Dean McGuinness & Anor v Edward Avery Gee & Ors

An applicant cannot obtain an injunction restraining office-holders from dealing with company property without a properly constituted claim by the company. A director has no personal standing to restrain disposal of company property unless he establishes an independent proprietary or other legal interest.

Where a party previously had the opportunity to challenge the enforceability of security or the appointment of office-holders, raising omitted grounds in later proceedings may constitute an abuse of process. Interim relief will also be refused where there is no serious question to be tried. Alternatively, the balance of convenience may favour office-holders who must realise assets for proper value and protect creditors.

The applicants sought continuation of an interim injunction restraining the marketing and sale of property charged to Goldentree Financial Services Ltd. The company was in administration, and the respondents included its administrators and the holder of the floating charge.

The application followed an earlier decision by Judge Prentis, reported at [2023] EWHC 1727 (Ch), that the floating charge was enforceable. The applicants advanced arguments concerning the Financial Services and Markets Act 2000 and sought interim relief pending declaratory proceedings.

The central issues were whether the company had been lawfully joined, whether the first applicant had personal standing, whether the later challenge was an abuse of process, and whether interim relief was justified.

The application for continuation of the injunction was dismissed, with costs assessed on the indemnity basis.

1. Standing and joinder. The company could be a proper applicant only if the administrators’ appointment was void and the sole director was consequently authorised to instruct solicitors on its behalf. The applicants did not seek a declaration that the appointment was void, although the issue was left open in argument. If the appointment was valid, the company had not been lawfully joined.
2. Mr McGuinness had no personal cause of action to restrain the company, its agents or its office-holders from disposing of company property. No independent beneficial or other material interest in the property was asserted. The application therefore failed at the first hurdle.
3. Financial Services and Markets Act 2000. Section 22(1) defines regulated activity by reference to an activity of a specified kind carried on by way of business. Article 61 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 limits a regulated mortgage contract to credit provided to an individual or trustee. The relevant facility and debenture provided credit to the company, not to Mr McGuinness. His guarantee and fixed charge did not alter that position or invalidate the company’s debenture.
4. Abuse of process. Judge Prentis had determined the enforceability of the debenture in proceedings to which the applicants and GFS were parties. Since the Financial Services and Markets Act arguments could and should have been raised then, the applicants were precluded from advancing them later. The court applied the principle in Henderson v Henderson and the guidance in Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd.
5. Even if there had been a serious question to be tried, the balance of convenience favoured the respondents. The administrators were expected to obtain a proper price for the property. Preventing a sale risked substantial prejudice to creditors, and the applicants had not evidenced an adequate cross-undertaking in damages.
6. A laches argument had force, but it was unnecessary to decide it as a free-standing ground.

This was a first-instance interim application. Judge Pearce granted short-term injunctive relief on 26 September 2023 because the property was shortly due to be auctioned, without expressing a concluded view on the merits. The present court refused to continue that relief.

The judgment also records an earlier decision by Judge Prentis, at [2023] EWHC 1727 (Ch), concerning the enforceability of the floating charge.