The judge's comments on Target follow:

52. The facts of Target Holdings are well known and it is not necessary to set them out in detail. The case concerned a claim against a firm of solicitors sued for its involvement in a mortgage fraud. Fraud as well as negligence was pleaded. On completion of the transaction the solicitors had (in breach of their instructions) parted with the mortgage advance before obtaining the security. Within a month, however, they did obtain the security. The claimant, as a possible short cut to having to prove fraud at trial, sought summary judgment on the basis of the unauthorised payment, despite the solicitors having obtained the security (which subsequently proved hopelessly inadequate). That is the explanation of the references in the speech of Lord Browne-Wilkinson (at pp.437 and 439) to 'stopping the clock'.

53. The result reached by the House of Lords in Target Holdings has been generally welcomed but the route to that result has been much debated (see in particular Sir Peter Millett, Equity's Place in the Law of Commerce (1998) LQR 114 p.214-227; Professor C E F Rickett, Where are We Going with Equitable Compensation? in Trends in Contemporary Trust Law (1996) pp.183-9). In my view it is unnecessary to go far into that debate, since whereas the trust in Target Holdings was (as Professor Ricketts puts it) simply an aspect of a wider commercial transaction involving agency, the fiduciary obligations undertaken in this case by the former directors involved heavy and continuing responsibilities for the stewardship of the company's assets. They were not strictly speaking trustees, as title to the assets was not vested in them; but they had trustee-like responsibilities, because they had the power and the duty to manage the company's business in the interests of all its members. It may be that a more satisfactory dividing line is not that between the traditional trust and the commercial trust, but between a breach of fiduciary duty in the wrongful disbursement of funds of which the fiduciary has this sort of trustee- like stewardship and a breach of fiduciary duty of a different character (for instance a solicitor's failure to disclose a conflict of interest as in Canson Enterprises v Boughton & Co (1991) 85 DLR (4th) 129, a decision of the Supreme Court of Canada discussed by Lord Browne-Wilkinson at pp.438-9).

54. These points were not fully explored in the course of argument and it would not be right to express any definite view on points which are not necessary to the determination of this appeal. It is sufficient, in my view, to observe that this is a wholly different case from Target Holdings, in which (so far as concerned the application for summary judgment) the solicitors were shown to have done no more than to have acted imprudently in reimbursing their client's funds before they obtained their client's security. In this case the former directors are liable for deliberately and (at least in relation to the 1991 accounts) dishonestly paying unlawful dividends out of the company's funds which were in their stewardship. Those unlawful payments have never been reimbursed.

There is also a brief discussion of the correct application of the objective dishonesty standard set out by Lord Nicholls in Royal Brunei Airlines v Tan [1995] 2 AC 378, 389.

 Joshua Getzler