Objective construction of “competing with” in interim interdict contempt: regulatory compliance does not negate competition

Court: Outer House, Court of Session  |  Citation: [2026] CSOH 62  |  Date: 26 June 2026  |  Judge: Lord Richardson

1) Introduction

This decision arises out of a wider set of disputes about control and leadership of Phlo Technologies Limited (the “company”), an online pharmacy business. The respondent, the company’s founder and former chief executive, disputed whether he had ceased to be a director as at 30 August 2024 (with parallel litigation ongoing).

In January 2025, the company obtained interim interdict enforcing restrictive covenants in a shareholders’ agreement. The interim interdict (materially) restrained the respondent from being concerned in any UK business “competing with the internet pharmacy business” carried on by the company during the period 30 August 2022 to 30 August 2024, until 28 February 2026.

The company later raised a Minute for contempt, alleging the respondent breached the order by continuing to operate Remedi Healthcare Limited (“Remedi”), a pharmacy business he founded in November 2024, which was also a regulated “distance selling pharmacy”.

Key issue

Whether Remedi (or any part of its business) was “competing with” the company’s relevant internet pharmacy business within the meaning of the interim interdict—and, if so, whether the respondent’s continued involvement constituted contempt of court.

2) Summary of the judgment

  • Admissibility: Evidence from a pharmacy consultant who had earlier advised the respondent was admissible; prior advice did not, without more, destroy independence, and his market evidence did not usurp the court’s function.
  • Construction: The interdict must be construed strictly, but paragraph 2 was unqualified: “competing with” did not import a requirement of “detriment” to the company.
  • Objective test: “Competing with” is assessed objectively; the respondent’s (or Remedi’s) subjective desire (or lack of desire) to win particular business was irrelevant.
  • Findings on competition:
    • Remedi’s care-home dispensing model was not proven (to the criminal standard) to be in competition with the company’s material-period business streams.
    • Remedi’s small “community patient” dispensing (NHS patients) was in competition with the company’s NHS prescription-fulfilment stream.
  • Contempt: The respondent’s deliberate continued involvement with Remedi after the order amounted to contempt. Reliance on professional advice was no defence, though potentially relevant to mitigation.
  • Public interest: The court held it was in the public interest to make a finding of contempt given the prolonged breach.
  • Procedure: The case was put out “by order” for a further hearing on sanction.

3) The factual and regulatory context

The company’s “internet pharmacy business” (material period)

By joint minute, the company’s business during 30 August 2022–30 August 2024 comprised three income streams:

  1. NHS dispensing for distance-selling pharmacy patients (online registration, GP liaison, delivery, reimbursement via an invoice finance facility).
  2. Independent prescribing (private prescriptions ordered and paid online), operated since March 2024.
  3. Business-to-business services providing technology infrastructure and pharmacy services to partner healthcare businesses.

Remedi’s model

Remedi was also on the NHS distance-selling pharmacy list. Evidence established Remedi’s business had two components:

  • Care-home dispensing: bulk-style dispensing to operators covering approximately 122 care homes (approx. 55,000 prescription items per month).
  • “Community” dispensing: a small number of NHS items for non-care-home patients (approx. 114 items per month to 79 patients, including staff and some public).

Distance-selling regulation

The National Health Service (Pharmaceutical and Local Pharmaceutical Services) Regulations 2013 (England) were important background. Regulation 64(3)(e)(i)–(ii) restricts advertising that suggests a distance-selling pharmacy only serves some areas or accepts prescriptions only from certain categories of patients; pharmacies must also provide public-facing health materials and dispense with reasonable promptness. These obligations shaped Remedi’s “general” website wording.

4) Analysis

A. Precedents cited and their role

1) Strict construction of orders in contempt

Lord Richardson accepted the orthodox approach that, when assessing breach for contempt purposes, court orders must be construed strictly (referencing Arlidge, Eady & Smith on Contempt). That strictness, however, did not justify adding words (such as “to the detriment of”) that were not present in the interdict.

2) Expert evidence and the “ultimate issue”

The company objected to the pharmacy consultant’s evidence on independence and on the ground that “competition” was the ultimate issue for the court. The court admitted the evidence, applying Kennedy v Cordia (Services) Limited 2016 SC (UKSC) 59 (para 49). The decision underscores that expert evidence may address matters close to the ultimate issue if it provides market/technical context rather than replacing judicial evaluation.

3) What “competition” means in restrictive covenant contexts

Although this was a contempt proceeding, the interdict’s wording was rooted in restrictive covenants, and the court found English restrictive covenant authorities helpful:

  • Rogers v Drury (1887) 57 LJ Ch 504: Chitty J rejected any distinction between “active” and “passive” competition; the court here adopted that approach to support an objective test.
  • Allied Dunbar (Frank Weisinger) Ltd v Frank Weisinger [1988] IRLR 60 (para 26): goodwill includes the opportunity to win future clients; cited to frame competition beyond existing customers, but ultimately constrained by the interdict’s strict terms and the evidence about the company’s actual market offering.
  • One Step (Support) Ltd v Morris-Garner [2017] QB 1: used for a structured way of analysing competition (comparability of services + same market/area). Lord Richardson drew from Christopher Clarke LJ’s formulation.

4) Contempt: mental element and advice as no defence

The court treated breach of interdict as contempt, citing Gribben v Gribben 1976 SLT 266. For the mental element, it relied on the Full Bench in Murray v HMA 2022 JC 181 (paras 60–61): contempt is not strict liability, but where an order prohibits an act, deliberate conduct that breaches it is sufficient; believing you were avoiding contempt is not a defence.

Beggs v Scottish Ministers 2005 1 SC 342 (para 30) supported the concept of “deliberate” as “not accidental”.

5) Public interest in invoking contempt jurisdiction

The court cited Sovereign Dimensional Survey v Cooper 2009 SC 382 (para 31) for the proposition that contempt jurisdiction is invoked where the public interest requires enforcement of the court’s authority. Prolonged non-compliance distinguished this case from the “limited and remedied” breach in Sovereign Dimensional Survey v Cooper.

6) Post-proof “new evidence” and res noviter

The respondent’s motion to recall a witness was refused as irrelevant to the issues. The court noted Rankin v Jack 2010 SC 642 on the exceptional “res noviter veniens ad notitiam” test, but did not need to decide competency because the point was immaterial.

B. Legal reasoning

1) The interdict’s structure mattered: “competition” versus “competition or detriment”

A central interpretive move was the contrast between paragraph 2 and paragraph 3 of the January 2025 interlocutor. Paragraph 2 prohibited involvement in a business “competing with” the company’s internet pharmacy business; paragraph 3 prohibited dealings “in competition with, or to the detriment of” the company. The court treated this as deliberate drafting: had “detriment” been required for paragraph 2, it would have been said.

2) “Competing with” given its natural, objective meaning

Lord Richardson defined competition in ordinary terms: entities compete when they “strive to win some part of the same custom”, assessed objectively. This is significant in regulated markets: even if a trader is compelled by regulation to hold itself out as available for certain customers, the objective effect may still be to compete.

3) Market reality constrained the company’s broader “prospects” argument

The company argued that care-home residents (as individuals) could have been its NHS customers, and that care-home operators were prospective customers under the company’s business-to-business stream. The court rejected these arguments on the evidence and the strict terms of the order:

  • Care-home residents: although theoretically possible, Remedi’s relevant service was to care-home operators (medication management model), not to residents acting independently; unchallenged evidence was that self-ordering would disrupt care-home regulatory and operational requirements.
  • Care-home operators as “prospects”: the interdict restrained competition with the company’s business “as carried out” in the material period. The company did not, in that period, offer the operator-facing service that Remedi provided, and its B2B stream was not shown to be a substitute for Remedi’s care-home dispensing model.

4) A narrow but decisive breach: the “community patient” segment

The court found the “community patient” portion of Remedi’s business did compete with the company’s first income stream (NHS distance-selling dispensing): comparable service, same market (NHS England patients), and actual dispensing to a small cohort. Arguments that (i) there was no detriment, and (ii) Remedi only did this to comply with the 2013 Regulations, did not avoid the objective conclusion of competition.

5) Contempt established despite advice and limited scale

Once competition (however limited) was established and continued involvement was deliberate, contempt followed. Acting on advice was treated as potentially mitigating sanction, not negating liability.

C. Impact and significance

  • Drafting and enforcement clarity: The decision signals that Scottish courts will resist importing a “harm/detriment” requirement into an interdict that prohibits “competition” simpliciter—especially where another paragraph expressly mentions detriment.
  • Objective competition in regulated sectors: Businesses cannot avoid “competition” findings by arguing that regulation forced them to market or serve a broader patient base. If the objective effect is to offer substitutable services to the same market, competition may be made out.
  • Partial overlap can be enough: Even where a business’s core model is distinct (care homes), a smaller overlapping segment (community NHS dispensing) can ground breach and contempt if the interdict is framed broadly enough.
  • Advice is not a shield: Reliance on professional advice will not ordinarily prevent a contempt finding where the prohibited act is deliberately done, though it may influence sanction.
  • Expert evidence boundary: The admissibility ruling provides practical guidance on using industry experts in contempt/restrictive covenant disputes: market-structure evidence is permissible even if it touches the ultimate issue, provided the court remains the decision-maker.

5) Complex concepts simplified

  • Interim interdict: A temporary court order preventing certain conduct pending final determination. Breaching it can be contempt.
  • Minute for contempt: A procedure seeking a finding that someone disobeyed a court order. The burden here was on the minuter (the company) and the standard was beyond reasonable doubt.
  • Strict construction: The order is read carefully and narrowly; courts do not expand it by implication. But “narrowly” does not mean adding extra requirements (like “detriment”) not in the text.
  • Objective competition: The court asks what the business does in the market, not what it says it intends. If customers could realistically treat two services as substitutes within the same market, they may be “competing”.
  • Distance-selling pharmacy obligations: Regulation can require a pharmacy not to appear selective in who it serves; complying with that may still create market overlap amounting to competition under a court order.
  • Advice and mitigation: Taking advice may reduce penalty, but it typically does not erase contempt if the prohibited act was done deliberately.

6) Conclusion

Lord Richardson’s opinion in [2026] CSOH 62 provides a clear Scottish treatment of “competition” in the specific setting of contempt for breach of interim interdict. The court (i) construed the order strictly but according to its unqualified wording, (ii) rejected an implied “detriment” gloss, (iii) applied an objective market-based test for competition, and (iv) held that regulatory compulsion does not prevent an overlap from being “competition” where comparable services are offered to the same market.

The practical takeaway is stark: where an interdict restrains involvement in a “competing” business, even a small overlapping segment of activity—if objectively competitive—can found contempt, leaving questions such as good faith reliance on advice and the scale of overlap for mitigation at sanction.