Former members of the Royal Automobile Club (RAC) sued the directors for failing to disclose that they had plans to demutualise.

The court cited with approval the headnote in Percival v Wright [1902] 2 Ch 421 that: The directors of a company are not trustees for individual shareholders, and may purchase their shares without disclosing pending negotiations for the sale of the company's undertaking.In his judgment Mummery LJ noted that the apparently unqualified width of the ruling had, over the course of the previous century, been subjected to increasing judicial, academic and professional critical comment.

But that, as a general rule, it was right that directors should not be over-exposed to the risk of multiple legal actions by dissenting minority shareholders.

The court relied upon Stein v Blake [1998] 1 All ER 724 (at 727D and 729G per Millett LJ) for the principle that a duality of duties may exist.

The court referred to examples from other common law jurisdictions where special circumstances had been held to exist which justified the imposition of fiduciary duties on directors to individual shareholders.

In the Court of Appeal of New Zealand in Coleman v Myers [1977] 2 NZLR 225 and in the Court of Appeal of New South Wales in Brunninghausen v Glavanics [1999] 46 NSWLR 538 fiduciary duties of directors to shareholders were established in the specially strong context of the familial relationships of the directors and shareholders and their relative personal positions of influence in the company concerned.