A director's breach of duty was proven in court, so why did his employer recover nothing
An employer that proved a director breached his duties still recovered no costs, Deputy High Court Judge Maria Yuen ruled on 7 July 2026.
The decision closed a set of consolidated High Court actions arising from a facilities group's dealings with a family-run equipment supplier. The court had handed down its main judgment on 25 July 2025, finding that the third defendant, a director of the group's cleaning and transportation company and an employee of its facility services company, had breached both his fiduciary duty and his contractual duty.
At the centre of the case was a procurement arrangement. The court found that an administrator of the supplier had dishonestly assisted by manufacturing inflated quotations so that the group would buy machinery from the supplier. The judge found the quotations had been created to look as though they came from independent companies, so that the supplier's price would appear to be the lowest of three competing bids.
The court rejected the two individuals' explanations even against the documentary record. Of their evidence, the judge wrote: "These are serious adverse finding against these witnesses' integrity."
Proving the misconduct did not translate into recovery. The employer could not rescind the purchase order because it had affirmed the deal by affixing its own labels to the machinery. It could not prove loss, having produced no evidence of the market price or of any defect in the equipment. Nor was it entitled to equitable compensation, because the venture the machinery was bought for had been unprofitable.
The defendant's own claims failed too. His counterclaim for wrongful dismissal against the facility services company was dismissed as a direct consequence of the liability findings. So was a breach-of-contract counterclaim brought by the environmental development company that had ended its service agreement after the group suspended the manpower it supplied.
The employer did not win on everything. The judge recorded that the plaintiffs had failed to establish liability over the procurement of sub-contractors, though that issue took up little of the trial.
On costs, the judge weighed the mixed result. The plaintiffs had largely succeeded on liability, and the dismissal of both counterclaims flowed from those findings. But they had also failed to prove loss and had lost the sub-contractor issue. Balancing these, the court concluded that "there should be no order as to costs" between the plaintiffs and the director and the environmental company.
The equipment supplier drew a different result. Although no order had been made against it and it had filed no losing counterclaim, the judge declined to award it costs, finding that its administrator's role in manufacturing the quotations meant it had brought the litigation upon itself and had done a wrongful act in the course of the transaction.
The final position was this: findings of breach in the employer's favour, two counterclaims dismissed on the strength of those findings, and yet no rescission of the purchase order, no damages, and no order for costs to show for any of it.
