In the recent case of Eurasian Natural Resources Corporation Limited v Judge, the High Court held that a director is not subject to an implied term requiring them to deliver up confidential documents to the company on the termination of his appointment.
Directors are subject to a number of duties and obligations which they owe to the company. Some of these duties/obligations are implied and do not therefore require express provisions to be made in the director’s service agreement to be binding.
In this case, Eurasian claimed that Sir Paul Judge was required to deliver up confidential documents to the company on the termination of his appointment. There was no express term in his service agreement to this effect, but the company claimed that this was an implied term of his directorship.
The company’s claim was rejected.
The Court held that:
(a) had it been the “obvious but unexpressed intention of the parties”, one would have expected it to be contained in the service agreement;
(b) it had been shown no legal authority, code of practice, guidance or other evidence that would suggest that such a requirement was the norm for directorships;
(c) there was no wider obligation of confidence arising from the director’s fiduciary duties;
(d) there was little probative value in requiring directors to deliver up confidential information, which could involve a considerable amount of work, for very little purpose.
The Court also highlighted the difficulties that some directors would face in complying with such a duty, especially for those who take on multiple directorships.
This case highlights the importance of preparing contracts with clear terms which set out the intentions of the parties, rather than relying on any supposed implied terms.
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