Gardner Aerospace v Upton: director found in breach after lobbying against his own company's transaction

In a striking judgment handed down by the Chancery Division this week, Mr Justice Richard Smith found that Antony Upton, former interim CEO of Gardner Aerospace Holdings Limited, committed multiple breaches of fiduciary duty and his contract of employment by secretly working to derail a transaction he was publicly obliged to support.

The case concerned a proposed debt-for-equity swap agreed in January 2022 between Gardner's Chinese parent, Ligeance Aerospace Technology Company Limited (LAT), and Sichuan Development Holding Company Limited (SDH), a Chinese state-owned investment fund. The transaction was notifiable under the National Security and Investment Act 2021, triggering a formal review process. The entire Gardner board — including Mr Upton — had agreed that securing HMG approval was the company's primary objective, given that completion would refinance Gardner's NatWest facilities and relieve it of significant inter-company debt. Mr Upton told the board on 1 April 2022 that HMG consent was the "best case" and refusal the "worst-case scenario."

Behind that position, however, Mr Upton was conducting an entirely different campaign. He lobbied MPs — including Richard Holden and Dame Margaret Beckett — not for approval with conditions, but for outright refusal of Chinese state ownership of "an aerospace asset." When the Secretary of State issued a call-in notice in March 2022, Mr Upton wrote to Mr Holden to thank him for the "welcome intervention" and indicate the "fight" was not over.

Most remarkably, without board authorisation or disclosure, Mr Upton wrote directly to the Investment Security Unit on 8 April 2022 proposing that LAT be required to divest control of Gardner entirely — a remedy that, as the judge found, he "readily appreciated" would kill the transaction and risk insolvency. The letter was sent on behalf of the "management team" but was seen by no one on the GAH board. Mr Justice Richard Smith described it as "an extraordinary communication for any GAH director to have sent."

Mr Upton also approached Montana Aerospace and Liberty Hall Capital Partners, soliciting letters of intent for a potential acquisition of Gardner and encouraging both to lobby HMG and politicians on his behalf. He shared the Montana letter of intent with NatWest as supposed "reassurance," while simultaneously writing to the bank in terms calculated to raise doubt about LAT's reliability as a funder — directly contradicting assurances he had given alongside the incoming CEO, Philipp Visotschnig, only a fortnight earlier.

The judge found that Mr Upton's true motive throughout was to engineer Gardner's involuntary sale to a new owner who would retain him in employment. He had begun exploring external roles from late 2021 in anticipation of being replaced, received a formal offer from Rcapital/Nasmyth on 7 July 2022, and was sharing confidential Gardner divestment materials with that potential acquirer while still a director and employee. His repeated explanations — that his conduct was aimed at protecting UK jobs, investment and national security — were not accepted; those concerns, the court found, "were mostly directed to the existing position under LAT's ownership rather than the impact of the transaction itself."

Breaches were established under CA06 ss.171(a) and (b), 172 and 175, and under the express terms of Mr Upton's employment contract requiring faithful performance, best endeavours to protect the business, and prompt disclosure to the board of his conduct of its affairs.

The case had an unusual procedural aspect: the claimants sought a late re-amendment to plead causation on a loss of chance basis. The court declined to permit this mid-trial, instead placing the claimants to election — they elected to proceed on breach only, with causation and quantum reserved for a further hearing. The judge made clear that no finding was expressed on the effect, if any, of the breaches found.

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