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English High Court steels itself for the evolving nature of injunctions in an ever-changing world

With the increased frequency of applications for injunctive relief, the English High Court has recognised in UTB, LLV v Sheffield United Limited  the need for flexibility in determining  when such relief might be justified.

An application was made for a mandatory injunction in the context of an ongoing power struggle over the ownership of Sheffield United Football Club, which has been owned on a 50/50 basis. One of the shareholders sought an order compelling the other shareholder to invest £1.25m in the football club to ensure it had sufficient funding to meet its commitments pending determination of the ownership dispute.

The judge expressly recognised that the application was an unusual one, because it sought to compel a shareholder of a company to lend money to the company on an interim basis and in circumstances where the shareholder had no obligation to do so. The Judge also observed that the loan was on commercially unattractive terms and was contrary to the terms of the agreement between the shareholders. There was no basis on which such relief could have been granted in final form at trial.

Nevertheless, the judge found that the court did have the power to grant an injunction of the type sought and reiterated the approach of Lord Nicholls in Mercedes Benz AG v Leiduck, in which he recognised that as circumstances in the world change, so must the situations in which the courts exercise their jurisdiction to grant injunctions. The judge also found that there are inevitably circumstances in which a court would be required to grant an interim order compelling the respondent to spend money.

Ultimately, the application in Sheffield United was refused because of the intrusive nature of the relief sought and because the judge found that whilst it would have been desirable for the football club to have the funding sought it was not essential. This conclusion appears to have been based on the likelihood that the club would receive funds from the sale of one of its players in the short term, but it is apparent that the court may have been persuaded to grant the relief had other sources of funding not been available.

Litigants seeking injunctive relief in novel forms will take encouragement from the court’s recognition of its wide-ranging jurisdiction, albeit they would do well to consider when and how the court is likely to exercise its discretion in practice.

 

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