Guinness PLC v. Ward, (1990) 108 N.R. 44 (HL)

• Case Date: February 08, 1990
• Jurisdiction: Canada (Federal)
• Citations: (1990), 108 N.R. 44 (HL)

Guinness PLC v. Ward (1990), 108 N.R. 44 (HL)

MLB headnote and full text

Guinness PLC (respondents) v. Saunders and Ward (appellants)

Indexed As: Guinness PLC v. Ward

House of Lords

London, England

Lord Keith of Kinkel, Lord Brandon of Oakbrook, Lord Templeman, Lord Griffiths and Lord Goff of Chieveley

February 8, 1990.

Summary:

Ward, a Guinness director, was a member of a directors' committee of three empowered by Guinness to negotiate the acquisition of the shares of Distillers. The committee awarded Ward 5.2 million, a percentage of the final price, in compensation for his negotiation efforts. Only the board of directors was empowered to award special compensation to a director. Guinness brought an action against Ward to recover the money. The trial judge allowed the action, affirmed by the Court of Appeal in a judgment reported [1988] 1 W.L.R. 863. Ward appealed.

The House of Lords dismissed the appeal.

Company Law - Topic 4122

Directors - Compensation - Contracts with company - A company director was a member of a directors' committee of three empowered to negotiate the acquisition of the shares of another company - The committee awarded the director 5.2 million, a percentage of the final price, in compensation for his efforts - Only the board of directors had power to award special compensation to a director - The House of Lords held that the director was liable to return the funds, because there was no contract to pay him compensation and he received it as a constructive trustee - The House of Lords held further that a director was not entitled to compensation in equity or on a quantum meruit basis, where he placed himself in conflict of his own and the company's interests.

Company Law - Topic 4341

Directors - Transactions between director and company - General - [See Company Law - Topic 4122].

Cases Noticed:

Aberdeen Railway Co. v. Blaikie Bros. (1854), 1 Macq. H.L. 461, appld. [para. 24].

Barrett v. Hartley (1866), L.R. 2 Eq. 789, appld. [para. 25].

Bray v. Ford, [1896] A.C. 44, appld. [para. 26].

Duomatic Ltd., In re, [1969] 2 Ch. 365, dist. [para. 28].

Craven-Ellis v. Canons Ltd., [1936] 2 K.B. 403, dist. [para. 28].

Phipps v. Boardman, [1964] 1 W.L.R. 993, affd. [1967] 2 A.C. 46, dist. [paras. 29, 48].

Hely-Hutchinson v. Brayhead Ltd., [1968] 1 Q.B. 549, dist. [paras. 30, 38].

Erlanger v. New Sombrero Phosphate Co. (1878), 3 App. Cas. 1218, appld. [para. 38].

Statutes Noticed:

Companies Act, 1985 (U.K.), sect. 317 [para. 29]; sect. 727 [para. 31].

Authors and Works Noticed:

Palmer, Company Law (24th Ed. 1987), vol. 1, pp. 902 [para. 23]; 943-944 [para. 21].

Snell, Principles of Equity (28th Ed.), pp. 244 [para. 20]; 252 [para. 22].

Counsel:

Peter Curry, Q.C., and Jonathan Crow, for the appellant;

David Oliver, Q.C., and Phillip Sales, for the respondent.

This case was heard at London, England, before Lord Keith of Kinkel, Lord Brandon of Oakbrook, Lord Templeman, Lord Griffiths and Lord Goff of Chieveley of the House of Lords.

On February 8, 1990, the judgment of the House of Lords was delivered and the following speeches were given:

Lord Keith of Kinkel - see paragraph 1;

Lord Brandon of Oakbrook - see paragraph 2;

Lord Templeman - see paragraphs 3 to 33;

Lord Griffiths - see paragraph 34;

Lord Goff of Chieveley - see paragraphs 35 to 53.