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Company awarded damages against former director

Posted: 9th April 2015   In: Corporate Commercial

A steel production company has won a damages claim against a former director and members of his family after they formed a rival start-up business.

The director, his son and daughter-in-law all worked for the production company at the same time. The son and daughter-in-law left to set up their own business in the same sector making steel products.

The director also resigned but while working his six months’ notice, he started to divert some of the company’s orders to the new start-up. He provided it with steel and various off-cuts, and hired it to provide cutting services on a sub-contract basis.

The company took legal action as soon as it discovered what had happened.

The court held that the director had breached his fiduciary duty to his company by getting involved with the start-up business. He had not made any financial gain from his dealings but he had let his concern for the success of his family conflict with the duties he owed to his company.

He had wanted to secure a future for his son and this led him to do things he should not have done. He kept his dealings secret, which showed that his conscience was uneasy and he knew he was breaching his duties.

The court also found that the son and daughter-in-law had been in breach of their employment contracts by starting a rival business while they were still employed by the company.

All three were held to be liable to pay damages.

Please contact Sing Li if you would like more information about company law and protecting your business.

Posted by: Sing Li
Corporate Commercial
Luton Office