Gilford Motor Co Ltd v Horne

Facts

Horne, a former managing director, had covenanted not to solicit his old employer's customers. He set up a company, run in his wife's name, to do so.

Issue

Could the covenant be enforced against the company as well as Horne?

Held

Yes. The Court of Appeal held that the company was a device or sham to evade Horne's covenant, and granted an injunction against both.

Principle

The court will not allow a company to be used to evade an existing legal obligation of its controller.

Why it matters

It is a leading example of the evasion principle confirmed in Prest v Petrodel.

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