Court Takes Dishonest Director to Task

In a stern reminder of the strict duties of good faith and fidelity owed by directors to the companies they work for, a businessman who leached business opportunities and key staff from his employers has been taken to task by the High Court.

The businessman was described as an ‘intelligent, engaging and highly articulate man’. However, the Court found that he was ‘prepared to tell lies’ when it suited him and had failed to disclose the fact that he had previously been disqualified from acting as a company director in relation to a company which had gone into liquidation with assets of £95 and liabilities of £700,000.

He had worked as a director of an internet services business (the company) which launched legal proceedings against him following his departure. The Court upheld arguments that, in beach of his employment contract and his fiduciary duties as a director, he had taken up valuable business opportunities for his own benefit which he should have pursued on the company’s behalf.

He had also set up a new corporate venture, which the Court found competed with his employer, and had arranged the dismissal of former colleagues so that he could re-employ them in his new business. He was also found in contempt of court in that he been ‘deliberately untruthful’ in a sworn statement relating to his contacts with the company’s clients and staff.

The Court’s decision opened the way for the company to seek a range of remedies against the businessman and others who had conspired with him in his breaches of duty, including an injunction, damages and an account of profits.