Phlo Technologies Ltd v Tallaght Financial Ltd (t/a Cubefunder)

An interim injunction restraining a qualifying floating charge holder from appointing administrators out of court is determined under the American Cyanamid principles. A good-faith, substantial dispute about the debt or security establishes a serious issue to be tried, but does not automatically justify an injunction.

The court must assess adequacy of damages, the balance of convenience and the risk of irremediable prejudice. On a without-notice application, extreme urgency does not ordinarily remove the obligation to give whatever informal notice is practicable. Material non-disclosure normally leads to discharge, but the court retains a sparingly exercised discretion to continue the injunction where the interests of justice require it, subject to appropriate costs and fortification.

Phlo Technologies Ltd obtained an out-of-hours injunction restraining Tallaght Financial Ltd, trading as Cubefunder, from appointing an administrator out of court under Insolvency Act 1986 Schedule B1. The injunction followed an earlier Scottish interdict and was continued on the initial return date, with a requirement that Phlo fortify its cross-undertaking in damages.

Cubefunder sought discharge, alleging that Phlo had failed to give proper informal notice and had breached its duties of full and frank disclosure and fair presentation. Phlo also sought continuation pending trial, arguing that the loans, guarantees and debenture were arguably unauthorised or void and that administration would stifle its claim. The issues were whether continuation was justified under American Cyanamid and whether the procedural failures required discharge.

1. Serious issue to be tried. There was a substantial and realistic dispute about the enforceability of the loans to Phlo, UPL and Holdings, including Mr Sarwar’s authority and Cubefunder’s knowledge. Applying BCPMS, that dispute did not give Phlo an automatic right to an injunction. The court had to proceed to adequacy of damages and the balance of convenience.
2. Damages. Damages were inadequate for both sides. Administration could seriously impair Phlo’s business and stifle its claim. Conversely, the statutory power to appoint an administrator gave Cubefunder enforcement advantages for which damages were not a sufficient substitute.
3. Notice. The application was extremely urgent but secrecy was not essential. The applicable Practice Direction required informal notice. The prior email exchanges did not provide sufficient information about the hearing, its purpose or the evidence relied upon. Phlo also breached CPR rule 25.3(3) by failing to explain to the judge why notice had not been given.
4. Disclosure. The failure to mention the August 2024 meeting and the December settlement email did not breach the duty. However, presenting two-year-old accounts and stating that Phlo remained profitable, without disclosing the more recent Board Pack showing increasing losses, was a significant breach of full and frank disclosure and fair presentation. It was not deliberate.
5. Discretion and balance. The starting point was discharge, but the court retained a discretion to continue the injunction. The decisive consideration was that discharge would almost certainly stifle Phlo’s claim and prevent determination of whether the loans and security were void. The injunction was therefore continued until trial or further order. The trial should be expedited. Cubefunder was protected by fortification and could still apply to court for administration under sections 10–12 of Insolvency Act 1986. Indemnity costs were ordered for the first two hearings, with further directions on fortification and consequential matters.