Peter Waddell Holdco Limited & Anor v Bluebell Cars Holding Limited & Ors (interim injunction hearing, Murray Rosen KC)

The Claimants sought interim injunctions under a Securityholders' Deed dated 4 April 2022 to restrain the Defendants from acting on Step-In Rights (SIRE) under clause 9 and Material Default Event (MDE) rights under clause 19, and to restore Mr Waddell's Schedule 1 approval rights and his directorships. The court applied the American Cyanamid principles for interim relief and considered whether there was a serious issue to be tried, whether damages would be an adequate remedy, and where the balance of convenience lay.

The court found that although some of the Claimants' contract-based challenges (including construction points relating to clause 9, alleged variation or waiver under clause 28, force majeure and alleged breaches of fair procedure under clause 19) were ambitious and in parts weak, they nevertheless raised narrow issues that deserved further investigation and disclosure such that there was a serious issue to be tried. However, on the key discretionary matters of adequacy of damages and balance of convenience the evidence overwhelmingly favoured the Defendants: the Claimants had not shown a real risk of irremediable, uncompensatable harm if injunctions were refused, while restoration of Mr Waddell's broader involvement posed a clear and serious risk of irreparable harm to the Group and its relationships. The Claimants' alternative proposals (appointment of a proxy non-executive director, enhanced notice or veto arrangements) were also rejected as inappropriate and disproportionate.

Result: the application for interim injunctions was dismissed.

Background and parties: The disputes arise under a Securityholders' Deed dated 4 April 2022 after HoldCo (a Freshstream subsidiary) acquired a minority interest in TopCo. Mr Peter Waddell (PWHL) was the founder and majority controller of the TopCo group. The SHD contained SIRE rights (clause 9) allowing HoldCo to step in if quarterly Group EBITDA fell to 60% or less of targets for two consecutive quarters, and MDE rights (clause 19) allowing investigation and removal of appointment rights if certain misconduct was found.

Nature of the application: By application issued 12 April 2024 the Claimants sought interim injunctions to restrain Defendants from acting pursuant to SIRE and MDE notices served in March and April 2024, and to restore Mr Waddell's Schedule 1 approval rights and his directorships. The Claimants later abandoned the reinstatement application and proposed instead appointment of a neutral non-executive director and/or narrower information and veto rights. They also sought an expedited trial.

Procedural posture: The court heard the interim application on 22-23 May 2024 on substantial written evidence; an independent investigation (by Nicholas Siddall KC) had produced a preliminary and then final report concluding, on the balance of probabilities, that a Material Default Event had occurred; BidCo terminated Mr Waddell's employment on 16 April 2024. The court noted consent orders dismissing claims against several individual defendants.

Issues framed:

• Whether there was a serious issue to be tried on contractual challenges to the March and April SIRE Notices (construction of clause 9, whether the relevant quarters pre-dated completion, alleged variation/waiver of EBITDA targets, and force majeure).
• Whether there was a serious issue to be tried on the validity of the MDE process and notice under clause 19 (allegations of bad faith, denial of natural justice, discrimination contrary to the Equality Act 2010, and the independence of the investigator).
• Whether damages would be an adequate remedy and where the balance of convenience lay as to granting interim relief.

Court's reasoning:

• Serious issue to be tried: The court accepted that, while many of the Claimants' contentions were ambitious and in parts implausible, they nonetheless raised narrow issues warranting further investigation and disclosure. The court declined defendants' invitation to treat the application as a summary disposal.
• Adequacy of damages and balance of convenience: The court concluded that the Claimants had not shown a sufficient risk of irremediable, uncompensatable harm. By contrast reinstating or enlarging Mr Waddell's management role risked serious, irreversible harm to the Group, employee welfare, counterparty relationships and regulated activities. The court regarded the Defendants' evidence of likely disruption and reputational damage as overwhelming and proportional reasons to refuse interim relief.
• Alternative remedies: The court rejected the proposed alternatives (proxy director, enhanced notice/veto rights) as disproportionate and unlikely to be effective in preventing the risks identified.

Conclusion: Having applied the American Cyanamid principles and balanced the competing risks, the court dismissed the application for interim injunctions. The judge invited written submissions on an expedited trial timetable and costs if required.

This was a first-instance decision. The application for interim injunctions was dismissed. The court held that although there were narrow and arguable issues to be tried on the construction and operation of clauses 9 and 19 of the Securityholders' Deed and related allegations (including alleged waiver, force majeure and procedural unfairness), the Claimants had not shown an adequate risk of irremediable harm and the balance of convenience overwhelmingly favoured refusal because reinstatement or increased involvement of Mr Waddell risked serious and potentially irreversible harm to the Group and its counterparties.