Meadow Designs Limited & Ors. v Rishco Leisure Limited & Anor.

An interim proprietary injunction must protect the particular property said to be subject to the claimant’s proprietary or specific-performance claim. It should not extend automatically to other assets or subsidiary shares. Where the restrained party manages the relevant business, the order should ordinarily contain a carve-out for dealings in the ordinary course of business and for the exercise of contractual rights.

The American Cyanamid test applies. A breach of the duty of fair presentation does not invariably require discharge. The court must exercise its discretion proportionately, considering culpability, materiality, prejudice, the strength of the case and the practical effect of continuing or regranting the injunction.

The claim arose from a joint venture to develop a golf club into a retirement village and leisure project. The claimants alleged breaches of a shareholders’ agreement by the second defendant, including failure to issue and transfer shares, failure to appoint agreed auditors, and failure to provide financial information.

Adam Johnson J granted an interim injunction on 13 May 2022 restraining dealings with shares and assets within the joint venture structure. The second defendant applied to discharge it, alleging defective service, failures of fair presentation, breach of undertakings and failure to satisfy the American Cyanamid test. The claimants sought variation, continuation or regrant of the injunction, together with orders concerning directorship, audit and information.

1. Disposition. The injunction was continued in substantially reduced form. It was confined principally to the RLL shares held beneficially for the claimants. It did not extend to the shares in subsidiary companies or to the Property. It did not restrain the second defendant from dealing with his own shares, exercising rights under the shareholders’ agreement, or acting in the ordinary course of business.
2. An interim proprietary injunction falls within CPR r.25.1(c)(i) and may preserve property whose ownership or terms of ownership are in issue. The injunction was properly characterised as proprietary relief, or relief in aid of specific performance, because the claimants sought transfer of legal title to particular shares. The fact that the dispute arose under the shareholders’ agreement did not prevent the shares being treated as held on trust on the agreement’s terms.
3. A proprietary injunction does not automatically justify restraint over subsidiary shares or underlying property. The scope of the order must correspond to the property rights or final relief in issue. An injunction over parent-company shares does not, without more, justify direct restraint over subsidiary assets.
4. The American Cyanamid test was satisfied. There was a serious issue as to when planning permission triggered the obligation to transfer the shares. Damages were inadequate because the claim concerned particular shares and specific performance of an obligation to transfer shares in a private company was available. The balance of convenience favoured limited protection, having regard to the risk of diminution in value and the limited intrusion caused by the revised order.
5. The claimants had breached the duty of fair presentation, particularly concerning service, costs and the breadth of the original order. They had also delayed serving the claim form and returning to court. Those breaches were innocent and caused no material prejudice sufficient to require complete discharge. Proportionality required continuation in reduced form, with the breaches reflected in costs.
6. The court refused retrospective relief under CPR r.23.7(4). It ordered procurement of Accura’s appointment as auditor of RLL and provision of documents relating to transactions between the joint venture companies and the second defendant or connected companies. It refused interim appointment of a director or auditors for the subsidiary companies and rejected a wider information order.