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HELD: (1) The defendants had formed the irrevocable intention to establish a business that they knew would be fairly regarded by both claimants as a competitor and they had continued to take steps to bring into existence that rival business, contrary to what they knew were in the best interests of the claimants and without the claimants' consent. The investment products offered by the new companies were not so dissimilar to the investment company's products that they would appeal to quite different investors. D1 and D3 were therefore in breach of fiduciary duties and in breach of their obligation of loyalty to C2 by virtue of the steps they had taken prior to their resignation in promoting the establishment of the competing business, British Midland Tool Ltd v Midland International Tooling Ltd (2003) EWHC 466 (Ch) , (2003) 2 BCLC 523 applied, Balston v Headline Filters Ltd (1990) FSR 385 distinguished on the facts, Item Software (UK) Ltd v Fassihi (2004) EWCA Civ 1244 , (2004) BCC 994 considered. D2 and D3 were also in breach of fiduciary duty in exploiting the business of investing in whole life policies, CMS Dolphin Ltd v Simonet (2001) 2 BCLC 704 applied. (2) At the time of D3's retirement, D3 was not engaged, concerned or connected with any other company. However, by the time of D1's resignation, the new business had been set up, if not fully in operation as an investment company, and D1 had acted as a compliance officer for the new companies at the same time as he was employed by C2. D1, but not D3, was therefore in breach of the express terms of his contract of employment by virtue of the steps taken prior to his resignation. (3) Although D2 had never been formally appointed as a director of C1, he had assumed the role of an actual director of that company at the material time. Even if D2 had been a mere employee owing no fiduciary duties to C1, his conduct prior to his resignation was such as to breach his employee's duty of good faith and fidelity. (4) C1 had not made out a case that the defendants had misused confidential information and the allegation that D2 had copied a list of independent financial advisors had not been established to the requisite standard. (5) C1 had failed to establish to the requisite standard of proof that the defendant's breaches of duty had caused any loss to the claimants. (6) C1 would be entitled to an account of the profits made by the defendants in consequence of their unlawful conduct in promoting the establishment of their new investment business.
Judgment for claimants in part.
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