Case note. Court of Appeal (Superior Jurisdiction).
Resignation and a diverted business opportunity: Associated Supplies v Mizzi and Typeset
- Court
- Court of Appeal (Superior Jurisdiction)
- Date of decision
- Case reference
- Civil Appeals 1163/2011/1 AF and 1163/2011/2 AF; retrial proceedings 1163/2011/3 AF
- Jurisdiction
- Malta
- Parties
- Associated Supplies Limited v Joseph Mizzi and Typeset Company Limited
- Bench
- Chief Justice Mark Chetcuti, Mr Justice Robert G. Mangion and Mr Justice Grazio Mercieca
- Decision under appeal
- Civil Court, First Hall, 4 October 2023 (Madam Justice Anna Felice)
- Result
- Liability for €1,697,658.25 survived the appeals.
- Later decision
- : Retrial application rejected by the Court of Appeal (Chief Justice Anthony Ellul, acting president, Mr Justice Christian Falzon Scerri and Madam Justice Josette Demicoli).
An executive’s freedom to resign does not necessarily permit the personal exploitation of a business opportunity entrusted to that executive by the employer. The Associated Supplies litigation illustrates the potential scale of fiduciary recovery, and why that liability must be distinguished from enforcement of a post-employment non-compete clause.
The commercial opportunity
Joseph Mizzi was Associated Supplies’ General Technical Manager. His responsibilities included technical assistance to the board and work connected with agency and commercial negotiations.
Through that employment, he became involved in discussions with Burmeister & Wain Scandinavian (BWSC) concerning the Delimara power-station extension. The proposed arrangement would have involved Associated Supplies providing local assistance. Negotiations between the companies did not result in a concluded agreement.
Mizzi subsequently left Associated Supplies and worked on the project with BWSC through Typeset, a company he substantially owned. Associated Supplies alleged that he had diverted the contacts and opportunity developed through his employment. The defendants contested both the factual account and the legal basis of the claim.
The fiduciary findings
The Court upheld the finding that Mizzi’s role carried fiduciary obligations relevant to the opportunity in question. Its analysis centred on loyalty, conflicts of interest and benefits obtained through a breach of the entrusted relationship.
The Court accepted that, while still employed, Mizzi had met a BWSC representative and that the subsequent events supported the finding of a plan to continue the project outside Associated Supplies. Information about BWSC’s interest, resources, proposed remuneration and management contacts had been obtained through his work for the employer.
The failure to conclude the proposed agreement between Associated Supplies and BWSC did not free Mizzi to appropriate the opportunity in the manner established. The Court also upheld Typeset’s liability as a recipient acting with the knowledge, or reasonably attributable knowledge, contemplated by the fiduciary provisions.
Recovery of benefits and the unsuccessful retrial
The €1,697,658.25 figure represented benefits received through Typeset in connection with BWSC’s successful project. The Court treated the relevant remedy as requiring the return of benefits obtained through the fiduciary breach. It rejected the proposed reduction for income tax already paid, leaving any possible tax-refund question outside the employer’s entitlement to recovery.
In January 2026, a differently constituted Court rejected the retrial application. Two clarifications are especially relevant to executive exits. The earlier judgment had not required Mizzi to remain employed by Associated Supplies. The restriction concerned his involvement in the particular BWSC project following the established fiduciary breach.
The retrial court also expressly explained that the liability did not depend on the non-compete clause in the employment contract. Its basis was the fiduciary obligation. The case therefore cannot accurately be presented as a general validation of post-employment restraints.
Significance for executive departures
When an executive is leaving with knowledge of live tenders, agency negotiations or commercial introductions, the relevant inquiry extends beyond the wording of a restrictive covenant. It includes what was entrusted to the executive, how the opportunity arose and whether benefits were diverted through a new role or associated company.
The judgment also shows why exit negotiations may need to address specific opportunities rather than rely exclusively on a general release or a standard non-compete clause. The scope of any proposed consent, reservation or settlement should be understood against the actual projects and benefits in issue. Whether a particular obligation can be modified or released remains a separate legal question.
The finding was tied to Mizzi’s responsibilities and the particular opportunity. It does not mean that every departing employee is prevented from competing or that all professional knowledge belongs to the former employer. The Court’s concern was the established misuse of an entrusted position and the benefits flowing from it.
Related: Negotiation and settlement · Executive exits in Malta
Key insights
- Freedom to resign does not include freedom to take a business opportunity that the employer entrusted to the executive.
- Fiduciary liability is separate from a non-compete clause. The retrial court said the liability did not depend on the restrictive covenant.
- When an executive leaves with knowledge of live tenders or negotiations, exit terms may need to deal with specific opportunities rather than rely on a general release.
The law changes, so please check the current position with an advocate before acting.