Finally some good news this week for wives seeking a fair settlement in Divorce. In a case known as R v R, the Court were dealing with an application for a freezing order.
The injunction included a clause which restrained the husband from directly or indirectly engaging in any business that competed with the family company or soliciting customers from or attempting to sell or provide similar services to any customer or client of the family company. The wife claimed that the husband was competing deliberately against the family company in order to undermine its value. This was denied by the husband. However the Judge was prepared to assume that the husband had been competing against the business.
The husband had accepted that he had acted in relation to the family company as a shadow director and therefore had a duty of good faith. In the circumstances he had acted in breach of his fiduciary duties in setting up and operating a competing business, whether in his own name or in the name of a corporate entity through which he carried on his business.
Often in divorce proceedings where there is a family business, the wife can be disadvantaged in divorce if the husband has managed the day to day running of the business. She is often reliant on the husband to be open and honest about the valuation and the disclosure.
Sometimes the husband will be trying to portray a bleak picture of the business trading’s; but it’s refreshing to see Judges take this approach and make decisions like this one as it’s a lesson to business men that trying to undermine the value of a business is not only a waste of time and effort, but a waste of legal costs because ultimately the Court will be forced to make assumptions and rely on third party expert evidence.
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