Can a company director quietly pursue his own strategy behind the board's back, so long as he sincerely believes it is best for the company? On 14 July 2026 the Supreme Court said no. In Saxon Woods Investments Limited and others v Costa [2026] UKSC 21, the Court held that the duty in section 172 of the Companies Act 2006 requires a director to act — not merely to think — in good faith, and dismissed Mr Costa's appeal.
What the case was about
Francesco Costa was a director, and until July 2024 the chairman, of Spring Media Investments Limited, the holding company of a group providing creative services to fashion, beauty and luxury brands (paras 6–7). A shareholders' agreement of 20 May 2016 committed the company and its investors to "work together in good faith towards an Exit no later than 31 December 2019" (paras 13–14). The board entrusted the sale process to Mr Costa (para 19). Believing a later sale would fetch a much better price, he set about delaying it — keeping his fellow directors in the dark and misleading them into thinking the company was honouring the agreement (paras 19–20). The trial judge summed up his state of mind as "they wouldn't like it now if they knew, but they will thank me in the long run" (para 21). Covid then destroyed any prospect of a beneficial sale (para 22). Saxon Woods (holding 22.33% of the company) petitioned for unfair prejudice under sections 994–996 (paras 8, 23). The trial judge (Mr Simon Gleeson, sitting as a deputy High Court judge) found unfair prejudice but no section 172 breach (para 24); the Court of Appeal found a breach and ordered a buy-out of Saxon Woods' shares at their undiscounted 31 December 2019 value (paras 25–26).
What the Supreme Court decided
Lord Briggs, for a unanimous Court (Lords Sales, Hamblen, Burrows and Lady Rose), dismissed the appeal (paras 61, 66). Section 172 codified a fiduciary duty of loyalty; section 170(4) requires it to be read in light of the common law it replaced (paras 29, 56). Good faith governs a director's conduct, not just his thought process — a director does not get "carte blanche… by any means, however covert or disloyal" (para 56). Mr Costa's reading "would be a recipe for chaos and paralysis in corporate governance" (para 60). His conduct was "manifestly disloyal" and in bad faith (para 61). The Court analysed the case through loyalty and good faith rather than the Ivey objective dishonesty test the Court of Appeal had used (para 62). The buy-out order stood (paras 65–66).
Why it matters
Good faith is about what a director does, not just what he believes (paras 56–60); the board's collective authority is protected, with section 171 duties also engaged (para 58); and where a fiduciary duty is in play the duty itself, not Ivey, supplies the test (para 62).
Explore the underlying law on Search the Law: directors' duty of good faith under section 172 · unfair prejudice under section 994.
Read the full judgment: Saxon Woods Investments Limited and others v Costa [2026] UKSC 21 (The National Archives).