North Principal Investment Fund Ltd v Greenoak Renewable Energy

On an application for interim injunctive relief, establishing a serious issue to be tried is only the starting point. The court must assess whether damages would be an adequate remedy, the risks of uncompensated loss to each party, and the balance of convenience. The court may require a cross-undertaking in damages to be fortified where the claimant’s financial position is uncertain. Where a claimant has a seriously arguable proprietary or veto right, it may be appropriate to restrain a proposed sale and place the burden on the defendant to obtain the court’s approval, provided the defendant is adequately protected. Extensive interim disclosure will not be ordered where the injunction itself sufficiently protects the claimant pending trial.

The claimant sought interim injunctions concerning a disputed entitlement to a 50 per cent equity interest in the defendant and a veto over disposal of the defendant’s interest in a North Sea wind-farm project. The defendant accepted that the claimant had a serious issue to be tried, but opposed the further relief sought.

The claimant sought an injunction restraining disposal or encumbrance of the defendant’s shares, business, assets or project interest without consent or court approval. It also sought continuing disclosure of documents relating to potential sales and a possible buy-out. The central issues were the adequacy of damages, the balance of convenience, protection for the defendant against loss, and whether the proposed disclosure was necessary.

1. Interim injunction principles. The court proceeded on the basis of the principles referred to in the American Cyanamid case. Although the claimant had a serious issue to be tried, the court had to consider whether damages would be an adequate remedy and where the balance of convenience lay.

2. Adequacy and protection. The possibility that a sale might occur below the best reasonably obtainable price made loss difficult to quantify. The defendants’ limited evidence of financial standing supported the conclusion that damages might not be an adequate remedy for the claimant. Conversely, the claimant’s cross-undertaking in damages was fortified by an undertaking to maintain €10 million in London, including liquid securities or cash and a blocked cash account.

3. Form of injunction. The claimant had a seriously arguable case both as to a 50 per cent equity interest and as to a veto over sale of the project interest. Since the subject matter might prove to be the claimant’s property, and the defendants could apply to court for approval of a reasonable sale, the appropriate course was to grant the restraint sought. The burden therefore lay, if necessary, on the defendants to obtain approval rather than on the claimant to return to court to restrain each proposed sale.

4. Information orders. The claimant’s entitlement to information was seriously arguable, but the claim was heavily disputed. The injunction required sufficient information to enable consent or court approval to be considered. Extensive continuing production of drafts, minutes, correspondence and emails was therefore unnecessary pending trial.

5. The injunction in paragraph 1 of the proposed order was granted, subject to the claimant’s cross-undertaking in damages and its proposed fortification. The orders sought in paragraphs 2 and 3 were refused.