[2021] 1 All ER 983 Ciban Management Corporation v Citco (BVI) Ltd [2020] UKPC 21 is a decision of the Judicial Committee of the Privy Council on appeal from the British Virgin Islands relating to directors' duties and the legal rule known as the Duomatic principle.

They also made some important legal clarifications in relation to directors' duties and the role of the registered agent, as well as expressing views on the proper application of certain statutory provisions.

[1] The Privy Council adopted the statement of facts as found by the Court of Appeal below: Mr Byington was a Brazilian businessman.

"[6] In relation to the judicial sale of the property and at various times subsequently, Spectacular issued powers of attorney authorizing Brazilian lawyers to take steps on behalf of the company.

Each time, his instructions were followed without question and the power of attorney was issued by TCCL as director on behalf of Spectacular.

Mr Costa caused the invoice for Citco and TCCL's fees to be settled on 23 August 2001 by a transfer from his son's bank account in Oxford.

On 20–21 November 2001 Mr Costa asked Citco to produce further documents in connection with the proposed sale, which it did.

[8] On 14 December 2001 Spectacular entered a contract for the sale of the property at a price of R$1.15m with Mr Thomas Law as purchaser under the power of attorney.

Mr Byington was not pleased, and his response made clear that he had not authorised the grant of the fifth power of attorney and was entirely unaware of the sale until then.

On 21 December 2001 he commenced proceedings in Brazil seeking to repudiate the sale agreement with the purchaser, Mr Law.

This dispute was eventually settled by an agreement under which Spectacular retained the property in return for a payment to Mr Law of R$1.6m.

In summary, it alleged that TCCL had acted in breach of its tortious (and fiduciary) duty of care as a director in failing to ensure that Mr Costa had the authority to procure the grant of the fifth power of attorney and to try and sell the property, and that Citco had acted in breach of its tortious (and fiduciary) duty of care as a registered agent in failing to do the same and in supplying further documents for the sale.

After reviewing the facts, the Privy Council considered the central allegation made on behalf of the appellants, namely that Citco and TCCL had ignored "red flags" in relation to the instructions from Mr Costa in relation to the fifth and final power of attorney which was used in the attempt to sell the property.

Lord Burrows first dealt with the "red flags" issue, that TCCL and Citco knew or ought to have known that Mr Costa was acting in an unauthorised fashion.

However, the Privy Council agreed with the trial judge that none of these things should have been expected to put the respondents on notice of anything untoward.

Accordingly, the Privy Council had to consider to what extent the tacit authority of Mr Byington constituted authorisation on behalf of Spectacular.

He also cited the speech of Lord Hoffman in Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500 at 506 in relation to how the Duomatic principle fits within the general rules on attribution in respect of a company.

The appellants argued "it would be a 'remarkable extension' to the Duomatic principle to apply it to apparent authority so as to allow an agent to commit a fraud against the company and its members.

Put another way, the Duomatic principle would not be permitting the ultimate beneficial owner or the director to commit a fraud against the company.

He also noted that the respondents rejected the allegation of dishonesty - Mr Costa was only trying to secure what was owed to him, and was turning over the surplus proceeds of sale to the company.

[19] The Privy Council also affirmed that the Duomatic principle generally applied to the giving of consent under section 80.

[21] Lastly he noted that "it has not been necessary for the Board to consider the propriety of that course of action" by Mr Byington setting up the structure in the way that he did.