The Supreme Court has dismissed an appeal by shareholders in Permanent TSB Group Holdings plc and affirmed an interlocutory injunction preventing them from issuing proposed proceedings to disqualify directors under section 160 of the Companies Act 1990.
In a judgment delivered on 5 November 2019, O’Donnell J said an applicant seeking to restrain the commencement of proceedings must show a prima facie case, rather than meet the lower “arguable case” threshold used in the usual interlocutory injunction test. The appeal concerned an injunction granted by the High Court in February 2013.
The proposed applicants had sent section 160(7) notices to directors in January 2013, stating they intended to seek disqualification orders but giving no grounds. The Supreme Court held there was a strong prima facie case that a valid notice had to identify the relevant parts of section 160(2) and, at least generally, the matters relied on. It also agreed that failure to meet the notice requirement would make proceedings brought on those notices invalid.
The court further found a prima facie case that the proposed proceedings were intended to put pressure on the bank and its holding company amid existing litigation and to affect a proposed sale of the Irish Life insurance business. The judgment noted evidence that the notices had been circulated to executives of Canada Life and its parent company, although the proposed applications had not been fully formulated and some intended applicants had not decided whether to proceed. The court concluded that the notices were used for a collateral and improper purpose, amounting to an abuse of process.
The injunction was interlocutory: the Supreme Court upheld the order restraining proceedings based on the defective notices in the circumstances before it. It did not determine any application to disqualify the directors. O’Donnell J said the balance of convenience favoured the injunction, noting that the shareholders could raise factual matters in other existing proceedings and that section 160 proceedings would provide no direct private benefit to their applicants while imposing a significant burden on the directors.
The court also considered fresh evidence tendered by one appellant in 2018, concerning alleged contradictions in statements about the group’s financial position. O’Donnell J made no determination on whether that evidence could properly be admitted, but said it could not cure the defects in the 2013 notices or justify the threatened proceedings retrospectively.