Axis Football Investments Ltd v Power & Ors

On an interim injunction application, a claimant with a good arguable case that contractual rights in a company or its assets require protection may obtain an injunction where damages would not provide an adequate remedy and the balance of convenience favours relief.

Contractual rights under a shareholders’ agreement may continue after completion and may require the consent of a shareholder whose legal title has not yet been registered. An existing injunction protecting another claimant does not necessarily protect that shareholder. Where an injunction merely preserves consent rights pending trial, the cross-undertaking may require little or no fortification if the evidence shows no realistic loss to the defendants.

Axis Football Investments Limited applied for an interim injunction against Lee Power, Swinton Reds 20 Limited and Seebeck 87 Limited. Axis had paid the agreed consideration under a share sale agreement for shares intended to give it a 15% interest in Swindon Town Football Club, but the transfer had not been properly completed or registered.

Axis claimed that the agreement required the defendants to obtain its consent before selling the Club or its assets. The defendants disputed the continuing effect of the agreement, the adequacy of damages, the need for an injunction, delay, Axis’s changing position and the sufficiency of its cross-undertaking.

1. Relief granted. The court granted an injunction until trial or further order preventing the defendants from selling the Club’s shares or assets without Axis’s prior written consent. The defendants were also required to notify potential purchasers of Axis’s 15% interest.
2. Axis had a good arguable case that the share sale agreement continued to regulate the parties’ relationship. Its continuing obligations included the requirement to obtain the prior written consent of all relevant shareholders. The fact that Axis was not yet registered as a member did not deprive it of its contractual rights. Under Companies Act 2006, sections 112 and 33, the distinction between legal membership and contractual rights under the agreement was material.
3. Damages were not an adequate remedy for failure to transfer and register shares in the ultimate holding company of a football club, given the special nature of the interest. Damages for failure to obtain consent to a sale would also be exceptionally difficult to calculate.
4. There was a real need for protection. The defendants’ conduct gave the court no confidence that Axis would be informed of, or asked to consent to, a proposed sale without an injunction. The injunction in related proceedings was insufficient because it protected another claimant and could be discharged without Axis being involved.
5. There had been no material delay. Axis’s earlier statutory-demand step and changes in its case did not justify refusing relief, particularly since the defendants’ position had itself shifted. The cross-undertaking did not require fortification because the injunction preserved consent rights, Axis’s registration was admitted to be inevitable, and the evidence supported no realistic loss to the defendants.
6. The requested restriction concerning insolvency proceedings was narrowed. It applied only to active steps by the defendants to place the relevant companies into an insolvency procedure, rather than conduct such as failing to oppose a creditor’s petition.
7. Costs were reserved to the trial judge.

First-instance decision. The judgment records that a related application in Standing v Power was heard at the same time and decided separately under [2020] EWHC 1173 (Ch).