Drachs Investment No 3 Ltd v Brightsea UK Ltd [2010] EWHC 2848 (Comm) (11 November 2010)

Drachs Investment No 3 Ltd v Brightsea UK Ltd [2010] EWHC 2848 (Comm) (11 November 2010)

The court declined to grant a mandatory order requiring the Respondent to procure subsidiaries to submit amended group relief forms, finding damages would not be an adequate remedy for either party and the balance of convenience favoured preserving the status quo. The court granted a mandatory order requiring the Respondent to procure that any sums repaid by HMRC up to £473,865 be paid into its solicitors' client account and not dealt with pending further order, as damages would be an adequate remedy for this relief and there was sufficient risk of dissipation.

Citation
[2010] EWHC 2848 (Comm)
Parties
Claimant/applicant: Drachs Investment No. 3 Limited; Defendant/respondent: Brightsea UK Limited
Jurisdiction
England and Wales
Judgment Date
11 November 2010
Procedural Posture
Commercial Court Interim Application / Interlocutory Mandatory Injunction
Outcome
Mandatory injunction granted in part; first mandatory order refused.
Legal Topics
Mandatory Injunction, Group Relief, Tax Deed Interpretation, Freezing Order, Specific Performance
Contract Law Tax Law Commercial Law Mandatory Injunction Group Relief Tax Deed Interpretation Freezing Order Specific Performance

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Parties

Drachs Investment No. 3 Limited

Claimant/applicant

Brightsea UK Limited

Defendant/respondent

Procedural Posture

Commercial Court Interim Application / Interlocutory Mandatory Injunction

Legal Issues

  1. 1 Whether the Respondent is obliged under the Tax Deed to procure subsidiaries to surrender tax losses to the Applicant's group
  2. 2 Whether a mandatory injunction should be granted to require submission of amended group relief forms
  3. 3 Whether an injunction should be granted to preserve repayment sums from HMRC pending trial

Ratio Decidendi

The court declined to grant a mandatory order requiring the Respondent to procure subsidiaries to submit amended group relief forms, finding damages would not be an adequate remedy for either party and the balance of convenience favoured preserving the status quo. The court granted a mandatory order requiring the Respondent to procure that any sums repaid by HMRC up to £473,865 be paid into its solicitors' client account and not dealt with pending further order, as damages would be an adequate remedy for this relief and there was sufficient risk of dissipation.

Court Disposition

Mandatory injunction granted in part; first mandatory order refused.

Orders

  • Respondent to procure that any sums repaid by HMRC up to £473,865 be paid into Olswang LLP client account in Respondent's name and not dealt with pending further order.
  • Respondent to procure that no further claim for surrender of tax losses or amendment of existing claims be made pending trial.