“On termination of the Appointment without notice under clause 18.1, at the request of the Company … you hereby agree … that you shall be deemed to have irrevocably served … a transfer notice pursuant to article 37.1 of the Articles with respect to all shares held by you in the Company, in which the price per share specified therein shall be deemed to be the fair value as certified by the auditors of the Company for the time being in accordance with article 37.5 of the Articles … ”
“37.1. Any person (hereinafter called the ‘Proposing Transferor’) proposing to transfer any Shares to a third-party Buyer (the ‘Buyer’) shall give notice in writing (hereinafter called 'the transfer notice') to the Company specifying the price per Share which has been agreed to be paid by the Buyer. The transfer notice shall constitute the Company the agent of the Proposing Transferor for the sale of all (but not some of) the Shares comprised in the transfer notice to any Shareholder or Shareholders willing to purchase the same (hereinafter called 'the purchasing Shareholder') at the price specified therein. A transfer notice shall not be revocable except with the sanction of the Directors. 37.2. The Shares comprised in any transfer notice shall be offered to the Shareholders (other than the Proposing Transferor) as nearly as may be in proportion to the number of Shares held by them respectively. Such offer shall be made by notice in writing (hereinafter called 'the offer notice') within seven days after the receipt by the Company of the transfer notice. The offer notice shall state the price per Share specified in the transfer notice and shall limit the time in which the offer may be accepted, not being less than twenty-one days nor more than forty-two days after the date of the offer notice. For the purpose of this article an offer shall be deemed to be accepted on the day on which the acceptance is received by the Company … 37.3. If purchasing Shareholders shall be found for all the Shares comprised in the transfer notice within the appropriate period, the Company shall not later than seven days after the expiry of such appropriate period give notice in writing (hereinafter called the ‘Sale Notice’) to the Proposing Transferor specifying the purchasing Shareholders and the Proposing Transferor shall be bound upon payment of the price due in respect of all the Shares comprised in the transfer notice to transfer the Shares to the purchasing Shareholders. 37.4. If the Company shall not give a Sale Notice to the Proposing Transferor within the time specified in article 37.3 above, he shall, during the period of thirty days next following the expiry of the time so specified, be at liberty to transfer all or any of the Shares comprised in the transfer notice to any person or persons at the agreed price. 37.5. In the application of Articles 38 - 40: [ … ] (c) where a transfer notice is given or deemed to be given under this article 37.1 and no price per Share is specified therein the transfer shall be deemed to specify the sum which shall, on the application of the Directors, be certified in writing by the auditors in accordance with article 38.3 of this article as the fair value thereof.”
“(1) The court may grant an interim remedy on an application made without notice if it appears to the court that there are good reasons for not giving notice. [ … ] (3) If the applicant makes an application without giving notice, the evidence in support of the application must state the reasons why notice has not been given.”
“3.4 Where an application is made without notice to the respondent, the evidence must also set out why notice was not given.”
“7. The law is non-contentious. The following general principles can be distilled from the relevant authorities by way of summary as follows: i) The duty of an applicant for a without notice injunction is to make full and accurate disclosure of all material facts and to draw the court's attention to significant factual, legal and procedural aspects of the case; ii) It is a high duty and of the first importance to ensure the integrity of the court's process. It is the necessary corollary of the court being prepared to depart from the principle that it will hear both sides before reaching a decision, a basic principle of fairness. Derogation from that principle is an exceptional course adopted in cases of extreme urgency or the need for secrecy. The court must be able to rely on the party who appears alone to present the argument in a way which is not merely designed to promote its own interests but in a fair and even-handed manner, drawing attention to evidence and arguments which it can reasonably anticipate the absent party would wish to make; iii) Full disclosure must be linked with fair presentation. The judge must be able to have complete confidence in the thoroughness and objectivity of those presenting the case for the applicant. Thus, for example, it is not sufficient merely to exhibit numerous documents; iv) An applicant must make proper enquiries before making the application. He must investigate the cause of action asserted and the facts relied on before identifying and addressing any likely defences. The duty to disclose extends to matters of which the applicant would have been aware had reasonable enquiries been made. The urgency of a particular case may make it necessary for evidence to be in a less tidy or complete form than is desirable. But no amount of urgency or practical difficulty can justify a failure to identify the relevant cause of action and principal facts to be relied on; v) Material facts are those which it is material for the judge to know in dealing with the application as made. The duty requires an applicant to make the court aware of the issues likely to arise and the possible difficulties in the claim, but need not extend to a detailed analysis of every possible point which may arise. It extends to matters of intention and for example to disclosure of related proceedings in another jurisdiction; vi) Where facts are material in the broad sense, there will be degrees of relevance and a due sense of proportion must be kept. Sensible limits have to be drawn, particularly in more complex and heavy commercial cases where the opportunity to raise arguments about non-disclosure will be all the greater. The question is not whether the evidence in support could have been improved (or one to be approached with the benefit of hindsight). The primary question is whether in all the circumstances its effect was such as to mislead the court in any material respect; vii) A defendant must identify clearly the alleged failures, rather than adopt a scatter gun approach. A dispute about full and frank disclosure should not be allowed to turn into a mini-trial of the merits; viii) In general terms it is inappropriate to seek to set aside a freezing order for non-disclosure where proof of non-disclosure depends on proof of facts which are themselves in issue in the action, unless the facts are truly so plain that they can be readily and summarily established, otherwise the application to set aside the freezing order is liable to become a form of preliminary trial in which the judge is asked to make findings (albeit provisionally) on issues which should be more properly reserved for the trial itself; ix) If material non-disclosure is established, the court will be astute to ensure that a claimant who obtains injunctive relief without full disclosure is deprived of any advantage he may thereby have derived; x) Whether or not the non-disclosure was innocent is an important consideration, but not necessarily decisive. Immediate discharge (without renewal) is likely to be the court's starting point, at least when the failure is substantial or deliberate. It has been said on more than one occasion that it will only be in exceptional circumstances in cases of deliberate non-disclosure or misrepresentation that an order would not be discharged; xi) The court will discharge the order even if the order would still have been made had the relevant matter(s) been brought to its attention at the without notice hearing. This is a penal approach and intentionally so, by way of deterrent to ensure that applicants in future abide by their duties; xii) The court nevertheless has a discretion to continue the injunction (or impose a fresh injunction) despite a failure to disclose. Although the discretion should be exercised sparingly, the overriding consideration will always be the interests of justice. Such consideration will include examination of i) the importance of the facts not disclosed to the issues before the judge ii) the need to encourage proper compliance with the duty of full and frank disclosure and to deter non-compliance iii) whether or not and to what extent the failure was culpable iv) the injustice to a claimant which may occur if an order is discharged leaving a defendant free to dissipate assets, although a strong case on the merits will never be a good excuse for a failure to disclose material facts; xiii) The interests of justice may sometimes require that a freezing order be continued and that a failure of disclosure can be marked in some other way, for example by a suitable costs order. The court thus has at its disposal a range of options in the event of non-disclosure.” i) The duty of an applicant for a without notice injunction is to make full and accurate disclosure of all material facts and to draw the court's attention to significant factual, legal and procedural aspects of the case; ii) It is a high duty and of the first importance to ensure the integrity of the court's process. It is the necessary corollary of the court being prepared to depart from the principle that it will hear both sides before reaching a decision, a basic principle of fairness. Derogation from that principle is an exceptional course adopted in cases of extreme urgency or the need for secrecy. The court must be able to rely on the party who appears alone to present the argument in a way which is not merely designed to promote its own interests but in a fair and even-handed manner, drawing attention to evidence and arguments which it can reasonably anticipate the absent party would wish to make; iii) Full disclosure must be linked with fair presentation. The judge must be able to have complete confidence in the thoroughness and objectivity of those presenting the case for the applicant. Thus, for example, it is not sufficient merely to exhibit numerous documents; iv) An applicant must make proper enquiries before making the application. He must investigate the cause of action asserted and the facts relied on before identifying and addressing any likely defences. The duty to disclose extends to matters of which the applicant would have been aware had reasonable enquiries been made. The urgency of a particular case may make it necessary for evidence to be in a less tidy or complete form than is desirable. But no amount of urgency or practical difficulty can justify a failure to identify the relevant cause of action and principal facts to be relied on; v) Material facts are those which it is material for the judge to know in dealing with the application as made. The duty requires an applicant to make the court aware of the issues likely to arise and the possible difficulties in the claim, but need not extend to a detailed analysis of every possible point which may arise. It extends to matters of intention and for example to disclosure of related proceedings in another jurisdiction; vi) Where facts are material in the broad sense, there will be degrees of relevance and a due sense of proportion must be kept. Sensible limits have to be drawn, particularly in more complex and heavy commercial cases where the opportunity to raise arguments about non-disclosure will be all the greater. The question is not whether the evidence in support could have been improved (or one to be approached with the benefit of hindsight). The primary question is whether in all the circumstances its effect was such as to mislead the court in any material respect; vii) A defendant must identify clearly the alleged failures, rather than adopt a scatter gun approach. A dispute about full and frank disclosure should not be allowed to turn into a mini-trial of the merits; viii) In general terms it is inappropriate to seek to set aside a freezing order for non-disclosure where proof of non-disclosure depends on proof of facts which are themselves in issue in the action, unless the facts are truly so plain that they can be readily and summarily established, otherwise the application to set aside the freezing order is liable to become a form of preliminary trial in which the judge is asked to make findings (albeit provisionally) on issues which should be more properly reserved for the trial itself; ix) If material non-disclosure is established, the court will be astute to ensure that a claimant who obtains injunctive relief without full disclosure is deprived of any advantage he may thereby have derived; x) Whether or not the non-disclosure was innocent is an important consideration, but not necessarily decisive. Immediate discharge (without renewal) is likely to be the court's starting point, at least when the failure is substantial or deliberate. It has been said on more than one occasion that it will only be in exceptional circumstances in cases of deliberate non-disclosure or misrepresentation that an order would not be discharged; xi) The court will discharge the order even if the order would still have been made had the relevant matter(s) been brought to its attention at the without notice hearing. This is a penal approach and intentionally so, by way of deterrent to ensure that applicants in future abide by their duties; xii) The court nevertheless has a discretion to continue the injunction (or impose a fresh injunction) despite a failure to disclose. Although the discretion should be exercised sparingly, the overriding consideration will always be the interests of justice. Such consideration will include examination of i) the importance of the facts not disclosed to the issues before the judge ii) the need to encourage proper compliance with the duty of full and frank disclosure and to deter non-compliance iii) whether or not and to what extent the failure was culpable iv) the injustice to a claimant which may occur if an order is discharged leaving a defendant free to dissipate assets, although a strong case on the merits will never be a good excuse for a failure to disclose material facts; xiii) The interests of justice may sometimes require that a freezing order be continued and that a failure of disclosure can be marked in some other way, for example by a suitable costs order. The court thus has at its disposal a range of options in the event of non-disclosure.”
“51. In summary, I would suggest that Mr Hersov and those representing him breached the duty of fair presentation in the following respects: (1) Misleading the Court as to the adequacy of damages for Mr Hersov if the injunction sought were not granted. (2) Failing to draw the Court's attention to the non-monetary claims that would be available to Mr Hersov if the injunction sought were not granted. (3) Failing to identify any of the arguments that ERL might have made as to the adequacy of damages for Mr Hersov and the non-monetary claims available to him had Mr Hersov made his application on an inter partes basis and on notice in accordance with the CPR. (4) Falsely asserting that the injunction sought would not prejudice ERL or any of its other shareholders. (5) Failing to identify any of the arguments that ERL might have made as to (i) the prejudice that the injunction sought would cause it and its shareholders, and (ii) the inadequacy of damages under the cross-undertaking as a remedy for loss that the injunction risked causing it. (6) Failing to draw the Court's attention to the fact that the cross-undertaking offered by Mr Hersov would not give any protection to ERL’s shareholders unless and until Mr Hersov gave them notice of the Ex Parte Order. (7) Incorrectly representing that Mr Hersov's shares in the ERL adequately substantiated the cross-undertaking. (8) Failing to identify any of the arguments that ERL might have made as to the need for Mr Hersov to (i) provide a cross-undertaking that protected its shareholders unconditionally, and (ii) fortify his cross-undertaking (alternatively provide proper evidence of his financial position). (9) Entirely failing to explain Mr Hersov's extraordinary delay in making the Application. In circumstances where ERL made its position in relation to Mr Hersov's shares clear as long ago as8 August 2024 [JRH1/153-158], I find this failure startling. Mr Hersov was the architect of the Application's urgency: by delaying for as long he did he manufactured a situation in which he could make the Application ex parte and without notice. The fair presentation of the Application demanded nothing less than a full and frank explanation for the reasons for Mr Hersov's delay and the timing of the Application. No explanation was given. (10) Failing to canvass the possibility of Mr Hersov undertaking not to reappoint himself as a director or to appoint any other person as a director. An undertaking to that effect would have reflected the status quo (at least as regards the composition of ERL’s board), since as at the date of the Ex Parte hearing Mr Hersov had no representative on the board. He has not sought to appoint a director since the Ex Parte Order was made.”
“I have explanation for that delay. I accept that is not in witness evidence so I am hesitant about seeking to give evidence from the bar about why it was not immediately followed up. I can confidently say that we are where we are because we have a firm deadline of 25 September. Even if started rolling sooner, we would have needed to do something from 25 sept.”
“I should also mention a point raised by CC [Clifford Chance, the defendant’s solicitors] that there has been significant delay between events in early to mi- August and the application being made. I haven’t been given the explanation as to why there was this delay, there is no evidence before me as to why the delay occurs. Whilst it was open for Mr Wibberley to say something, he took the following course: he says we are where we are, as of tomorrow the notice period runs out. It is now that the application needs to be considered and I accept that. I am satisfied that the court should do so.”
“I can see no downside to the company being prevented from taking further steps in relation to shares.”
“24. In that case there was a risk of irreversible damage if an interim remedy was not granted. That is because the respondents to the unfair prejudice petition in that case proposed to make a rights issue and [Harman J] held that there was an arguable issue as to unfair prejudice where the object of the issue, and its effect, might be to deplete the resources of the petitioner to such an extent that he could no longer properly prosecute the petition and where he could not take up his proportionate entitlement under the rights issue.”
“26. It is a very different matter where the remedy sought at the end of the day is a buyout and where the matters complained of on an interim basis can be taken into account in the process of the valuation of the shares for the buyout. This is made clear by Hoffmann J in Re Posgate and Denby (Agencies) Ltd[1987] BCLC 8 .”
“71. So far as the damages calculation is concerned, there is no doubt that it will be possible to estimate the value of the companies now. If there is a sale of the companies to a third party at a lower figure, that will provide a measure of the damage, if any, caused by the interim administration of the majority. A similar calculation applies if the ultimate outcome is a buyout by the majority, a possibility that I cannot reject as readily as the judge did.”