Courtwood Holdings SA (a company registered & incorporated under the laws of Panama) v Woodley Properties Ltd (a company registered & incorporated under the laws of Jersey) & 10 Ors (2018)


A company which had contracted with a special purpose vehicle to provide advice regarding land acquisition and planning matters also had a fiduciary duty towards the SPV where the practical reality was that the SPV's directors had no expertise in those matters and were entirely dependent on the advice for day-to-day decision-making. A contractual duty to provide services with due skill and care was not inconsistent with the existence of a fiduciary duty.


The claimant brought an action for the recovery of the proceeds and profits of sale of investment property sold to the first defendant (D1).

The property had been acquired by the claimant's predecessor (SFPL) as an offshore special purpose vehicle funded by bank finance and individual investors. SFPL's sole purpose was to improve the planning position of the site and sell it for profit. The project was managed by the sixth defendant (D6), a company of which the second defendant (D2) was sole director. SFPL and D6 signed a property advisory agreement (PAA) which provided for D6 to advise SFPL in relation to the planning and development issues in return for half the profits of the project. The other half of the profits was to go to the investors. Following delays in obtaining planning permission, D6 petitioned for SFPL's winding up. The bank called in its loan and appointed receivers. As a result, the land was sold to D1, a company owned by D2 and other individual defendants. The investors lost their money. D1 succeeded in obtaining planning permission and the property was sold for a significant profit. According to the claimant, the profits eventually realised should have gone to SFPL instead of to those who were supposed to be managing the project on its behalf. It alleged that the defendants had received the property or its sale proceeds through a breach of fiduciary duty on D6's part and had sufficient knowledge of that breach to make them accountable as constructive trustees on the ground of knowing receipt within Brown v Bennett [1999] B.C.C. 525.


Existence of fiduciary duty - A fiduciary duty typically arose where one person was entrusted with authority to manage the property or affairs of another who was reliant or dependent on such exercise of powers, Al Nehayan v Kent [2018] EWHC 333 (Comm) applied. SFPL's directors were not selected for their expertise in matters of land acquisition and planning, but were professional directors provided by a corporate services provider. SFPL's only purpose was the project in issue, which was managed almost entirely by D6. Even though the PAA expressly referred to an obligation to exercise "due skill and care" with regard to the provision of advice on which SFPL would make the final decision, the practical reality was that SFPL was entirely dependent on that advice and it was D6 which effectively made the decisions on a day-to-day basis. A contractual duty to provide services with due skill and care was not inconsistent with the existence of a fiduciary duty. The effect of the PAA was to require D6 to act with loyalty in SFPL's interests, and it operated to impose fiduciary duties on D6 accordingly (see paras 131-138 of judgment).

Breach of fiduciary duty - D6 had acted in breach of duty in procuring SFPL to make a payment to a company associated with D2, but there was no evidence that that payment had caused SFPL's collapse. Although D6 had acted in its own interests, and not those of the company, in submitting the winding-up petition, the presentation of the petition was not the sole reason for the withdrawal of the bank's funding and it was likely that it would have appointed receivers and called in the loan in any event. Once receivers were appointed, the sale of the land was a matter for them and D1 was the highest bidder. Therefore, although D6 had acted in breach of duty, the claimant had not established that that breach had led to the disposal of the land. In particular, it was not accepted that D6 had entered into a scheme to push SFPL into receivership and pick up the property from the receivers (paras 156-157, 159, 164-166).

Knowing receipt - In order for "knowing receipt" to be established, the defendants had to have such knowledge as to make it unconscionable for them to retain the property, Bank of Credit and Commerce International (Overseas) Ltd v Akindele [2001] Ch. 437 applied. It was a prerequisite of a claim in knowing receipt that the disposition to the recipient was itself a breach of trust or fiduciary duty; it was not enough that the disposition followed, and was caused by, other such breaches, Brown followed. The focus was on the disposer, not on the acquirer. The sale by the receivers to D1 was not a disposition in breach of fiduciary duty, since it was not a disposition by D6 at all (paras 11, 190-192, 199).

Claim dismissed