Case No: HC03C005582
Neutral Citation No: [2004] EWHC 52 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Date: 23rd January 2004
Before :
THE HONOURABLE MR JUSTICE PETER SMITH
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Between :
 	(1) Crown Dilmun
(2) Dilmun Investments Limited 	Claimants 	
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 	(1) Nicholas Sutton
(2) Fulham River Projects Limited 	Defendants 	
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Mr C Hollander QC (instructed by S J Berwin) for the Claimants
Mr R Knowles QC and Mr D Alexander (instructed by Ferguson) for the First Defendant
Mr A Hochhauser QC and Mr M Griffiths (instructed by Howard Kennedy) for the Second Defendant
Hearing dates: 21st, 24th, 25th, 26th, 27th, 28th November and
1st, 2nd, 3rd, 4th, 5th, 8th, 9th and 10th December 2003
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Judgment

Mr Justice Peter Smith:
INTRODUCTION
1.	This Judgment arises out of the trial of the above action. The first Claimant ("CD") is a property developer. The Second Claimant ("DIL") acts as a service company in the group of which CD and DIL are subsidiaries. CD is a wholly owned subsidiary of Crown Dilmun (UK) Holdings Plc ("CDH") and CD’s only director is CDH. 
2.	The First Defendant Mr Sutton was employed by DIL (formerly known as Dilmun Investment and Advisers Limited) under a written service agreement dated 4th October 1994 ("the Service Agreement") originally as an Assistant Director but subsequently as a Director. Part of his responsibilities required him to act as a Director of CD. The terms of the service contract will be set out further in this Judgment. 
3.	Mr Sutton was also a Director of DIL and CDH. 
4.	The group of the UK companies are part of the Bahrain International Bank (EC) ("BIB") group of companies. Placed between BIB and CD (UK) Holdings Plc is a further company Crown Dilmun Holdings (CI) Limited, a company registered in Jersey. One hundred percent of its shareholding was held by BIB. The latter provided equity investment of £60 million, ultimately to enable CD to acquire properties within the United Kingdom. The corporate structure, is in cases like this, as usual, complicated and I append to this Judgment a copy of the corporate structure. 
5.	It will be seen that one of the parallel strands of the structure involves serviced apartments through Crown Dilmun Serviced Apartments (CI) Limited (another Jersey registered company) which itself had a fifty percent holding in Ascott Dilmun Holdings Limited another Jersey company. The other fifty percent was owned by the Ascott group, whose ultimate beneficial ownership, as I understand the position, is in Singapore. Both CD and Ascott Dilmun have a large number of subsidiaries as shown in the attached copy of the corporate structure. The subsidiaries generally relate to separate developments; the policy being that where a development is required it is taken in a separate company, a special purpose vehicle ("SPV"), solely for the purposes of that particular development. The reasons for this are readily understood and do not need setting out in this Judgment. 
6.	The Second Defendant was incorporated on 5th September 2002. It was incorporated by a firm of solicitors Forsters. A number of partners within Forsters were involved in the matters the subject matter of this dispute, the Senior Partner being Ms Sophie Hamilton ("Ms Hamilton"). The Second Defendant ("FRP") had at all material times only one director namely Ms Hamilton. 
7.	Its total issued share capital is one hundred shares of £1.00 each. Of those shares fifty-one A shares were issued to a company Worldmade Limited ("WL") and forty-nine B shares were issued to Ottoman Homes Limited ("Ottoman"). Ottoman is a one hundred percent subsidiary of Imperial Property Company Holdings ("IHL"). IHL’s shares are owned equally between Mr Sutton and his wife. 
8.	Worldmade is a company through which a Mr Mark Neil Steinberg, a Mr Steven Collins and a Mr Terence Cole in effect invested in FRP. Mr Cole and Mr Steinberg have been established together in the property business for approximately twenty-five years and have created a substantial property investment and development group. Together with Mr Collins they own a number of companies that have been used as vehicles for holding interests in a number of property developments and transactions. They have known Mr Sutton since 2001 (they did some transactions with him then). They understood him (as indeed is the case) to be well known in the property world, enjoying a high reputation and further he was voted Young Property Personality for 2002. 
9.	The claim arises out of a contract ("The Agreement ") dated 18th September 2002 and made between (1) Fulham Stadium Limited ("the Seller"), (2) Harrods Holdings Limited ("the Seller’s Guarantor") and (3) FRP. 
10.	That is a conditional contract whereby Fulham Stadium Limited agreed to sell the property known as Craven Cottage Football Stadium, Stevenage Road, London SW6 to FRP for £50 million exclusive of VAT plus an Overage Payment (if any) exclusive of VAT. 
11.	That contract is a conditional contract whereby (clause 2.1) the entry into force of the obligations (other than specified ones) is conditional upon the Unconditional Date occurring on or before the Termination Date. The unconditional date is the latest of a number of dates all linked to the obtaining of a satisfactory Planning Permission as defined in the Agreement. A satisfactory planning permission, means a planning permission which is not subject to an onerous condition steta in the The development is the most controversial aspect, being the demolition of the existing Football Stadium and other buildings on the site and the construction thereon of residential units comprising not less than two hundred and forty thousand square feet of net saleable space. 
12.	An unusually large deposit of £15 million was payable on the signing of the Agreement. 
13.	The litigation arises out of FRP entering into the Agreement. I will set out the allegations in the pleadings further in this Judgment. For present purposes the allegation is that the opportunity to enter into the Agreement conferred on FRP was obtained by Mr Sutton, CD contends, in breach of the fiduciary duties he owed as a director to the Claimants, CDH and the other companies in the group and in breach of his fiduciary duty. It was an opportunity, which instead of seeking to obtain for the benefit of CD, he caused to be diverted to FRP. 
14.	As I shall set out further in this Judgment, FRP, which had no capital at all beyond its £100.00 issued share capital, was able to enter into the Agreement by reason of a loan made to it of £15 million from the Irish Nationwide Building Society. That loan was secured through the efforts of Mr Steinberg. In addition to that loan WL lent an interest free loan to FRP of £1.7 million, as to £1.3 million being provided on the date of the shareholders agreement, which was entered into between WL (1) and Ottoman (2) on 18th September 2002, the same date as the Agreement. Mr Sutton contributed £100,000.00 as an interest free loan to FRP as his contribution. 
15.	The claims against Mr Sutton are damages for breach of contract and fiduciary duty and alternatively, at the Claimants’ option, a claim that he is liable to account to them for any profits made from the Agreement or alternatively that the Claimants are entitled to elect that he holds the benefit of the Agreement on constructive trust. 
16.	As against FRP the allegation against it is a claim for damages in respect of dishonest assistance in breach of trust and/or knowing receipt of trust property with the same alternatives as are sought against Mr Sutton. 
DRAMATIS PERSONAE
17.	I should at this stage say something about the witnesses who appeared before me. The Claimants called four witnesses. First there was Mark Minashi who is the finance director of CD, having held that post since August 1999. Initially, he reported to Mr Sutton. The second witness called was Ibrahim Aladwani. He is the managing director of DIL, a post which he occupied since 24th June 2002. His role was somewhat controversial. He was "parachuted" into that post on 24th June 2002 with little or no warning to Mr Sutton and all of the other people concerned in CD. His appointment certainly caused friction between the Claimants and Mr Sutton and it is quite clear that there was, what might neutrally be described as, an initial antipathy as between Mr Aladwani and Mr Sutton, which developed over the period until November 2002 to outright hostility. The third witness called by the Claimants was Simon Gawthorpe, who is a development director, employed by CD. I should say that virtually everybody concerned with the company appears to have been called a director, but the only actual relevant holders of the office of director at all relevant times were Mr Sutton, Mr Aladwani (who was a director of Dilmun Holdings) and Mr Gawthorpe (who was a director of CDH). Mr Gawthorpe was initially a project management director having been responsible for that role since April 2001 and is now a development director of CD. He reported too Mr Sutton and he was a close friend and confidant of Mr Sutton. 
18.	The fourth witness called by the Claimant was Stephen Mallet, a director of DIL, having joined the board on 15th October 1997. The decision of the Claimants to call him arose as a result of a ruling I made on the pleadings during the course of the trial, to which I shall make reference further in this Judgment. 
19.	Mr Sutton gave evidence for himself. Mr Steinberg gave evidence for FRP as did Ms Hamilton. In addition another partner in Forsters, Michael David Cunliffe, was called on behalf of FRP as a result of evidence Mr Sutton gave during his cross examination by Mr Hochhauser QC, when he asserted, for the first time, that certain telephone conversations took place between him and Mr Cunliffe on the 19th/20th August 2002. 
THE CLAIMANTS
20.	As Mr Sutton acknowledged he owed fiduciary duties to the Claimants and their associated companies, it is not necessary to examine in detail the corporate structure. Mr Sutton became CD’s managing director in about 1998. The Claimants accept that he was the dominant figure in CD in the UK and his skill enabled CD to be extremely profitable over the years. It had a successful business of acquiring properties for development within the UK. When Mr Sutton joined DIL, his role was initially to oversee badly performing property in the United States. He believed BIB would be better investing in the United Kingdom and he got CD involved in a joint venture to develop fifty-nine flats in the Barbican, being BIB’s first deal in the United Kingdom. Apparently it was very successful, CD making a £2 million profit on a £2 million investment. His primary role was to identify suitable targets for investment, see they were secured and run the whole property business of CD. This was done on modest staffing levels. As I have said earlier in this Judgment, BIB provided a £60 million facility and by 2001 that facility was fully invested in property. He reported to Robin McIlvenny, the Chief Executive Officer of BIB. After 1999 Mr Sutton himself appeared in front of the board of BIB for proposals. Prior to that Mr McIlvenny had put projects to the board leaving him to run CD. 
21.	In mid 2000 CD was approached to ascertain whether it was interested in purchasing Trevor House, Brompton Road and the Harrods Depository, Trevor Square. CD had not had any previous dealings with Harrods and this represented a good proposal. This led to a contract exchange on 26th January 2001 on a conditional basis; the contract going unconditional on 6th September 2001. The total cost of the transaction was approximately £52.5 million and Crown Dilmun (Harrods Estates Limited) acquired eight-five thousand square feet of residential development, thirty-eight thousand square feet for office space and eight thousand square feet for retail space. Harrods Estates Limited managed the Depository on behalf of CD. They are co-agents along with Knight Frank and Goldberg and Co. for selling the flats. Forsters acted for CD on the deal and Hamilton Associates were the architects. 
22.	The relationship between CD and Harrods was dealt with on a day to day basis by Mr Gawthorpe. 
TERMS OF MR SUTTON’S CONTRACT OF EMPLOYMENT
23.	The written contract of employment is set out in a letter of 4th October 1994. It initially appointed Mr Sutton as Assistant Director Real Estate Investment Banking in DIL. Clause 3 set out the salient obligations as follows:- 
"(a) During your employment you shall:
(i) Report to the Managing Director, Real Estate Investment Banking:
(ii) Be primarily responsible for further developing all aspects of the Companies international real estate investment banking activities;
(iii) Well and faithfully serve the Company and its Associated Companies to the best of your ability and carry out your duties in a proper and efficient manner and use your best endeavours to promote and maintain the interests and reputation of the Company and its Associated Companies.
(c) Not during the continuance of your employment without the prior consent in writing of the Board either along (sic) or jointly with or on behalf of others, whether directly or indirectly engage in, carry on or be interested or concerned in any business but this does not preclude you from holding more than 2% of any class of issued shares or other securities which are dealt in on a recognised stock exchange by way of bona fide investment only".
24.	His remuneration is set out at £45,000.00. There were various profit share arrangements entered into and Mr Sutton’s entitlement to profit share upon the disputed termination of his employment in November 2002 is the subject of separate proceedings in the Commercial Court. There is a slight overlap in that some allegations raised in those proceedings feature in this case. However, I have made clear during the course of the trial that I did not intend to come to any final decision on any matters, which were raised in those proceedings. Nobody has sought to consolidate the two proceedings. 
25.	Clause 12 imposes an obligation on Mr Sutton to keep information secret during his employment and extends that obligation after the termination of his employment. 
26.	Clause 14 obligates Mr Sutton upon termination of his employment (however and whenever terminated) upon request to promptly to return to the Company all motor cars and credit cards, keys and passes, equipment, lists of clients and customers, computer disks and software, correspondence, documents and other property or material of or relating to the business of the Company and any associated company or their clients which was in his possession custody or control in the course of or in the consequence of his employment. 
27.	When Mr Sutton’s contract of employment was terminated the Claimants requested the return of his personal laptop. Around 7th November 2002 Mr Sutton ceased to have any active role in the Claimants. The precise circumstances I will set out further in this Judgment. However, on 15th November 2002 Mr Aladwani sent him a letter requesting return of the laptop, which was returned that same day by Mr Sutton. Mr Aladwani (according to paragraph 23 of his first witness statement) had the laptop forensically examined and deposed that Mr Sutton had used a deletion programme on 14th November to wipe his files and emails from the system. The Claimants were unable to reconstitute those documents. There is a suggestion that he attempted to delete information from other locations of the Claimants’ computer network, but that was denied by Mr Sutton. Mr Sutton’s response (as set out in paragraph 213 of his first witness statement) was that he had indeed used a deletion programme to delete "my personal emails from the C drive". This was actually untrue. On 1st December 2003, during the course of the trial he produced a supplemental witness statement. This was after the cross examination of Mr Aladwani on his witness statement. At paragraph 14 he confessed that the third sentence of paragraph 213 of his first witness statement was misleading. He acknowledged that there were office emails on the C drive and that there were a large number of documents in electronic form relating to his private affairs and business interests. He stated that he wished to ensure that any confidential personal documents remained confidential. He said that he had copied on to a CD ROM contents of the C drive as he anticipated a dispute and wished to ensure he retained copies of all documents. Thereafter he cleared the C drive. He used a professional company, Isis Solutions, to carry out the exercise. Whilst he might be correct that the emails might have remained on the central server at CD, other documentation clearly did not. For example, drafts that related to the gestation of board minutes which are an important feature of this case were not on the CD central server. 
28.	At paragraph 14.5 he said that he carried out a detailed search of the documents copied from the C drive and all relevant documents were disclosed. Mr Knowles QC on instructions initially informed me that Mr Sutton’s solicitors, Messrs Fergusons, had examined the CD ROM and that all relevant documents had been disclosed. During the course of this exchange, I pointed out that disclosure for the purposes of the litigation would not necessarily be as wide-ranging as the disclosure of documents as part of Mr Sutton’s overall duty to account as a fiduciary. Mr Knowles QC acknowledged that, but nevertheless it turned out that he was wrongly instructed; the solicitors had never inspected the CD ROMs. Accordingly the Claimants were given access to the CD ROM (on a confidential basis), but there were many thousands of pages on that and after two days they gave up the exercise. Mr Hollander QC, who appears for the Claimants, did not feel it necessary to seek an adjournment to examine the documentation. Nevertheless, it shows a serious attempt by Mr Sutton to mislead the court and the Claimants, which was only corrected during the course of the trial. 
29.	Mr Sutton therefore broke his contract of employment and told a lie in his first witness statement when he said he deleted personal emails only. Regrettably, this was one of a number of instances when Mr Sutton plainly told lies in his witness statements and during the course of giving evidence as Mr Knowles QC in his closing submissions was constrained to accept. 
THE OPPORTUNITY
30.	As I have set out above one of the later development projects of CD’s was the Harrods Depository. The solicitors who acted for CD on that transaction were Forsters, they having previously acted for CD on a number of transactions, the Senior Partner being Ms Sophie Hamilton, being the client partner for CD. Forsters had never acted for Mr Sutton before, he having his own separate firm of solicitors. This is relevant because a major issue in this case involves the ability of Mr Sutton to be interested in companies and transactions that would be a breach of clause 3(c) of his contract of employment. 
31.	In March 2002, Mr Sutton received a brochure from Harrods Estates with details of a development opportunity for a partial development of the Fulham Football Ground. He wrote back on 5th March 2002 to Harrods saying that CD would not wish to be involved in it. I accept that this was an entirely different proposition to the subsequent opportunity as it involved a small number of flats to be built on the riverside adjacent to a new twenty-eight thousand seat capacity football stadium. In June 2002 a revised project was put forward for the development of the whole football ground by Harrods. Mr Sutton viewed the site on 7th June 2002 with Fulham’s agent Mr Julian Cook. Thereafter negotiations took place between Mr Cook and Mr Sutton involving an exchange of heads of terms to which I shall make further reference in this Judgment. Ultimately, Herbert Smith were retained on behalf of Fulham Stadium Limited (Fulham) and Harrods. Forsters acted on the transaction on the other side. I put it that way because there is a substantial dispute as to whether or not Forsters were acting for CD or whether they were acting for Mr Sutton or whether they were acting for both of them at different stages or whether they were acting for CD and ultimately FRP. This will require more detailed examination when I come to the evidence, but suffice it to say that at this stage of the Judgment the negotiations that were started by Mr Sutton in June 2002 led to meetings at Herbert Smith, (a vital one being 14th August 2002) and the exchange of the Agreement on 18th September 2002. 
32.	The opportunity put forward by Harrods and the negotiations and the Agreement involving FRP and Mr Sutton’s involvement in FRP through Ottoman and his advance of £100,000.00 through Ottoman to FRP were never disclosed to CD at all. There is a dispute as to when they became aware, but they certainly did not see the contract until they obtained a copy from the Land Registry in late January 2003. The earliest that CD’s solicitors, S J Berwin, became aware was in November/December 2002, after the dispute with Mr Sutton over his contract of employment had already arisen. 
33.	At this stage I should mention a little of BIB’s financial difficulties. As I shall set out in this Judgment BIB, CD’s parent, had financial difficulties and those difficulties lurched into far more serious aspects. By April/May 2002 it was clear that the BIB board had embarked on a strategy of liquidating assets of BIB to reduce its indebtedness. CD’s property holding was such an asset. It was profitable and not insolvent. However, it was dependent on BIB for its continued finance for operations and BIB had difficulty in funding it. Decisions were made to dispose of CD’s property portfolio. Mr Sutton and the other members of CD, in particular Mr Minashi was also involved in this exercise. The evidence given by Mr Minashi and to a degree Mr Sutton was that they disagreed with the policy, but nevertheless had no option because BIB was the beneficial owner of CD. Mr Sutton became disillusioned with this policy and proposals were initiated in late May for what was called at the trial an MBO headed by Mr Sutton. It was not actually an MBO as it involved the acquisition by a consortium headed by Mr Sutton of the major part of the CD portfolio on terms, which would involve Mr Sutton obtaining initially a substantial profit share payment, but on terms also that on subsequent realisations further returns would be made to CD. The negotiations over that MBO were protracted, difficult and ultimately collapsed in acrimony on or about 30th October 2002. At an early stage, namely 24th June 2002, Mr Aladwani arrived at CD. Mr Sutton resented his presence, instructing (for example) staff not to communicate with Mr Aladwani. He denies that his role was merely to oversee the liquidation of CD’s assets. I accept that. It seems to me that his role also was, as Mr Hochhauser QC described it, to be the eyes and ears of the men sitting in Bahrain. He was there to protect BIB’s interests. Self evidently, those could not be left to Mr Sutton, although he does not appear to appreciate that. Thus he objected to Mr Aladwani introducing S J Berwin as solicitors to advise BIB and CD over the MBO, he believing the matter could be controlled by him through the existing solicitors Berwin Leighton 
34.	The fact that Mr Sutton believes all of this is possible is a good demonstration of his minimal understanding of his duties and responsibilities and possibilities of conflict, which he plainly never fully understood at all. The other point to note also is that most of the staff of CD were going to join the consortium when the MBO operated. Both Mr Gawthorpe and Mr Minashi were initially involved. Mr Minashi was taken out of the consortium by Mr Sutton. He no longer had confidence in Mr Minashi. In his evidence he suggested that he had been dissatisfied with Mr Minashi’s performance for many years, but there was no evidence to show that he had ever raised Mr Minashi’s supposedly inadequate performance over the years. He took him out of the MBO proposals in September 2002, shortly before the collapse of the MBO on around 30th October 2002. He included his name confidentially on a list of staff to be made redundant to Mr McIlvenny. Mr Gawthorpe knew about this and helpfully told Mr Minashi. It is undoubtedly the case that this caused friction between Mr Minashi and Mr Sutton. It undoubtedly led to Mr Minashi colouring his evidence to the advantage of CD to the detriment of Mr Sutton. Equally, Mr Aladwani had strong views about Mr Sutton’s conduct. He also coloured his evidence by exaggerating in my opinion supposed breaches of contract committed by Mr Sutton, understating the tension between him and Mr Sutton and approaching his evidence (for example by re-reading hundreds of emails overnight) with a certain lack of objectivity. I approach the evidence of Mr Minashi and Mr Aladwani with an element of caution and scepticism in respect of their more bold aspects. I do not believe however, that their motivation led them to lie. At best their evidence in some areas was slanted in favour of the Claimants and was exaggerated. Mr Sutton as I have already observed was demonstrated to have lied on a significant number of occasions. That of course tells against him where there are areas of dispute between witnesses who plainly did not lie or exaggerate their evidence. 
35.	However, it is important in a case like this, where there are hotly disputed factual issues, to approach all witness evidence carefully and not make sweeping judgments about rejection of evidence merely because witnesses have lied or exaggerated their evidence at various stages. It is with that warning to myself that I have approached the evidence given by witnesses in this case. 
THE PLEADED ISSUES
36.	The Claimants’ case is that the Opportunity to enter into the Agreement came to Mr Sutton whilst he was their managing director and thus owed fiduciary duties. Those fiduciary duties the Claimants contend, require any opportunity that comes his way to be disclosed to them as part of his fiduciary duty and that it is not permissible for Mr Sutton as such a fiduciary to enter into the Agreement directly or indirectly without giving antecedent full and frank disclosure to the Claimants. Absent such disclosure, and acceptance by the Claimants that he should be permitted to obtain for himself the opportunity which came to him as a fiduciary, he is liable for breach of trust. 
37.	In addition the Claimants say that that is a breach of clause 3(c) of the Service Agreement. 
38.	The Claimants make no bones about the situation. They suggest that Mr Sutton acted dishonestly. Thus they say, when Mr Gawthorpe raised the question of the Opportunity with Mr Sutton, he told him dishonestly that there had been planning problems and the deal was not going to happen. There is, as this Judgment will show later, a dispute as to when that conversation took place. There are three potential dates, namely the week commencing around 12th August 2002, 11th September 2002 and the end of September / early October 2002. It is not disputed by the Defendants that if the conversation took place as suggested by Mr Gawthorpe, in regard to the latter dates, the answer as recounted by Mr Sutton is a dishonest answer in view of the fact that FRP had already entered into the Agreement and, further, on the very day of the second of those two dates (11th September 2002), Mr Sutton transferred by telegraphic transfer his £100,000.00 investment to Forsters. 
39.	The Claimants contend (paragraph 14) "by reason of Sutton’s involvement in FRP as aforesaid and his participation and involvement in the Fulham deal on behalf of FRP his knowledge is to be treated as the knowledge of FRP". 
40.	Alternatively, the Claimants contend that it would be unconscionable for FRP or Sutton to retain any benefit from the Fulham deal because (a) it was a business opportunity which arose from and in consequence of information provided by and an opportunity offered by Harrods Estates Limited to Sutton, the information was provided to him whilst acting as Managing Director of CD, the information was highly confidential, it was concealed from the Claimants, Forsters agreed to act for Mr Sutton on the transaction and acted for him until September and FRP was set up as a corporate vehicle for the sole purposes of entering into the opportunity and it had no other assets. 
41.	Mr Hollander QC made his position clear in his closing, namely that the Claimants’ contention was that Mr Sutton was dishonest and that dishonesty was attributable to FRP because he was the directing force which led to the opportunity coming FRP’s way. 
42.	Separately they suggest that Ms Hamilton knew or believed that the Agreement arose from an opportunity, introduction or connection, which had come Mr Sutton’s way as a Director and fiduciary, that no consent had been obtained from CD or she was reckless as to whether consent or proper consent had been obtained. Mr Hollander QC expressly disclaimed any allegation of dishonesty as against Ms Hamilton, but maintained in his closing that her conduct was reckless, so that with her recklessness as to whether or not Mr Sutton was in breach of his duty she took that knowledge to FRP (she being its sole Director) and that therefore FRP was similarly reckless as to whether or not Mr Sutton was in breach of his duty when it entered into the Agreement pursuant to the diversion of the Opportunity by him. 
43.	The Claimants do not make any allegation of dishonesty against Mr Steinberg. As shall be seen by virtue of the shareholders agreement in FRP Mr Steinberg and his associates, until Worldmade receives £750,000.00 from FRP’s distributable profits, are in a position to control FRP, as they have fifty-one per cent of the shares and the power to appoint four of the seven directors to the board from time to time. Mr Hollander QC submits that these factors are not relevant in determining whether FRP is liable based on the knowledge of Mr Sutton and Ms Hamilton attributable to it. 
44.	Accordingly, the Claimants claim that Mr Sutton is liable in damages for his breach of contact or fiduciary duty or alternatively, as I have said above, he is liable to account or at their option they are entitled to claim that he holds the benefit of the Agreement on constructive trust. FRP are said to be liable because of dishonest assistance and breach of trust and/or for knowing receipt of trust property, namely the benefit of the Agreement and is similarly liable to account. 
45.	As I have said, for the Claimants to establish that FRP are liable for dishonest assistance, it must be necessary to show that any dishonesty on the part of Mr Sutton that is established is attributable to it. 
MR SUTTON’S DEFENCE
46.	Mr Sutton’s Defence is summarised in paragraph 3 of the Amended Defence and is as follows:- 
(1) The acquisition of the Agreement was not the type of investment that the Claimants would have wished to acquire in 2002.
(2) The Claimants had agreed to Mr Sutton having outside interests, including in the property development sector, without his having to make advance disclosure.
(3) The allegation that the Claimants would have wished to become involved in a development like that posed by the Agreement is denied.
(4) Even at the time of the trial, the Claimants are not in reality interested in taking over the Agreement.
(5) Mr Sutton, at all times has acted in good faith.
(6) The Claimants have suffered no loss.
47.	The essence of these allegations is to be found in paragraphs 31 and 32 of the Amended Defence :- 
"31 Clause 3(c) of the Contract of Employment was amended at meetings of the Board [between 3rd April 2000 and 19th February 2002]. At each of these meetings Dilmun Investments and Mr Sutton agreed among other things, that Mr Sutton was entitled to acquire personal holdings in property trading development and investment companies without the permission of Dilmun Investments and those holdings needing to be sought or obtained in advance. 
32 Alternatively at the meetings of the Board of Dilmun Investments [as set out above] Dilmun Investments gave its consent under clause 3(c) to Mr Sutton thereafter acquiring further personal holdings in property trading, development and investment companies".
48.	This is a bold pleading. One starts with the basic proposition that a fiduciary cannot enter into any transaction, which might put him in there being a possibility of conflict with his beneficiaries. If he does, the arrangement is voidable at the instance of the beneficiary. Alternatively the fiduciary can be required to disgorge any profits and, finally, if the beneficiary has suffered any loss, the beneficiary can sue for damages. 
49.	It is particularly significant that, on the authorities, where a fiduciary obtains a benefit in breach of his fiduciary duty thus defined, he is liable to account even if the beneficiary could not itself have obtained that benefit or opportunity; see for example IDC –v- Cooley [1972] 1 WLR 443. 
50.	The normal way in which a fiduciary is enabled to retain benefits is if he makes a full and frank disclosure in advance and the beneficiaries allow him to take the benefit. Alternatively the beneficiaries may of course allow a benefit to be retained retrospectively if they consent after full disclosure has been made. In those circumstances, of course, the beneficiaries have an option after the full disclosure has been made whether to allow the fiduciary to retain the benefit which otherwise would be incapable of being retained. 
51.	Of course the prerequisite to liability is the fiduciary acting in breach of his duties. Thus it is necessary to establish for example that his actions were taken when he was exposed to a possibility of conflict. There can be debates about whether there was actually a possibility of conflict. This is addressed in many contracts of employment of fiduciaries by tightening up the prohibition of being interested in matters outside the area for which the fiduciary was employed. Thus clause 3(c) of Mr Sutton’s contract of employment provided a blanket prohibition (whether there is a possibility of conflict of interest or otherwise) in being involved in any outside business, save in a very limited investment aspect. 
52.	The First Defendant’s case is that by agreement, as shown by the resolutions, the Claimants agreed not only to abrogate clause 3(c), but also to create a different regime, which would create problems rather than solve them. The essence of Mr Sutton’s Defence is that he was enabled to take opportunities, which came his way personally, even though those opportunities might put him in a position of conflict, provided he acted in good faith in making the decision and he disclosed those matters retrospectively. On such disclosure, there was no question then of CD being given an option to agree or disagree the taking of the benefit or the other matters retrospectively disclosed. 
53.	Not surprisingly, this was the subject matter of detailed submissions and argument between Mr Knowles QC and me. As it distilled, Mr Knowles QC’s submissions meant that the Claimants trusted Mr Sutton to act bona fide (not dishonestly). They trusted him that if opportunities came his way, he could take them himself, provided he bona fide believed that the Claimants would not want them. In that eventuality he did not have to disclose in advance that he was proposing to do that or discuss it with anybody; all he had to do was to disclose it retrospectively on an annual basis. 
54.	Further, Mr Knowles QC was constrained to concede that the test was one of bona fide belief only on the part of Mr Sutton. If he had a bona fide belief that the Claimants would not be interested in the transaction, but that the belief was wrong and the Claimants would have been interested in the transaction, nevertheless he was entitled to take it for himself. Further, when the matter was disclosed retrospectively, this was merely a matter of informing the Claimants of what he had done in the previous year; there was no question of the Claimants being given an opportunity retrospectively to consent or not. All they could do at that stage would be to challenge the transaction on the grounds that Mr Sutton had taken the transaction in breach of those revised duties i.e. he had not made a bona fide decision. They could not for example challenge him if it was plain that they would have wanted the opportunity. 
55.	Now, given the carefully drafted contract, this supposed variation is quite breathtaking. I posed on a number of occasions one example. Suppose Mr Sutton acquired a massive property portfolio during a year and genuinely (but hopelessly incompetently) believed that the Claimants would not have wished to take the opportunity, he is nevertheless not in breach, can retain the benefits and only has to disclose it retrospectively. All the Claimants can do is at that stage remove for the future the opportunity of retrospective disclosure in future years. 
56.	Even apart from the boldness of this submission, one would be left to think it would be difficult to see how such an opportunity as proposed by the Opportunity would be something that CD would not be interested in. It was a property deal of the type that they did. It was with a party (Harrods) with whom they had a successful existing relationship. It had been offered to them (and other developers) confidentially, amongst other things, because of that existing successful relationship. 
57.	The only answer Mr Sutton puts forward is that BIB was in financial difficulties to such an extent that it was not interested in any acquisitions in 2002 and was only interested in disposals. Thus when this opportunity came to him, it is said, Mr Sutton bona fide believed that there was no possibility that CD would entertain it. In giving evidence he said it would be so laughable that if he presented it to BIB’s board they would think he was "on something". 
58.	Basing his case on his bona fide belief that CD’s financial difficulties would have meant that it would not have been interested in the contract Opportunity so that he could bona fide take it, neatly sidesteps the authorities crystallised in the Cooley case. 
59.	The arguments were presented with great subtlety and finesse. In the light of those arguments, it is necessary to examine the evidence. Thus Mr Sutton could take the Opportunity for himself, did not have to reveal it at the time and only had to disclose in February 2004, when CD could not object unless it could show he had no bona fide belief that CD would not have been interested in taking it. 
FRP DEFENCE
60.	Paragraph 11 of FRP’s Defence contains an important allegation, namely that prior to entering into the Agreement Mr Sutton told Ms Hamilton orally that CD was neither interested nor financially able to enter into the transaction and was content for him to carry out the project and he was at liberty to take advantage of this opportunity. She honestly believed that, it is said, and accepted it. 
61.	Paragraph 14 (A) (f) of the Amended Particulars of Claim was admitted (paragraph 15 (B) (f) of the Amended Defence). This acknowledged that Mr Sutton was the source of the instructions, but until the formation of FRP it was alleged it was unclear for whom he spoke. The paragraph also asserted that he was never regarded by Ms Hamilton as her client, was never billed nor did he pay for any advice. The relevant paragraph also admitted that Ms Hamilton was aware that Mr Sutton was a director of CD and that, insofar as there were any questions about outstanding fiduciary obligations, she raised this with Mr Sutton before agreeing to become the sole director of FRP and received assurances from him that he was entitled to participate in the Agreement. It is also asserted that Ms Hamilton initially believed it was going to be a CD deal and she first became aware that CD was subject to considerable financial uncertainty and that its parent company BIB was in trouble and would not survive with the result that it might not be involved in the Agreement, when she was told so by Mr Sutton on 14th August 2002. By the time FRP was incorporated on 5th September 2002, she knew that CD was not involved. By that time she had been informed by Mr Sutton the deal was going to be carried out by a company in which he was to have a minority shareholding and that CD was not in a position to do the deal. However, it is asserted that she did not understand that she was being asked to act for Mr Sutton personally. She also denied the allegation that Mr Sutton asked her not to send emails to his office because this was a personal transaction. 
62.	Paragraph 14 A (m) of the Amended Particulars of Claim contained an important allegation that the knowledge of Ms Hamilton was to be treated as the knowledge of FRP and further that she knew from an internal note dated 4th September 2002, sent to her by her partner Craig Eadie that the Opportunity arose from a test (of fiduciary duty to disclose) referred to in the Internal Note and she accordingly knew that no consent had been obtained from CD or was reckless as to whether any consent or proper consent had been obtained. 
63.	In paragraph 15 (A) (n) of the Amended Defence, FRP admitted that her knowledge was to be treated as that of FRP, but denied that she was reckless or that the Internal Note showed her to be reckless. A positive case is put forward that the Internal Note showed that she was alert to the possibility she should be satisfied that FRP was entitled to proceed with the Opportunity for its own benefit. It asserts that she went through the gist of the note with Mr Sutton and she was satisfied on the information provided to her by Mr Sutton. It is asserted that FRP, of which she was the sole director, acted honestly and in good faith throughout. The paragraph also denied the reference in paragraph 52 of Mr Sutton’s witness statement where he asserted that he did not at any time discuss with her the issue of obtaining consent from CD and further denied that he told her at any time that he had disclosed his interest in the Opportunity to CD and had received clearance from them and that they had been offered the opportunity to invest and it had declined the opportunity. 
64.	It is similarly asserted in paragraph 57 of Mr Sutton’s witness statement that Mr Steinberg was fully aware that he had never disclosed his interest in the Opportunity to CD. That paragraph also asserted that both he and Mr Steinberg handled matters with the utmost secrecy and confidentiality to ensure that CD did not become aware of his interest and because of the sensitivity of the site with the fans. It asserted that Mr Steinberg accordingly did not use his office, email address, fax or telephone, and that all discussions were in his office or at home or via mobile telephones. 
65.	In paragraph 18 of the Amended Defence if, which FRP denies, FRP is liable to the Claimants, it has to be given credit for investments made in good faith in and on behalf of FRP by persons other than Mr Sutton, the work done by FRP and other funding on its behalf and for the work which will be required by FRP in the future for the Opportunity to be fulfilled and for further investment and security which will be required from and on behalf of FRP in the future for the Opportunity to be fulfilled. 
66.	The proceedings were issued without warning with an application for extensive disclosure which initially came before Patten J. on 20th February 2003 when it appears the Defendants intended to contest the application for disclosure but gave undertakings not to deal with any shares in FRP and not to dispose of any rights under the Agreement, nor to act in repudiatory breach of it. In fact when the fixed inter parties application came on before Sir Andrew Morritt V-C on 13th March 2003, the matter proceeded by way of consent for there to be a speedy trial fixed in the trial window 1st October to 17th November 2003. 
67.	The replies served to the respective defences do not take the matter any further. 
FINANCIAL STATE OF BIB AND ITS SUBSIDUARIES
68.	There is no doubt that in 2002 BIB was in financial difficulties and it is not an overstatement to say that by September 2002, when the Agreement was entered into, those difficulties had reached a crisis point. The same could not be said for CD: it remained profitable and the review, for example, by BIB, for the annual report and accounts for 2001, showed that there was a cautious view that they expected to spend the year (2002) consolidating the investment portfolio. It further observed that the UK property market remained resilient in 2001, but that the sustained price rises over the last five years and the risk of overheating prompted them to focus on the realisation of the existing projects, rather than on continued new investment at historic levels. The report also further went on to identify that CD had a total of 16 projects in various stages of completion, which were expected to be realised in 2002 and 2003 with very positive profit expectations. However the cautious view of the UK market was once again reiterated. 
69.	Nevertheless, at the Crown Dilmun Group new year briefing for January 2002, BIB’s directors approved a portfolio redemption plan whereby no new investments were undertaken, the existing portfolio was to be realised and cash returned to BIB "in permanent reduction of the preference share". By the target date of 31st December 2003, all remaining assets were to be transferred at a valuation to a new vehicle. Following this meeting, Mr Sutton informed the CD employees, including Mr Gawthorpe and Mr Minashi, that BIB was to have repatriated to it the £60 million, which it had given CD, which was already fully invested. The email contained the following also:- 
"At a time when (1) we have sufficient human resources to handle further development projects (2) the current market uncertainty has cleared (3) good buying opportunities again exist, we will be back in the market building up our portfolio again with further funding from BIB and a new 3 or 5 business plan with them.
They are 100% supportive of our business and when we want to start buying again which will certainly be before 31.12.03 they will fund it".
70.	This does not rest easily with Mr Sutton’s contention that there was no realistic possibility of further investment. When cross examined on this on day 9 (page 108) I found his answers unconvincing. 
71.	By April BIB’s postion had worsened. Mr Sutton attended a meeting of BIB in Bahrain over 6th and 7th April 2002. The minutes show that BIB was suffering liquidity problems and was to commence an immediate asset sales programme. Contrary to the evidence of Mr Minashi and Mr Aladwani, it is clear that a crisis sale was taking place and that assets were going to be sold to raise cash even though losses would be thereby sustained. The asset sales contemplated significant sales of CD’s property portfolio over the first half of 2002. It noted that CD was unable to securitise the cash flows (i.e. raise cash) and was unable to borrow additional monies due to the existing leverage on the various properties. The business plan was on the basis that there would be an assumption of no new major investments in 2002. This culminated in an email from Ahmed Nazir of BIB to Mr McIlvenny, Mr Mallet and others headed "Asset Sales Programme". 
72.	The email said:- 
"I am writing to reemphasise the urgency of the asset sales programme. As you know we were downgraded yesterday … to BB+ from BBB- with a negative outlook. … you will recall that our treasury department has informed us on several occasions that they can hold things up to the end of June, the rest is dependent on asset sales and other support mainly sale of treasury shares, standby line and semi government support all of which are being worked on".
73.	Mr Hochhauser QC categorised this in his cross examination as "sell and sell now" and I agree with his analysis. BIB’s downgrading was a matter of public knowledge, as shown in the press releases, which came out at the same time. This is of course at the same time as the Opportunity arose and is the major platform for Mr Sutton’s and FRP’s defence, namely that there was no prospect of BRB allowing CD to take advantage of the Opportunity. 
74.	Nevertheless the matter was not entirely to proceed on a fire sale of everything. Thus on 5th June 2002 Mr Sutton put forward a proposed arrangement to restructure CD. It envisaged CD becoming a property fund manager and that the business would be tightened with the utilisation of other people’s money in carrying out property development business. However, the memo also pointed out that investors wished to see that promoters also participate in their projects ("hurt money") i.e. that they should share some of the risk. 
75.	It is at this precise time that the buy out proposals were raised by Mr Sutton. 
76.	The fact that matters were not entirely bleak is shown for example by the presentation Mr Sutton made to the risk management committee of the BIB board on 6th June 2002, to invest £4.5 million in phase 6 of the Redcliffe Village. Whilst Mr Sutton can say that this was stage 6 of an existing project nevertheless, it did involve funding from CDH of £4.5 million on the basis that there would be a fairly rapid return by releases of phases 4 and 5 simultaneously over quarters 3 and 4 of 2002. Nevertheless, quarter 3 did require a net investment of £410,000.00 and the total potential exposure was, as I have said £4.5 million against a potential profit of £5.9 million. This transaction was proposed by Mr Sutton the day before the Opportunity was raised with him. It shows that CD was willing to consider commitments even during this crisis year 2002. 
77.	At about the same time on 11th June 2002, Mr Sutton on behalf of CD wrote to Lovells offering, subject to contract, to purchase 68/76 Brompton Road, for £58 million odd. It was to be financed with senior debt being provided by the Royal Bank of Scotland, but "the balance/equity will be funded out of Crown Dilmun’s own resources. As you may be aware Crown Dilmun is a subsidiary of Bahrain International Bank and therefore benefits from strong financial backing from its parent company". 
78.	Mr Sutton explained this in his witness statement as him going through the motions. He explained this in cross examination on day 7 and day 9. On day 7 he acknowledged in response to a question from me that he was trying to put forward the best story on behalf of CD by saying things that were misleading and that he knew were misleading. In other words his evidence on day 7 was that he was in effect willing to lie as to the willingness of CD to enter into a transaction and in effect as to the financial position of BIB. On day 9, when cross-examined by Mr Hochhauser QC, on the same topic, Mr Sutton (page 67 and following) attempted to suggest that it was a way of trying to involve Ascott who funded service apartments. When I reminded him of what he had acknowledged on day 7, he attempted to suggest that he was not lying, he was only misleading. When I put to him the question of what he meant by a transaction being "funded out of Crown Dimun’s own resources" he suggested that it meant getting others to invest as being covered by the description "Crown Dilmun resources". Mr Hollander reminded him of what he had said on day 7 about looking at the site with others after the board meeting and how it would be a fantastic opportunity. 
79.	Mr Sutton either wrote misleading letters or his evidence was lies. I am firmly of the view that Mr Sutton told lies when he suggested that this was not a genuine opportunity which he was actively pursuing. He did so because it was inconvenient to his stance that CD would not be involved in the Opportunity or any other opportunity, because it involved financial commitment. 
80.	This is further demonstrated by a third transaction, which took place again in June 2002. This is the Great Charles Street development. This was an existing transaction. On 30th May 2002, Mr Sutton made a presentation to CDH’s board, which recommended extending the agreement for the site, which involved a further £1.2 million exposure on the part of CD. This too took place therefore at about the same time as the Opportunity arose. Whilst dealing with this there are two matters which arise out this transaction on 30th October 2002. By that time CD’s financial position had considerably worsened. The extension which was entered into as a result of Mr Sutton’s recommendation on 30th May 2002 was about to expire by 31st October. By October 2002 BIB had suffered (17th September 2002) publicity in the Gulf Daily News, which show it was selling its entire US and European corporate bond portfolios at a loss of US$70 – US$80 million at current prices. On 26th September 2002 exchanges of emails showed that CD was not receiving monies which it needed to continue from BIB "enough threats …SELL!". At the same time it was downgraded to DDD. It was stated in the Gulf Daily News release that whilst BIB appeared to be solvent this was dependent on valuations of illiquid real estate and private equity assets. In addition on 20th September 2002, BIB issued a standstill of 90 days to its lenders. It broke its banking covenants at the same time. 
81.	Notwithstanding all of this, Mr Sutton extended the Charles Street contract on 30th October 2002. He did this without authority as fiscal matters required transactions to be approved by the board in the Channel Islands and not within the United Kingdom. He thereby exposed CDH to a further contingent liability in excess of £5 million. Further he did this against the background of the developing financial crisis and financial statements being prepared in respect of CD’s accounts to 30th September 2001, which indicated that Great Charles Street was unlikely to proceed and was removed from the balance sheet. The attendant cash flow analysis showed that happening. He did this without reference to anybody else. He did it at about the same time as the MBO was collapsing and he acknowledged in his evidence that by that time he was looking to his own interests. 
82.	That is only part of the problems in relation to this transaction. Mr Sutton had failed to disclose that he had an interest in the associated parts of the transaction via a company, Max Hotels (Ludgate) Limited. He also by reason of the extension simultaneously received for the benefit of that company repayment of £100,000.00 deposit and £15,000.00 payment towards legal costs from the developer Amec. Mr Knowles QC was constrained practically to admit the extension was improper without the approval of the board, but denies that a sweetener was received in return. I reject that submission. No satisfactory explanation was given by Mr Sutton in his evidence or cross examination as to how it was that his company took the £100,000.00 repayment. In effect it is quite clear that he extended the contract and bound in CD for a further seven months. If the contract had not happened at that stage, then I accept that Max Hotels might well have received back the £115,000.00 then. However, CD’s liability would also have ended at that time. He ought to have logically extended the retention of the £115,000.00 to 30th June. In effect his company walked away from its financial commitment at the same time as obtaining the benefit of the extension of CD. Significantly of course, Mr Sutton had invested £100,000.00 in the Opportunity less than a month earlier. 
83.	There were many other projects raised in the cross-examination. Those too show (to a lesser extent) a pattern. That pattern to my mind shows that BIB and CD were still receptive to conservative proposals. 
84.	I reject Mr Sutton’s defence based on a suggestion that he had a bona fide belief that CD would not have been interested in the Opportunity and that justified him in not mentioning it at all. 
85.	I am quite satisfied that the Opportunity would have been of interest to CD and that Mr Sutton could not have bona fide believed that. That is demonstrated by the other transactions that I have already made reference to in this Judgment. In so concluding, I do reject Mr Minashi’s more optimistic way in which he would have drawn CD into the Opportunity. I do not accept that CD would have entered into some arrangement with third parties whereby it could have obtained as much as seventy-five percent of the profit of the transaction without any significant financial commitment. None of this of course arises at this stage. The only question for consideration at this stage is whether Mr Sutton could have bona fide believed that CD would not have been interested at all. In rejecting that, it means that Mr Sutton was under a duty in any event to disclose the transaction to CD and he failed signally in that duty. It is quite clear for example that CD could at the least have entered into the arrangements which Mr Sutton actually entered into with an initial commitment of only £100,000. It is to be noted that the Second Defendant itself has not yet made any arrangements for funding if the Agreement goes unconditional 
86.	That means that in my view Mr Sutton’s primary defence fails. I reject his evidence that he had a bona fide belief that CD would not have been interested in this Opportunity, which relieves him of any obligation to disclose it. It will be remembered that under his Service Agreement he was prohibited from participating in any transaction without agreement and his modification of it requires him to have a bona fide belief that they would not be interested, so he could take the opportunity himself. As I have said I reject that. That means that it is not necessary strictly to consider the further aspects of Mr Sutton’s defences. However, I will do so, so that there is a complete picture provided. Before doing that I will set out the terms of the Opportunity to show its nature and value as perceived by Mr Sutton in 2002. That is very different of course from the Agreement as perceived by Mr Sutton’s expert Mr Angel. His evidence, which was not challenged, suggests that by July 2003 and by the date of the trial the Agreement, if pursued to development, will result in figures of a very different (i.e. lower) basis to that projected in August 2002. I will deal with this further in this Judgment. 
EVALUATION OF THE OPPORTUNITY
87.	This first came Mr Sutton’s way in a significant way in June/July 2002. Mr Gawthorpe who had a long and friendly relationship with Mr Sutton put the meeting that took place when the Opportunity was first put forward as after 28th June 2002. It arose at a meeting with him, Mr Sutton at the show flat at the other Harrods development, the Depository. Mark Collins was also there. He asked Mr Sutton if the "other one" could also be discussed. He said "yes", and Mr Sutton asked if he was happy for Mr Gawthorpe to stay. Mr Gawthorpe was an extremely honest witness. I accept all of his evidence. Where his evidence conflicts with that of Mr Sutton, I unhesitatingly prefer Mr Gawthorpe’s evidence. Mr Sutton, as I have said, was trapped in a significant number of lies in his testimony. As I have already said, I do not reject the entirety of Mr Sutton’s evidence, but I approach it with caution. There are instances where I prefer Mr Sutton’s evidence (for example) to that of Ms Hamilton. 
88.	The broad lines of the Opportunity were then discussed between Mark Collins and Mr Sutton in the presence of Mr Gawthorpe. Mr Gawthorpe believed the Opportunity was coming CD’s way as he said the meeting was between Mark Collins and Mr Sutton, at the premises of another development of CD’s, with the other developer of that opportunity discussing another opportunity. This was I conclude part of Mr Sutton’s strategy. He wished to conceal as long as possible a desire that he formulated very early on to take this opportunity for himself. The reason for his desire is obvious. CD by June 2002 was breaking up. He regarded it as "his baby". He had developed it and it was profitable and he was now seeing it broken up through circumstances beyond his control and which did not involve any criticism of the way CD had developed. That is often a cause of regret for employees, but of course Mr Sutton was only an employee. It was not his property to do with as he wished. Nor could he decide to take opportunities elsewhere if he so wished. I am quite satisfied that when the opportunity arose he decided to take it for himself as part of a strategy (simultaneously with the MBO) to achieve his own benefit at the expense of CD as much as possible. 
89.	It will be remembered that Mr Sutton’s evidence was that it was always going to be his opportunity and everybody else knew it. As shall be seen from an examination of the evidence, my conclusion is that all the other people around him did not immediately become aware of the fact that this was a proposal which he was taking for himself. He kept it, I am quite satisfied, deliberately ambiguous until it became too late for people for various reasons to reassess their positions. 
90.	Mr Gawthorpe initially gave evidence that he heard nothing more about the opportunity until after 30th September 2002, when he had a conversation with Mr Sutton who told him then that there had been planning problems and the deal was not going to happen. 
91.	Mr Gawthorpe concluded in his witness statement that it was clear that Mr Sutton had been lying to him. That was based on the fact that the conversation must have taken place after 30th September, by which time the agreement had already been entered into for twelve days. He initially verified his witness statement at the start of his evidence. 
92.	Mr Gawthorpe reconsidered his evidence during the trial. Overnight he examined a large number of personal emails. The reasons for that were that Mr Sutton’s evidence was that the conversation took place in the week commencing 12th August 2002, after Cowes Week. Further examination of this issue with Mr Sutton showed that the conversation according to his evidence must have taken place on 15th/16th August 2002. Mr Sutton then used that dating as showing that he was justified in a statement that the Opportunity was fraught with difficult planning problems and might well not proceed. 
93.	On examining his emails Mr Gawthorpe came to the conclusion that he was wrong in dating the conversation to after 30th September, but more likely (on examination of those emails and the contents of them) that the conversation took place probably on 11th September 2002. Initially he therefore withdrew his allegation that Mr Sutton had lied to him. Mr Gawthorpe was plainly an honest man and was plainly troubled because of the serious impact his evidence would have on a friend (or rather a former friend). I found his explanation entirely convincing. My conclusion is that the conversation took place probably, more likely than not, on 11th September 2002. I do not accept Mr Sutton’s evidence that the conversation took place around 15th/16th August 2002. Even if it did, I do not accept his assertion that he could have said that the contract was still doubtful at that stage. All that had happened was that there had been a first meeting on 14th August 2002 with Herbert Smith in negotiating the terms of the contract. There was an issue over the time for the contract to go unconditional. There was a decision of the courts which might expose the prospective purchaser on the terms of the then contract to committing itself to complete when a decision to grant planning permission could be challenged after the contract had gone unconditional. An agreement was made on 14th August 2002 for a joint opinion of counsel to be obtained (Guy Roots QC) for advice as to the impact of this decision. I do not accept, however, that the contract prospects were anything like as pessimistic as Mr Sutton attempts to portray in his evidence. On 16th August 2002 Mr Sutton sent an email to Mr Steinberg, the first paragraph confirmed a conversation the day before, that he personally (i.e. Mr Sutton) had a contract to acquire the Fulham Stadium from Al Fayed and that he was faxing the heads of terms to his office. He then summarised the terms and said this:- 
"Strategy is come in quickly now and secure site. Then asap sell out for a profit which we roll over for equity and profit share into a JV with a major developer. So far Miller Developments and Taylor Woodrow via Hutchinson Whampoa very keen. We act as lead developer but have no money left in the deal just profit.
Can you get this financed. Harrods will want a great deal of comfort about ability to come up with balance of purchase price.
Plans, HOT and appraisals on the fax to you"
The enclosed appraisal done by Mr Sutton (Young Property Developer of the Year) shows a net profit of £35 million with a mark up of 23.76%.
94.	I do not believe that if Mr Sutton attempted to give an impression that there were doubts about the progress of the opportunity, even if the conversation took place on 15th/16th August 2002, that impression could have been honestly given by him to Mr Gawthorpe. In fact, as I have said my conclusion is that the conversation actually took place on 11th September 2002. Such an impression would have been even more dishonest. On that very day Mr Sutton deposited £100,000.00 with Forsters as his contribution to FRP’s funding of the Agreement, which itself was exchanged seven days later. 
95.	Why did Mr Sutton lie to his close friend? I reject Mr Sutton’s evidence that this was part of a confidentiality exercise to keep matters from leaking through CD and BIB offices. I accept the evidence of others, that there was concern to ensure that the deal was kept confidential from the fans of the Football Club, and parties who were interested as purchasers wished to avoid their identity becoming known to avoid the attention of fans. There is of course a confidentiality clause in the Agreement, but the purpose of that is that protection. Paradoxically, of course, the terms of the agreement did not remain confidential very long as they were lodged at the Land Registry in January to support the caution, a necessary pre-requisite of the security obtained by Irish Nationwide when it funded the Agreement. It had a charge over the Agreement and the premises of the vendors to repay with a charge over the Football Ground as security for their promises to repay. 
96.	However I find Mr Sutton also was motivated to conceal it from everyone because he knew he was taking the Opportunity for himself in breach of his fiduciary and contractual duties. It is to be noted that Mr Sutton had received legal advice over the years involving his duties of disclosure. That is why he truly wished to hide what he was doing. 
97.	The deceptive conduct of Mr Sutton is shown by an examination of the way in which the Agreement gestated. 
98.	His case is that Ms Hamilton was at all times aware that the contract was to be his personally. On 7th June 2002 Mr Cook sent a proposal being the Opportunity addressed to Nick Sutton, Crown Dilmun. It was hand delivered. The Opportunity was entiled "Project Wisley". Mr Sutton said he received a further document from Mr Cook on 15th July 2002, this is the document headed Project Wisley Crown Dilmun Proposal 17th June 2002, and a counter proposal 8th July 2002. Thus Mr Cook as is quite obvious from reading the terms believed he was dealing with CD and not with Mr Sutton personally. This is confirmed again by his fax of 18th July 2002, where he enclosed draft heads of terms, which are marked subject to contract and the purchaser is identified as Crown Dilmun Plc. Mr Sutton spoke to Mr Cook and as a result this draft was altered and the buyer was deleted (in Mr Cook’s handwriting) to be "a new joint venture company to be formed by Nick Sutton". That Mr Sutton contends is clear indication that he was intended to be the buyer personally. I do not agree. In my view it is ambiguous. Equally ambiguous is the letter of 31st July 2002 sent by Mr Cook incorporating a typed version of those. Martin Dawbney of Herbert Smith, solicitors for Fulham, sent a draft contract by email to Sophie Hamilton. That draft contract has been disclosed but is not in the trial bundles; however, there is reference to an agreement following the Trevor House/Trevor Square format so it will be "familiar to you and your clients". I do not believe that Mr Dawbney at that stage thought he was dealing with Nick Sutton personally. On 7th August 2002 Ms Hamilton sent an internal memo to Michael Cunliffe, headed "Crown Dilmun – Project Wisley". She opened a new account 22305.289 in Crown Dilman’s name and identified it as a Crown Dilmun matter. She attached the draft agreement. It is by no means clear which agreement that was, but it looks like it was the draft agreement by Herbert Smith and is none of the forms of the heads of agreement that passed between Mr Cook and Mr Sutton. On 8th August 2002 she was concerned about Forsters having a conflict because she was acting for CD. The conflict was not because she acting for Mr Sutton. A number of emails passed between Mr Sutton and Ms Hamilton, which at first sight give the impression that it was a transaction for Mr Sutton, but my interpretation is that the emails reflect the fact that he was usually the instructing person from CD and that she still believed that this was a CD contract. 
99.	As I have said, there was a meeting on 14 August 2002 at Herbert Smith, which both Ms Hamilton and Mr Sutton attended. It was as a result of this meeting that a decision was made to obtain advice from Guy Roots QC. Mr Sutton maintains that he told her in a taxi on the way to Herbert Smith of his plans following the MBO, and that he corrected her belief that the initial contract had been made with CD. He also says he told her that she should not send any emails regarding the Fulham deal to his office because this was his personal transaction. Ms Hamilton’s evidence differs quite significantly. First she says the taxi conversation took place after the meeting. She says that Mr Sutton informed her that CD was subject to considerable financial uncertainty and BIB was in trouble and might not survive. He indicated that CD might not be involved in the purchase for the first time and it would either be done through the MBO or he would do it himself and need another partner. The meeting notes of Ms Hamilton make references to Mr Sutton rather than CD assuming obligations. She made no note of the discussion with Mr Sutton nor later important telephone conversations she said she had with him. 
100.	On 15th August 2002 a meeting took place where Mr Sutton and Mr Cook attended at ML Design Group ("MLD") about the proposed scheme. The minutes of the meeting prepared by MLD attribute Mr Sutton to CD. 
101.	It appears therefore on Mr Sutton’s evidence that everybody knew it was a contract for him personally, but all of these professionals acted as if it was a contract with CD. The give away in my view is in paragraph 29 of his witness statement:- 
"Indeed when I was first looking at the Fulham deal I believed this could be the first new deal after the MBO had taken place and I would be independent of Crown Dilmun. By the time the MBO was completed which should have been by the end of July 2002 I would have left Crown Dilmun because I was so disappointed by the behaviour of BIB".
102.	That is the supposed justification in Mr Sutton’s mind for keeping the transaction away from CD. It is also one of the reasons in my view why he did not come clean with Mr Gawthorpe who was a potential investor in the MBO. He had not decided whether or not to put the transaction in the MBO or whether to take it personally free from the MBO. This was his secret arrangement which he would develop to his advantage whatever his duties. 
103.	In paragraph 30 he reinforced this with his statement "with the pressures of the MBO and the continual hurdles put up by BIB I also did not wish to create a further hurdle by disclosing a major interest that would create jealousy among senior BIB staff". This paragraph is to be coupled with paragraph 57 where he wanted to insert the word staff after the phrase in line 3 "we handled matters with the utmost secrecy and confidentiality to ensure that Crown Dilmun [staff] did not become aware …". All of this is disingenuous. It is an attempt to explain why the transaction was not revealed. 
104.	I have already observed that on 16th August Mr Sutton was contacting Mr Steinberg with a very positive financial appraisal of the proposed transaction. Ms Hamilton went on holiday from 19th to 23rd August 2002. She left instructions with Kim Lalli to deal with the matters in her absence. Various notes were produced of Miss Lalli contacting Mr Sutton during this period. It is clear from those notes that Miss Lalli believed that Mr Sutton was to be personally involved. No precise date can be attributed to the notes, save the note, page 3, which is dated 23rd August 2002. However, her note on page 5, for example refers to "SPV to be owned by NS contractual arrangement re banks profit share". It refers further to "NS to cover £10k of NN fees. Undertaking FC". Miss Lalli did not give evidence. On 18th August 2002 Ms Hamilton sent a detailed briefing note to Mr Cunliffe and Miss Lalli referring to the meeting of 14th August 2002, but not indicating who was the client. Mr Cunliffe gave evidence to the effect that he always believed (and he got this belief from Ms Hamilton or Miss Lalli) that CD was the client. Forsters opened the ledger as I have said, initially in the name of CD. Indeed, on 16th September 2002 when Mr Sutton lodged his £100,000.00 it was credited to this CD ledger, although when the transaction was finally concluded a fresh ledger was opened on 16th September 2002 in the name of the Second Defendant which was billed with the entirety of Forsters costs for the whole of the transaction. 
105.	In apparent disregard of the prohibition on communication Mr Cunliffe sent a fax to Mr Sutton at CD on 19th August 2002. The file reference is the CD ledger 22305.219. This enclosed the instructions to counsel. The instructions identified the client as Crown Dilmun Limited both as the substantive part and in paragraph 1.1 of the instructions. The heading was changed by Mr Cunliffe probably after a discussion with Ms Lalli. He sent a fax to Herbert Smith on 19th August 2002, having included a question and indicating that the client should be referred to as Crown Dilmun as opposed to Crown Dilmun Limited. That was copied to Mr Sutton. On 20th August 2002 Mr Cunliffe sent the revised instructions to Mr Sutton at CD’s general fax number, which showed the correction to the heading, but maintained the error in paragraph 1.1. What it did not say of course was that the client jointly instructed was Mr Sutton. 
106.	There is no documentary evidence showing that Mr Sutton suggested an alteration of this misidentification of the prospective Purchaser. He gave evidence of having raised it in conversations with Mr Cunliffe. He first mentioned this when giving evidence. This led to Mr Cunliffe being called to deny that he was told that Mr Sutton was the client. He impressed me as a careful and thorough man. His retainer was in respect of a limited technical planning matter only. Nevertheless, I am satisfied that if conversations took place as alleged by Mr Sutton he would have recorded them and noted them. I disbelieve Mr Sutton. Once again he wished to preserve the ambiguity of the situation for his own benefit. His motivation for keeping it quiet and ambiguous is obvious. At this stage he did not have the finance to put the deal together. Had the matter been revealed to CD it would have shown an immediate interest in the Opportunity one way or another. By the time it reached the post 14th August meeting stage it was necessary to come clean with Kim Lalli and this is what he did. I accept Ms Hamilton’s version of the 14th August meeting in preference to that of Mr Sutton. I reject his evidence that he told her for example not to send emails to his office. If he did the surprising thing is that that was ignored both by Ms Hamilton and Mr Cunliffe at Forsters and also by Mr Steinberg. Second it was also apparently ignored by Mr Sutton when he replied and despite the obvious apparent need for secrecy there is not one email or other communication from him recording complaints about this apparent serious breach of confidence taking place. The ambiguity was preserved by having the communications directed to him at CD’s offices. 
107.	When Ms Hamilton returned from holiday on Tuesday 27th August 2002, she became aware of the discussions that had taken place between Mr Sutton and Miss Lalli. This I accept was the first time it occurred to Ms Hamilton in any sensible way that CD might not be involved. She ought to have been put on alert, of course, on the 14th August, even on her version of the taxi meeting. She made no note of that meeting, nor of any discussion between her and Miss Lalli. What she did do was send an email to her corporate partner Craig Eadie. This email was belatedly disclosed by the Second Defendants on 28th November 2003. In her email to Mr Eadie dated 4th September 2002, she said this:- 
"Can you get someone going on forming newco please. Ultimately to be called Fulham River Projects Limited. One shareholder to be new Forsters nominee co-director co, director initially me
Can you send me the note that I need to give Nick Sutton about his duties etc. I have discussed with him and will tell you more tomorrow".
108.	Despite that note and having received the note from Mr Eadie (which I shall refer to in more detail), she apparently did not give it to Mr Sutton and I reject her evidence that she had any discussion with Mr Sutton about it. She made no note of any such discussion and I simply do not believe her when she says she had not less than two discussions with Mr Sutton about the contents of the note. Had she done so she would have given the copy of the note to him as she envisaged. No satisfactory explanation was given by her to explain why having embarked on the exercise of obtaining the note from Mr Eadie to discuss with and give to Mr Sutton she did not do that. Nor did she even make a note of these vitally important conversations. It must be remembered she was discussing a potential breach of duty being committed by the Managing Director of one of her biggest clients. In this aspect I believe Mr Sutton when he says there was no discussion on the 2nd, 4th 5th or 6th September as alleged by Ms Hamilton discussing his duties as a director and the implications of Mr Eadie’s note.Mr Eadie’s note is a very careful document. In the first paragraph it expresses the opinion that Mr Sutton may be a director of one or more of UK Crown Dilmun companies and if not he would be regarded as a shadow director. 
109.	In the second paragraph it observes that if he is a director he is under a general obligation to bring to the Crown Dilmun companies every transaction that he comes across which was introduced directly or indirectly to him as a result of his position in Crown Dilmun or as a result of his connections he makes while working for Crown Dilmun. This rule applies, he says, even if Crown Dilmun would have no other interest at all in doing the transactions concerned or was unable to do them or if the other party would never have dealt with Crown Dilmun [I interpose to observe that that reflects in effect the case of IDC –v- Cooley to which I have made reference above]. 
110.	In the third paragraph he observes that the rule is regularly disregarded in the property industry, but periodically matters when somebody does a deal privately which turns out to be very valuable and the shareholders/directors of his company then claim their entitlement to the benefit. In paragraph 4 he observes that, if a claim is made, Mr Sutton would have to account personally for every penny of profit from the transaction, probably including any profits made by any partner he introduces and without deducting anything for his time or effort. In paragraph 5 he deals with how this problem can be addressed, by saying that it was sufficient if each beneficial owner of shares in a Crown Dilmun company of which he was a director gave written consent to him doing the relevant transaction so long as reasonably full disclosure of the transaction and its value had been made. In paragraph 6 he points out that that consent itself will not be relevant if any of the Crown Dilmun companies is possibly insolvent. 
111.	In paragraph 7 it is common in these cases that a person in Mr Sutton’s position says the other shareholders are aware of what is happening, but this becomes challenged later on when there is no written evidence. "So a written document is advisable". 
112.	In paragraph 8 he refers to the possibility of there being other duties which might be imposed under his employment contract. 
113.	Ms Hamilton gave evidence to the effect that the purpose of her being advised was to protect Forsters’ interests. 
114.	Mr Eadie therefore advised her of a number of matters. First, Mr Sutton would have to disclose every opportunity and obtain consent to maintaining a private benefit. Failing to disclose leads to a duty to account, whether or not the principal could take or was interested in taking the opportunity. Second, there are often disputes about transactions like this after the event and proof is significant. Written consent is advisable to deal with that challenge. Third, if there is a possibility of insolvency, even that procedure will not totally safeguard against a claim from a liquidator: see West Mercia Safety Wear –v- Dodds [1988] BCLC 250 C.A. 
115.	Ms Hamilton says in her evidence that she discussed the gist of this note with Mr Sutton on a number of occasions. She acknowledges that insolvency did not feature in those discussions, which is surprising given the fact that on her evidence she was told on 14th August that BIB was not likely to survive. 
116.	She asked for the note, as I have observed, in order to give a copy to Mr Sutton and she then totally disregarded all the various warnings that Mr Eadie drew to her attention in the note. Finally, in this context, she kept no note of these vitally important conversations she had with Mr Sutton. 
117.	This is at a time when she knows Mr Sutton has obtained an opportunity of the type which CD would be interested in, when CD’s parent company faced insolvency, when her partner is telling her that it is important to obtain written proof of consent, because these matters can be fought over afterwards. She asked for the note so that she can give it to Mr Sutton. Against that background, I find her evidence incredible. I do not accept she had any such discussion of the note. 
118.	Why would she do this? The conclusion I have come to is that she was too far wedded to this big contract, which the deal maker Mr Sutton was bringing to her firm. CD was becoming history and the future lay with Mr Sutton. She was not going to harm the firm as she saw it by creating problems. To fall out with Mr Sutton at this late stage would jeopardise the contract and would lead to him going elsewhere. She was, in my opinion, completely reckless in considering Mr Sutton’s actions. I do not accept that any conversation took place as she alleged. It follows that Mr Sutton did not provide any of the assurances verbally that she suggests in her witness statement. Had any conversation taken place she would have reinforced the need for proof of what he was saying as opposed to his mere unverified statements of consent. If there is a problem about consent, and Mr Sutton is acting in breach of his duty, he is hardly likely to tell her that he does not have the consent. That is why it was essential to obtain the documentary proof, as Mr Eadie said. Ms Hamilton said she was going to get it, but failed to do so. 
119.	At about the same time that Mr Sutton was attempting to raise finance from Mr Steinberg, he was also trying other sources. One of those was Investec Bank. It sought information from him to evaluate the proposition. In exchange for providing that, Mr Sutton (not CD) required a confidentiality agreement. The undertaking was addressed to him. This was prepared while Ms Hamilton was on holiday, and she did not recall seeing it. It had been prepared by Miss Lalli. I do not see how it can be interpreted as anything other than an arrangement entered into when Mr Sutton was the client of Forsters. Ms Hamilton’s initial evidence was that her firm had never acted for Mr Sutton. This Investec proposal simply shows that is not the case. Further Mr Ross, an employee in Forsters, drafted a letter to send to the senior partner of Nabarro Nathanson. They had left some confidential documents relating to the Opportunity in a taxi (they were acting for a proposed financier). The taxi driver had discovered them, saw the reference to Mr Al Fayed and handed the confidential documents about the purchaser’s financing proposals to the seller. Not surprisingly, Mr Sutton was concerned. Ms Hamilton saw the letter and toned it down. Nevertheless, she did not correct the opening sentence "we act for Nicholas Sutton…". She does not say that she acted for CD. She said in evidence that she missed that on reviewing the draft. I do not believe her. In furtherance of that transaction, Ms Hamilton on 29th August wrote to Nabarro Nathanson as follows:- 
"Dear Miss McMury,
Project Wisley
I understand that you require an undertaking from this firm on behalf of our client Mr Nick Sutton in relation to fees to be incurred by you in relation to the prospective financing by your client Investec of the transaction comprising of the above project up to a maximum of £10,000.00.
I am instructed to give you an undertaking …"
120.	Ms Hamilton’s explanations for this wording were simply incomprehensible. It is quite plain that the letter can only have been written on behalf of a client, Mr Sutton, not on the basis that he was to be the funder, i.e. the guarantor. It is another instance of Ms Hamilton knowing that Mr Sutton is the true purchaser by the end of August 2002. 
121.	By early September it was clear that the Opportunity was going to be taken by the Second Defendant in which Mr Sutton and Mr Steinberg and his associates would be interested. The involvement would be hidden by nominee shares issued in Forsters’ name with Ms Hamilton as director. The desire was twofold. The first desire was to avoid the ire of Fulham fans. From Mr Sutton’s point of view, as the MBO had still not concluded, it was in his interests to keep the matter hidden from CD. 
EVALUATION OF THE OPPORTUNITY
122.	There is no doubt in my mind that in August 2002 it was perceived to be a very valuable opportunity. I have referred already to Mr Sutton’s email to Mr Steinberg, enclosing appraisals. On 22nd August 2002 Mr Steinberg (himself an experienced property developer) wrote to Gary McCollum at Irish Nationwide outlining the transaction and including notes. He reiterated that the base case scheme was for the attached appraisal, and provided a land value of circa £63 million. 
"A strategy to move quickly and secure the site off market, thereafter either selling out the land in its entirety subject to planning for a substantial profit or rolling the profit over for equity and a substantial profit share into a joint venture into a major development.
This seems an opportunity to secure a highly prominent site off market which would enable a substantial profit to be earned with minimal risk. We are prepared to place on deposit on day one sufficient funds to fund the interests for two years (circa£2 million)".
123.	This was copied to Mr Sutton and he accepted (day 9, page 131) that he thought it was an excellent deal at the time. So much so that he was happy enough to invest his own money. Part of the documentation provided to the Irish Nationwide was an analysis, written by Mr Sutton. In that he set out his experience and added the cryptic sentence "for the avoidance of doubt this project will not be undertaken by Crown Dilmun". In answer to questions put by Mr Hochhauser QC (day 7, page 128) he acknowledged that this was because he told Mr Steinberg that he was free to do the transaction. This was a complete negation, of course, of paragraph 57 of his witness statement. 
IRISH NATIONWIDE OFFER
124.	Irish Nationwide offered £15,500,000.00 to be secured by mortgage debenture over the assets of the Second Defendant, a sub-charge of a first legal mortgage over Fulham Football Club Stadium and a charge over a deposit account to be opened with the society by Fulham River Projects containing an initial amount of not less than £2 million. For some reason condition 13 required the ownership of the Second Defendant to be 49% to Mr Sutton and 51% to Mr Steinberg. There was a draw down fee of £75,000.00. The share structure was to be implemented on that basis. Mr Sutton provided the opportunity, his expertise in seeing the project through (Mr Steinberg’s role in reality being confined to raising the finance only, in my opinion) and £100,000.00. Mr Steinberg secured the £15 million and provided the £2 million deposit, which was used as security for the Irish Nationwide against the interest which had rolled up over the two year period when the Agreement was primarily conditional. 
125.	As I have said, the transaction looked attractive. It was also supported by a valuation by Knight Frank dated 9th September 2002. This valued the site at a figure in excess of £18 million based on its current condition and planning status and valued it at £62 million with the benefit of planning permission based on proposal 7C, which was one referred to in the Agreement. If the contract did not go unconditional then the deposit of £15 million was to be repaid with interest at 12% per annum with annual rests (clause 4.2(a)). It follows that if the contract did not go unconditional after two years some £3.6 million worth of interest would be repayable by Fulham. That payment was guaranteed by Harrods and secured on the ground, which had a (surprising at least to me) valuation of at least £18 million. In that eventuality, apart from the costs of the transaction, a significant amount of money can be made even if the transaction does not proceed. Indeed, Mr Steinberg’s evidence now is that, in the light of the matters referred to in Mr Angel’s report, it would be preferable for the Second Defendant if it did not proceed, because otherwise large losses will be sustained. In that context Fulham have a contract with a company which self evidently of itself could not complete the £35 million that would be required if the contract became unconditional. Although Mr Sutton, in his email to Mr Steinberg, said Fulham required satisfaction as regards the purchaser, they had plainly heard of Mr Steinberg and did not require any further security. As Mr Steinberg said in evidence, if the contract went unconditional and the Second Defendant did not complete, the likelihood is that Fulham would not become seriously concerned because it would forfeit the £15 million deposit and would still have the benefit of the site with planning permission for development. Of course, if the valuation of the site after that was anything like Mr Angel’s, that would not necessarily provide them with full comfort. However, in 2002 nobody expected, I suspect, the development to be anything other than very profitable, so far as I can see. 
126.	Under the terms of the Fee Agreement dated 18th September 2002 between Irish Nationwide (1) and the Second Defendant (2), the building society is entitled to a fee of 25% of any net profit. It is by no means clear that that is payable if the site is not developed and the only income is interest. Even if that is taken into account there will still be a significant return, even if the matter does not proceed. I do not accept that it is an unattractive proposition even if it does not proceed. 
127.	Mr Sutton bought into this at a cost of £100,000.00 and his expertise. I do not see how it can be seriously argued that the Claimants would not have bought in if that was the level of commitment required of them given the material that was being advanced in August 2002. Further, I do not believe that they would have entered into any arrangement with Mr Steinberg along the lines of Mr Sutton. He was to my mind in a weaker position than CD would have been despite BIB’s financial position. None of this actually matters because all Defendants accept that the ability of CD to enter into the transaction is irrelevant as regards the duty to account once I determine that mr Sutton ought to have disclosed the existence of the opportunity. It is only raised as the bona fide justification for Mr Sutton determining that he could take the contract. I have already rejected that argument in any event. Had he disclosed the matter properly, I am quite satisfied, as I have said, CD would have taken it in some way. 
128.	Mr Sutton therefore has, in my Judgment, and I so find, acted dishonestly. He failed without any justification to disclose this Opportunity, but determined to take it for himself. He did so because he believed it would be extremely profitable and at that stage, following the anticipated break up of CD and the MBO, he was not going to give CD a further valuable opportunity which came his way as he saw the death throes of CD which he believed he had created and was seeing being broken up to address BIB’s financial problems. 
MS HAMILTON
129.	I accept that Mr Sutton initially did not reveal that he was going to seek to take the Opportunity for himself. However, by 14th August 2002 the alarm bells should have rung in her ears (to adopt an expression used initially by Mr Hollander QC in cross examination). They did not even tinkle. Bells did begin to ring after she returned from holiday and spoke to Ms Lalli who seemed more alive to the problem. By that time, she realised that she was actually acting for Mr Sutton. That is why she wrote, or participated in the writing of the letters written, on his behalf. Her thought processes at last woke up and she realised that, with parent group difficulties and the fact that he was a director, there might be some corporate law issues. She might be an experienced property lawyer but she is plainly not a corporate lawyer or insolvency lawyer. She did not appreciate that if CD became insolvent even disclosure would not have been sufficient if it was actually close to insolvency when disclosure would have taken place. This was a real potential difficulty in August 2002 when disclosure ought to have taken place. She sought reassurance from Craig Eadie. She did not receive it. What she received was potentially disastrous for the transaction as she saw it and, as I have said, in my judgment she recklessly disregarded everything Mr Eadie advised her to do. 
MR. SUTTON
130.	As I have observed, if I am wrong in the conclusion that Mr Sutton had no bona fide basis for believing Crown Dilmun would not be interested in the Opportunity, the next question arises as to whether or not he was entitled to take the Opportunity without disclosing his intention so to do and obtain the agreement from CD to that course of action (whether in advance or retrospectively). As I have said, his case is that by virtue of arrangements made over the passage of time he was entitled to take opportunities, provided he could do so bona fide and provided he notified them afterwards, without at that time giving CD an opportunity not to allow him to retain the benefits already taken. 
131.	His case is thus summarised in Mr Knowles QC’s opening skeleton argument paragraphs 3 and 4. This is based upon a succession of board meetings. The Claimants initially called no evidence in respect of this allegation for reasons which I have already set out. The sole evidence they called was then the evidence of Mr Mallett. He, as I have already observed, could give no evidence of the matters. He left it to Mr McIlvenny and was content to leave it to his recommendation or not. What is significant, however, is the way Mr Sutton put it in his witness statement. Whatever else Mr Sutton is, he is a very careful person. The witness statement was carefully crafted. Mr Sutton plainly came to CD with an existing portfolio and was allowed to develop that portfolio. In paragraph 18 of his witness statement, he said he had an interest in various companies which have been disclosed to Mr McIlvenny in correspondence or in formal board minutes or resolutions. It was at his instigation that these interests were minuted because Mr McIlvenny was always happy for him to have such interests, knowing how committed he was to Crown Dilmun. He asserted that Mr McIlvenny told him on a number of occasions that disclosing interests at formal disclosure was not really necessary, since he was fully aware of the interest. A brief perusal of the interests and transactions disclosed shows why CD would not be concerned about the disclosure. Thus, on 2 March 1998, Mr Sutton informs Mr McIlvenny of property companies run by his wife which included "Ottoman" and "Imperial" property companies. Mr McIlvenny acknowledged that he confirmed that his interest (note the word interest) was not a breach of the contract of employment. That was granted on the basis that the directorships in no way affected his ability to carry out his responsibilities to BIB and CD. On 3rd April 2000, minutes are recorded of a large number of disclosures, and the board consented to his interest in the companies, that to date his interests had not affected his duty to the company and that he would update the board in twelve months time of further holdings. But that was on the basis that the Board acknowledged that such interests were unlikely to affect his ability to satisfy his contractual requirement. On 29 June 2000 the disclosure of Max Hotels Limited was approved. It was stated that "this was to ensure that Nicholas Sutton’s activities could not lead to any allegation that he has not acted in accordance with his contract of employment or in a conflict of interest position or used confidential information for his own business or not dutifully and faithfully served Dilmun Investments Limited". Once again the three itemised bases were repeated. 
132.	On 15th May 2001, a further minute was produced, referring to the personal interests which required prior approval, which was approved. Item 3 required Mr Sutton to update the board or Chief Executive (i.e. Mr McIlvenny), as and when required, of further holdings. 
133.	In paragraph 19(c) of his witness statement, he referred to the resolution passed on 3 April 2000 and, in particular, the extract which I have quoted above. He said board resolutions of DIL in similar terms were passed on 29th June 2000 (correct) and 15th May 2001 (incorrect). The latter minute was actually negotiated after an exchange of emails that passed between Mr Khouri, which deleted the self-serving statement as to the reason for declaration. It also included a provision, not to be found in the earlier minutes, which states:- 
"Nicholas Sutton referred to his contract of employment dated 4th October 1994 which requires prior approval of personal interests by Dilmun’s Chief Executive and confirmed his personal interest in a number of property trading, development and investment companies of which he is both a shareholder and director as follows…"
Mr Khouri introduced the words "which require prior approval of personal interests by Dilmun’s Chief Executive".
134.	Mr Sutton not only made no mention of this in his witness statement, but failed to produce these emails until disclosure in the trial. Mr Sutton acknowledged in cross examination that the minutes were drafted by his lawyers initially to protect him. He accepted Mr Khouri redrafted the proposed 19th May 2001 resolution. The introductions appear to me to have 3 significant changes. First, there is reference to prior approval from Mr McIlvenny. I do not accept Mr Sutton’s evasive answers on this point (see day 8, page 148 and following). This seemed to me to introduce a measure of protection, namely, that interests would be disclosed in advance to Mr McIlvenny and, if he approved, the matter would proceed by way of a formality exercise at board level. The second thing that Mr Khouri did was delete the self-serving declaration to which I made reference. The third matter was that he was required to disclose "as and when required". There was therefore no regular retrospective update being contemplated by that minute. 
135.	Now Mr Khouri, of course, was not called. I have had no explanation as to why neither Mr Khouri nor Mr McIlvenny (nor for that matter why nobody from BIB) was called. There is a gaping hole in Mr Sutton’s witness statement in that it totally fails to deal with the circumstances of the gestation of the 19th May 2001 resolution. Further, in paragraph 19(f), Mr Sutton says, as I have already indicated, that the resolution of 19th February 2002 includes the self-serving declaration (as indeed is the case). What he failed to reveal in his witness statement (and this only emerged in cross examination) was that the form of that minute was obtained by a misrepresentation. On 19th December 2001 he sent an email to Mr Khouri and Mr McIlvenny headed "Personal Holdings". In the email he said; 
"I have 3 new companies (2 acting, 1 holding company) since my last disclosure which I have updated the disclosure letter for which is in exactly the same format as the last one."
He attached the draft which he had sent to Mr Khouri, but which Mr Khouri had rejected on 19th May 2001. He therefore misrepresented that the proposed minute was in the same form as the one previously agreed. This is a serious misrepresentation in my opinion, coming as it is from Mr Sutton in his fiduciary position and in relation to his obligations to disclose those interests. He suggested that it happened because he went back to the draft on his computer which pulled out the previous draft and not the one that had been overtaken on 19th May 2001. I simply do not accept that as credible. Equally, he said Mr Khouri was a careful man and would have checked everything including the previous minute. I do not accept that either. When a senior executive writes in the terms as Mr Sutton did, I do not believe Mr Khouri would question his veracity and in effect check him when he is saying that he is sending a standard form disclosure document in the same form as it has been previously agreed. I am reinforced in that fact because, as Mr Mallet indicated (and once again Mr Sutton failed to indicate in his evidence), no board meeting actually apparently took place. These documents were recorded in writing but were never actually discussed. 
136.	To my mind, this demonstrates, as Mr Hollander QC said in his submissions, that the true position was that the consent given was limited to holdings. It can under no circumstances in any of the cases be interpreted as being a general abrogation of Mr Sutton’s duty as a fiduciary to disclose potential conflicts of interests arising out of opportunities that came his way. If one applies the facts of the Opportunity, absent this supposed defence of disclosure retrospectively, it is self evident that the Opportunity puts Mr Sutton in a position of conflict if he wishes to take it himself. If, of course, he does not wish to take it himself there is no conflict as he simply negotiates a transaction on behalf of CD. I further accept that Mr Khouri introduced a pre-condition requirement, namely disclosure in advance to Mr McIlvenny and approval by him. Finally, in my judgment, Mr Khouri deleted the self-serving statement to retain in place the firm duty on the part of the fiduciary (Mr Sutton) that if he wished to obtain a benefit or incur or enter into any transaction which is a prima facie breach of his fiduciary duties, he must make full and frank disclosure in advance; see New Zealand Netherlands Society v Kuys [1973] 1 WLR 1126. 
137.	For a fiduciary to escape liability to account because of breach of his fiduciary duty he must show that full informed consent has been given by the beneficiaries after a full and proper disclosure has been made. The burden is therefore upon Mr Sutton to show that he made full disclosure, frank disclosure, and that, in the light of that full and frank disclosure, informed consent has been given. I do not see how, when the minute of 19th February 2002 has been obtained by deception, it can be said that he has made full disclosure and that any consent that has been given is fully informed. It is also a significant point to observe that he failed in any event to disclose his interest in Max Hotels (Ludgate Hill) Limited. If he obtains a consent by serious misrepresentation no consent is established. 
138.	In any event, I do not see how the disclosure exercise applies to anything other than holdings. I do not see how it could possibly be argued that the operation of these minutes and the way they were shown to have gestated in the evidence can be interpreted as a licence to obtain benefits in breach of fiduciary duty without having the full rigours of disclosure and consent satisfied. 
139.	Finally, in the context of the minutes, there is the proposed minute of 9th October 2002. 
140.	Mr Sutton refers to this in paragraph 21 of his witness statement. He said that during the very difficult MBO negotiations he was asked to provide a list of his interests because Mr Aladwani had never seen this. This caused him concern because he believed that his personal interests were fully disclosed. I have already observed they had not been fully disclosed, as he was constrained to admit. He listed disclosures for the solicitor acting for CD, Berwin Leighton, in his email of 9th October 2002. He acknowledged in cross examination that he did not specifically refer to the Opportunity. He says that he disclosed his interest in Ottoman Homes, which owned 49% of the shares in FRP; 
"But I wanted as far as possible to keep the Fulham deal highly confidential and did not wish to disclose it to all these different parties. This was not the formal disclosure opportunity to the board of DIL that I used with an update of my personal interests being sent to the board of DIl".
141.	The email says this:- 
"I enclose a copy of the last letter of disclosure I have signed. 
Added to this now is Max Hotels (Brighton) Limited as well as…
Thanks
Nick
P.S. lets get SPA signed off by BIB before we formally table this by SJ Berwin – therefore sit on for now"
142.	This is a quite extraordinary email. First, it fails to disclose his interest in Max Hotels (Ludgate Hill). Second, it fails to disclose his interest in the Agreement. Third, it invites the solicitor (note not the solicitor retained by CD in the transaction, SJ Berwin) to sit on it for a time. Fourth, he urges the solicitor to get the SPA which is the share purchase agreement i.e the MBO signed off before this is then revealed to SJ Berwin. 
143.	Not surprisingly Mr Sutton was extensively cross examined on this and the next paragraph of his witness statement (paragraph 22), where he suggested that he would have disclosed the Fulham deal at the next board meeting in February 2003. There he said he did not want to put up more barriers to the MBO and that the disclosure would lead to jealousy among the management of BIB and may have upset the whole MBO. During day 9 (page 46 and following), in response to questions put by Mr Hochhauser QC, it was put to him that there was a deliberate decision not to disclose the Agreement, and that is why he used the word "specifically", hoping to shield behind the fact that he had disclosed Ottoman, thereby attempting to suggest that the Ottoman disclosure previously was a sufficient disclosure of the 49% shareholding taken in the Second Defendant. Although he repented of that later in the cross examination, none of this supposed desire to keep it confidential, as set forward by Mr Sutton, can possibly excuse his failure to disclose the Agreement. I find his explanation as to how it was somehow different, because he was at the time concerned with the sale of the MBO, as opposed to his alleged regular disclosure, to be untrue. He did not disclose it because he wanted to keep it for himself. 
144.	Mr. Hollander QC in his closing submissions made a significant number of trenchant criticisms of Mr Sutton’s dishonesty. In paragraph 24 of his closing, he set out 11 instances of dishonesty. Mr Knowles QC was constrained in his closing to concede that Mr Sutton was "wrong" in assuring Mr Khouri that the draft resolution was in the same form; that, Mr Knowles QC submitted, was an innocent mistake and is unlikely to have misled Mr Khouri. I reject both of those. He was constrained to acknowledge that his statement to the staff on 9th January 2002 that money would be found by BIB was also wrong, but, once again, Mr Knowles QC suggested that the motivation was staff commitment. In relation to the Brompton Road development he acknowledges that Mr Sutton was wrong to write the letter but once again he suggests that his motivation was in the interests of CD. He acknowledges that he failed to reveal the Opportunity and Ottoman’s interest on 9th October 2002 and that his motivation was confidentiality, but that does not justify the exclusion. He acknowledges that the extension of the Great Charles Street property was wrong, but that he did not receive the benefits to which I have already made reference as he was entitled to these anyway. He finally acknowledged that he was wrong to delete the contents of his C drive in his laptop and report them and failed to explain that he deleted that material and held copies of the DVD. 
145.	It is a sorry story. Mr Sutton has to my mind repeatedly told lies and, whilst I do not go as far as Mr Hochhauser QC suggested, when he submitted I should not accept anything he said unless it was independently corroborated, I accept that he lied to the significant extent put forward by Mr Hollander QC in his closing submissions to which I have already referred. I do not propose to set them out in detail in this judgment but they are I find all made out. 
EVENTS OCTOBER 2002 TO MAY 2003
146.	The MBO collapsed in late October 2003. This caused a certain amount of acrimony bearing in mind the fact that Mr Aladwani, as late as 16th October, had sent an email to Mr Sutton enclosing a draft letter that he was going to send to the BIB board saying that he believed the transaction was a fair deal, despite the price being paid being was slightly less than full market value, and taking into account BIB’s desire for liquidity. Mr Sutton emailed back suggested alterations which emphasized the financial problems (doubtless as he saw it) that would visit BIB and CD if the deal was not proceeded with. Mr Aladwani appears to have incorporated these in the memorandum sent to Mr McIlvenny on 17th October. The board of BIB apparently agreed it on 22nd October 2002. On the same day Mr Mallett informed Mr Sutton and Mr Minashi, with copies to the senior members of BIB and Mr McIlvenny and Mr Aladwani, saying that all future sales of CD assets would be remitted to BIB and the only matters to be netted off would be expenses of the transaction and overdue drawdowns which had been approved by Mr McIlvenny. Any future funding was to be done on a drawdown by drawdown basis. By 30th October Mr Sutton was becoming desperate, sending an email saying "it either happens tomorrow or I’m unemployed". 
147.	The MBO collapsed on 31st October 2002. Mr Sutton explained the failure was due to Mr Al-Marzook saying that BIB would not sign it off because it was likely that BIB would be in liquidation the following week and he would be criticised for selling assets off immediately before appointing a liquidator. The same day, Mr Sutton responded to an earlier request from Mr McIlvenny identifying candidates for redundancy, including Mr Minashi. Mr McIlvenny, at the same time, told Mr Sutton that BIB was in a position to fund his requirements right now with or without the MBO. Mr Minashi prepared a cashflow requirement on 1st November 2002. 
148.	On 6th November 2002, Mr Minashi revealed the extension of Great Charles Street, to which I have made reference. He also indicated he might have difficulty obtaining finance, citing the "BIB factor". 
149.	At about the same time, Ernst and Young, the auditors, were completing the clearance of the audit to 30th September 2002 and, as part of that exercise, they reviewed all of CD’s ongoing projects. There was an audit clearance meeting on 4th November 2002, and the Great Charles Street development was discussed. By this time Mr Minashi knew that he was on Mr Sutton’s redundancy list. I have no doubt (although Mr Minashi denies this) that this lead to animosity between him and coloured his views. I do not accept, however, that it coloured his views to the extent that he would lie to support CD’s case. Equally, as I have set out above, Mr Aladwani was plainly brought in to oversee the operation in circumstances which to my mind are quite understandable, namely Mr Sutton’s MBO. Mr Aladwani, too, has exaggerated his evidence, as I have said, but I do not accept that Mr Aladwani, as part of that exaggeration exercise, has lied in order to further CD’s case. Whichever way one looks at it, the Great Charles Street issue was something which could be properly raised as against Mr Sutton. 
150.	There are other proceedings between the parties, as I have already observed, in respect of Mr Sutton’s entitlement (if any) under a share profit agreement dated 2nd September 2002. The Opportunity is raised in that action and obviously it is essential that I adjudicate on that. In addition, CD raise the Great Charles Street issue, both as to his failure to disclose his interest in Max Hotels (Ludgate Hill) and in the circumstances of the renewal. Those too are matters which it is appropriate for me to adjudicate on. As is the wont in cases like this, CD have raised a whole series of other matters. They are not essential to this case and I indicated (and the parties agreed) that I should not adjudicate on those. They do demonstrate, however, the way in which, for example, Mr Aladwani has exaggerated his evidence to support CD. Thus, the evidence in relation to Roland House, which is an allegation that Mr Sutton purchased a penthouse for £2 million, whilst another was sold by CD three months later for £3.5 million (thus suggesting he made a secret profit of £1.5 million), was devastatingly exposed in cross examination. As it was extracted from Mr Aladwani in cross examination, the allegation involves in effect saying independent surveyors also produced a fraudulent valuation. Mr Al-Marzook arranged the valuation and they reported to him with a price and that was the price that was then fixed. There was no question of Mr Sutton proposing the price and producing the valuation. None of this was revealed in Mr Aladwani’s witness statement (nor is it actually revealed in CD’s defence in the other action). It is a good example of how Mr Aladwani has become obsessively questioning of everything that Mr Sutton was involved in. 
151.	Equally, I do not propose in this action to become involved in the allegations as to how Mr Sutton left. He may have been constructively dismissed, he may have resigned, he may have left of his own accord. Those are germane issues to the profit share. What is quite clear is that, when he ceased employment duties actively, around 7th November 2002, the claim in respect of the Opportunity was not known to CD. It emerged slowly. Mr Aladwani discovered matters when he reviewed Mr Sutton’s emails over a period of time. Once again I thought his evidence was exaggerated and I reject his suggestion that he did not realise Fulham was a football club and that the transaction related to Fulham Football Club. I accept his evidence that he kept it from Mr Minashi. This is quite understandable because one has to bear in mind that Mr Minashi was thought to be part of the original MBO (as was Mr Gawthorpe) and I can well understand why Mr Aladwani, having discovered possible allegations of misconduct that were made against Mr Sutton, would be concerned as to the haemorrhaging of that discovery before his investigation was complete. He would also be concerned as to whether or not the other employees of CD were involved in some way. I am satisfied therefore that he did not consult Mr Minashi when he retained S J Berwin. 
152.	Mr Sutton was still playing an ambiguous hand. On 7th November 2002 he wrote to Mr McIlvenny after a meeting with Mr Al-Marzook and Mr Bader Wahidi, saying he was taking two weeks leave. In item 4 he said that he had been called by various contacts who had been told that he had resigned from CD, which he said was not the case. On the same day, he was emailing Mark Alexander at Amec saying that, in terms of CD, he was no longer part of the group, having parted company following an aborted management buyout. On the same day he wrote without prejudice and subject to contract to Mr Al-Marzook setting out terms upon which he would be willing to be bought out of his contractual arrangements with CD. Not surprisingly, that foundered on the discoveries. 
153.	Solicitors then became engaged. Ferguson wrote on 15th/16th November 2002. On 15th November 2002 it was asserted on behalf of Mr Sutton that CD had committed a repudiatory breach of the contract of employment which was accepted by him. 
154.	A detailed response was sent by S J Berwin on 20th November 2002. It asserted, amongst other things, that Mr Sutton had committed a repudiatory breach of contract by giving an interview to the Estates Gazette about his departure. This was followed up by a further detailed letter on 2nd December 2002 raising (inter alia) under item (d) the Opportunity. The other matters have largely found their way into the pleadings in the other action and I propose to say no more about them. 
155.	That detail produced a quiet period. Fergusons did not reply until 23rd December 2002. In respect of the Fulham project, they revealed the exchange of contracts (but not the contract) and then recited the BIB review of 4th January 2002 and asserted that it was Mr Sutton’s view that there was no conceivable prospect of CD being interested in the transaction in any event. Mr Sutton then made the following offer via Ferguson:- 
"Mr Sutton is ready to stand aside to allow your client to negotiate with the other party to the contract to take the contract over if that is what your client seriously wishes to do. Your client needs to be aware in particular (a) that the deposit required under the contract is £15 million (b) that the planning issues involved in this project are very substantial and very difficult and (c) the consent of the other parties to the contract will be required before it could be assigned or transferred".
156.	There was then an attempt to say that, as it is Ottoman’s shareholding and not Mr Sutton’s, in effect there has been a written consent by virtue of the board meetings. 
157.	This, to my mind, was the start of a mutual shadow boxing exercise that took place between Ferguson and S J Berwin. I do not believe that was a genuine offer by Mr Sutton. It was an attempt to call CD’s bluff. That is why reference is made to the extensive financial commitments. Further, Mr Sutton could not actually have delivered what he was offering. He made no reference to Mr Steinberg’s involvement. He was not consulted and it is by no means clear that he, at that time, would simply allow the shares that Ottoman held to be transferred without further consideration of their position. 
158.	The Second Defendant’s stance now is that it would not object to that proposal, but that too, to my mind, is part of the shadow boxing exercise to put pressure on CD to elect whether or not to proceed with its claim or to seek some reduced amount. Mr Knowles QC in his closing invited me to evaluate and determine the worth of Mr Sutton’s offer and to determine that it would satisfy any breach of fiduciary duty by him. Mr Hollander QC said it would not be appropriate at this stage to make any determination if I had determined that there was a breach of fiduciary duty. 
159.	It should be clear from this Judgment thus far that my determination is that Mr Sutton has committed a serious breach of fiduciary duty. I do not think the offer was a genuine offer and I do not think for one minute that any breach of the fiduciary duty would be discharged by a simple transfer of the 49 shares in the Second Defendant which would be held under the terms of the Shareholders Agreement which put the minority shareholder in a weak position vis-à-vis Mr Steinberg and his fellow investors. 
160.	S J Berwin did not reply until 17th January 2003. In that letter they stated that CD wished to take the contract over. I do not believe that was a genuine stance of CD’s at that time. It had not seen the contract, it had not seen any of the appraisals and it was simply not in a position to decide whether or not it would take the contract over. It too was, in my opinion, a counter bluff. It is plain that, by making that statement, S J Berwin on behalf of CD was simply trying to spin things out and obtain information. At the end of that exercise CD would be in a position to decide what to do about the Agreement. It plainly could not be forced to take the Agreement, simply by the letter it wrote on 17th January 2003, and it knew it. 
161.	Despite the correspondence taking place between S J Berwin and Ferguson and the involvement of Mr Aladwani, I accept that Mr Minashi did not become aware of the Opportunity until the story broke in the press in early January 2003. I accept his and Mr Gawthorpe’s evidence as to their thoughts that Mr Sutton was behind it. Mr Aladwani arranged a meeting on 16th January 2003 with Ms Hamilton. She spoke to Mr Sutton shortly before the meeting. That conversation is disputed. Mr Sutton says that she was told just to listen and not disclose any client confidential information. Her version in her witness statement (paragraph 21) was that he told her that he was still trying to resolve his dispute with CD, had offered them the Opportunity to take his position in the transaction, but they had declined. The initial impression given by her letter of 23rd January 2003, was that she was saying that Mr Sutton told her back in August/September that the offer to take the transaction and the declining of it by CD occurred then. In her evidence before me she corrected that and stated that she was referring to the offer in Fergusons’ letter referred to above. That only partially solves the problem because the offer had not been declined by the meeting of 16th January so that Mr Sutton was either lying or she was lying because he did not say it. Further cross examination of her elicited a concession by her that he might have said not taken up, rather than declined. She plainly gave the impression to CD that the word declined was used and plainly gave the impression that it was given in the context of events in August/September as is shown by Mr Minashi’s letter of 22nd January 2003, which she confirmed. 
162.	It is extraordinary indeed that Ms Hamilton felt able to go to CD and discuss Mr Sutton’s confidential relationship with her. She was of course by that time in terrible difficulties because CD was itself was a longstanding client of hers. I accept Mr Sutton’s version of the conversation that took place before the meeting. I cannot believe that he would have sanctioned her discussing his affairs at that stage. In the course of the conversation he may have told her about the offer, but she plainly misunderstood it. Once again she kept no note of this conversation. 
163.	The shadow boxing continued. On 21st January, Ferguson, in response to S J Berwin’s letter of 17th January indicating that CD wished to take over the contract, asked for a confirmation that BIB had authorised the transaction, that CD had the facilities necessary to allow them to pay upon the assignment of the contract the deposit of £15 million together with interest at 12% from the contract date (why that has to be paid I do not understand). By this time CD had obtained a copy of the contract from the Land Registry. S J Berwin’s response in the letter of 23rd January 2003 was to request a detailed amount of information and say that "steps have been taken to secure the necessary authorisations and financing for the Project. The company is not prepared to disclose details of these arrangements". 
164.	The reason why it was not prepared to disclose them was because no serious steps had taken place. All Mr Minashi could say somewhat lamely was that he understood steps to mean arranging an appointment with BIB in Bahrain. I reject that. I cannot believe he understood that is what the preparations meant. The plain fact is that S J Berwin was shadowboxing. They did not wish to answer Ferguson’s letter of 21st January as regards finance because there was none in place. Knowing that, there was a refusal to provide it. 
165.	Mr Gawthorpe and Mr Minashi went out to Bahrain with Mr Aladwani the following weekend. CD has been remarkably coy about what went on that weekend. Despite the practice that was plainly revealed on earlier occasions, of there being reports to the board and minutes of the board, no board minutes or reports have been produced. Cross-examination of Mr Minahsi revealed, for the first time, that various appraisals had been prepared by him and that these were presented to the board. CD has still failed to produce the later appraisal Mr Minashi prepared in March 2003. No member of the board of BIB has given evidence and the evidence of Mr Minashi, Mr Aladwani and Mr Gawthorpe was extremely imprecise and vague about what was discussed and the result of the discussions. The Defendants were right to criticise this evidence and had it been significant evidence I might have drawn an adverse conclusion as against the Claimants. However, as I have already set out earlier in this Judgment, I have rejected Mr Sutton’s version of his contractual relations with the Claimants. It follows that it does not matter whether or not the Claimants were financially in a position to take the contract at all. Equally I believe that CD had not then and still did not wish to decide irrevocably whether to take over the Agreement 
166.	The present proceedings were commenced without warning. Herbert Smith had joined the shadowboxing exercise on 30th January 2003. They informed S J Berwin that the Agreement was inalienable and that no action would be taken by them concerning a transfer until S J Berwin gave an undertaking that all costs to be incurred by Fulham in connection with any arrangement with CD, including those of Herbert Smith, MLDG, Planning Perspectives and Harrods Estates Limited, were paid. In addition, there would then be a confidentiality undertaking and upon all of that a copy of the contract would be released. Unfortunately for Herbert Smith, the contract had already been obtained, as I have said. Sparring took place about the documents, which S J Berwin required as set out in their letter of 30th January to Ferguson. Forsters then started to act for the Second Defendant and asked for the Claimants’ offer to take over the Agreement. That was rejected on the basis that the Claimants would not be in a position to make any formal detailed written offer until it had completed due diligence on the contract. Ferguson returned to the issue of financing on the part of CD. The issue of Herbert Smith’s costs fell apart on the distinction between paying all costs and reasonable costs, S J Berwin seeking to put a cap of £5,000.00 plus VAT and disbursements. On 13th February, the Claimants issued the present proceedings and sought disclosure and thus to obtain the documents that way without payment and indemnities. No warning was given as to the proceedings. Herbert Smith’s stance hardened on 27th February 2003. 
167.	The documentation was obtained by S J Berwin. On 25th March 2003, Ferguson wrote seeking clarification as to whether or not the Claimants still remained interested in taking over the contract. S J Berwin wrote a holding letter. Finally, on 2nd May 2003, S J Berwin wrote saying that their clients had no obligation to indicate whether there was value in the Agreement, how profits would come from the Agreement or that they would wish to take over the Agreement. 
168.	That remains the stance of the Claimants during the trial and remains their stance. 
169.	The reality is that taking over the Agreement at this point in time is an unlikely proposition because there is no evidence to show that Fulham will agree to an absolute assignment and in effect a novation in favour of CD. Further there is no evidence to show that CD would be in a position to provide £15 million immediately to replace the money in favour of Irish Nationwide. Mr Steinberg at the trial indicated a willingness to allow a transfer of the minority shareholdings to take place, but there is no evidence to show that Irish Nationwide will agree such transfer and the maintenance of the shareholding as between Mr Steinberg and Mr Sutton is a mortgage condition. It might well be that there will be little difficulty agreeing it, but it is by no means certain that Irish Nationwide would be willing to allow CD to come in as minority shareholders. 
170.	Finally there is Mr Angel’s uncontradicted evidence as to the present value of the Agreement. 
171.	No one has addressed clearly Mr Sutton’s £100,000.00 and when, if at all, that is to be repaid, and it is difficult to see how it can be realistic for the Claimant to commit itself either to take over the whole contract or to be locked in as a minority shareholder in the Second Defendant at this stage. 
172.	That is Mr Hollander QC’s stance on behalf of the Claimants and I understand and accept it. I have already observed that I do not accept that Mr Sutton’s breach of fiduciary duty will be satisfied by the transfer of the shares to CD. It fails to address his £100,000.00. I posed the non-rhetorical question, would he demand that back? It fails to address the possibility of Mr Sutton re-emerging as an A shareholder on behalf of Mr Steinberg in the Second Defendant. When I put that to Mr Knowles QC in argument he suggested that Mr Sutton would give an undertaking that that would not happen. The fact that these matters have to be addressed on an ad hoc basis demonstrates how unrealistic are the suggestions of involving CD in either taking over the Agreement or becoming a minority shareholder in the Second Defendant. 
173.	As a matter of legal principle the Defendants contend that the Claimants should be required to elect to do either of those and if they do not so elect, they should be limited to any claim to be assessed as at the date of the trial. As a matter of legal principle I do not accept that and I will set out the legal issues on that further in this Judgment. 
174.	The reason for the submission is the evidence of Mr Angel FRICS who was called on behalf of Mr Sutton. His evidence is that the market value of the Football Club as at the date of his report (and trial), if it has planning permission in accordance with the scheme known as 7C, is £26.4 million, but if the social housing element is increased from 30% to 50% in accordance with the requirements of the Mayor of London, the valuation then comes down to £14.58 million. Somewhat intriguingly, Mr Angel was not asked a value as at the Agreement date. No evidence, as I have said, has been led by any party at that date to contradict that and I accept it insofar as it is relevant. 
175.	The contemporary evidence of Mr Sutton showed a valuation of around £65 million. Mr Steinberg endorsed that when he corresponded with the Irish Nationwide Building Society and Knight Frank who were in the same region. Mr Angel was critical of those valuations. He did not say, however, that those opinions could not have been honestly held then. He also accepted his figures might change in the light of build costs, as he was not an expert in building costs, but the difference between the figures is quite stark. This might, of course, be relevant to a claim for damages in order to show that the Claimants have suffered no loss. The Claimants do seek damages, but have not yet sought to elect between damages as an alterative to an account of profits. 
176.	Interesting though Mr Angel’s evidence is, it is of no assistance to the issues before me, except his answers in relation to the various figures being canvassed in 2002. Given his answer, that reinforces my view that anybody then would have perceived the Opportunity as being a valuable one. 
SUMMARY OF FACTUAL CONCLUSIONS
177.	Having heard the witnesses and analysed the documentation my factual conclusions are as follows:- 
1. There was no arrangement between CD and Mr Sutton which entitled him to consider bona fide whether or not to take the Opportunity. The Opportunity came his way as a director of CD and he was bound to exploit it for the benefit of CD.
2. There was no agreement, understanding or procedure whereby Mr Sutton was entitled to take the Opportunity and disclose the taking retrospectively in 2003.
3. Mr Sutton could not have had a genuine bona fide belief in June 2002 (or later for that matter) that CD would not have been interested in the Opportunity had it been presented to them.
4. Mr Sutton, almost as soon as the Opportunity arose in early June, decided to take the Opportunity for himself and, in so acting, he was dishonest and in breach of his fiduciary duties.
5. Mr Sutton decided to conceal what he was doing as long as possible. To that end he gave a misleading impression to Forsters, initially, that it was a CD matter.
6. Forsters initially believed the Opportunity was a CD Opportunity and that Mr Sutton had brought it to them for CD’s benefit and not his own. Ms Hamilton was misled initially by Mr Sutton, but on 14th August 2002, she became aware that it was an Opportunity which Mr Sutton was seeking for his own benefit.
7. Ms Hamilton, despite having acted for many years for CD and being aware of the director status of Mr Sutton and his consequent fiduciary duties, was reckless in how she addressed the consequence of him taking the Opportunity when he was a director of CD. She failed to respond when he informed her on 14th August 2002 of the possibility and only revisited it after Kim Lalli brought it to her attention at the end of August 2002. Despite her evidence to the contrary, she did act for Mr Sutton from that time. She sought to protect her position in a self-serving way seeking guidance from Craig Eadie her partner, but failed to implement all of the guidance he offered, failed to keep a note of any conversations that she alleged she had with Mr Sutton (which I find did not take place) and failed to update Craig Eadie as promised in her email. She also failed to hand a copy of Craig Eadie’s notes to Mr Sutton. She did all of that because she was reckless as to the extent of Mr Sutton’s breach of fiduciary duty. In view of the admission in the defence of the Second Defendant, her knowledge of Mr Sutton’s breach of fiduciary duty is attributable to the Second Defendant.
8. The Second Defendant was aware of Mr Sutton’s breach of fiduciary duties because of Ms Hamilton’s knowledge. It was also aware because Mr Sutton self evidently knew that he was acting in breach of fiduciary duty. Although Mr Sutton is not an officer of the Second Defendant, he is intimately concerned in the Second Defendant by virtue of his investment of £100,000.00, his shareholding and the terms of the shareholders agreement. Also he was the person, I find, who was to exploit the Opportunity and the Agreement. I find Mr Steinberg and his associates provided finance, but took no active role in the exploitation of the Agreement.
9. Mr Steinberg was not aware of Mr Sutton’s breach of fiduciary duty, nor was he aware of the matter of which Ms Hamilton was aware.
Whilst BIB was in serious financial difficulties and was teetering on insolvency, in September 2002, CD was not, and the BIB group, whilst operating a cautious policy of investment, did not have a policy of accepting no investment proposals whatsoever. It would have evaluated the Opportunity and, whilst its ability to introduce its own funds was modest, I am satisfied that it would have taken the Opportunity with others that operated through an SPV like the Second Defendant. It is not inconceivable that the Opportunity could have been exploited by CD had Mr Sutton carried his duties out properly in a different arrangement with Mr Steinberg (as acknowledged by Mr Minashi in his evidence). Mr Sutton was not in a strong position to negotiate with Mr Steinberg I find, as CD would have been. None of this actually matters because this issue is only relevant to the question as to whether or not Mr Sutton was able to take the Opportunity. The only way in which he could have taken the Opportunity himself is after he had made full and frank disclosure to CD and BIB and, after that full and frank disclosure, they had decided both that they did not wish to take the Opportunity and that he could. 
 
MR SUTTON’S LIABILITY
1.	The above findings show that I find that CD would have been interested in the Opportunity and the evidence that Mr Sutton gave and persisted in before me at trial was simply untrue and dishonest. He could never have had any genuine belief, in my view, that CD would not have been interested. If he had it would have been the easiest thing to disclose, to be laughed at, and then take it for himself. I do not believe for one minute that CD would have laughed at a presentation which included the appraisal he sent to Mr Steinberg 
LEGAL ISSUES
2.	Given my decision that Mr Sutton had no right to make any decision to take opportunities which came his way whilst he was a Director of the Claimants, the parties all agree that he came under a duty not to take opportunities which arose that might put him in conflict with his duties to the Claimants. As a director of the Claimants, he had a duty to exploit every opportunity that he became aware of for the benefit of the Claimants. The only exception is if they permit him to take such opportunities after he has made full and frank disclosure and they have given full and informed consent. I have already found that none of that happened. 
3.	The acceptance of those duties was inevitable given the line of authorities starting with Keech –v- Sandford [1726] Sel. Cas. 1. King 61 through to Boardman –v- Phipps [1967] 2 AC 46, IDC –v- Cooley (supra) and Island Export Finance -v- Umunna [1986] BCLC 460. 
4.	In addition, for what it is worth, I am of the view that as a fiduciary he had a positive duty to disclose his own misconduct: see the cases summarised by me in Tesco Stores –v- Pook [2003] EWHC 823 (Ch). 
5.	The parties also acknowledge that, given my findings, there is no question that he is in breach, even if it is established that CD would not want the opportunity or that the third party would never have given it to CD; see the Boardman and Cooley cases. 
6.	It is necessary to evaluate in particular the Second Defendant’s role and potential liability and to analyse in legal terms the basis for liability. That is not so important as regards Mr Sutton, because the liability of the fiduciary to account is well established by reasons of the cases that I have set out above. I was referred to the very helpful article by Sir Peter Millett, as he then was, in [1993] Restitution Law Review 7. 
7.	It is essential to appreciate two restrictions which apply to a fiduciary in the position of Mr Sutton. First, he is not allowed to set up for business in competition with a business carried on by CD. That is self evident from the express wording of his contract of employment. The second prohibition is, where he obtains an opportunity to purchase or otherwise acquire property from a third party, or obtains special knowledge or information which indicates such a purchase or acquisition might be worthwhile, then he is disabled from taking any benefit resulting from the purchase. In order to found liability, it is not necessary to establish that the fiduciary was unable to purchase the property as a result of an opportunity or special knowledge or information required by him by reason of the fiduciary relationship. It is not all knowledge or information which counts, and in general terms a fiduciary is allowed to use knowledge or information acquired during the course of his fiduciary relationship for his own purposes. 
8.	There are two instances where a fiduciary might be liable. The first is where a fiduciary obtains knowledge or information which is not available to the general public and is obtained by him as confidential information in the course of his fiduciary relationship and had a special value, in that it enables him to assess the commercial feasibility of a purchase by him and the appropriate terms of a purchase offer and thereby substantially contributes to the successful purchase by him. In that situation, liability attaches whether or not matters such as the skill of the fiduciary contribute to the purchase, even though the purchase involved risk-taking despite the knowledge and information gained by him. The second situation is where a fiduciary obtains confidential information in the course of his fiduciary relationship and then enters into a purchase for his own benefit in circumstances where his personal interest conflict or may conflict with his fiduciary duties, for example his duty to consider a purchase on behalf of the trust or even an application to the court for authority to purchase. 
9.	I distil that analysis from the cases referred to in Lewin on Trusts (17th Edition) paragraphs 20-40 through to 43. 
10.	Whether or not confidential information is property is an interesting point. There are conflicting views: see Phipps –v- Boardman pages 90 – 91, 102, 107, 115, 128 – 129. In the case of the fiduciary the analysis is interesting but not necessarily of any great practical significance. Whether or not the information is confidential, if the opportunity that arises by reason of the acquisition of the information puts the fiduciary in a position of conflict, he cannot take that opportunity. It follows, as I have said, whichever way one analyses it, Mr Sutton is liable. 
PROFIT OBTAINED BY A THIRD PARTY
11.	There is limited English authority providing guidance about the rules applicable in a case where profit is obtained by a third party who is not in a fiduciary relationship with the beneficiary. That is potentially the position of the Second Defendant. A claim against a third party may be based on (i) a connection between the third party and the trustee, (ii) breach of confidence or (iii) participation in breach of fiduciary duty. 
12.	In this context, it is essential to analyse what matters are attributable to the Second Defendant. I have already found that Ms Hamilton was aware of all the circumstances as to Mr Sutton’s breach of fiduciary duty and was reckless in considering them. That knowledge is admittedly attributable to the Second Defendant. The Second Defendant therefore comes to this claim with an attitude of being reckless as to whether or not Mr Sutton was in breach of fiduciary duty. 
13.	There also remains the question of Mr Sutton. Mr Sutton is not an officer of the Second Defendant. He has a role which is ostensibly limited by the shareholders agreement. That gives him considerable power. He has the power to appoint three of the seven directors of the board of the Second Defendant. He has the right to be fully involved and he has, once Worldmade received £750,000.00 profits, the right to equal treatment under the shareholder agreement thereafter. He was responsible for bringing the Opportunity to the Second Defendant. He was also (and remains so), I find, the person who is going to have the prime responsibility for bringing the Agreement to fruition. I do not accept, as I have said, that Mr Steinberg and his investors had anything other than a role of providing finance, with a transitional element of control solely to protect the imbalance of their investment at that time compared with the investment of Mr Sutton. 
14.	In reality, Mr Sutton, therefore, has a significant role in the Second Defendant. It is the same as the situation in, for example Jones –v- Lipman [1962] 1 WLR 832 and "The guvnor" in Gilford Motor Co. Ltd. –v- Horne [1933] Ch 935. 
15.	I am firmly of the view that the formation of the Second Defendant and the appointment of Ms Hamilton as the sole Director and the registration of the shares in a Forsters nominee company was, amongst other things, to hide Mr Sutton’s interests in it. The potentially intrusive presence of fans was a factor that affected Mr Steinberg’s interest and desire to be "off the record" as regards the Second Defendant, but Mr Sutton’s motivation was to hide it from CD. 
16.	Mr Hollander QC puts it another way. He submits that for the purposes of the attribution of Mr Sutton’s knowledge to the Second Defendant, he is to be regarded as a directing mind. He submits, applying El Ajou –v- Dollar Land Holdings Plc and another [1994] 2 All ER 685 C.A. and Meridian Global Funds Management Asia Limited –v- Securities Commission [1995] 2 A.C. 500, the relevant test is to find the person who had management and control in relation to the act or omission in point. As the Court of Appeal made clear in El Ajou the formal position i.e. the status, as a director is relevant but not decisive. Nourse LJ referred to what is required is a "pragmatic" approach (page 696 C):- 
"Decided cases show that, in regard to the requisite status and authority, the formal position, as regulated by the company’s articles of association, service contracts and so forth, though highly relevant, may not be decisive. Here Millett J adopted a pragmatic approach. In my view he was right to do so, although it has led me, with diffidence, to a conclusion different from his own".
17.	Mr Hochhauser QC referred me to Hoffman LJ’s (as he then was) judgment at page 703. However, that argument seems to me to be circular. It is not realistic (or to use the words of Norse LJ pragmatic) to describe Mr Sutton as a mere agent of the Second Defendant. The key part of Lord Justice Hoffman’s decision is to be found at pages 705-706 as follows:- 
"The authorities show clearly that different persons may for different purposes satisfy the requirements of being the company’s directing mind and will. Therefore the question in my judgment is whether in relation to the Yulara transaction, Mr Ferdman as an individual exercised powers on behalf of the company which so identified him. It seems to me that Mr Ferdman was clearly regarded as being in a different position from the other directors. They were associates of his who came and went. SAFI charged for their services at a substantially lower rate. It was Mr Ferdman who claimed in the published accounts of DLH to be its ultimate beneficial owner. In my view, however, the most significant fact is that Mr Ferdman signed the agreement with Yulara on behalf of DLH. There was no board resolution authorising him to do so. Of course we know that in fact he signed at the request of Mr Stern, whom he knew to be clothed with authority from the Americans. But so far as the constitution of DLH was concerned, he committed the company to the transaction as an autonomous act which the company adopted by performing the agreement. I would therefore hold, respectfully differing from the judge, that this was sufficient to justify Mr Ferdman being treated, in relation to the Yulara transaction, as the company’s directing mind and will. Nor do I think it matters that by the time DLH acquired Yulara’s interest in the Nine Elms project on 16 March 1988, Mr Ferdman had ceased to be a director. Once his knowledge is treated as being the knowledge of the company in relation to a given transaction, I think that the company continues to be affected with that knowledge for any subsequent stages of the same transaction. So, for example, if (contrary to the judge’s finding) the £1,030,000 sent by Yulara on 29 May 1986 had been received beneficially by DLH as a loan, but Mr Ferdman had resigned or died a week earlier, I do not think that DLH could have said that it received the money without imputed knowledge of the fraud. And in my judgment the subsequent acquisition of Yulara’s interest was sufficiently connected with the original investment to be affected by the same knowledge. 
I would therefore allow the appeal. I do not regard this as an unsatisfactory outcome. If the persons beneficially interested in a company prefer for tax or other reasons to allow that company to be for all legal purposes run by off-shore fiduciaries, they must accept that it may incur liabilities by reason of the acts or knowledge of those fiduciaries."
18.	In passing, I should say, given Hoffman LJ’s observations about people who were put up as officers, the concession that Ms Hamilton’s knowledge was attributable to the second Defendant was well made. 
19.	Given the El Ajou case and the Meridian case, when applied to Mr Sutton and his role in bringing the Opportunity to the Second Defendant, which led to the Agreement, in that his solicitors were retained by the Second Defendant and they, through Ms Hamilton, had a significant role in the management of the Second Defendant, and the essential developmental qualities of Mr Sutton (as opposed to the bringer of finance), I have no doubt in concluding that on those authorities Mr Sutton’s knowledge is to be attributed to the Second Defendant. 
SUMMARY AS REGARDS KNOWLEDGE ON THE PART OF THE SECOND DEFENDANT
20.	I accordingly conclude that the Second Defendant was both reckless as to whether or not Mr Sutton was committing a breach of duty in bringing the Opportunity and the Agreement to the Second Defendant and, further, knew of Mr Sutton’s dishonesty in that regard. 
KNOWLEDGE SUFFICIENT?
21.	It is to be noted that the Claimants do not suggest that the corporate veil of the Second Defendant should be lifted so that it is to be regarded as Mr Sutton for all purposes. 
22.	The Second Defendant submits that its knowledge is insufficient as regards a stranger to a breach of fiduciary duty. In that context reliance is placed upon the Court of Appeal decisions in Satnam Investments Ltd. –v- Dunlop Hayward and Co. Ltd. [1999] 3 All ER 652 C.A. and Criterion Properties Ltd. –v- Stratford UK Properties [2003] 1 WLR 218 C.A. 
23.	I accept the consequence of those decisions, but I am bound to say that I do so with reluctance. They are nevertheless binding upon me and I therefore am bound to give effect to them. However, the decisions have been the subject of significant criticism. I refer to Goff and Jones "The Law of Restitution" (6th Edition) paragraphs 33-019 through to 33-020. I agree with the observations in the latter paragraph in particular that "even in the commercial field, ethics and good faith are not to be regarded as merely opportunist or expedient" (quoting Sach LJ in Scheiring Chemicals Ltd. –v- Falkman Ltd. [1982] QB 1). The analysis put forward in that part of Goff and Jones is compelling to my mind. Nevertheless it is not the law (certainly not at first instance). It follows therefore that the attribution of the knowledge is not enough. It must be unconscionable for the Second Defendant to retain the benefit obtained by it through Mr Sutton’s breach of his duties and his dishonesty. 
24.	Given the facts I have no hesitation in concluding that it would be unconscionable for the Second Defendant to retain those benefits. That may be unfair to Mr Steinberg, who I accept personally had no knowledge of the breaches committed by Mr Sutton, but it is not unfair to the Second Defendant. However, Mr Steinberg is not a party. It is the knowledge and actions of the Second Defendant which are in question, not his. Merely because at the moment his consortium has 51% of the shares and control through the shareholders agreement does not affect that situation. Mr Hollander QC and I had a vigorous debate about that in his closing submissions and I was persuaded by the force of Mr Hollander QC’s submissions in that regard. 
25.	If I was wrong in that regard it seems to me that there is an alternative analysis. This too was put forward by Mr Hollander QC. The information, I accept, is, on the preponderance of the authorities now within this jurisdiction, not property. The information becomes confidential in the circumstance in which it is delivered. I have no doubt that Mr Sutton acquired the information in circumstances of confidence. That information was used to enable the Second Defendant to acquire property. The property is the Agreement. That property is, in my Judgment, the Claimant’s property because it was property which ought to have come its way had Mr Sutton acted correctly. 
26.	Thus in summary the Second Defendant has, as I said, knowledge to a reckless degree of Mr Sutton’s breach and to a dishonest degree by reason of the attribution of his knowledge to it. It also has acquired that in circumstances where Mr Sutton’s knowledge is attributable to it in circumstances where it would be unconscionable to retain the benefits of the Agreement. It also represents property that actually belongs to the Claimants. 
LIABILITY OF THE SECOND DEFENDANT TO ACCOUNT
27.	It seems to me plain on my analysis, set out above, the Second Defendant has either received property with knowledge that the property was being acquired by it, by reason of the breach of Mr Sutton’s fiduciary duty. On the basis of Ms Hamilton’s knowledge, that was reckless, but not dishonest. On the basis of Mr Sutton’s knowledge, that was dishonest. It follows, therefore, that, assuming those two factors are correct, not only had the Second Defendant received property of the Claimants, it has also participated in a breach of duty by Mr Sutton with actual knowledge of dishonesty. It therefore is liable to account for the profits it has received, or will make, by reason of the acquisition of property with notice that it was acquired in breach of fiduciary duty. It also has the requisite level of dishonesty (by virtue of Mr Sutton’s knowledge) to make it liable as an accessory in accordance with the House of Lords decision of Twinsectra Ltd. –v- Yardley [2002] 2 AC 164. There was no question of Mr Sutton having any element of honesty and, by reason of my attribution of his knowledge to the Second Defendant, it too cannot claim to be an innocent abroad either. 
GIVING EFFECT TO THE EQUITY
28.	It is plain that both Defendants must account to the Claimants. There was much debate as to whether or not the accounting exercise should be taken now, or at some future date, or whether or not the Claimants should be required to elect now. 
29.	I was unimpressed by the submission of the Defendants and I found them unmeritorious. The basis, of course, for the argument to force the Claimants to elect now is two fold. 
30.	First, the terms on which the Claimants would have to take over the contract at this stage might well involve it assuming large financial obligations, which it could not necessarily assume at this stage. I do not see why the Claimants should have foisted on them obligations or arrangements made by the Defendants. The Defendants chose to organise the matters their way and they should bear the responsibility of it as regards their liability to account. I do not see that it is any part of the Claimants’ obligations when faced with a claim to account to be forced to take over obligations, which the Defendants made in which it had no role. The test to my mind is well established by the questions I posed to Mr Knowles QC, namely this: the Claimants would have had a period of six years to bring a claim for an account after they first became aware of their claim. It follows that they could have brought the action on the facts of this case at any time up until the year 2009. They would have been quite within their rights in noting the claim and waiting until the Opportunity was fully developed by the Defendants (if it was capable of development) and then seeking an account. Subject to the possibility of raising a defence based on laches, it is difficult to see how the Claimants could be criticised for that. The thrust of the Defendants’ submissions in effect penalises the Claimants for acting expeditiously. I accept (as indeed did Mr Hollander QC) that at some stage the question of the furtherance of the Agreement will have to be addressed by the Claimants in conjunction with the Defendants. Thus if the contract goes unconditional £35 million will have to be found. The Second Defendant could well decide not to find that £35 million. They might well then lose their £15 million deposit. That is a matter entirely for the Second Defendant. I do not see that the Claimants can be forced at this stage to make any definitive election one way or another. 
31.	In any event, I do not accept that they have enough information to make that informed decision. It seems to me that in a case like this an informed decision cannot realistically be made before the planning process had gone its course. Whether or not the contract goes unconditional is a vital factor in assessing any liability to account for profits. 
32.	The second reason why the Defendants press this argument is based on Mr Angel’s evidence. The accounts will produce a figure of nil or virtually nothing. I do not see, however, why the undoubted claims of the Claimants and the undoubted liabilities of the Defendants should lead to a conclusion that the Claimants should now be required to elect on that basis. 
33.	Property markets can move fairly rapidly. A snapshot now of unprofitability might not be the same in several years time. It is quite possible that the obtaining of planning permission may be a lengthy process. The Claimants are perfectly entitled to let the matter run its course. 
34.	The second criticism of the Defendants in this regard is that it over compensates the Claimants. I was referred to the decision of Fyffes Group Ltd v Templeman [2000] 2 Lloyds Rep 643 at 672, referring to the decision of Warman International Ltd v Dwyer [1995] 128 ALR 201 which stated; 
"The stringent rule requiring a fiduciary to account for profits can be carried to extremes and ... in cases outside the realm of specific assets the liability of the fiduciary should not be transformed into a vehicle for the unjust enrichment to the Plaintiff".
35.	Once again, I have sympathy with that analysis. However, it does seem to me that, in this area, the law favours conferring benefits on the wronged even though that is at the expense of the wrongdoer. I refer once again to Goff and Jones, "Law of Restitution" (6th Edition) paragraphs 33–0118 
"Boardman v Phipps is an important illustration of how rigorously English courts interpret the "scope and ambit" of a fiduciary’s duty of loyalty. We have sympathy with the vigorous dissent that on these facts equity’s role was harshly and indiscriminately applied, whereas the decision of the House of Lords in Guinness v Saunders demonstrates there is little evidence that the courts are ready to treat more kindly the honest fiduciary. Indeed in Guinness the House concluded that only in "exceptional circumstances" should a court remunerate any trustee. … It is to be hoped that the conflict of interest rule would not be applied so rigorously as to deny an allowance to honest beneficiaries who have acted in the best interests of and enriched their principals ".
36.	As this argument developed, it seemed to me more and more obvious that this is a question to raise on the accounts. What bears significantly, in my mind, are my findings that Mr Sutton was dishonest and that the Second Defendant was also dishonest by reason of his knowledge. That will militate against any allowances as regards the Second Defendant, but I do not exclude it as a possibility. In particular I do not exclude it as a possibility as regards Mr Steinberg, and whether or not he is prepared to inject further funds into the company, or whether he wishes to remain involved in the Second Defendant. I say that because it is quite clear that the Second Defendant only obtained the £15 million from Irish Nationwide as a result of Mr Steinberg’s good reputation and connections with it. His integrity is well shown by the fact that he would be very unwilling to allow the Second Defendant to go into liquidation and leave the Irish Nationwide with no remedies (it will be recalled that it is a non-recourse loan and there are no third party guarantees either from Mr Steinberg or Mr Sutton). Mr Hollander QC acknowledged that, at some stage, if the contract is to proceed, the Claimants will have to address the continued involvement, if any, of Mr Steinberg. It seems to me (and I express no concluded view for obvious reasons at this stage) that how the accounting exercise is to be worked out is to be decided on taking the account. 
37.	What I am quite clear about, however, is that both Defendants are liable to account to the Claimants for the reasons set out in this judgment. I will make an appropriate consequential order in the light of this Judgment when it is handed down. 
38.	Finally, I cannot pass without thanking all Counsel for their considerable assistance in their submissions in this interesting and dynamic area of law. I also commend them for their patience in dealing with what was clearly an interesting and vigorous debate.