$($a$)$ Insurance Claim:

Issue: The issue is whether Hillary is eligible to make a claim on the Employers$$ Liability insurance policy.

Rule: The key legal principle is that the status of a director and shareholder does not necessarily preclude someone from being considered an employee for the purposes of insurance coverage. The determination depends on the specific circumstances and the nature of the individual's relationship with the company.

Application: In the case of Ready Mixed Concrete $($South East$)$ Ltd v Minister of Pensions and National Insurance $[1968]2$ QB $497,$ the court held that a director who is also an employee can be covered by an employer's liability insurance policy if they have entered into a contract of service and not just a contract for services. This means that if Hillary can demonstrate that she had an employment contract with Tricks and Treats Catering Ltd and was working under the control and direction of the company, she may be successful in her insurance claim.

Conclusion: Hillary may have a strong argument for coverage under the Employers$$ Liability insurance policy if she can establish that she was an employee of Tricks and Treats Catering Ltd and not just a director and shareholder.

$($b$)$ Breach of Contract Claim:

Issue: The issue is whether Hillary breached the agreement not to solicit Sweets Catering's clients.

Rule: The rule is that a non$-$solicitation clause in an employment contract is enforceable if it is reasonable in scope, duration, and geographical area, and if the employee had access to confidential information about clients during their employment.

Application: In Attwood v Lamont $[1920]3$ KB $571,$ the court held that a non$-$solicitation clause was enforceable when the employee had access to confidential information about clients. Here, Hillary had access to valuable client information during her employment with Sweets Catering, and her employment contract specifically prohibited her from soliciting those clients upon resignation.

Conclusion: Hillary is likely to be found liable for breach of contract if Sweets Catering can demonstrate that Melody solicited their clients using the information obtained from Hillary, and if the non$-$solicitation clause in Hillary's employment contract is deemed reasonable and enforceable.

Overall, Hillary may have a valid claim for insurance coverage if she can establish her status as an employee, but she is likely to face liability for breach of contract if the non$-$solicitation clause is enforceable and Melody solicited Sweets Catering's clients.