Friend Media Technology Systems v Jonathan Norman Friend: Court dismisses breach of duty claims

The High Court has comprehensively rejected claims that a company founder breached restrictive covenants and fiduciary duties following his departure from the business he established, finding that his actions were motivated by a genuine desire to promote the company's interests.

Jonathan Friend founded Friend Media Technology Systems Limited (FMTS), which provides anti-piracy technology to major sports and entertainment organisations. Following a 2022 investment by private equity firm NorthEdge Capital, divisions emerged between Mr Friend and new management. He resigned as an employee in February 2024, with his employment terminating in October 2024, though he remained a non-executive director of the parent company.

FMTS alleged Mr Friend had engaged in discussions with customers, potential partners and competitors, divulging confidential information and positioning himself to compete with the company. The claimants sought injunctive relief based on alleged breaches of his service agreement, investment agreement and statutory duties under the Companies Act 2006.

The court's analysis

Mr Justice Constable systematically addressed each allegation, applying the subjective test for the section 172 duty to promote the company's success. The judge found that Mr Friend "honestly believed his actions to be in the best interests of the company" throughout the relevant period.

Key allegations dismissed included claims regarding Mr Friend's attendance at a Motion Picture Association conference in Amsterdam. The court found no evidence that he disclosed confidential information or promoted competitive services. Indeed, the MPA subsequently indicated FMTS would be their preferred supplier for live blocking services.

The claim concerning a purported £1 million commercial opportunity with Serie A and DAZN also failed. The court concluded there was no extant commercial opportunity within Mr Friend's power to grant or withhold, finding his exchanges with intermediaries had "entirely petered out" and related primarily to industry guidance rather than concrete business prospects.

Allegations concerning the establishment of Friend TP Limited were similarly rejected. With the company remaining dormant and no credible evidence of competitive intent, the court found no breach of anti-competition restrictions or fiduciary duties.

Conduct of the parties

Whilst acknowledging that Mr Friend's continuing operational contact with clients without reporting back was "most unorthodox", the court observed that the claimants "saw shadows everywhere" and failed to undertake straightforward investigations that would have dispelled concerns.

The judgement contained particularly strong criticism of the surveillance operation conducted against Mr Friend and his family. Mr Justice Constable found that surveillance over 18 days, substantially involving Mr Friend's wife and children, continued despite having "no legitimate purpose" and reflected "very poorly on those involved in its devising and execution".

Implications

The case illustrates the high threshold for establishing breaches of directors' duties where subjective good faith is in issue. The court emphasised that honest but mistaken beliefs about the company's best interests will not constitute breach, even where the director's approach may appear unorthodox.

However, the judgement also highlighted important limitations on non-executive directors involving themselves in operational matters without board approval, noting "serious reservations" about unilateral action by NEDs in executive functions.

All claims were dismissed in their entirety.

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