Jewson v Heatspace Ltd

Interim injunctive relief may protect a prospective shareholder’s entitlement to a dividend from company assets where there is an arguable risk that the assets will be misapplied before the entitlement is resolved. The interest may be analogous to a proprietary interest, although the claimant has no proprietary interest merely as a creditor. A director may also seek to restrain an arguably improper disposition of company assets. Procedural defaults do not automatically defeat continuation of an injunction. The court should assess their seriousness and avoid disproportionate or duplicative penalties.

The claimant sought continuation of interim injunctions restraining Heatspace Limited from dealing with proceeds of the proposed sale of shares in Eastfield Management Limited. She alleged that she was entitled to a larger shareholding in Heatspace than the other directors recognised and that an original directors’ loan remained outstanding.

The injunction had been granted and continued on earlier applications. The claimant had issued the claim form late and had committed other procedural defaults. Heatspace argued that those defaults disentitled her to further relief and that there was insufficient evidence of any threatened misapplication of the sale proceeds. The central issues were whether continued protection was legally available and, if so, in what amount.

1. Continuation of injunction. The injunction was continued until judgment or further order, but the protected amount was reduced to £123,000.
2. Legal basis for protection. A claimant suing as an ordinary creditor has no proprietary interest in company assets. However, a prospective interest in a dividend payable after the company’s proper debts have been discharged may be analogous to a proprietary interest. That interest can justify protection against a threatened misapplication of the assets from which the dividend ought to be paid. The claimant’s status as a director provided an additional basis for restraining an arguably improper disposition of company assets.
3. Risk of misapplication. The defendants’ failure to answer material parts of the claimant’s evidence, including the alleged original loan and additional shares, justified an inference that, without protection, the proceeds might be distributed without making provision for her claims.
4. Procedural defaults. The claimant had failed to issue the claim form forthwith and had committed other defaults concerning the hearing note and further evidence. Those defaults did not automatically deprive her of continued relief. Following the approach in P.S. Refson & Co Ltd v Saggers and Another [1984] 1 WLR 1025, the court treated costs consequences as the appropriate response where the defaults had been cured or were insufficiently serious to justify discharge of the injunction. The claimant should not be punished twice for the same default.
5. Quantum. There was no arguable evidential basis for including an alleged £150,000 unexplained surplus from the earlier property sales. That element was excluded from the calculation, producing a protected sum of £123,000.
6. Costs. There was no order as to costs on the main application. The claimant was ordered to pay £1,000, including VAT, for a separate unsuccessful application to defer judgment.