach of these fiduciary duties when he contracted with the Government to provide professional services which were the same as those the plaintiff company provided under its contract with the Government and were, in fact, the major components of a new contract which he had led his employers to believe he was pursuing on their behalf. Consequently both he and the second defendant were liable to account to the plaintiff company for the benefit of the contract and it was immaterial to this liability that the plaintiff company might not in any case have obtained the new contract in consequence of the deteriorating relationship between its chairman and the Government (page 208, lines 12–20; lines 33–36; page 218, line 17 – page 219, line 5).
Cases cited:
(1)      Boardman v. Phipps, [1967] 2 A.C. 46; [1966] 3 All E.R. 721, dicta of Lord Upjohn applied.
(2)      Bray v. Ford, [1896] A.C. 44; [1895–9] All E.R. Rep. 1009.
(3)      Canadian Aero Service Ltd. v. O’Malley (1973), 40 D.L.R. (3d) 371, dicta of Laskin, J. applied.
(4)      Industrial Dev. Consultants Ltd. v. Cooley, [1972] 1 W.L.R. 443; [1972] 2 All E.R. 162, dicta of Roskill, J. applied.

1988–89 CILR 197
(5)      Island Export Fin. Ltd. v. Umunna, [1986] BCLC 460, distinguished.
(6)      Reading v. Att.-Gen., [1948] 2 K.B. 268; on appeal, [1949] 2 K.B. 232; on further appeal, [1951] A.C. 507; [1951] 1 All E.R. 617, considered.
(7)      Regal (Hastings) Ltd. v. Gulliver, [1967] 2 A.C. 134; [1942] 1 All E.R. 378, followed.
P. Lamontagne, Q.C. and G.F. Ritchie for the plaintiff;
R.D. Alberga, Q.C. and R.L. Nelson for the defendants.

10      HARRE, J.: By his originating summons the plaintiff 
  (“CINB”) is seeking, as against the first defendant, a declaration 
  that the first defendant has been and is in breach of his fiduciary 
  duty to the plaintiff; declarations that the first and second defend- 
  ants, in their respective capacities, are trustees of the plaintiff of 
15  all contracts to provide public relations and sales promotion ser- 
  vices entered into with the Government of the Cayman Islands or 
  Cayman Airways Ltd. (“CAL”); orders that the defendants 
  account to the plaintiff for all fees, remuneration and other 
  profits received by and payable to them in respect of any such 
20  contracts; an inquiry as to such fees, remuneration and other 
  profits; orders that the first and second defendants, in their 
  respective capacities, pay to the plaintiff all moneys found to be 
  due to it on the taking of such accounts; and further or conse- 
  quential relief, costs and interest. 
25      The chairman and principal shareholder of CINB is Mr. Garth 
  Davies. He swore an affidavit in support of the summons, and 
  also gave oral evidence as did the first defendant, Mr. Cohen. 
  There is substantial agreement as to the facts of this case. What is 
  in issue is whether in the light of those facts the first defendant 
30  owed a fiduciary duty to the plaintiff and if so whether he was in 
  breach of that duty. It is alleged that the second defendant is the 
  alter ego of Mr. Cohen. 
      From 1977 until 1986 CINB provided the Government with 
  public relations and sales promotion services under a series of 
35  contracts. Those which are most directly relevant run from 1984 
  to 1986. There was provision in the contracts for termination on 
  or after a date fixed in the contract upon either party having first 
  given to the other 90 days notice in writing. It was, however, the 
  practice of CINB and the Government at the material time to 
40  renegotiate contracts from year to year, or thereabouts. 
      There was also a series of agreements starting with an agree- 

1988–89 CILR 198

  ment dated December 15th, 1977 made between CINB and CAL. 
  The last of these was dated June 23rd, 1984. The CAL contracts 
  provided that CINB would provide it with public relations and 
  sales promotion services and would maintain facilities in Grand 
Cayman and Miami to perform the services set out in the con- 
  tracts. Like the Government contracts, the CAL contracts con- 
  tained provisions for termination on notice, but it was the 
  practice of CINB and CAL to renegotiate the contracts from time 
  to time. There was also an agreement between the Government 
10  and CINB dated June 24th, 1981 for the provision of various 
  information services but this was terminated by due notice as of 
  November 14th, 1984. 
      CINB provided public relations and sales promotion services to 
  the Government and CAL until the end of 1986. Both contracts 
15  were then terminated, and it is the events preceding and sur- 
  rounding the termination which are the subject-matter of the 
  present case. 
      Before I describe these events in detail I must refer to one 
  other characteristic of the arrangements between the Govern- 
20  ment and CINB. It was normal Government practice for the 
  Director of Tourism, acting on instructions from the Financial 
  Secretary, to invite contracting agencies such as the plaintiff to 
  submit a budget for the following year. The submission of a bud- 
  get by the Government’s contracting agencies was part of the pro- 
25  cess of preparation of the Government’s own budget. It was, 
  formally speaking, quite separate and distinct from the renewal of 
  a Government contract as such. 
      The essence of the plaintiff’s allegation against Mr. Cohen is 
  simply this: That while he was ostensibly faithfully engaged on 
30  behalf of CINB in carrying out his duties, including work related 
  to the submission of that company’s 1987 budget to the Govern- 
  ment, he had already been told, in the spring of 1986, that it had 
  been decided by the Government that no further contract would 
  be awarded to CINB and had been requested by the Government 
35  to prepare a proposal of his own; and that he thereupon whilst 
  still employed with CINB as Managing Director not only kept this 
  knowledge to himself but surreptitiously prepared and success- 
  fully submitted to the Government on his own behalf a proposal 
  for the provision of services to the Government in direct compe- 
40  tition to those then being provided by CINB. 
      It is formally admitted by the defendants that—(a) Mr. Cohen 

1988–89 CILR 199

  was under specific instructions by the Government of the Cayman 
  Islands not to discuss its plans and intentions with Mr. Davies; 
  (b) the Government and CAL had decided, at the time when the 
  Hon. Mr. Bodden communicated that fact to Mr. Cohen in the 
spring of 1986, to determine CINB’s contract as of the end of 
  1986; (c) Mr. Cohen believed this to be true; and (d) however, 
  CINB was not apprised of that decision until September 15th, 
      It is part of the plaintiff’s case that the Government’s decision 
10  and reasons for it are completely immaterial, as are the grounds 
  of Mr. Cohen’s belief that such a decision had been arrived at. It 
  acknowledges that its whole case is based on the existence of a 
  fiduciary relationship between Mr. Cohen and CINB, and breach 
  by him of his fiduciary duty. If that duty is not owed, it will be an 
15  end of the matter. 
      Mr. Cohen was hired by CINB as its Managing Director under 
  the terms of a written contract dated May 7th, 1984. Paragraph 1 
  of the contract reads as follows: 
          “The person engaged agrees to take up employment in the 
20      Cayman Islands and undertakes that he will diligently and 
      faithfully perform the duties of Managing Director for the 
      term of his engagement and will act in all respects according 
      to instructions or directions given to him by the corporation 
      through the Head of his Department or other duly author- 
25      ized officers. In this agreement the term ‘Head of his 
      Department’ shall mean the person for the time being acting 
      as Head of his Department.” 
  The layout of the contracts shows that it is in a standard form, to 
  which details have been added. It seems, on the face of it, to be 
30  more appropriate to a larger kind of organization than CINB. For 
  example, I can attach no meaning to the phrase “Head of his 
  Department” in relation to Mr. Cohen’s employment with CINB. 
      The contract includes a schedule, para. 2 of which reads: 
          “The duties of the person engaged shall include the usual 
35      duties of the office in which he is engaged, and any other 
      suitable duties which the Corporation may call upon him to 
      perform. The person engaged shall reside in such place and 
      occupy himself in such manner as the Corporation, through 
      its duly authorized officers, shall direct, and he shall not, 
40      either directly or indirectly, engage or be concerned in trade 
      or in private professional practice, but shall devote the 

1988–89 CILR 200

      whole of his time and attention to the service of the Corpor- 
      ation and shall use his utmost exertions to promote the inter- 
      est of the Corporation. He shall conform (to the Regulations 
      of the Corporation.” 
    That paragraph is not particularly helpful in determining the 
  actual duties which Mr. Cohen was expected to perform. How- 
  ever, the affidavit of Mr. Davies exhibits a job description which, 
  he says, details the responsibilities of the Managing Director. It is 
  dated October 10th, 1983. I quote it in full as it is very important: 
10      “Job Title: Managing Director 
      Responsible to: The Chairman 
      Description: News Bureau operation in Grand Cayman 
          1. To conduct the affairs of the Cayman Islands News 
15      Bureau to the satisfaction of clients and within the budgetary 
      constraints of the company. 
          2. To maintain regular contact with the clients and act as 
      liaison between them and the Bureau’s Miami and London 
20          3. To supervise the News Bureau’s invoicing to all clients 
      in Grand Cayman; collection of all funds; depositing of all 
      moneys in the company’s accounts; to relay all supplier 
      invoices, money collection and deposit information to the 
      chairman; to maintain files for all processed and paid 
25      invoices, etc. 
          4. To ensure preparation and distribution of such local, 
      US and Canadian trade and consumer stories and pictures in 
      a manner and volume designed to reflect a favourable image 
      of tourism in the Cayman Islands, both at home and abroad, 
30      tentatively targetted at a minimum of 20 trade, 4 home town 
      tourism stories, one consumer story, each month for US and 
      UK distribution. 
          5. To maintain close contact with all local media and act as 
      liaison with Radio Cayman in the production of People pro- 
35      grammes and other special features as required. 
          6. To ensure that visiting media people receive all assist- 
      ance necessary for the satisfactory completion of their 
          7. To act as liaison locally between the advertising agency 
40      and the Department of Tourism and Cayman Airways. 
          8. To seek ways of improving the image of the Bureau’s 

1988–89 CILR 201

      clients and of the Bureau’s own operations both in the 
      United States and the Cayman Islands. 
          9. To ensure adequate communication between the Cay- 
      man Islands Bureau, the clients and the Bureau’s Miami and 
    London offices. 
          10. To direct staff activities and ensure that the require- 
      ments of their job descriptions are met and ensure all-round 
      Bureau operating efficiency. 
          11. To develop photographic systems and programmes for 
10      both Cayman Airways and the Department of Tourism 
      aimed at providing a constant flow of illustrative material in 
      colour and black-and-white, to supply two sets of contact 
      sheets to enable Miami, Cayman and London Bureaus to 
      maintain photographic libraries, and to provide a proper 
15      accounting of this activity. 
          12. To produce at least one detailed conference report 
      each week for each client, reviewing the past week’s work 
      and giving a brief position on current projects being handled 
      by the Bureau and the decisions taken at meetings to further 
20      such projects. 
          13. To provide satisfactory time sheets for all members of 
      staff on account work, detailing breakdowns of time spent 
      each day on each client’s account. 
          14. To counsel and advise the Member and chief execu- 
25      tives of the Department of Tourism and Cayman Airways on 
      public relations and community affairs as they relate to their 
      public responsibilities and the development of tourism in the 
      Cayman Islands. 
          15. To keep the Chairman of CINB fully advised on all 
30      matters of importance concerning both clients and the Cay- 
      man Islands generally. 
          16. To keep the costs of operation of the Cayman office 
      down to a minimum and to utilize the Bureau’s air pouch via 
      CAL whenever possible for inter-office communication. 
35          17. To become familiar with all aspects of life in the Cay- 
      man Islands and consider carefully, in the light of socio/ 
      economic/political conditions, and the limitation of labour 
      and budget, every project the Bureau might conceive against 
      the benefits which might accrue from its successful imple- 
40      mentation. 
          18. To provide a comprehensive Government Information 

1988–89 CILR 202

      Service and an ongoing public affairs programme for the 
      Department of External Affairs, in a manner conducive to 
      the dignity of the Cayman Islands Government and in 
      accordance with the systems currently in force, in the 
    Bureau, as prescribed in the previous paragraphs.” 
      There is now a dispute between Davies and Cohen about 
  whether the latter was the “chief operating officer” of CINB. I do 
  not think the terminology matters. Mr. Cohen admits that he was 
  charged with the responsibility of the day-to-day operation of the 
10  bureau but says that he had no control over the finances nor could 
  he hire and fire without specific prior approval. He says that Mr. 
  Davies placed wide restrictions on the nature, scope and billing of 
  the work he undertook and that it is not true that he was left to 
  run the business of CINB with minimal board supervision. 
15      There is considerable evidence as to how the relationship 
  between Mr. Cohen and Mr. Davies actually worked. What was 
  ever referred to formal board meetings is not clear, and is not 
  important. Such limits on Mr. Cohen’s autonomy as were set 
  were set by Mr. Davies. [The learned judge then went on to con- 
20  sider the evidence relating to Mr. Cohen’s dissatisfaction with 
  Mr. Davies’ treatment of him. He continued with the following 
  example:] Mr. Cohen then refers to an internal company matter 
  with which he was unhappy, and concludes with these words: 
      “Either I shall be the chief operational officer which you 
25      described last night, or not. The half-way situation in the 
      company cannot go on.” 
  Below this are the handwritten words “I agree.” It is not in dis- 
  pute that these were written by Mr. Davies. However, Mr. Cohen 
  says that the agreement thus recorded did not change the situ- 
30  ation. As before, he had no power to hire and fire nor did he have 
  full budget and financial responsibilities. He could not even sign 
  cheques. These are the matters he principally relies on to demon- 
  strate that he was not really the chief operating officer of CINB. 
  However, he did acknowledge under cross-examination that the 
35  Government saw him as lead man or point man in servicing the 
  account; that he and the employees were the people with whom 
  the Government dealt on a regular basis; that he had been the 
  lead person responsible for getting the Government contract for 
  1986 and that he had been told that if he had not been there, 
40  there would have been no such contract; that everything hinged 
  on him being there; that if he had not been there the public rela- 

1988–89 CILR 203

  tions situation would have depended on how long others took to 
  pick up the pieces; and that once the Government had decided 
  against Mr. Davies, it was normal to turn to him. 
      I now turn to 1986, and set out first and in chronological order 
the events of that year. They are not disputed in any significant 
  way and their sequence is important. 
      It is Mr. Cohen’s contention that the CINB budget of $345,000 
  for 1986 was accepted by the Government with the understanding 
  that Mr. Davies would play a low profile, non-interfering role in 
10  the account service for that year but that in early 1986, with the 
  contract signed, Mr. Davies reneged on that commitment and 
  actively began to participate in the servicing of the account, caus- 
  ing extreme tension and discord with the client. There is certainly 
  evidence in the contemporary documents for early 1986 that there 
15  was friction between the Government and Mr. Davies over a 
  number of administrative and financial matters. I need not go 
  further into these because it is agreed that by some time in the 
  spring of 1986 the Government had decided not to renew the 
  CINB contract for 1987. For the reasons which I shall give later, I 
20  have concluded that the Government’s reasons for this decision 
  are immaterial. 
      I turn therefore to the events of April and May 1986. On April 
  25th, Mr. Cohen wrote to Mr. Davies about the renewal of his 
  own contract of service and various organizational matters. There 
25  is no evidence as to whether, when he wrote that letter, he had 
  already been informed of the Government’s decision not to 
  renew the CINB contract. The only evidence is that he came by 
  this knowledge in late spring. Mr. Cohen has described his reac- 
  tion to the information he was then given in some detail both in 
30  his affidavit and in his oral evidence. He says that he informed the 
  Hon. Norman Bodden that he would only be prepared to submit 
  a proposal if there was no way the CINB contract would be 
  renewed and if he was actually requested to make a proposal. He 
  says he explained to Mr. Bodden that his professional ethics pre- 
35  vented him from making an unsolicited proposal while under con- 
  tract. He describes himself as having been angry with Mr. Davies 
  for putting them both in that situation so soon after they had 
  negotiated a substantial new contract and distressed at the 
  dilemma of following the Government’s instructions not to dis- 
40  cuss the matter with Mr. Davies in that if he did tell him he would 
  lose all credibility with the Government. The Government, he 

1988–89 CILR 204

  said, was concerned at what Davies might do to damage the con- 
  tract further if he knew it was to be terminated. That might cause 
  cancellation for breach which would effect him, Mr. Davies and 
  his staff. He was asked in cross-examination what he considered 
to be the Government’s authority to tell him not to inform Mr. 
  Davies of its decision not to renew the contract. He replied that 
  the authority was that they had signed the contract with CINB 
  and that on a regular basis they gave him instructions to perform 
  duties. The Government had the right to give those instructions 
10  as the client under the contract. He considered that this fell in line 
  with his responsibilities as account manager servicing the 
  account. He slept on it, and concluded that he must comply with 
  the Government’s instructions if he was to be a credible account 
  manager and do his job. In his view it would have been immoral 
15  to defy the Government who, as he put it, were paying his salary 
  through Mr. Davies. 
      Mr. Cohen had clearly overcome any qualms he may have had 
  by May 10th. On that day he submitted his own proposal, to 
  which I have already referred. It was a proposal for a marketing 
20  programme, an important aspect of which was described as being 
  the area of public relations—its continuity, professionalism, per- 
  formance record and costs. The proposal addresses itself to those 
  areas and I shall do likewise. 
      On continuity and professionalism the proposal had this to say: 
25          “At CINB I have built a loyal group of PR professionals, 
      who take pride in their work and in the opportunity to pro- 
      mote the tourism aspects of the Cayman Islands. 
          I believe that this staff can contribute most effectively to 
      the future planning and implementation of PR activities, 
30      ensuring trained people addressing the needs of the market- 
      ing program, based on their experience and knowledge of 
      the people and resources of the Cayman Islands. 
          I do not believe that 1987 is the time for on-the-job train- 
      ing, and I can assure the portfolio that the basic staff is pre- 
35      pared to continue providing services as members of a new 
      firm that I am prepared to establish.” 
  The staff referred to was, of course, the staff of CINB. In other 
  words, on May 10th, 1986 Mr. Cohen was in a position to claim— 
  rightly, as subsequent events proved—to have induced the CINB 
40  staff to transfer their loyalties to him and his proposed new com- 

1988–89 CILR 205

      The proposal then goes on to describe the services which would 
  be provided, both in Grand Cayman and Miami. It is not necess- 
  ary to say more about these than that they were obviously 
  intended to replace the services provided by CINB. This part of 
the proposal contained a brief resume of the preceding two years. 
  It was as follows: 
          “In 1984, when I assumed the position of Managing Direc- 
      tor, I believe it is fair to point out that the firm was in pro- 
      fessional disarray, and was not providing acceptable, current 
10      professional client services. In the two years I have been 
      responsible for service, that situation has been completely 
      changed, leading, I believe, to the renewal of the CINB con- 
      tract for 1986. 
          Frankly, new, up-to-date public relations practices were 
15      introduced and implemented, new staff were recruited, and 
      new plans developed, despite the internal opposition of the 
      The next item in the proposal is concerned with costs, and is 
  based on the concept of dividing the annual budget total by 12 
20  and billing as a monthly fee, including expenses, up to a predeter- 
  mined monthly maximum. The following passage needs to be 
  recorded in view of the budgetary activities of CINB which took 
  place later in 1986 and which I shall soon describe: 
          “A preliminary, but detailed analysis of the 1987 budget- 
25      ary requirements for a PR firm representing the portfolio 
      lead to the conclusion that the previously stated services, 
      and the accompanying expenses, can be provided for a cost 
      not to exceed $300,000. 
          This figure is substantially lower than the costs for services 
30      in 1985 and the costs associated with the projected, current 
      1986 contract. It is also my position that CINB would need 
      to increase its charges for 1987, based on the anticipated 
      costs of operating under the present ownership expenditure 
35      Some four weeks after the date of the Cohen proposal to the 
  Government, the time had come for CINB to receive its invi- 
  tation to submit its budget proposals for the following year. That 
  invitation came from the Director of Tourism and was addressed 
  to Mr. Cohen. It was dated June 6th, 1986 and read as follows: 
40          “I have now been advised by the Hon. Financial Secretary 
      of the requested submission date for 1987 estimates. I would 

1988–89 CILR 206

      be most grateful if the Cayman Islands News Bureau could 
      submit their budget proposals for fiscal 1987 no later than 
      July 15th, 1986. 
          If you have any questions concerning this, please give me 
    a call.” 
      There is correspondence in evidence between Mr. Cohen and 
  Mr. Davies which indicate their respective roles in a preparation 
  of the 1987 budget. Many other topics are covered and I extract 
  the following key phrases from the relevant letters. Paragraph 5 
10  of Mr. Cohen’s report dated June 22nd, 1986 to Mr. Davies states 
  “I am looking at a 5 to 10% increase for the 1987 budget includ- 
  ing salaries, expenses . . . .” In his later report of July 13th, 1986, 
  Mr. Cohen states: 
          “I believe we should go after a 10% increase in the fees, 
15      10% in the expenses area, and $5,000 to $10,000 additional 
      for TV equipment. I don’t see any bigger increase coming 
      and I am not sure we can even get the 10%, but we should 
      ask for it now in the budget review stage, prior to negoti- 
      ation on a new contract for 1987.” 
20  The outcome was that on July 21st, 1986 an estimated budget for 
  1987, signed by Mr. Cohen, was submitted to the Director of 
  Tourism. The total covering services and out-of-pocket expenses 
  for 1987 was $378,600. This compared with $344,184 for 1986. 
      Mr. Cohen’s final word on the CINB budget comes in his 
25  report to Mr. Davies on July 27th, 1986, para. 4 of which reads as 
          “No word back yet from Eric re our budget proposal, and 
      I believe that it is a reasonable one to fight for in light of 
      other increases that I expect will be asked for.” 
30  Mr. Cohen says that it is ludicrous to suggest that he had some- 
  how contrived to increase CINB’s budget proposal in order to 
  undercut it. It is indeed, and for a very good reason. Mr. Cohen 
  already knew that he had submitted his own proposal budgeted at 
  $300,000, which was not only lower than the CINB proposal for 
35  1987 but lower than the budget for the year then current, 1986. 
  The correspondence concerning the 1987 budget reveals two 
  things. First, the extent to which Mr. Cohen was prepared to dis- 
  semble while debating with Mr. Davies on a budget process which 
  was an exercise in futility and in referring to negotiations for a 
40  1987 contract; and, secondly, the extent to which reliance was 
  placed on Mr. Cohen in budgetary matters. 

1988–89 CILR 207

      In the early part of 1986 other negotiations were taking place 
  between Mr. Davies and Mr. Cohen. They related to the renewal 
  of Mr. Cohen’s service agreement. When the agreement was ulti- 
  mately signed it was dated as of May 7th, 1986, although it is com- 
mon ground that the signing actually took place in late July or 
  early August. The agreement was for a tour of 12 months’ con- 
  tinuous service but provided that at any time after the expiration 
  of 12 months from the commencement of any resident service and 
  while serving in the Cayman Islands, the person engaged could 
10  determine his engagement on giving three months’ notice. In fact 
  Mr. Cohen gave three months’ notice of termination of this con- 
  tract on October 1st, 1986. I shall now describe the circumstances 
  which led to this termination. 
      Mr. Davies does not live in the Cayman Islands. Indeed, the 
15  nature and extent of his visits here was a topic which caused much 
  of the friction with the Government in early 1986. In September 
  of that year he came to Grand Cayman to attend a marketing 
  meeting between the Department of Tourism, CAL and CINB. It 
  was one of an annual series and was held on September 15th. He 
20  was asked to meet the Member for Tourism, Aviation and Trade, 
  the Hon. Norman Bodden, before the meeting. He asked Mr. 
  Cohen several times what this was about and was told each time 
  by Cohen that he did not know. That, of course, was not true. 
  When they met, the Hon. Norman Bodden told him of the 
25  Government’s decision to terminate the Government contract 
  with CINB and award a public relations and sales promotion ser- 
  vices contract to Cohen Associates Ltd. The Government’s 
  decision was formally announced at the marketing meeting. I 
  shall describe the end of the story in the terms of the plaintiff’s 
30  submissions. They are not in dispute. The articles of Cohen 
  Associates Ltd. had been signed on September 8th, 1986 and the 
  company was incorporated on September 11th. It is controlled by 
  Mr. Cohen, who holds 60% of its shares, and his wife is the other 
  shareholder. On September 22nd a formal agreement was 
35  entered into between Cohen Associates Ltd. and the Govern- 
  ment. A contract with CAL followed on October 7th. All this 
  took place while Mr. Cohen was still under contract as Managing 
  Director of CINB. 
      The Government terminated its contract with CINB as of Janu- 
40  ary 1st, 1987 by a notice of September 16th, 1986 and CAL did 
  the same on September 22nd. Cohen gave notice of termination 

1988–89 CILR 208

  of his service agreement as of December 31st on October 1st, 
  1986 but CINB served notice of immediate dismissal upon him on 
  November 26th for misconduct. Key staff of CINB left the com- 
  pany to take up employment with Cohen Associates Ltd., a move 
which was anticipated in Cohen’s proposal to the Government of 
  May 10th, 1986. That company has been providing services to the 
  Government and CAL under their respective contracts ever 
      I now turn to the law. Counsel for the plaintiff and for the 
10  defendants both referred to the review of the earlier authorities 
  and statements, of principle made by the House of Lords in Regal 
  (Hastings) Ltd. v. Gulliver (7). That case is the first authority to 
  which I shall refer for the proposition that the rule of equity 
  which insists on those, who by use of a fiduciary position make a 
15  profit, being liable to account for that profit, in no way depends 
  upon such questions or considerations as whether the profit 
  would or should otherwise have gone to the plaintiff, or whether 
  the profiteer was under a duty to obtain the source of the profit 
  for the plaintiff, or whether the plaintiff has in fact been damaged 
20  or has benefited by his action. The liability arises from the mere 
  fact of a profit having, in the stated circumstances, been made. In 
  saying that I do not overlook that I have yet to determine whether 
  the fiduciary relationship exists in this case, and it is the principle 
  governing that question to which I now turn. 
25      Regal (Hastings) Ltd. v. Gulliver was considered by the House 
  of Lords in Boardman v. Phipps (1). In that case, the speech of 
  Lord Upjohn was a dissenting one but his dissent concerned the 
  application of the legal principles to the facts of the particular 
  case rather than the principles themselves and it is his speech 
30  which has been most often referred to in later cases as expressing 
  those principles. He referred first to the fiduciary duty of trustees 
  and directors. Mr. Cohen was, of course, neither a trustee nor a 
  director of CINB. Nevertheless, the cases to which I shall refer 
  later establish that senior executives to whom initiatives and 
35  responsibilities are given far in excess of the obedient role of ser- 
  vants are in exactly the same position as directors. It is on that 
  basis, to which I shall also refer in more detail later, that I shall 
  base my conclusion as to whether a fiduciary relationship existed. 
      Lord Upjohn referred to the statement by Lord Herschell in 
40  Bray v. Ford (2) of the rule of equity that a person in a fiduciary 
  position is not allowed to put himself in a position where his 

1988–89 CILR 209

  interest and duty conflict and then, in the following terms, to its 
  development ([1967] 2 A.C. at 124): 
      “It is perhaps stated most highly against trustees or directors 
      in the celebrated speech of Lord Cranworth L.C. in Aber- 
    deen Railway v. Blaikie, where he said: 
              ‘And it is a rule of universal application, that no one, 
          having such duties to discharge, shall be allowed to 
          enter into engagements in which he has, or can have, a 
          personal interest conflicting, or which possibly may 
10          conflict, with the interests of those whom he is bound to 
      The phrase ‘possibly may conflict’ requires consideration. In 
      my view it means that the reasonable man looking at the rel- 
      evant facts and circumstances of the particular case would 
15      think that there was a real sensible possibility of conflict; not 
      that you could imagine some situation arising which might, 
      in some conceivable possibility in events not contemplated 
      as real sensible possibilities by any reasonable person, result 
      in a conflict.” 
20  On the Regal case Lord Upjohn said this (ibid., at 125): 
      “In my view, their Lordships were not attempting to lay 
      down any new view on the law applicable and indeed could 
      not do so for the law was already so well settled. The whole 
      of the law is laid down in the fundamental principle exempli- 
25      fied in Lord Cranworth’s statement I have already quoted. 
      But it is applicable, like so many equitable principles which 
      may affect a conscience, however innocent, to such a diver- 
      sity of different cases that the observations of judges and 
      even in your Lordships’ House in cases where this great prin- 
30      ciple is being applied must be regarded as applicable only to 
      the particular facts of the particular case in question and not 
      regarded as a new and slightly different formulation of the 
      legal principle so well settled.” 
      Since Boardman v. Phipps there has been a diversity of cases 
35  where the court has sought to apply the principle. The first of 
  these to which I shall refer is Industrial Dev. Consultants Ltd. v. 
  Cooley (4). That case concerned a managing director who 
  became aware during the course of his employment of work in 
  which his employers the plaintiffs were interested. He realized 
40  that he had a good chance of getting this work for himself and 
  that if he were to succeed in this he would have to free himself 

1988–89 CILR 210

  from his employers as soon as possible. He therefore made rep- 
  resentations to them about his health which he knew to be 
  untrue. In consequence, his employers agreed to release him 
  quickly and he obtained employment as project manager for 
work for a gas board which was in substance the same as that 
  which his previous employers had unsuccessfully attempted to 
  obtain. It was held according to the headnote to the All England 
  Law Reports ([1972] 2 All E.R. at 163): 
          “(i) Whilst the defendant was managing director of the 
10      plaintiffs a fiduciary relationship existed between him and 
      the plaintiffs; accordingly information which came to him 
      while he was managing director and was of concern to the 
      plaintiffs, was information which it was his duty to disclose 
      to the plaintiffs. He was under a duty therefore to disclose 
15      all information which he received in the course of his deal- 
      ings with the gas board. Instead he had embarked on a delib- 
      erate course of conduct which had put his personal interests 
      as a potential contracting party with the gas board in direct 
      conflict with his pre-existing and continuing duty as manag- 
20      ing director to the plaintiffs. He was therefore in breach of 
      his fiduciary duty to the plaintiffs in failing to pass on to 
      them all the relevant information received in the course of 
      his dealings with the gas board and in guarding it for his own 
      personal purposes and profit . . . . 
25          (iii) Because of his breach of duty the defendant was liable 
      to account to the plaintiffs for all the benefit he had received 
      or would receive under the contract with the gas board. The 
      question whether the benefit of the contract would have 
      been obtained for the plaintiffs but for the defendant’s 
30      breach of fiduciary duty was irrelevant. It was therefore 
      irrelevant that, as a result of the order to account, the plain- 
      tiffs would receive a benefit which they would not otherwise 
      have received . . . .” 
  It will be seen that the facts of this case bear, in many respects, a 
35  close similarity to those with which I am now dealing. One differ- 
  ence was that Cooley was a member of the board of the plaintiff 
  company. As I have said, the later cases to which I shall refer will 
  establish the extent to which that is relevant. 
      There are several passages in the judgment of Roskill, J. where 
40  he sets out the principles which he found to be applicable. He 
  referred, as I have already done, to the speech of Lord Upjohn in 

1988–89 CILR 211

  Boardman v. Phipps (1) and to Lord Cranworth’s “great prin- 
  ciple” which is set out in the passage from that speech which I 
  have extracted. Roskill, J. observed ([1972] 1 W.L.R. at 451) that 
  Lord Cranworth’s well-known statement had been repeated in 
innumerable cases of the highest authority and continued as fol- 
      “It is the principle which is important and there is no limit, I 
      venture to think, to the cases to which that principle can be 
      applied, always provided that in applying it, the court does 
10      not go outside the well-established limits of the principle.” 
      I respectfully adopt two conclusions in particular at which Ros- 
  kill, J. arrived. The first is directly applicable to Mr. Cohen’s 
  argument as to the extent of his obligations to the client. It is as 
  follows (ibid.): 
15      “The defendant had one capacity and one capacity only in 
      which he was carrying on business at that time. That capacity 
      was as managing director of the plaintiffs. Information 
      which came to him while he was managing director and 
      which was of concern to the plaintiffs and was relevant for 
20      the plaintiffs to know, was information which it was his duty 
      to pass on to the plaintiffs because between himself and the 
      plaintiffs a fiduciary relationship existed . . . .” 
  In relation to the second, it will be remembered that, having 
  embarked on his course of dealing with the gas board, Cooley 
25  obtained his release from his employment by an untrue represen- 
  tation. It was made to Mr. Hicks, the chairman and founder of 
  the group within which he worked. On that, Roskill, J. had this to 
  say (ibid., at 451–152): 
          “It seems to me plain that throughout the whole of May, 
30      June and July 1969 the defendant was in a fiduciary relation- 
      ship with the plaintiffs. From the time he embarked upon his 
      course of dealing with the Eastern Gas Board, irrespective 
      of anything which he did or he said to Mr. Hicks, he 
      embarked upon a deliberate policy and course of conduct 
35      which put his personal interest as a potential contracting 
      party with the Eastern Gas Board in direct conflict with his 
      pre-existing and continuing duty as managing director of the 
      plaintiffs. That is something which for over 200 years the 
      courts have forbidden.” 
40      Much of Mr. Cohen’s evidence was directed towards discredit- 
  ing Mr. Davies. He says that it was Mr. Davies who was the 

1988–89 CILR 212

  cause of the Government’s decision not to renew the CINB con- 
  tract. I need not go into the matters of that nature, because I 
  find them to be immaterial. If a fiduciary duty is established, the 
  question of accountability does not depend on whether the plain- 
tiff would, but for the breach of duty, have obtained the benefit 
  which went to the defendant. I have already referred to the 
  statement of that principle in Regal (Hastings) Ltd. v. Gulliver 
  (7). It was expressed again by Roskill, J. in the Cooley case as 
  follows (ibid., at 453): 
10          “Does accountability arise? It is said: ‘Well even if there 
      were the conflict of duty and interest, nonetheless, this was a 
      contract with a third party in which the plaintiffs never could 
      have had any interest because they would have never got it.’ 
      That argument has been forcefully put before me by [coun- 
15      sel for the defendant]. 
          The remarkable position then arises that if one applies the 
      equitable doctrine upon which the plaintiffs rely to oblige 
      the defendant to account, they will receive a benefit 
      which . . . it is unlikely they would have got for themselves 
20      had the defendant complied with his duty to them. On the 
      other hand, if the defendant is not required to account he 
      will have made a large profit, as a result of having deliber- 
      ately put himself into a position in which his duty to the 
      plaintiffs who were employing him and his personal interests 
25      conflicted . . . . Therefore, if the plaintiffs succeed they will 
      get a profit which they probably would not have got for 
      themselves had the defendant fulfilled his duty. If the 
      defendant is allowed to keep that profit he will have got 
      something which he was able to get solely by reason of his 
30      breach of fiduciary duty to the plaintiffs. 
          When one looks at the way the cases have gone over the 
      centuries it is plain that the question whether or not the 
      benefit would have been obtained but for the breach of trust 
      has always been treated as irrelevant.” 
35      The next case to which I refer is Canadian Aero Service Ltd. v. 
  O’Malley (3). It was an-appeal to the Supreme Court of Canada 
  from the judgment of the Ontario Court of Appeal. I shall refer 
  to the plaintiff as “Canaero.” The allegation against two of the 
  defendants was that while directors or officers of Canaero they 
40  had devoted effort and planning in respect of a corporate oppor- 
  tunity in which Canaero had a continuing interest, but had 

1988–89 CILR 213

  subsequently wrongfully taken its benefit in breach of a fiduciary 
  duty to Canaero. The plaintiffs contention was upheld in the 
      The judgment of the court, delivered by Laskin, J., contains 
vivid restatements of the principle developed through the earlier 
  cases to which I have referred. Having observed that the fiduciary 
  relationship in its generality betokens loyalty, good faith and 
  avoidance of a conflict of duty and self-interest, Laskin, J. had 
  this to say (40 D.L.R. (3d) at 382): 
10      “Descending from the generality, the fiduciary relationship 
      goes at least this far: a director or a senior officer like [the 
      first and second defendants] is precluded from obtaining for 
      himself, either secretly or without the approval of the com- 
      pany (which would have to be properly manifested upon full 
15      disclosure of the facts), any property or business advantage 
      either belonging to the company or for which it has been 
      negotiating; and especially is this so where the director or 
      officer is a participant in the negotiations on behalf of the 
20          An examination of the case law in this Court and in the 
      Courts of other like jurisdictions on the fiduciary duties of 
      directors and senior officers shows the pervasiveness of a 
      strict ethic in this area of the law. In my opinion, this ethic 
      disqualifies a director or senior officer from usurping for 
25      himself or diverting to another person or company with 
      whom or with which he is associated a maturing business 
      opportunity which his company is actively pursuing . . . .” 
      Later, having referred to Boardman v. Phipps (1) and Indus- 
  trial Dev. Consultants Ltd. v. Cooky (4), Laskin, J. continued 
30  (ibid., at 384): 
          “What these decisions indicate is an updating of the equit- 
      able principle whose roots lie in the general standards that I 
      have already mentioned, namely, loyalty, good faith and 
      avoidance of a conflict of duty and self-interest. Strict appli- 
35      cation against directors and senior management officials is 
      simply recognition of the degree of control which their pos- 
      itions give them in corporate operations, a control which 
      rises above day accountability to owning shareholders and 
      which comes under some scrutiny only at annual general or 
40      at special meetings. It is a necessary supplement, in the pub- 
      lic interest, of statutory regulation and accountability which 

1988–89 CILR 214

      themselves are, at one and the same time, an acknowledge- 
      ment of the importance of the corporation in the life of the 
      community and of the need to compel obedience by it and by 
      its promoters, directors and managers to norms of exem- 
    plary behaviour.” 
  He added (ibid., at 391): 
      “ . . . I am not to be taken as laying down any rule of liab- 
      ility to be read as if it were a statute. The general standards 
      of loyalty, good faith and avoidance of a conflict of duty and 
10      self-interest to which the conduct of a director or senior offi- 
      cer must conform, must be tested in each case by many fac- 
      tors which it would be reckless to attempt to enumerate 
      exhaustively. Among them are the factor of position or 
      office held, the nature of the corporate opportunity, its ripe- 
15      ness, its specificness and the director’s or managerial offi- 
      cer’s relation to it, the amount of knowledge possessed, the 
      circumstances in which it was obtained and whether it was 
      special or, indeed, even private, the factor of time in the 
      continuation of fiduciary duty where the alleged breach 
20      occurs after termination of the relationship with the com- 
      pany, and the circumstances under which the relationship 
      was terminated, that is whether by retirement or resignation 
      or discharge.” 
      The court applied these general principles to a number of par- 
25  ticular questions. It found that the fiduciary duty would be 
  reduced to an absurdity if it could be evaded simply because the 
  proposals made differed in some respects. Laskin, J. expressed 
  the matter thus (ibid., at 388–389): 
      “I do not regard it as necessary to look for substantial 
30      resemblances. Their presence would be a factor to be con- 
      sidered on the issue of breach of fiduciary duty but they are 
      not a sine qua non. The cardinal fact is that the one project, 
      the same project which [the second defendant] had pursued 
      for Canaero, was the subject of his Terra proposal. It was 
35      that business opportunity, in line with its general pursuits, 
      which Canaero sought through [the first and second defend- 
      ants]. There is no suggestion that there had been such a 
      change of objective as to make the project for which pro- 
      posals were invited from Canaero, Terra and others a differ- 
40      ent one from that which Canaero had been developing with 
      a view to obtaining the contract for itself.” 

1988–89 CILR 215

      Laskin, J. also expressed the following conclusion of the court 
  on the position of senior managers who were not directors (ibid.
  at 381): 
      “Like Grant, J., the trial Judge, I do not think it matters 
    whether [the first and second defendants] were properly 
      appointed as directors of Canaero or whether they did or did 
      not act as directors. What is not in doubt is that they acted 
      respectively as president and executive vice-president of 
      Canaero for about two years prior to their resignations. To 
10      paraphrase the findings of the trial Judge in this respect, they 
      acted in those positions and their remuneration and respon- 
      sibilities verified their status as senior officers of Canaero. 
      They were ‘top management’ and not mere employees 
      whose duty to their employer, unless enlarged by contract, 
15      consisted only of respect for trade secrets and for confiden- 
      tiality of customer lists. Theirs was a larger, more exacting 
      duty which, unless modified by statute or by contract (and 
      there is nothing of this sort here), was similar to that owed to 
      a corporate employer by its directors. I adopt what is said on 
20      this point by Gower, Principles of Modern Company Law
      3rd ed. (1969), at p. 518 as follows: 
          ‘ . . . these duties, except in so far as they depend on 
          statutory provisions expressly limited to directors, are 
          not so restricted but apply equally to any officials of the 
25          company who are authorised to act on its behalf, and in 
          particular to those acting in a managerial capacity.’ 
          The distinction taken between agents and servants of an 
      employer is apt here, and I am unable to appreciate the basis 
      upon which the Ontario Court of Appeal concluded that [the 
30      first and second defendants] were mere employees, that is 
      servants of Canaero rather than agents. Although they were 
      subject to supervision of the officers of the controlling com- 
      pany, their positions as senior officers of a subsidiary, which 
      was a working organization, charged them with initiatives 
35      and with responsibilities far removed from the obedient role 
      of servants.” 
      The last in this line of cases to which I shall refer is Island Export 
  Finance Ltd. v. Umunna (5). It was a Queen’s Bench Division case 
  in which the court found that the defendant was not in breach of his 
40  fiduciary duty. It is a case which mainly concerned the extent to 
  which a director’s fiduciary duty continues after his resignation, 

1988–89 CILR 216

  and the cases to which I have already referred were subject to a 
  further extensive review by Hutchinson, J. He concluded that the 
  formulation of the fiduciary duty of a director by Laskin, J. in 
  Canaero (3) appeared to be absolutely in accord with the line of - 
authority exemplified by Regal (Hastings) Ltd. v. Gulliver (7). 
      In the present case, counsel for the defendant submitted that, 
  like Umunna, the present plaintiff should fail because the pros- 
  pect of renewing the Government and CAL contracts was not a 
  “maturing business opportunity” for CINB by the time Mr. 
10  Cohen put together his proposal. These were contracts, he says, 
  which in any event CINB was not going to get, and therefore 
  there was no conflict of interest. But there is a great difference 
  between the facts of Umunna and the present case. Umunna’s 
  former employers were not actively pursuing further orders either 
15  when Umunna resigned or when he subsequently obtained the 
  contracts concerned. Moreover, it was held that Umunna’s resig- 
  nation was not prompted or influenced by a wish to acquire the 
  business for himself, nor had he exploited—that is to say, 
  exploited after his resignation—confidential information he had 
20  acquired as a director. The case is an application of the estab- 
  lished principle to particular facts which differed significantly 
  from the facts of the present case, rather than an authority for any 
  alteration of that principle. 
      One case outside the developing line to which I have referred 
25  was relied on on behalf of the defendant. It was Reading v. Att.- 
  Gen. (6). The case was heard at first instance by Denning, J., and 
  thereafter by Tucker, Asquith and Singleton, L.JJ. in the Court 
  of Appeal. It concerned a sergeant in wartime Cairo who rode in 
  uniform from time to time for reward in the front seat of a civilian 
30  lorry carrying illicit drugs in order, by his presence, to divert the 
  suspicions of the police. 
      Denning, J. expressed ([1948] 2 K.B. at 275) the principle of 
  accountability as being applicable where a servant wrongfully 
  takes advantage of his service to make a profit for himself in the 
35  sense that— 
      “the assets of which he has control, or the facilities which he 
      enjoys, or the position which he occupies, are the real cause 
      of his obtaining the money, as distinct from being the mere 
      opportunity for getting it, that is to say, if they play the pre- 
40      dominant part in his obtaining the money, then he is accoun- 
      table for it to the master.” 

1988–89 CILR 217

  He held that although there was no fiduciary relationship in 
  respect of the illicit journeys, nor indeed in respect of the 
  uniform, the position of the man as a servant of the Crown was 
  the sole reason why he was able to get the money, and that was 
sufficient to make him liable to hand it over. He distinguished the 
  case from cases where the service merely gives the opportunity 
  for making money. 
      In the Court of Appeal the appeal was dismissed. The court 
  was of the unanimous opinion, differing in that respect from Den- 
10  ning, J., that a fiduciary relationship subsisted and that Sgt. 
  Reading obtained the sums claimed by acting in breach of that 
  relationship. The court also said ([1949] 2 K.B. at 238) that “we 
  do not wish to be taken as holding that if the fiduciary relation 
  were absent the appeal would necessarily succeed.” That is the 
15  extent of the endorsement, if such it can be called, of the prin- 
  ciple of law on which Denning, J. based his decision. 
      In the House of Lords, their Lordships unanimously dismissed 
  the appeal. Viscount Jowitt, L.C. and Lord Porter held that, 
  independently of any fiduciary relationship, the official position 
20  held by the soldier, which enabled him to earn the money by its 
  use, gave the Crown, his master, the right to the money so earned 
  as money had and received, even though it was earned by a crimi- 
  nal act, and even though the Crown suffered no loss. Lord Nor- 
  mand did not find it necessary to consider whether the Crown 
25  could have recovered on the footing of money had and received. 
  Lord Oaksey agreed with the judgment of the Court of Appeal, 
  except to the extent that he did not think that there was any diffi- 
  culty in imputing to a servant an implied promise to account to his 
  master for any moneys he might receive by the use of his master’s 
30  property and of his position as his master’s servant. Lord Rad- 
  cliffe agreed that the appeal should be dismissed for the same 
  reasons as the Court of Appeal. 
      Counsel for the defendants relied on the Reading case in sup- 
  port of the proposition that I should add to the catalogue of 
35  matters for consideration which has been enunciated time after 
  time in the line of cases to which I have referred, an analysis of 
  whether Mr. Cohen’s position was the cause, or merely the 
  opportunity, which enabled him to acquire the Government pub- 
  lic relations and sales promotion contract. It was said that the 
40  shortcomings of Mr. Davies were the cause and I was, in conse- 
  quence, taken in some detail through the history of his activities 

1988–89 CILR 218

  from 1977 onwards. To that, in my view, there are two answers. 
  In none of the later cases is there any reference to Reading at all; 
  and the reason, in my view, is to be found in the following pas- 
  sage from the judgment of Denning, J. ([1948] 2 K.B. at 276): 
    “This man Reading was not acting in the course of his 
      employment: and there was no fiduciary relationship in 
      respect of these long journeys nor, indeed, in respect of his 
      The Court of Appeal and the House of Lords unanimously 
10  decided that there was a fiduciary relationship. That was the basis 
  on which Reading was finally decided, and that is the basis on 
  which the present case is being put. I shall decide it upon the prin- 
  ciples which are to be found in the developing line of cases which 
  have applied the “great principle” of Lord Cranworth to which I 
15  have referred, unencumbered by any gloss from Reading. 
      On the basis of the facts and the law as I have sought to express 
  them, I have reached the following conclusions. Mr. Cohen owed 
  a fiduciary duty to CINB. He was the chief point of contact 
  between CINB, the Government and CAL in Grand Cayman. Of 
20  course he was subject to some control, particularly in relation to 
  financial and administrative matters. There is no executive, how- 
  ever senior, who is not, unless he be also the owner of the busi- 
  ness. But he was “top management,” and owed the duty which 
  applied to any official of a company who is authorized to act on its 
25  behalf in a managerial capacity, no less than to a director. 
      Mr. Cohen was in breach of his fiduciary duty. He owed that 
  duty to CINB, not to any client. His duty to the client arose from 
  his position with CINB. The fact that the major client was the 
  Government is immaterial, and the proposition that it was the 
30  Government which was really paying Mr. Cohen’s salary through 
  CINB is quite misconceived. He did not merely remain silent 
  about his knowledge of the Government’s intentions, while con- 
  tinuing to act in all other respects with the utmost good faith 
  towards CINB. It is possible to conceive a situation where Mr. 
35  Cohen might have concluded that not telling Mr. Davies of the 
  Government’s decisions was in the best interests of CINB—for 
  example, if he felt that he could, in the months remaining of 1986, 
  save the day for CINB. But far from doing that, he proceeded to 
  make his own proposal, and indeed to bring it to a conclusion, 
40  while he was still employed by CINB. Indeed, he entered into a 
  new contract of service with CINB after he had made his own 

1988–89 CILR 219

  competing proposal to the Government. In that respect, this case 
  is, in my view, more extreme than either Cooley (4) or Canaero 
  (3), and I cannot find anything in the other differences of fact 
  between the cases to bring the present case outside the principle 
of accountability. 
      I find also that the differences between the Cohen proposal and 
  the CINB arrangements were immaterial. It was the one project, 
  the one to which he was pretending to give his whole time and 
  attention on behalf of CINB, which was the subject of Mr. 
10  Cohen’s own proposal. That proposal was one which he alone 
  was in a position to make, and that by virtue of his position with 
  CINB. The suggestion that a stranger to the previous arrange- 
  ments could have done so is unsustainable. It may well be that 
  CINB could never have obtained the contract for 1987. But that, 
15  for the reasons which have been stated time and again in the cases 
  to which I have referred, is immaterial. 
      Accordingly, the plaintiff is entitled to all the declarations and 
  orders for which he has asked in para. 1(a)-(e) of his originating 
  summons against the first defendant and against the second 
20  defendant, through which the first defendant acted in breach of 
  his fiduciary duty, in para. 2(a)-(d). It follows that the first 
  defendant’s counterclaim fails, and is dismissed. 
      With regard to interest, the plaintiff filed yesterday an affidavit 
  of a bank official giving details of his bank’s prime lending rate for 
25  Cayman Islands dollars for the period from January 1st, 1987 to 
  November 22nd, 1988. I am left in some doubt as to the basis on 
  which the plaintiff is claiming interest in view of the other relief 
  which he has successfully sought. I would like to hear counsel 
  now on that, and indeed on anything which may need to be said 
30  on costs and any consequential matters. 
  Judgment for the plaintiff; counterclaim 
  Attorneys: Charles Adams & Co. for the plaintiff; Truman Bodden & 
  Co. for the defendants.