Facts

The company (‘Goldtrail’) was a tour operator. The director, who owned 100% of the company, had attempted to sell 50% of his shares to each of two companies without one knowing about the other. Goldtrail went into liquidation leaving passengers stranded overseas and owing £20m for repatriation.

The judge found that the appellants had dishonestly assisted the director to breach his duties to Goldtrail by diverting to himself £1.4m which would otherwise have been due to Goldtrail. The judge decided that that money would have been paid to Goldtrail as payment for an opportunity, namely entering into a five-year seat commitment with an airline. She also found that they had dishonestly assisted the director in misapplying £1.25m of Goldtrail’s money for airline seats which was diverted to a Seychelles company owned by the director. She held that they were only liable to compensate Goldtrail for the loss that it had suffered, rather than for the profit that the director made, but she rejected the contention that Goldtrail’s equitable compensation should be reduced by £500,000 for flight seats that had been recouped. The appellants appealed against the findings that they had dishonestly assisted the director. 

Held

The court concluded that the judge was reasonable to conclude that Goldtrail had been deprived of an opportunity properly and that it had been properly valued at £1.4m in a way which did not ignore commercial common sense. There was no evidential gap between the dishonesty and the assistance. However, the judge considered the wrong question in deciding not to reduce Goldtrail’s equitable compensation for the recouped £500,000.

The proper question was whether the appellants, in dishonestly assisting the director, should compensate Goldtrail for the loss of £500,000 that had, as a matter of fact, been recovered buy Goldtrail. Goldtrail did not suffer a loss because it was recouped prior to the liquidation. Accordingly, the director’s misuse of £500,000 did not cause Goldtrail any loss.