The High Court has refused Tola Capital Management LLC’s application for interlocutory injunctions against Joseph Linders and Patrick Linders in a dispute over an option agreement linked to a debt refinancing with Ulster Bank.
In a judgment delivered on 5 June 2014, Mr Justice Cregan said the orders sought would, in substance, require the defendants to hold properties in trust for Tola or contract with it under a specified purchase structure. Although framed as restraints, he treated them as mandatory injunctions because they would require the defendants to take positive steps and could affect their financing arrangements.
The dispute concerns a Binding Option Agreement which Tola says the parties entered into on 6 February 2014. The agreement provided for negotiations over a partnership structure and, if those failed, an option for Tola to purchase certain properties under a loan structure. It also allowed the Linders to decline that option if they obtained alternative financing made up entirely of debt, without third-party equity participation, and paid Tola €500,000.
After negotiations proved inconclusive, the Linders notified Tola that they were withdrawing and later said they had secured alternative debt financing to complete a loan purchase with Ulster Bank. They offered the €500,000 payment. Tola disputed that they could decline its option without providing documentary confirmation of the financing terms, and maintained that it had a binding right to purchase the properties. The Linders said their remaining obligation was to pay €500,000 and denied that Tola was entitled to further information.
The judge said interpretation of the agreement was for the full trial, not the interlocutory hearing. For the mandatory relief sought, Tola had to show a strong case that it was likely to succeed at trial. The court found it had not met that test, referring in part to the general reluctance to order specific performance of loan agreements.
Tola accepted that damages could adequately compensate it, while arguing that the defendants might not be able to meet an award. The judge found that Tola had not quantified its potential damages and that the affidavit evidence indicated the defendants would be able to meet an award.
The court also concluded that an injunction risked undermining the debt purchase agreement with Ulster Bank. The defendants’ evidence was that failure to meet the transaction timetable could lead to enforcement against properties and affect related businesses and employment. The judge found the balance of convenience clearly favoured refusing the injunctions. Tola had withdrawn its request for a separate order requiring evidence of the financing, and the court refused the reliefs sought in the notice of motion. The underlying contractual dispute remained for trial.