Axis Football Investments Ltd v Power & Ors

The Claimant, Axis Football Investments Ltd, sought an interim injunction to restrain the Defendants from selling or otherwise dealing with the shares or assets of Swindon Town Football Club without Axis' prior written consent and to compel protection of Axis' admitted 15% interest. The judge applied the American Cyanamid principles and found there was a serious issue to be tried that the Share Sale Agreement (SSA) remained in force and that clause 7 of the SSA required the consent of Axis to certain disposals. The court held damages would not be an adequate remedy given the nature of the interest and the risk of a fait accompli sale, and that the balance of convenience favoured Axis because the Defendants had been evasive and there was a real risk they would not keep Axis informed. The court granted an interim injunction protecting Axis' contractual rights and imposed a limited restraint on active steps to place the companies into insolvency procedures; costs were reserved to trial.

Background and parties: Axis Football Investments Ltd (a special purpose vehicle incorporated to acquire an interest in Swindon Town Football Club) claimed that it had paid £1.1 million under a Share Sale Agreement (SSA) and was entitled to be transferred and registered as holder of 15% of the relevant shares. The Defendants were Mr Lee Power, Swinton Reds 20 Limited and Seebeck 87 Limited. Related proceedings (Standing v Power [2020] EWHC 1173 (Ch)) concerned other claimed interests in the same club.

Nature of the application: Axis applied for an interim injunction (on American Cyanamid principles) to prevent any sale or disposal of the Club's shares or assets without Axis' prior written consent and to protect its contractual and membership interests pending trial; it sought delivery of a duly executed stock transfer form, share certificate and registration as a member.

Issues framed: The court identified the main contested issues raised by the Defendants: (1) whether the SSA or the articles of association governed the parties' relationship; (2) whether damages would be an adequate remedy; (3) whether an injunction was necessary given other protections; (4) whether delay should bar relief; (5) whether Axis' changing case undermined entitlement to relief; and (6) adequacy of Axis' cross-undertaking.

Court's reasoning and findings:

• The judge found Axis had a good arguable case that the SSA continued to govern the parties' relationship and that clause 7 required prior written consent of Axis for specified disposals, so a serious issue to be tried existed.
• On the Companies Act 2006 points, the court observed that until Axis was registered it could not rely on the articles (citing s.112 and s.33), so the SSA remained the operative contractual framework at present.
• Damages were held to be an inadequate remedy for the loss of a shareholding in the ultimate holding company of a football club and for protecting Axis' contractual rights (difficulty of assessing loss and risk of insolvency or inability to recover damages).
• The balance of convenience favoured Axis because the Defendants had behaved evasively, there was a realistic risk of a sale being presented as a fait accompli, and the injunction in the related proceedings did not adequately protect Axis.
• Delay was not sufficiently prejudicial to bar relief in the circumstances, and Axis' prior mistaken steps (statutory demand) did not prevent relief. The court found the cross-undertaking in damages was adequately fortified for interim relief.
• The court therefore granted the interim injunction sought, with terms including notification to potential purchasers of Axis' 15% interest and a limited prohibition on the Defendants taking active steps to place Swinton, Seebeck or STFC into an insolvency procedure; costs were reserved to the trial judge.

Wider context: The judge stressed the special nature of an equity interest in a football club and the practical difficulty of compensating by damages, justifying interlocutory protection to prevent a deprived party being presented with a fait accompli.

This first-instance application for an interim injunction was granted. The judge found a serious issue to be tried that the Share Sale Agreement continued to bind the parties and required Axis' consent to specified dispositions; damages were inadequate; the balance of convenience favoured Axis because of the Defendants' evasive conduct and the real risk of a fait accompli sale. The injunction restrained sale or disposal of the Club's shares or assets without Axis' prior written consent and prohibited the Defendants from taking active steps to place the companies into insolvency procedures; costs were reserved.