Changez Khan succeeds in High Court business protection case – damages, an injunction and a finding of contempt against a company director.

Thu, 14 Jan 2021

Changez Khan acted for the Claimant company in Solitair Ltd v Nambiar and Go Singles Ltd [2021] EWHC 49 (Comm). The case concerned a bitter fall-out between two directors of a family-run travel agency.

The highlights were as follows:

  • At trial it was proven that D1, a departing director, had arranged a cyber-attack on the company’s website; had removed its client database to set up a competing business, D2; and had misappropriated company funds.
  • The Court also held that D1 had breached his fiduciary duty to avoid conflicts of interests (s.175 Companies Act 2006). He had abused his position as a director to take over the company’s business lease with a Turkish hotel, thereby diverting to himself a corporate opportunity.
  • Finally, the Court held D1 in contempt of court. The company had previously secured an interim injunction prohibiting D1 and D2 from contacting restricted customers. It was clear, however, that D2 had continued to send them marketing mailshots. Although it was argued that any breach of the injunction had not been deliberate, the judge held that intention to breach was not a necessary ingredient. The question of contempt was an objective one: see recently, Varma v Atkinson & another [2020] EWCA Civ 1602.

This case illustrates the dangers of a director taking matters into their own hands. Often, this happens in small, owner-managed companies, where there has been a personal falling-out between the key players. Departing directors are tempted to take what they consider is “theirs”. Yet failing to respect the company’s rights and failing to observe one’s fiduciary duties can have severe consequences.

Changez is a member of both the Employment and Business & Property groups. He specialises in cross-over work, including director disputes, business protection and injunctive relief. He was instructed by Rob Green, Jessica Bass and Steven Organ of Curzon Green solicitors.

The Judgment can be found here.

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