More than “a bit naughty”: Directors’ duties and unlawful means conspiracy in Lux Films v Fowler

When relationships break down in owner-managed companies, departing directors sometimes begin competing while still in post. The High Court’s decision in Lux Films Ltd v Fowler & Andrew Fowler Media Ltd [2026] EWHC 963 (KB) shows how that can go badly wrong for both the individual and their new vehicle.

Of particular note is that the Court held that it is possible for a director to conspire with his own one-man company and so be liable for unlawful means conspiracy – an issue which had previously been left open or addressed only on a preliminary basis.

The judgment also touches on directors’ duties under the Companies Act 2006, implied duties of good faith and fidelity, breach of confidence and the limits of insolvency as a procedural shield.
 

Background

Lux Films Ltd (“Lux”) was a small UK media production company owned in equal shares by three director-shareholders: Mr Lowndes, Mr Woodhead, and Mr Fowler. There was no shareholders’ agreement. All three were also full-time salaried employees, though none had a written contract of employment.

Relations between the directors deteriorated and Mr Fowler indicated he wished to exit the business. Exit discussions continued but did not result in any agreed restructuring. Rather than resign and start afresh, Mr Fowler quietly set about diverting clients and business opportunities to his own company, Andrew Fowler Media Ltd (“AFML”), while continuing to draw a salary, occupy Lux’s office and use Lux’s systems, staff and confidential information.

Lux brought claims against both Mr Fowler and AFML for breaches of fiduciary duties, statutory directors’ duties under the Companies Act 2006, contractual and implied duties of good faith and fidelity, misuse of confidential information and unlawful means conspiracy. Lux sought damages and/or an account of profits and/or restitutionary relief, together with delivery up and destruction of its property and injunctive relief.

Mr Fowler’s own words proved damning. In a message sent by Mr Fowler referring to taking business away from Lux while still a director, he described what he was doing as “a bit naughty” but suggested it would be “hard to prove”. Mr Justice Sweeting treated that as a candid acknowledgement that Mr Fowler knew his conduct was improper.
 

Unlawful means conspiracy

Lux brought a claim in unlawful means conspiracy against Mr Fowler and AFML. AFML argued that a company and its sole controlling director cannot, in law, conspire with each other, relying on criminal law authorities such as R v McDonnell¹.

Mr Justice Sweeting carefully distinguished criminal and civil conspiracy. Criminal conspiracy focuses on the culpability of an agreement between minds and is now largely governed by statute. Civil conspiracy, by contrast, is a tort concerned with coordinated action by separate legal persons using unlawful means to cause loss.

The Judge considered that the authorities support the view that a company and its controlling individual can conspire where the company is used as the instrument of the wrongful scheme.

Mr Justice Sweeting concluded that the argument raised by AFML that a sole director and his company cannot conspire together did not defeat the conspiracy claim. Where a company is used as the vehicle through which unlawful acts are carried out and profits realised, and those acts cause injury to a third party, the elements of unlawful means conspiracy can be satisfied despite the unity of control between the individual and the company.

On a practical level, this confirms that individuals cannot shield themselves from civil conspiracy liability simply by routing their wrongful conduct through a company under their control. The Judge summed this up as follows: “Equity does not permit a fiduciary to evade liability by interposing a company under his control.” For businesses pursuing claims against departing directors, this opens the door to potential joint and several liability against both the individual and their corporate vehicle - a valuable additional target for enforcement.
 

Directors’ duties

The Court also analysed Mr Fowler’s conduct against the full range of his duties to Lux: fiduciary, statutory and contractual.

Mr Justice Sweeting concluded that Mr Fowler had clearly breached his fiduciary duties by placing himself in a position of conflict and by making unauthorised profits from corporate opportunities belonging to Lux. If a corporate opportunity falls within the company’s line of business, a director cannot keep it for himself without the company’s fully informed consent.

In his capacity as director of AFML, he had caused AFML to enter into contracts with the diverted clients, invoice for the work and receive payment, exploiting the misused confidential information in the process.

Mr Fowler was also found to have breached his statutory duties under the Companies Act 2006, including:

• the duty to promote the success of the company (s.172), because diverting key clients and revenue streams to AFML was “incompatible with the promotion of Lux’s success”;
• the duty to exercise independent judgment (s.173), as his decision‑making was driven by his personal interest in AFML, not Lux’s interests; and
• the duty to avoid conflicts of interest (s.175), by exploiting opportunities and information that arose in the course of Lux’s business in order to compete with Lux.

Mr Fowler argued that following the breakdown of relations in March 2023, he had been effectively excluded from management and was therefore entitled to pursue his own interests. Mr Justice Sweeting rejected that contention. The evidence showed that Mr Fowler remained a director and employee throughout, continued to control Lux’s systems and occupy its office and continued to receive a salary. There was no formal exclusion, no removal from office, and no deprivation of access comparable to that in In Plus Group Ltd v Pyke².
 

Confidential information beyond ‘trade secrets’

The decision is also notable for the comments of Mr Justice Sweeting as to what material is capable of being confidential to a business. The Judge emphasised that: “confidential information extends beyond formal trade secrets and includes information which, although not secret in isolation, derives its value from collation, context and currency.” In Lux’s case, its confidential information included, for example:

• client contact details, decision‑makers, preferences and pipeline opportunities;
• pricing structures, budgets and negotiated commercial terms;
• proposals, pitch materials and contractual templates;
• operational and production methodologies for major events;
• freelancer and supplier data (identity, capability, availability and rates); and
• raw and edited video footage stored on the company’s systems.

Although individual elements might not have seemed particularly sensitive on their own, “the information as a whole derived its value from collation, context and currency” and was plainly “commercially sensitive, not in the public domain, and provided a competitive advantage if used by a rival”.

Mr Justice Sweeting found that Mr Fowler had misused this confidential information. That finding gave rise to liability on two separate bases: an equitable claim for breach of confidence and a contractual claim for breach of an implied duty of fidelity.
 

Insolvency: no automatic shield

Finally, the decision is of note because, shortly before trial, without warning and against a backdrop of adverse procedural rulings and unpaid costs orders, AFML entered into voluntary liquidation and Mr Fowler was made bankrupt. The timing of these insolvencies did not escape judicial notice. Mr Justice Sweeting noted that neither AFML’s voluntary liquidation nor Mr Fowler’s personal bankruptcy gave rise to an automatic stay and he did not exercise his discretion to stay the proceedings. Accordingly, the apparent attempt to avoid scrutiny failed.
 

Conclusion

Duties owed by shareholders, directors and employees do not diminish simply because relationships sour. To the contrary, such duties are of utmost importance in such circumstances.

That said, this case underscores the value of clear contractual arrangements governing a company’s relationship with its shareholders, directors and employees such as, for example, a carefully drafted shareholders’ agreement with clear exit mechanisms. When relationships break down, the existence of clear agreements between the parties in such situations can help prevent prolonged disputes and offer additional protections for companies against rogue shareholders, directors and employees attempting to divert business.

The case also illustrates that, where a director or employee has diverted business or misused confidential information, there are multiple potential avenues available to bring claims targeting both the individual and any company they have set up to receive the diverted work. For departing directors or employees, the message is clear: resign and make a clean start. What feels “hard to prove” may in fact turn out to be extensively documented.

With thanks to Jack Saville for his contributions to this article.
 

¹ [1966] 1 QB 233
² [2002] EWCA Civ 370