Assetco Plc v Shannon

For an interim mandatory injunction, the court must identify the course carrying the least risk of injustice if the order later proves wrong. A mandatory order requiring positive action generally creates greater risk than an order preserving the status quo. Relief may nevertheless be granted where the risk of injustice from refusing it sufficiently outweighs the risk from granting it.

AssetCo plc sought an interim mandatory injunction requiring its chief executive and substantial shareholder, Marcus John Shannon, to vote in favour of an equity placing intended to provide essential liquidity.

Mr Shannon argued that his undertaking was ineffective because his signature had not been witnessed in accordance with section 1(3) of the Law of Property (Miscellaneous Provisions) Act 1989. The company relied on estoppel and an alleged collateral agreement. The central issue was whether mandatory relief should be granted before trial and on very short notice.

1. The court applied the principles stated in Nottingham Building Society v Eurodynamics Systems [1993] FSR 468. The overriding consideration was which course was likely to involve the least risk of injustice if wrong at trial.
2. A mandatory injunction requiring positive action ordinarily carried a greater risk of injustice than an order preserving the status quo. Relief could still be granted where the risk of injustice from refusal sufficiently outweighed the risk from granting it.
3. The company had a good arguable case based on estoppel and an alleged agreement requiring Mr Shannon to vote in favour of the placing.
4. Refusal risked preventing essential payments, triggering banking defaults and placing the company and subsidiaries into administration. Alternative funding arrangements lacked equivalent certainty.
5. The interim mandatory injunction was granted.