Thermascan Ltd v Norman

A former director’s fiduciary duties do not create a general post-termination prohibition on soliciting the company’s customers. The duty concerning corporate opportunities applies to a genuine maturing business opportunity, not to possible future orders where no relevant discussions or negotiations had begun when the director resigned. General skill, knowledge and business contacts may ordinarily be used after termination, subject to contractual obligations and the continuing duty concerning confidential information. An interim restraint should also be refused where the defendant has already established the competing business and suspension would seriously prejudice its continuation, particularly where the public interest in competition favours the defendant.

The claimant provided infrared surveying services. The defendant had been its employee and director, and his employment contract contained confidentiality, delivery-up and six-month non-solicitation obligations. After resigning, he joined another business and later began establishing his own competing thermal-imaging business.

The claimant sought an interim injunction prohibiting the defendant from soliciting or canvassing its clients, relying on the fiduciary duties in sections 175 and 170(2) of the Companies Act 2006 after the contractual restraint had expired. The central issues were whether future repeat surveys constituted maturing business opportunities belonging to the claimant and whether an interim restraint was appropriate after the defendant had already begun competing.

1. Application refused. The claimant was not entitled to an interim injunction imposing a blanket prohibition on soliciting or canvassing its clients. The defendant’s undertaking concerning the use or disclosure of confidential information remained in place.
2. The statutory general duties did not alter the pre-existing law. A director must avoid conflicts and may not appropriate a corporate opportunity belonging to the company or being pursued by it. After termination, however, a director is generally free to exploit his general fund of skill, knowledge, expertise, business contacts and personal connections, subject to contract and any continuing obligation concerning confidential information.
3. The claimant’s proposed restraint was misconceived. The possibility that customers might seek repeat surveys many months later did not amount to a maturing business opportunity when, at the date of resignation, nothing was happening and there had been no relevant discussions. The court regarded significant discussion of the potential business as ordinarily necessary before such an opportunity could be shown.
4. The court would in any event have refused the restraint as an interim remedy. The claimant had previously agreed that the contractual prohibition would expire, and the defendant had since been actively seeking orders and had obtained work from former clients. Suspending an established new business could seriously jeopardise its ability to resume, whereas the likely interim loss to the claimant was less significant. The balance was additionally influenced by the public interest in competition.