The Court of Appeal (CoA) upheld a lower court's ruling to deny a temporary order, known as an interim injunction, that would have stopped a company's critical business reorganisation.
Facts:
Yodel, a home delivery and logistics company, had been incurring large losses. Its ultimate owners were formerly Sir Frederick and Sir David Barclay, although, on 13 February 2024, the second defendant, YDLGP Ltd. (YDLGP), incorporated by Mr. Corlett, bought Yodel's issued share capital for £1. Shortly after, the company was transferred to Judge Logistics Ltd. (JLL), yet another entity. Mr. Corlett is the founder of the group of companies to which Shift belongs and is the sole owner of Corja.
Following these transactions, Yodel's ultimate owner, InPost, provided substantial financial backing, eventually investing over £100m. InPost later converted its loans, acquiring 95.5% of JLL and thereby taking control of Yodel. With InPost at the helm, a comprehensive "transformation plan" was developed to turn the company's fortunes around. However, when Shift and Corja attempted to exercise their warrants on 7 January 2025, Yodel denied their claims, disputing the authenticity and enforceability of the Warrant Instrument.
Shift Global Holdings Ltd. and Corja Holdings Ltd. claim they are entitled to a majority of shares in Yodel by exercising rights from a Warrant Instrument dated 19 June 2024 and have sought an injunction. Yodel, whose shares are currently held by JLL, disputes this, arguing that the instrument is not authentic and the warrants are unenforceable. The High Court dismissed Shift and Corja, allowing the transformation plan to proceed.
Decision:
The CoA dismissed the application and upheld the original decision to refuse the injunction. The Court found there was no good reason to doubt the claimants' ability to recover compensation after InPost S.A. offered a guarantee to pay any damages awarded to them. This offer effectively neutralised the claimants' arguments on this point, making damages an adequate remedy.
The claimants argued that Yodel had not sufficiently proved its potential losses, although the Court rejected this. It found there was a "very real prospect" of Yodel suffering significant, irreparable losses if the injunction were granted, including continued losses and the risk of losing major customers. The Court held that the onus was not on Yodel to prove its losses in a way that would satisfy a technical legal test.
The Court found that the balance of convenience tipped heavily in Yodel's favour. It concluded that the proposed injunction was not about preserving the status quo but would instead actively prevent a crucial restructuring plan that was already underway. The Court contrasted InPost's well-funded plan with the claimants' lack of evidence on how their alternative plan would be financed or implemented. It reasoned that the potential irreparable harm to Yodel from an injunction—which could lead to further losses of money and customers—was far greater than the potential harm to the claimants, whose losses were now fully compensable under the InPost guarantee.
Implications:
This case highlights that courts will deny an interim injunction if a claimant can be adequately compensated, their undertaking is worthless, or the requested injunction would harm the defendant more than it would help the claimant. The Court's reasoning underscores that a claimant's ability to be compensated by an award of damages is a key factor. In this case, the Court determined that a monetary award would be an adequate remedy, especially after a third party offered to guarantee the payment of any damages. This effectively nullified the claimants' argument that the defendant was in too financially precarious a position to pay.
The case also highlights the critical importance of a claimant's ability to satisfy their cross-undertaking in damages. The Court found the claimants' undertaking to be "worthless" and that there was a real risk that the defendant would suffer significant losses, for which they could not be compensated if the injunction were granted.
Finally, the reasoning underscores that a Court's decision on an injunction is a matter of balancing the convenience and potential harm to both parties. The Court found that stopping the defendant's active restructuring plan would cause more prejudice than the claimants would suffer from the plan proceeding, particularly given that their losses were now fully compensable.