A company operated a members' club centred on water-skiing on a lake. An unincorporated partnership ran a water ski school at the lake.
The businesses were independent of each other but in some ways intertwined. Among other things, the partnership ran the business for the company in return for a management fee and operated from a building at the lake, paying rent to the company for the use of the building and the lake.
The company decided at a board meeting in 2007 to increase the rent and the management fee and an agreement was reached with the partnership to reflect this. Ten years later, the company launched a court action claiming damages, including against the company's Chairman, for repayment of £350,000 paid by way of management fees to the partnership. The company claimed to be entitled to recover these fees because the chairman had failed to declare the nature of his interest in the proposed management agreement at a board meeting.
The Court of Appeal ruled that the Chairman had sufficiently declared the nature of his interest in the management agreement. The Court of Appeal based its decision on several reasons including:
Directors must be alert to the circumstances in which they should disclose their interests and should ensure that: