Wright v Pyke & Anor

On an appeal from refusal of an interim injunction, the Court of Appeal must review the judge’s exercise of discretion rather than substitute its own view. Intervention is justified for an error of law or fact, a material change of circumstances, or a decision so aberrant that no reasonable judge acting judicially could have reached it. A party cannot recast an interlocutory application as a claim for final relief on appeal. Where an injunction would risk damaging both the defendant’s business and the claimant company’s business, an undertaking to keep full records may provide adequate interim protection while liability is determined at trial.

The claimant, a former director and equal shareholder of Acorn Dental Laboratory (Liverpool) Ltd, brought a derivative claim against the respondent director for alleged breaches of fiduciary duty and misuse of confidential information. The allegations arose from the respondent’s secret incorporation of A1 Aesthetics Ltd and alleged diversion of Acorn’s customers and business.

His application for an interim injunction was refused by His Honour Judge Hodge QC. The judge accepted that there was a serious issue to be tried but held that the balance of convenience favoured permitting the respondent to continue trading, subject to an undertaking to maintain full business records. The claimant appealed, advancing arguments approaching final relief.

The central issues were whether the appellate court could properly interfere with the discretionary refusal of interim relief and whether the undertaking adequately protected the claimant pending trial.

1. Appeal dismissed. The judge had identified a serious issue to be tried and had correctly treated the application as one concerning interim relief and the balance of convenience.
2. Under Hadmor Productions v Hamilton [1983] 1 AC 191, an appellate court must not exercise an independent discretion merely because it might have reached a different conclusion. It may intervene for a misunderstanding of law or evidence, a material change of circumstances, or a decision so aberrant that no reasonable judge acting judicially could have reached it. No such basis was established.
3. The proposed injunction was extremely wide. Its practical effect might have been to prevent the respondent from working as a dental technician and to require the dismissal of employees, without ensuring that Acorn would recover the business or remain solvent.
4. The respondent’s undertaking to keep accurate and full records of transactions, invoices and payments involving Acorn’s customers or former customers provided information by which any liability could be quantified if the claim succeeded. The judge was entitled to regard that protection, together with the surrounding financial and corporate circumstances, as making the balance of convenience favour refusal of the injunction.
5. The claimant could not change the case on appeal from an application for interim relief to an application for final judgment and proprietary relief. The proposed amended claims and any trust or statutory recovery claims remained matters for the proper procedural stages.
6. The court observed that the parties should consider resolving their deadlocked corporate relationship commercially. The formal order was that the appeal be dismissed.

• Court of Appeal (Civil Division): Appeal dismissed. The court upheld the refusal by His Honour Judge Hodge QC to grant an interim injunction and accepted the undertaking to maintain records.
• High Court of Justice, Chancery Division: The judge found a serious issue to be tried on alleged breaches of fiduciary duty and refused the injunction because the balance of convenience favoured the respondent’s undertaking.