The first claimant company operated a restaurant business from the ground floor of a premises of which the defendant was the lessee. The second claimant was the sole director of the first claimant. The share structure of the first claimant was split into A shares and B shares: holders of A shares had exclusive voting rights but no entitlement to dividends; holders of B shares had entitlement to dividends but no voting rights. The defendant held all the A shares in the first claimant. The second claimant held the B shares. That structure took effect subject to an agreement of 13 May 2007. Subsequently, the defendant became involved in proceedings with the head landlord. Those proceedings arose out of allegations (partly based upon information provided by the police and partly based upon information provided by the second claimant) that the defendant had been using the upper floors of the premises for the purposes of prostitution. On 31 March 2008, the defendant evicted the claimants from the premises. On 2 April, the claimants obtained an ex parte injunction effectively putting them back into the premises and restraining the defendant from preventing the claimants carrying on the restaurant business from the premises. On 22 April, the defendant undertook, inter alia, not to prevent the carrying on of the restaurant business and to take no further steps to call an annual or extraordinary general meeting of the first claimant without the prior agreement of the second claimant. The latter undertaking arose from a fear that the defendant could have sought to exercise its power to remove the first second claimant as an officer of the first claimant. In their particulars of claim, the claimants alleged, inter alia, a breach of trust on the basis of the second claimant's allegation that, at the time of the May 2007 agreement, the moving spirit of the defendant had represented to him that the first claimant company would in effect be under his control and would belong to him. Subsequently, the claimants sought injunctive relief along the lines of the undertakings given on 22 April 2008.

The application would be allowed.

While the claimants' claim for breach of trust faced difficulties, the allegations were of the type that fell to be determined at trial where the remarks relied upon by the second claimant could be placed into context and assessed in the light of the evidence of the parties to the agreement of May 2007. On that basis, there was a serious issue to be tried. On the facts, damages were not an adequate remedy for either party. In all the circumstances, the balance of convenience lay in maintaining the status quo pending the trial of the action. Accordingly, the undertakings of 22 April 2008 would be placed on the footing of injunctive relief.

American Cyanamid Co v Ethicon Ltd [1975] 1 All ER 504 applied.

Giovanni D'Avola Barrister.