Much of the work we do as “employment lawyers” involves representing businesses whose staff, or indeed “contractors”, leave and by various means start competing. Considerable protection from what our employer client often perceives to be unfair, damaging, competition can in many cases be found in well drafted (and properly agreed) contracts of employment including, of course, director’s service agreements and independent contractor ‘consultancy’ agreements. Such contractual protection normally includes post termination protection from: the exploitation of commercially valuable confidential information; poaching of staff; solicitation of customers and suppliers; dealing with customers and suppliers; and more blanket non- compete restrictions.
In addition to breach of contract, employer’s who face ‘unfair’ competition can invoke other legal rights and causes of action such as the so called ‘economic torts’ of: inducement of breach of contract, which can be used to found a claim against the new employer; causing loss by unlawful means; and conspiracy, including so called “unlawful means conspiracy”.
In this regard an interesting recent High Court case Lux Films Ltd -v- (1) Andrew Fowler; (2) Andrew Fowler Media Limited (24th April 2026) has established that a one-man band providing his service (or services) through his own company can conspire with that company and therefore be liable for the ‘tort’ – wrong-doing – of unlawful means conspiracy.
It might be thought that a director of a company cannot conspire with a company of which he is the sole controller because the conspirators are to all intents and purposes the same person albeit not one ‘legal person’. Indeed that is the position in criminal law. However, the purpose of a civil law cause of action such as a tort is to remedy the damage caused by what the Judge described as “the concerted action between two legal persons, even if they are closely connected, rather than whether they are two independent psychological actors”. In a case such as this the director acts unlawfully by him or herself and procures his or her “company to receive and exploit the fruits of that conduct (so) the requirement of combination is satisfied”.
In this case the First Defendant, Mr Fowler, was in breach of duties he owed to his former employer, the Claimant Lux Films Ltd by taking confidential information belonging to Lux and diverting business away from it. He then procured or caused his own company, the Second Defendant, Andrew Fowler Media Limited, to contract with the Claimant’s customers.
Practical tip
Check your directors’ and senior key employees’ and contractors’ contracts to ensure they are sufficiently well drafted to provide a first line of defence, and if attacked seek legal advice and representation from our experienced employee competition team.
