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Director Who Put Family Before Duty Must Pay the Price

PLEASE NOTE: Information in this article is correct at the time of publication, please contact DFA Law for current advice on older articles.

A company director who breached his employer’s trust by misusing its resources to aid his son and daughter-in-law in establishing a new, and potentially competing, business has been ordered to pay more than £90,000 in damages.

The man was managing director of a company for which his son and daughter-in-law also worked. After they left to set up a venture in the same line of trade, he caused the company to enter into contracts and undertake various dealings with their start-up business on favourable terms. After he too left the company’s employ, its new managing director discovered what had been going on.

The High Court accepted that he had made no personal profit from the support which he gave his relatives. However, he had allowed his wish to see them succeed to outweigh the fiduciary duties he owed to the company. He had ‘no defence’ to the company’s claim and was ordered to pay £90,500 in compensation.

His son and daughter-in-law were found jointly liable to pay the same amount after the Court found that they had assisted him in his breaches of duty and breached their employment contracts. They had set about establishing their new business and covering its running costs by making illegitimate use of the company’s resources.

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