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Family Law

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13 JAN 2014

FREEZING INJUNCTION: R v R and Others [2013] EWHC 4244 (Fam)

(Family Division, Sir James Munby, the President of the Family Division, 15 November 2013)

During financial remedy proceedings the wife became concerned that the husband was conducting his business in such a way as to depreciate the value of one of the matrimonial assets, namely, the family company, of which he was a shadow director. The husband denied that but the wife was granted a freezing injunction which included a provision preventing the husband from directly or indirectly engaging in any business that competed with the family company or soliciting customers from or attempting to sell, licence or provide the same or similar services to any customer of the company.

When the matter returned before the President there was a measure of agreement between the parties permitting the freezing order to remain in place with some significant adjustments. The provision restricting the husband's business activity was a matter of contention and a a determination had to made as to the appropriate legal basis for authorising such a course.

The injunction had to be brought under s 36 of the Senior Courts Act 1981 rather than under s 37 of the Matrimonial Causes Act 1973 which required an appropriate cause of action in relation to which the injunctive relief was properly granted.

In these circumstances the husband as a shadow director of the family company owed fiduciary duties to act in the interests of the company and not to act in his own separate interests: Vivendi SA & Another v. Murray Richards & Another [2013] EWHC 3006 (Ch). It was, therefore, a breach of his fiduciary duties to set up and operate a competing business. On that basis if any of the husband's other business activities did not compete with the family company then there would be nothing in the injunction to fetter the husband's business operations. If it did compete then it was right that the injunction was in force.



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