The Elusive Nature of the ‘Public Function’: Poplar Housing and Regeneration Community Association Ltd v Donoghue

Abstract

standard of probity which equity demands of fiduciaries, and the reliance which shareholders and creditors are entitled to place upon it, the Mashonaland principle is a very limited one.'3l As a matter cyf general principle, therefore, the proposition that a director may be released from his duties short of resignation or of securing the company's consent, merely because the director has been unfairly treated, seems substantially to compromise the objectives of the fiduciary duty of loyalty. A company can now no longer absolutely be assured of the loyalty of its directors until they resign. Rather, loyalty is now a function of the extent of the director's involvement in the affairs of the company and of the company's loyalty to the director. With respect, the rather extreme facts of the case, where the director's exclusion from the management of the company may well have amounted to constructive dismissal, may have led his Lordship to do justice at the expense of princIple and doctnne. In this respect it is interesting to compare Pyke wsth the decision of Robert Reid QC (siting as a Deputy High Court judge) in Coleman Taymar Ltd v Oakes.32 Although not referred to in Pyke, the case also involved a director competing with his company. Reid QC approached the matter on the basis that such competition was a breach of the director's fiduciary duty. As in Pyke, however, at the time of the competition the dIrector had had no involvement in the company and was a director in name only. Reid QC held that the director was nevertheless in breach of his duty, but that in the circumstances it was approprsate to relieve him of liability pursuant to section 727 of the Companies Act 1985.33 Such an approach is, it is suggested, to be preferred. In taking account of the defendant's exclusion from the company's affairs only at the remedial stage, Reid QC was able to reach an intuitively fair result on the facts while respecting both the objective and methodology of the fiduciary concept in its application to company directors.