TRANSPARENTLY LIMITED v GROWTH CAPITAL VENTURES LIMITED

In deciding an application for an interim mandatory injunction, the court applies the American Cyanamid principles, modified by the heightened caution required for mandatory relief. The overriding consideration is the course carrying the least risk of injustice if the order proves wrong. The court may consider whether it has a high degree of assurance that the claimant will establish its right at trial, but that is not an absolute requirement. The court must also assess the adequacy of damages for each party and the balance of convenience. Where the contractual scheme makes delivery of software conditional on completion of related payment or equity obligations, and the claimant has not performed those obligations, the claimant may fail to establish a serious issue justifying delivery up. Incomplete evidence of financial difficulty and an adequate damages remedy may further justify refusal of relief.

Transparently Limited sought a mandatory interim injunction requiring Growth Capital Ventures Limited to deliver software, source code, documentation, hosting access and related materials developed under a software development agreement.

The parties’ agreements provided for payment partly in cash and partly through an equity arrangement. On termination, completion under the equity agreement was triggered, and delivery of the software and intellectual property was expressed to follow payment and completion. Transparently had terminated the development agreement alleging material breach, but had not issued the shares required under the equity agreement. Growth Capital Ventures disputed liability and remained willing to deliver the materials upon completion.

The central issues were whether there was a serious issue to be tried, whether damages were an adequate remedy, and where the balance of convenience lay.

1. Application refused. The court declined to grant the mandatory interim injunction requiring delivery of the software, source code, documentation and hosting access.
2. Under section 37 of the Senior Courts Act 1981, the court had jurisdiction to grant an injunction where it was just and convenient. The general interim injunction test was that in American Cyanamid v Ethicon Limited [1975] AC 396: whether there was a serious question to be tried, whether damages were adequate, and, if necessary, where the balance of convenience lay.
3. For mandatory relief, the overriding consideration was the course involving the least risk of injustice if the order proved wrong. The court could consider whether it had a high degree of assurance that the claimant would establish its right at trial, while recognising that such assurance was not indispensable. The principles stated in Nottingham Building Society v Eurodynamics Systems [1993] FSR 468 and approved in Zockoll Group Limited v Mercury Communications Limited [1998] FSR 354 governed the application.
4. The contractual documents formed a complete scheme on termination. Termination triggered completion under the equity agreement. Transparently was required to allot and issue shares representing the accrued discount, while its entitlement to delivery of the software and intellectual property was subject to completion. As Transparently had not performed those obligations, it had not shown an arguable contractual entitlement to delivery up.
5. The evidence did not establish that damages would be inadequate for Transparently. Its estimated losses could be quantified. Conversely, Transparently’s limited financial information indicated that it might be unable to satisfy Growth Capital Ventures’ undertaking in damages if the injunction were wrongly granted.
6. The balance of convenience favoured maintaining the status quo. Transparently could obtain the software and related materials by complying with the contractual equity obligations, while preserving any later challenge to the share allotment. The least risk of injustice therefore lay in refusing interim relief.
7. The cases concerning delivery-up injunctions, including Saphena v Allied Collection Agencies [1995] FSR 616 and Psychometric Services Ltd v Merant International Ltd [2002] FSR 8, turned on their particular contractual and evidential circumstances and did not alter the applicable principles.