Daniels v Daniels

Facts

The two majority shareholders, who were directors, caused the company to sell land to one of them at a gross undervalue. She resold it at a large profit.

Issue

Could the minority sue without proving fraud?

Held

Yes. Where directors use their powers, even negligently, to benefit themselves at the company's expense, the minority may sue.

Principle

Self-serving negligence by controlling directors can be challenged by the minority.

Why it matters

It extends fraud on the minority.

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