Yodel Delivery Network Limited v Jacob Corlett & Ors

The court held that it has jurisdiction under section 37 of the Senior Courts Act 1981 to grant interim injunctive relief of the kind sought, but declined to exercise its discretion to do so in this case. Applying the American Cyanamid principles, the judge found that the applicants (Shift and Corja) raised serious issues to be tried concerning the existence and effect of the Second Warrant Instrument, including allegations about director authority, alleged breaches of fiduciary duty under sections 171, 172 and 175 of the Companies Act 2006 and the construction and lapse of the Warrants.

The judge concluded that damages would be an adequate remedy for the applicants and that the cross-undertaking in damages offered was inadequate (Corja having no assets and Shift's balance sheet being unreliable). For those reasons, and because the proposed injunction would overly restrain the company's management and risk impeding an ongoing transformation that may preserve the business, the injunction application was dismissed.

The court granted permission for Corja to amend to bring the Warrant Claim in its own name and acceded to the applications to determine the Warrant Claim as a preliminary issue and to expedite trial. The application for security for costs was not determined at the hearing and directions were given for its expedition.

Background and parties. Yodel Delivery Network Limited ('Yodel') is a UK delivery business in precarious financial condition. Yodel was acquired on 13 February 2024 through YDLGP Limited; shares were sold to Judge Logistics Limited ('JLL') on 21 June 2024. Shift Global Holdings Limited ('Shift') and Corja Holdings Limited ('Corja') assert rights under a Second Warrant Instrument said to have been executed by Yodel on 19 June 2024, entitling them to subscribe for large blocks of shares. If specific performance were obtained, Shift and Corja would become majority shareholders, displacing JLL. Yodel denies the Warrant Claim.

Nature of the applications. The principal contested applications were: (i) interim injunctive relief restraining Yodel/JLL from implementing a proposed transformation of Yodel's business pending resolution of the Warrant Claim (Injunction Application); (ii) permission for Corja to amend to assert the Warrant Claim in its own name (Corja's Amendment Application); and (iii) applications that the Warrant Claim be tried as a preliminary issue on an expedited timetable (Preliminary Issue and Expedition Applications). Yodel also sought security for costs (SFC Application), not determined at the hearing.

Issues framed. The court addressed: (i) whether it has jurisdiction under section 37 of the Senior Courts Act 1981 to grant the relief sought; (ii) whether a serious issue to be tried exists on the Warrant Claim; (iii) adequacy of damages as a remedy and sufficiency of the cross-undertaking in damages (including fortification); (iv) construction and lapse of the Warrants; (v) alleged want of authority by the director in issuing the Second Warrant Instrument (including alleged breaches of duties under sections 171, 172 and 175 Companies Act 2006 and the effect of insolvency); and (vi) balance of convenience.

Court's reasoning and disposal. The judge accepted that the court has jurisdiction to grant such relief in appropriate cases, having regard to authorities including Convoy Collateral. Applying the American Cyanamid approach (and related authorities), he found that Shift and Corja had raised serious issues to be tried on the key defences advanced by Yodel (including breaches of duty, quorum/authority and lapse of the Warrants). However, the judge concluded that damages would be an adequate remedy for the applicants and that the cross-undertaking in damages was insufficient: Corja had no assets and Shift's management accounts and consolidated balance sheet were unreliable such that the cross-undertaking could not be relied on. The injunction would also be over-intrusive, substituting the applicants' control for directors' decision-making and risked impeding an ongoing transformation that may preserve Yodel's operations. As a result the Injunction Application was dismissed.

The court granted Corja permission to amend to bring the Warrant Claim in its own name and ordered that the Warrant Claim be determined as a preliminary issue on an expedited trial listing. The SFC Application was left to be heard on an expedited timetable.

No final findings were made on the substantive merits; the judgment resolves interlocutory applications and directs an expedited determination of the Warrant Claim.

This was a first-instance disposal of multiple interlocutory applications. The court dismissed the application for interim injunctive relief because damages would be an adequate remedy and the cross-undertaking in damages was inadequate; the proposed injunction would be over-intrusive and risked prejudicing an ongoing transformation that may preserve the business. The court granted Corja permission to amend to bring the Warrant Claim in its own name and ordered that the Warrant Claim be tried as a preliminary issue on an expedited basis. The security for costs application was not determined at the hearing and was directed to be expedited.