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Non-competition injunction granted against ‘shadow director’ husband

President finds that shadow director’s fiduciary duties satisfy s 37 Senior Courts Act

The President has approved the continuation of an injunction in favour of a wife restraining her husband from directly or indirectly engaging in any business that competes with a the family company run by her and of which the husband is a shadow director.

In R v R [2013] EWHC 4244 (Fam) Sir James Munby queried the basis for the injunction, originally granted as part of a freezing order by Roderic Wood J.

The wife had claimed that the husband had deliberately begun competing against the company in order to depreciate the value of one of the matrimonial assets, namely, the company.  That allegation was denied by the husband. However, the President proceeded upon the basis that there was a sufficient factual foundation for the wife's concerns as to justify in principle the continuation of the injunction if, but only if, there was some appropriate legal basis for doing so.

The President's provisional view was that section 37(2) of the Matrimonial Causes Act 1973 did not provide a basis for the injunction which would have to be granted under section 37 of the Senior Courts Act 1981. Under that provision there would have to be an appropriate cause of action in relation to which the injunctive relief was properly granted.

It was argued by Brent Molyneux, on behalf of the wife, relying on the recent decision of Vivendi SA & Another v. Murray Richards & Another [2013] EWHC 3006 (Ch), that the husband's admission in other proceedings that he was a shadow director of the company, imposed upon him fiduciary duties to the family company which would satisfy s 37.

The President agreed and concluded that the injunction was properly made and should remain in force.

Brent Molyneux of 29 Bedford Row (instructed by Keene Marsland) acted for the wife. Jane Campbell of Six Pump Court (instructed by Thomas Haywood) acted for the husband.

The judgment can be read here.

10/1/14