Unlawful means conspiracy and directors’ duties: High Court clarifies scope in Lux Films v Fowler

In the recent case of Lux Films Ltd v Fowler & Andrew Fowler Media Ltd [2026] EWHC 963 (KB), the High Court found in favour of a small media production company whose shareholder and director had secretly diverted clients, confidential information and business opportunities to his own competing venture whilst remaining employed and in office.

The judgment provides important guidance on various issues of practical significance in such disputes, including that a sole director and their one-man company can be found liable for civil unlawful means conspiracy, the limits of the “preparatory steps” defence available to a departing director, and the length of notice that can be implied for a senior director-employee without a written contract.

Background

Lux Films Ltd (Lux) is a small UK video production company with three equal shareholders, including the defendant (AF), who were each also directors and employees of the company. AF assumed primary responsibility for day-to-day administration, client liaison, and management of Lux’s digital systems.

Relations between the directors deteriorated in early 2023 and AF indicated a desire to exit. Before his departure, AF began secretly operating a competing video production business through a new company (AFML). AF used Lux's office, equipment, IT systems, junior employees, Lux’s footage, and testimonials for that business to divert business from one of Lux’s most significant clients to AFML.

Lux brought claims against AF and AFML for breach of confidence, breach of fiduciary duties, knowing receipt, and unlawful means conspiracy, and obtained interim injunctive relief pending trial. AF’s subsequent disclosure revealed that AFML had generated in excess of £450,000 plus VAT in gross revenue between February 2023 and September 2024.

Shortly before trial, both AF and AFML voluntarily entered into insolvency without notice to Lux in an attempt to automatically stay the proceedings.

The Court’s decision

The Court found comprehensively for Lux. The core findings on breach of fiduciary, statutory, and employment duty were clear on the facts, and the Court rejected each of AF’s defences in turn. Five aspects of the judgment merit particular attention.

Unlike under criminal law, civil conspiracy can arise between a sole director/shareholder and their company:

The defendants argued by analogy to the law of criminal conspiracy that there could not be the required “combination” where AF was the sole director and controlling mind of AFML, as there were not, in substance, two independent minds. The argument drew support from R v McDonnell [1966] 1 QB 233, in which it was held that a sole controller and his company could not be convicted of criminal conspiracy.

The Court rejected that argument, holding that:

• Criminal conspiracy criminalises the agreement itself, regardless of whether the agreed offence is ever committed.
• However, civil conspiracy is concerned with the "practical reality of concerted action by separate legal persons causing harm.”
• Following the decision in Barclay Pharmaceuticals v Waypharm and the Irish Supreme Court in Taylor v Smyth, the Court held that the decisive question in civil law is whether there is evidence of concerted action between two legal persons that causes damage, not whether there are two independent psychological actors. Where a director acts in one capacity to procure unlawful conduct, and in another capacity causes his company to receive and exploit the fruits of that conduct, the combination requirement is satisfied.

AFML’s liability in knowing receipt was established through AF’s own knowledge as its sole controlling mind:

AFML argued that, as it owed no primary fiduciary or employment duties to Lux, it could not be liable for breaches of those duties.

The Court rejected this as a mischaracterisation of the claim. Lux did not allege that AFML itself owed such duties; rather, AFML’s liability arose from its knowing receipt of benefits derived from AF’s breaches and its participation in the scheme by which Lux was injured.

AF’s knowledge that the information and opportunities funnelled into AFML had been acquired in breach of his duties to Lux, and without Lux’s consent, was properly attributable to AFML as its sole director and controlling mind. The principle of separate corporate personality did not assist AFML in those circumstances.

The "preparatory steps" defence has firm and well-defined limits:

The Court rejected AF's argument that his conduct amounted only to permissible "preparatory steps" for future competition.

The law permits preparatory steps only where they do not involve competition, misuse of confidential information, or conflicts of interest. AF had not merely made arrangements for the future. Whilst still a director and employee, he had solicited Lux’s clients, performed work through AFML, used Lux’s confidential information, staff and resources, and received payment for competing work.

An implied reasonable notice period for senior director-employees can be substantial:

The Court did not consider that AF's purported resignation, given on one week's notice shortly after his competitive activities had been exposed through the interim injunction, constituted reasonable notice.

The Court concluded that, in the absence of written contractual notice period, the appropriate implied notice period was six months, having regard to AF’s seniority, his significant managerial responsibilities and his integral importance to a small business with no obvious replacement. Seven days’ notice fell far short of that requirement and caused Lux additional loss through the disruption to management continuity and the absence of any orderly handover.

Voluntary insolvency does not guarantee a stay of proceedings:

The Court’s decision to proceed notwithstanding AF’s bankruptcy and AFML’s voluntary liquidation is a reminder that neither event gives rise to an automatic stay in all cases.

Where insolvency appears strategically timed, or where resolving liability would benefit the insolvency proceedings, the Court may decline to exercise its discretion to stay. No application for a stay was made here, and the trial proceeded on the basis of the pleadings and contemporaneous materials.

[1] Lux Films Ltd v Fowler & Andrew Fowler Media Ltd [2026] EWHC 963 (KB).
[2] R v McDonnell [1966] 1 QB 233.
[3] Barclay Pharmaceuticals Ltd v Waypharm LP [2012] EWHC 306 (Comm).
[4] Taylor v Smyth [1991] IR 142.