C.T. Dent Ltd v Atias & Anor

On an interlocutory injunction application, the court must select the course carrying the least risk of injustice if its decision later proves wrong. Mandatory relief may justify particular caution because it changes the position before trial, but the court may consider whether it has a high degree of assurance that the claimant will establish its rights. Relief may still be granted where the risk of injustice from refusal sufficiently outweighs the risk from granting it. Mandatory and prohibitory relief are not subject to fundamentally different principles. Orders preserving evidence must also be proportionate and properly safeguarded. A director’s entitlement to exploit a maturing business opportunity is not unlimited and depends on the circumstances, including the director’s fiduciary duties.

The claimant, a dental scanning company, sought urgent interim relief against its former effective chief executive and a company incorporated by him shortly after his resignation. The relief included access to business systems, delivery up of company property and documents, restraints on use of the claimant’s systems and materials, and imaging of electronic devices and relevant online accounts.

The application arose from evidence that the former director had retained or controlled passwords, company equipment, electronic records and business-critical systems, and was seeking to establish a competing business. The central issues were whether the claimant had shown a serious issue to be tried and whether the proposed mandatory, prohibitory and evidence-preservation orders were justified and proportionate.

1. Application granted. The court granted extensive access, delivery-up, non-use and imaging orders against both defendants. The defendants were ordered to pay £50,000 on account of the claimant’s costs, with the balance to be assessed on the standard basis if not agreed.
2. The claimant had plainly established serious issues to be tried in relation to breach of fiduciary duty, interference with property, copyright infringement, database right infringement and misuse of confidential information. The court applied the approach in American Cyanamid v Ethicon [1975] AC 396 and the principles for mandatory injunctions stated in Nottingham Building Society v Eurodynamics Systems [1993] FSR 468, as approved in Zockoll Group Ltd v Mercury Communications Ltd [1998] FSR 354.
3. The overriding consideration was the course likely to involve the least risk of injustice. Mandatory relief required caution because a wrongly made positive order may create greater injustice than an order preserving the status quo. The court could consider whether it had a high degree of assurance that the claimant would succeed at trial, although such assurance was not indispensable where the balance of irremediable prejudice strongly favoured relief. This approach was consistent with National Commercial Bank Jamaica Ltd v Olint Corp Ltd [2009] 1 WLR 1405, which recognised no distinction in principle between mandatory and prohibitory relief.
4. The access and delivery-up orders were justified because the claimant faced a virtual certainty of irreparable damage without control of its systems, documents and data. The former director had no sufficient justification for continued access or use. The court also had a high degree of assurance that the claimant owned, or was beneficially entitled to, the software, subject to possible reconsideration if convincing evidence of another owner emerged.
5. The imaging order was treated as an evidence-preservation measure. Having regard to TBD (Owen Holland) Limited v Simons [2020] EWCA Civ 1882, imaging of the limited electronic devices and online accounts used for the claimant’s business was proportionate. A wider order covering all commercial online accounts would have been disproportionate because it risked capturing unrelated private material.
6. The submission that a director may exploit a maturing business opportunity irrespective of when preparations began was rejected as too broad. The exceptional circumstances discussed in Foster Bryant Surveying Ltd v Bryant [2007] EWCA Civ 200 did not apply. The position remained fact-sensitive and governed by fiduciary duties.