An interesting case was heard in the High Court recently where the court refused to grant an interlocutory injunction to prevent a company from selling properties until shareholder oppression proceedings were fully resolved.
It can be said that the courts are generally slow to grant injunctions unless the facts of the case are compelling and that damages would not be a suitable remedy.
The board of the company had decided to sell its property assets. The Applicant wanted the company to obtain an independent valuation of the property holding company which was selling its assets as a going concern. The Applicant argued that the Company had not taken proper expert advice on the proposed sales.
The defendants submitted that the issues complained of by the applicant fell well short of oppression of a shareholder. The defendants submitted that the decision to sell was made by the Board of the company in a proper manner and they had the right to sell as mandated by the Board. The defendants also argued that the applicant had delayed bringing his application by waiting several weeks and that this delay should be considered.
The Court took into consideration whether the balance of convenience favours the granting of an injunction and whether there was a fair question to be tried.
The Court accepted that damages might be a difficult remedy to establish but felt that the damage suffered to the shareholders by granting an injunction would be very significant if the injunction was granted. The Court found it relevant that the majority of shareholders had voted for the early realisation of assets and that the market could change and that the shareholders could lose significant sums if the injunction was granted.