In the recent case of Mitchell and another (Joint Liquidators of MBI International & Partners Inc (In Liquidation)) v Sheikh Mohamed Bin Issa Al Jaber [2025] UKSC 43, the UK Supreme Court clarified the scope of fiduciary duties owed by directors and controllers of companies following the commencement of liquidation. The Court determined that a director whose statutory powers have ceased may still owe fiduciary duties if he purports to exercise authority over the company’s assets and intermeddles with them dishonestly.
 
This decision reinforces the strict approach of equity toward individuals who assume fiduciary powers in bad faith and without lawful authority.
 
Relevant Facts
 
MBI International & Partners Inc (“MBI”), a British Virgin Islands company, was placed into liquidation in October 2011. At the material time, MBI owned 891,761 shares in JJW Hotels & Resorts Holding Inc (“JJW Inc”) (“JJW Shares”).
 
Following the commencement of MBI’s liquidation, Sheikh Mohamed Bin Issa Al Jaber (“the Sheikh”), a director and ultimate controller within the MBI group, signed share transfer forms purporting to transfer MBI’s JJW Shares to JJW Hotels & Resorts Holding Ltd (Guernsey) (“JJW Guernsey”) for no consideration (“2016 Share Transfers”). The trial court found that these transfers were executed dishonestly and in bad faith.
 
Subsequently, all assets and liabilities of JJW Inc were transferred to another group company (“2017 Asset and Liability Transfer”), thereby rendering the JJW Shares worthless.
 
The liquidators commenced proceedings against the Sheikh for breach of fiduciary duty and against JJW Guernsey as the knowing recipient of the JJW Shares, seeking equitable compensation.
 
The Supreme Court’s Decision
 

 
The principal question before the Supreme Court regarding the Sheikh’s fiduciary duty was whether a person can owe fiduciary duties when, as a matter of law, he no longer possesses any powers as a director but nonetheless purports to exercise such powers over the company’s property. The Supreme Court answered this question in the affirmative.
 
In so deciding, the Supreme Court held that fiduciary duties do not depend solely on formal appointment or legal authority. Where a person assumes or arrogates to himself fiduciary powers, equity will treat him as subject to fiduciary obligations.
 
By signing share transfer forms and effecting the transfer of company assets as if he were a director, the Sheikh had intermeddled with the MBI’s property and assumed a fiduciary role de son tort i.e. in his own wrong.
 
The Supreme Court reaffirmed the long-established principle in Soar v Ashwell [1893] 2 QB 390 that “a person who assumes an office ought not to be in a better position than if he were what he pretends”. Accordingly, the Sheikh was treated as owing fiduciary duties to MBI, despite the statutory removal of his directorial powers upon liquidation.
 

 
The Court rejected the argument that the absence of legal power negates fiduciary liability. The Sheikh could not rely on the statutory provision that removed his authority to avoid responsibility for conduct carried out under the pretence of authority.
 
Equity looks to substance rather than form and will impose fiduciary accountability where a person exercises control or command over another’s property in circumstances of trust and confidence.
 

 
The Sheikh’s dishonest transfer of MBI’s assets without authority and without regard to creditors’ interests constituted a clear breach of fiduciary duty. The Court emphasised that fiduciary obligations include duties of loyalty, good faith, and acting in the interests of the company.
 

 
At the Court of Appeal stage, the Court held that the substitutive approach to equitable compensation required loss to be assessed at the date of trial. By that date, the Court of Appeal reasoned, the JJW Shares had become worthless as a result of the 2017 Asset and Liability Transfer. As the liquidators had not proven that the JJW Shares would have been sold prior to that transfer, the Court of Appeal concluded that the company had suffered no loss by the Sheikh’s breach of fiduciary duty.
 
The Supreme Court rejected this approach and held that there is no fixed rule requiring equitable compensation to be assessed at the date of trial. Rather, the appropriate valuation date is “an open one”, to be determined by what is “just and equitable as between the beneficiary and the trustee (or the principal and the fiduciary).”¹
 
The Supreme Court emphasised that where a fiduciary misappropriates property under his control, the principal suffers an immediate loss at the point of misappropriation, provided the property had value at that time. In this case, the Sheikh’s breach of fiduciary duty caused the 2016 Share Transfer, thereby alienating the JJW Shares from MBI. That alienation itself constituted the loss.
 
The Court further held that where a fiduciary seeks to rely on a supervening event to break the chain of causation between breach and loss, the burden lies squarely on the fiduciary to prove both the existence of the supervening event and that it should be treated as severing the causal link.
 
The Court explained that supervening events are unlikely to qualify as causation-breaking where the defaulting fiduciary had a hand in them, absent a “clear and convincing innocent explanation”.
 
The Supreme Court distinguished between: 

On the facts, the Sheikh was more than a “bystander” and had “triggered the process” which led to the 2017 Asset and Liability Transfer by serving a letter of demand, attending key board meetings, and stood to benefit from the transaction.³ He made no attempt to show that he played no significant part in the transaction or derived no significant benefit from it. The Supreme Court therefore concluded that the 2017 Asset and Liability Transfer could not defeat the liquidators’ claim.
 
Significance of the Decision
 
This decision carries significant implications for directors and controllers: 

Conclusion
 
The UK Supreme Court’s decision sends a clear message that fiduciary responsibility cannot be avoided by technical arguments as to authority. Where an individual holds himself out as having fiduciary powers and purports to exercise them, equity will require him to accept the full consequences of that role. In short, those who pretend to act as fiduciaries must also be prepared to walk the talk.
 
 
Case Note by Louise Jacqueline Azmi (Partner) and Nurul Syafinas Ibrahim (Associate) of the Dispute Resolution Practice of Skrine.
 
 

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