A former managing director, bound by a restrictive covenant not to solicit his former employer's customers, set up a company to solicit them. In Gilford Motor Co v Horne, what did the court do?

Correct answer: C) It lifted the veil and granted an injunction against both him and the company because the company was a sham to evade his obligation

Explanation

The court will disregard the separate personality of a company used as a mere façade or sham to evade an existing legal obligation. In Gilford Motor Co v Horne the company was a device to evade the covenant, so an injunction was granted against both. Prest v Petrodel later described this as the 'evasion principle'.