Following a Chancery trial lasting eight weeks across January to March, the High Court has delivered judgment in Morjaria v Mirza [2025] EWHC 1961 (Ch). These complex civil fraud proceedings, relating to a property joint venture in London, raised numerous interrelated claims and counterclaims alleging breach of contract, tortious conduct, and equitable wrongs. The lengthy trial encompassed an additional claim against offshore directors of three Jersey companies which had been established for the purposes of the joint venture.
The claim against the directors alleged that they had in bad faith, and in breach of their duties to their companies, procured the relevant joint venture entity to breach good faith obligations contained in the joint venture agreement to which it was a party. The claim advanced allegations that the directors had preferred their own personal interests to the best interests of their companies and were motivated by a desire to obtain personal benefits in causing the joint venture entity to enter into various contracts with one of the joint venturers, which assigned to that joint venturer the companies’ rights against the other joint venturer.
In a judgment running to over 300 pages, Mr Justice Thompsell decided that the claim against the directors failed at every hurdle. The Judge determined that the claim failed at the outset, because the entry into the contracts did not breach the duty of good faith contained in the joint venture agreement. Further, he determined that the directors were not motivated by personal benefits, did not have the requisite knowledge or intention necessary to satisfy the tort and, in the alternative, had lawful justification for acting as they did (at [1205]-[1209]).
The judgment is notable for its analysis of contractual duties of good faith, and also for its careful treatment of the rule in Said v Butt [1920] 3 KB 497, which holds that a director acting in good faith and within the scope of his or her authority is not liable in tort for procuring breach of contract by his or her company. Mr Justice Thompsell emphasised that to fall outside the protection of the rule in Said v Butt, a director would need to be acting in bad faith, and doubted that breach of a director’s duty to act with reasonable care, diligence and skill could reach that threshold: at [1174]-[1179]. The judgment is also significant for clarifying that a director acting in accordance with his fiduciary duties to his company may thereby be discharging an “equal or superior duty”, so as to provide lawful justification for what would otherwise constitute the tort of procuring breach of contract: at [1203]-[1204].
The judgment is available here.
Christopher Lloyd and John-Patrick Asimakis acted for the directors, instructed by Trevor Mascarenhas, Caitlin Ferguson, Ben Cook and Zac Barber of PCB Byrne LLP.
