KB-2025-001228 - [2025] EWHC 2506 (KB)

The First Defendant, Jonathan Friend, is a director of the First Claimant (“FMTS”) and is a former director of the Second Claimant (“Friend MTS”). Mr Friend originally founded the Claimant companies. Their principal business is the provision of services and software designed to combat the piracy of, for example, sports and entertainment content.

NEC is the fund manager for three limited partnerships funds (the “Investors”) who acquired shares in FMTS by way of a private equity investment. NEC owns the majority of the shares in the First Claimant.

NEC’s investment took place in accordance with an investment agreement dated 19 July 2022 made between FMTS, the managers (which included Mr Friend), the investors, NEC, the founders (which also included Mr Friend) and DSZ (PTC) Limited (as trustee of a trust of which Mr Friend is a beneficiary). On the same date, Mr Friend also entered into a service agreement. The Claimants contend that Mr Friend’s contractual obligations arise the investment agreement and the service agreement.

Birkby 1 explained at [9]-[13] that pursuant to the investment agreement, NEC is entitled to appoint two Investor Directors to the boards of FMTS and Friend MTS. Their purpose is to ensure that the Investors have representation on the board of directors of the holding and operational companies and can thereby influence decision-making to further the Investors’ goal of growing the business, increasing shareholder value and achieving a realisation.

Mr Skinner, Mr Parker and Mr Joseph are all partners in NEC. Mr Skinner and Mr Parker currently perform the role of NEC-nominated directors on the Claimants’ boards. Mr Joseph was a director of the First Claimant until 18 January 2023 and of the Second Claimant until 26 June 2024. He retired from dealing with the day-to-day operations of NEC on 30 September 2024.

Investor Directors are non-executive directors. The NEC Custodians when acting as Investor Directors are not employed by either FMTS or Friend MTS nor are they specifically remunerated for their roles. As well as acting as Investor Directors, the NEC Custodians are also the same individuals who have or had primary responsibility within NEC for its role of Fund Manager, managing the investment from an Investor perspective.

In early 2024 Mr Friend resigned his employment. In November 2024 the Claimants removed him as a director of Friend MTS. He reserves his position as to whether the Claimants had the right to do so. He remains a director of FMTS and he and his family, directly and indirectly have a more than one third shareholding in the Claimants.

The Claimants allege that Mr Friend is in breach of duty as a result of his contact with customers of and competitors to the Claimants. It is alleged that he has made disparaging comments about the Claimant companies, misused confidential information, and established the Second Defendant in competition with the Claimants.

Mr Friend denies being in breach of his obligations. He contends that his establishment of the Second Defendant (“Friend TP Ltd”), which is currently dormant, was merely a means by which to provide non-competing consulting services in the future. To the extent that he had contact with customers, he did so to protect and advance the Claimants’ business (thereby protecting his interest as a shareholder). The Claimants’ inferential allegations as to competition and misuse of confidential information are denied.

On 25 October 2024 the founders and minority shareholders of FMTS commenced a claim against the Investors in Jersey for unfair prejudice (the “Jersey proceedings”). There is also a claim in the Employment Tribunal which is currently stayed.