James Robert Hersov v Energy Research Lab Ltd

An applicant seeking a without-notice injunction must give a fair and complete presentation, including a proper explanation for delay that made a without-notice application necessary. A serious breach may require discharge even if the injunction would otherwise have been granted. The court may nevertheless grant fresh relief where the interests of justice require it, but the applicant must not retain an advantage obtained through non-disclosure.

Where an unfair-prejudice petitioner seeks a buy-out rather than retention of shares, damages or financial relief will generally be adequate because the valuation can reflect the alleged prejudice. The position differs where the petitioner seeks to preserve unique proprietary or management rights. A party may choose to restrain its alleged agent without joining every potential purchaser.

The claimant, an approximately 8% shareholder and former chief executive of the defendant company, challenged the termination of his employment and the proposed compulsory transfer of his shares under the employment contract and the company’s articles.

HHJ Monty KC granted an interim injunction on 24 September 2024 on very short notice. The claimant subsequently presented an unfair-prejudice petition under section 994 of the Companies Act 2006 and sought continuation of the injunction until trial. The defendant opposed renewal, alleging material non-disclosure, delay, inadequate remedies and prejudice. The central issues were whether the original order should be discharged and whether fresh interim relief should be granted.

1. Disposition. The court discharged the order made by HHJ Monty KC on 24 September 2024 and dismissed the claimant’s application for a renewed interim injunction.
2. Without-notice disclosure. The claimant had not substantively breached Civil Procedure Rules 1998, rule 25.3, by failing to explain why notice could not be given at the end of the offer period. However, he had committed a serious breach of the duty of full and frank disclosure by failing to explain why he had delayed from July and August until the eve of the compulsory purchase deadline. The later partial explanation was incomplete and inadequate. The court would discharge the original order even though it was impossible to know whether the order might otherwise have been made.
3. Fresh relief. Discharge of the original injunction did not automatically preclude a fresh injunction. Nevertheless, continuation would allow the claimant to benefit from an injunction obtained through serious non-disclosure. Had the original order not been made, the transfer process would have completed and any later application would have been directed principally against the purchaser.
4. Adequacy of financial relief. The authorities recognised a distinction between a petitioner seeking to be bought out and one seeking to retain shares or management rights. In the former case, the buy-out valuation can take account of unfairly prejudicial conduct. Since this petition primarily sought a buy-out and did not specifically seek retention of the shares, financial relief was adequate. The general preference for preserving unique property in specie therefore did not assist the claimant.
5. Other objections. The court did not decide the correctness of decisions concerning whether a petitioner loses standing after compulsory acquisition of shares. Those decisions did not prevent a different decision in a future case. The claimant was entitled to proceed against the company as his alleged agent, without joining the majority shareholders or potential purchaser.

First-instance decision. The judgment records that HHJ Monty KC granted the original interim injunction on 24 September 2024, but no appellate decision is stated.