Miller & Ors v Simon & Anor

A commercial joint venture does not, merely because it is described as a joint venture or is conducted through a jointly owned company, give rise to fiduciary duties between the participants personally. Such duties require particular and special features, including circumstances of trust, confidence, agency or dependency. Directors’ statutory duties remain duties owed to the company and depend on the company’s actual business and circumstances. A restraint of trade given in connection with the sale of an interest in property, rather than a genuine sale of a business, may be unenforceable, especially where it has no temporal or geographical limits.

The claimants alleged that the first defendant, who had been a director of Domestic Fire Appliances Limited, breached a 2003 joint venture agreement, his statutory and fiduciary duties, and an alleged 2011 non-compete agreement. They also alleged that he diverted product-development opportunities to Hearth Products Limited.

The defendants denied liability and counterclaimed that the claimants had committed the economic torts of inducing breach of contract, intimidation and unlawful interference by threatening retailers who stocked Hearth Products’ goods. The court tried liability as a preliminary issue and determined the principal contractual, fiduciary and tort questions.

1. Claim and counterclaim dismissed. The claimants failed to prove that the 2003 agreement required the first defendant to undertake product development exclusively for Domestic Fire Appliances or CFM, or to transfer all resulting intellectual property to Domestic Fire Appliances. The first defendant was entitled to make development decisions case by case. The parties had recognised limits on competition with CFM’s Kinder range, but had not agreed an absolute prohibition on competition.
2. The first defendant’s duties under sections 170–177 of the Companies Act 2006, including the duties under sections 172 and 175, were owed to Domestic Fire Appliances. Since that company had transferred its gas-fire business to BFM and was no longer trading in gas fires when the Wildfire range was launched, the conduct did not amount to competition with Domestic Fire Appliances. No breach of statutory or fiduciary duty was established.
3. A commercial joint venture is not a term of art and does not itself create fiduciary duties between co-venturers. The relationship must be examined on its facts and terms. The necessary particular and special features were absent: the claimant was not dependent on the first defendant for advice, negotiations or the management of the venture in the manner seen in Murad v Al-Saraj. The first defendant therefore owed contractual duties to the claimant and fiduciary duties to Domestic Fire Appliances, but no personal fiduciary duties to the claimant.
4. The evidence suggested that the first defendant had referred to not competing in 2011, but the statement was not sufficiently clear and definite to constitute a contractual promise. In any event, the alleged promise was unenforceable as a restraint of trade. It was connected with the sale of an interest in a Spanish apartment rather than a genuine sale of a business, and lacked limits of time and geography.
5. The counterclaim failed. There was no breach of any retailer contract capable of founding inducement of breach. Nor had the claimants used or threatened unlawful means, or caused the loss required for intimidation or unlawful interference. The retailers continued to stock Wildfire products, and the evidence did not establish loss attributable to the claimants.