Saxon Woods Investments Ltd and others v Costa [2026] UKSC 21 concerned the director’s Companies Act 2006, s 172 duties to act in good faith to promote the company’s success.
Francesco Costa, chair of Spring Media, was asked by the board to prepare the company for a sale by the end of 2019. However, he genuinely believed a later sale would deliver a higher price. Instead of putting this view to the board, he acted covertly, misleading the board and excluding other directors in order to delay the sale past 2019. Unfortunately, this meant the COVID-19 pandemic shattered any chance of a profitable exit.
Saxon Woods, a minority shareholder, presented a petition against Costa for relief from unfair prejudice.
The High Court held Saxon suffered unfair prejudice but Costa did not breach his s 172 fiduciary duty. Overturning this, the Court of Appeal held the breach did exist on the basis Costa’s deception was dishonest, applying the objective test in Ivey v Genting Casinos (UK) Ltd (trading as Crockfords Club) [2017] UKSC 67. It ordered Costa to buy out Saxon Woods’ shares at their 31 December 2019 value.
Unanimously dismissing Costa’s appeal this week, the Supreme Court rejected the argument ‘good faith’ is subjective, governing the director’s thinking and views rather than their conduct.
Lord Briggs, giving the main judgment, said: ‘Far from promoting corporate success in the modern world, it would be a recipe for chaos and paralysis in corporate governance, and destructive of the collegiality of the board of directors as a whole which all stakeholders in limited companies are entitled to expect.’
Instead, ‘good faith’ is objective, ‘applied to the director’s conduct, and not limited to his thought processes about company strategy’.
Saxon Woods’ solicitors Stephenson Harwood said that, while the Court of Appeal relied on Ivey dishonesty, the Supreme Court took ‘a broader view’. Consequently, directors must use delegated powers ‘solely for the purposes and strategies the board has approved’ and ‘must cooperate with the board’.
