British Midland Tool Limited v Midland International Tooling: ChD 2003

Four former employees had set out to create a business in competition with the claimant. They had agreed to use unlawful means to do so.
Held: A director who decided to set up a competing business and took preparatory steps could rely upon the public interest in favouring competitive business as an answer to allegations of breach of fiduciary duty. He must end to his fiduciary obligation by resigning his directorship. Until he has done so, preparatory steps taken in pursuance of an irrevocable intention to compete would generally amount to a breach of his fiduciary obligations as director
Hart J said: ‘The claimant undoubtedly suffered some damage in the present case as a result of the secession of the Tamworth Four together with a large part of the workforce. There is also no doubt, in our judgment, that such damage was not only foreseeable but actually foreseen . . By virtue of that fact they may be said, for the purpose of the tort, to have intended that damage.’

Judges:

Hart J

Citations:

[2003] 2 BCLC 523

Jurisdiction:

England and Wales

Cited by:

CitedIS Innovative Software Ltd v Howes CA 19-Feb-2004
It was alleged that the defendant had backdated contracts of employment to a time when he had been employed by the claimant, and had induced staff to leave. The company appealed dismissal of its claim.
Held: The advantage of the court . .
CitedUltraframe (UK) Ltd v Fielding and others ChD 27-Jul-2005
The parties had engaged in a bitter 95 day trial in which allegations of forgery, theft, false accounting, blackmail and arson. A company owning patents and other rights had become insolvent, and the real concern was the destination and ownership of . .
CitedHelmet Integrated Systems Ltd v Tunnard and others CA 15-Dec-2006
Whilst employed by the claimants as a salesman, the defendant came to want to develop his idea for a modular helmet suitable for fire-fighters and others. He took certain steps including showing the proposal confidentially to a competitor, and then . .
Lists of cited by and citing cases may be incomplete.

Torts – Other, Company

Updated: 29 April 2022; Ref: scu.194586