Miller & Ors v Simon & Anor

This is a first instance Chancery Division judgment concerning alleged breaches of contractual and fiduciary duties arising from a 2003 joint venture and subsequent commercial dealings. The court examined the terms of the 2003 agreement, duties owed by a director under the Companies Act 2006 (including sections 170–177, specifically section 172 and section 175), alleged later oral non‑compete undertakings from 2011 and counterclaims for economic torts. The judge concluded that the claimants had not proved the contractual terms they relied on from 2003, that the defendant had fiduciary duties to the company (DFA) but not to the claimant personally, that any alleged 2011 non‑compete promise was either not sufficiently certain or, if it existed, unenforceable as a restraint of trade, and that the defendants had failed to establish economic torts because no unlawful means or resultant loss had been shown.

Background and parties:

The dispute arose from the 2003 acquisition of Global Fires Limited's assets by a vehicle company (DFA) in which Mr Miller and Mr Stonier had agreed respective economic interests. Claimants were Mr Miller and companies associated with him (including DFA, BFM and AEF). Defendants were Mr Stonier and a company he controlled (FDL / Hearth Products). The claim alleged breaches of an original 2003 agreement, breaches of director and fiduciary duties, breach of an alleged 2011 non‑compete promise and sought relief for resulting loss. The defendants counterclaimed for economic torts against Mr Miller and BFM.

Procedural posture: The trial was of preliminary issues ordered by the District Judge; liability issues (excluding causation of loss) were heard at first instance before Newey J.

Relief sought: Declaratory and monetary remedies for alleged breaches of contract and fiduciary duties; the defendants sought damages in counterclaim for inducing breach of contract, intimidation and unlawful interference.

Issues framed:

• Construction and content of the 2003 agreement between Mr Miller and Mr Stonier;
• Whether Mr Stonier breached duties as a director of DFA under the Companies Act 2006 (notably sections 172 and 175);
• Whether Mr Stonier owed fiduciary duties to Mr Miller personally as a co‑venturer;
• Whether an oral 2011 non‑compete agreement was made and, if so, whether it was enforceable;
• Whether Mr Miller and BFM were liable in economic torts to FDL/Hearth Products.

Court’s reasoning and conclusions:

The judge found a binding 2003 agreement existed but not on the terms alleged by the claimants: there was no agreement that, beyond limited exceptions, Mr Stonier would conduct product development exclusively for DFA or CFM nor that all patents would vest in DFA. Documentary and oral evidence (including early patent filings in Mr Stonier’s name and contemporaneous correspondence) supported the conclusion that Mr Stonier had formed his own development company and retained discretion to exploit inventions case‑by‑case. As a director of DFA, Mr Stonier owed duties under the Companies Act 2006, but his conduct did not amount to a breach of those duties given the factual findings (DFA had transferred the Global business to BFM and was no longer trading in gas fires when the alleged competing products were launched). The court held that Mr Stonier did not owe fiduciary duties to Mr Miller personally because the relationship lacked the particular and special features that give rise to personal fiduciary obligations between commercial co‑venturers. Any alleged 2011 non‑compete was, on the balance of evidence, not a clear contractual promise and, alternatively, would be unenforceable as an unlimited restraint of trade unrelated to a sale of a business. The defendants’ counterclaim in economic torts failed because no unlawful means had been shown and no loss caused to FDL had been established.

At first instance the court dismissed the claim and dismissed the counterclaim. Rationale: the claimants failed to prove the substantive contractual terms alleged from 2003; the defendant did not breach his duties as a director of DFA given the factual findings; no personal fiduciary duties were owed to Mr Miller; any alleged 2011 non‑compete was not a clear enforceable promise and would in any event be an unenforceable restraint of trade; and the economic torts alleged were not made out because no unlawful means or loss were demonstrated.