Business Mortgage Finance 6 Plc v Greencoat Investment Ltd & Ors

For interim injunctive relief, the court applies the American Cyanamid questions: whether there is a serious issue to be tried, whether damages are adequate, and where the balance of convenience lies. A receiver appointed over charged assets does not thereby acquire the company’s power to appoint or remove directors. An order for information about relevant property may be made where credible evidence gives rise to a reasonable possibility that a freezing order may be sought. Expedition requires consideration of good reason, interference with the administration of justice, prejudice to the other side and any special factors.

Business Mortgage Finance 6 plc sought urgent interim injunctions and expedition in a Part 8 claim concerning a securitisation structure. The defendants purported to act as noteholders, trustees, an agent, receivers and directors, and purported to sell the issuer’s charged assets.

The claimant challenged the defendants’ standing and the validity of those steps under the trust deed, deed of charge and company’s articles. It also sought information about the alleged sale and an expedited trial before the intended redemption timetable. The central issues were whether the injunction threshold was met, whether information could be ordered under CPR 25.1, and whether the trial should be expedited.

1. Interim injunction. The applicable principles were those in American Cyanamid v Ethicon [1975] AC 396: serious issue to be tried, adequacy of damages, and balance of convenience. There was plainly a serious issue concerning the defendants’ authority. The claimant’s case included substantial arguments that GIL was not a noteholder and that the trust deed gave the relevant appointment powers to the issuer or existing trustee, rather than to noteholders.
2. The court considered that the receiver’s powers were limited to dealing with the charged assets. They did not include the power to interfere with the shareholders’ control over the appointment and removal of directors. The trustee’s power to appoint and dismiss agents did not extend to dismissing the company’s directors. The purported appointments of the fifth and sixth defendants as directors therefore appeared ineffective.
3. Damages were not an adequate remedy for the claimant if the injunction were refused. There was uncertainty about whether the alleged sale had occurred, its terms and the location of the proceeds, together with serious doubt about the defendants’ ability to satisfy a damages award. Conversely, the defendants had identified no realistic short-term loss that the injunction would cause. The balance of convenience favoured preserving the status quo. Injunctions were granted, subject to an unfortified cross-undertaking in damages.
4. Information. CPR 25.1(g), read with CPR 25.1(2), permitted an order requiring information about relevant property where there was credible material or a reasonable possibility that a freezing order might be sought. The unexplained alleged sale of the issuer’s assets, combined with the serious issue about the defendants’ authority and refusal to provide information, satisfied that threshold.
5. Expedition. The court applied the four factors identified in WL Gore & Associates GmbH v Geox SpA [2008] EWCA Civ 622, namely good reason, interference with the administration of justice, prejudice to the other side and special factors. The urgency created by the redemption timetable justified a one-to-one-and-a-half-day trial before the end of term. The application to join the former directors was dismissed because their alleged role was irrelevant to the issues requiring determination.