“Stop the company paying a dividend. Right now!”

An alleged shareholder, P, sought an immediate injunction to stop a Co declaring a dividend or reducing its share capital: [1]

P’s alleged status a shareholder, P said, gave rise to an entitlement to $700K in dividends. Failure to pay those dividends was a breach of the Co’s constitution – which was, P said, a breach of duty and oppressive: [2]

In the substantive claim, P was seeking orders requiring the Ds to purchase P’s shares: [3]

The Court was satisfied there was a serious question (whether P was indeed a shareholder in the Co) to be tried: [6], [7]

However, The Court rejected P’s argument that damages would not be adequate compensation, a necessary step to get an interlocutory injunction.

In the substantive claim, P was seeking was a declaration that it owned shares and an order that the Ds buy those shares i.e. P wanted money. Clearly P considered the payment of money to be adequate: [8]

The Court characterised the relief as a “freezing order” in essence. As the planned dividend would not see the Co divesting itself of a unique, irrecoverable asset the balance of convenience did not favour the making of an injunction: [11]

P’s application failed. Costs followed: [13]