The High Court has refused an application by Fulman Holdings SARL to stop Oviedo Limited and its directors disposing of company assets while Fulman’s oppression proceedings continue. The ruling was an interim decision on the injunction application, not a determination of the underlying section 212 claim.
Fulman, which holds 33.63% of Oviedo’s shares, argued that the board had not properly considered whether selling the business as a going concern would produce better value than selling assets individually. It sought an injunction covering company assets, including the Mountview development site and the Northern Quarter site at Citywest. As a more limited alternative, it proposed restraining sales until independent advice and valuations were obtained.
Oviedo and the director respondents opposed the application. They said the asset disposal programme had been approved by a majority of shareholders, that the claim concerned commercial decisions and alleged harm to the company, and that damages could provide a remedy. They also relied on the applicant’s delay in seeking an injunction.
Mr Justice Denis McDonald treated the requested relief as prohibitory and applied the principles set out by the Supreme Court in *Merck Sharp & Dohme Corporation v Clonmel Healthcare Ltd*. He considered it doubtful that a permanent injunction would be granted even if Fulman succeeded at trial, but assumed that part of the test was met for the purpose of deciding the interim application.
The judge held that Fulman had not established a fair case under the alternative section 212 ground concerning the conduct of the company’s affairs, given that it had not pursued a claim against all shareholders in the majority. On the oppression claim directed at the directors’ powers, however, he was not prepared to conclude at this stage that it was doomed to fail. He said there was evidence that the board had not obtained specific advice on whether a going-concern sale would produce a better outcome. Whether that omission could amount to serious mismanagement and oppression remained for trial.
The balance of justice nevertheless weighed against an injunction. The judge considered that a court could make a reasonable, though imperfect, assessment of any loss after sales, while restraining the programme could delay value for other shareholders, expose them to market changes and risk reputational damage to the company. He also found that Fulman had not satisfactorily explained its delay in seeking urgent relief.
The court refused the injunction. It did not decide the substantive oppression proceedings or make consequential orders on costs. The matter was listed for remote mention on 12 July 2021 to address any consequential orders, including costs.