Pomfret v Cumberland

The plaintiffs, Pomfret, sought an interlocutory injunction against the defendants, Cumberland, to restrain the passing of a resolution proposed in a notice of an extraordinary general meeting. The resolution aimed to vest a unit trust and distribute its assets to unitholders. The plaintiffs also sought the appointment of a provisional liquidator for the defendant companies on the grounds of oppression. The primary dispute centred around whether the directors had the authority to make the resolution and whether the plaintiffs, as directors, had the standing to enforce the Unitholders Agreement. Additionally, the plaintiffs argued that the proposed resolution was in breach of the Unitholders Agreement.

The court was tasked with determining several legal issues. Firstly, it had to ascertain whether the directors had the power to make the resolution in question. Secondly, it needed to decide if the plaintiffs had the necessary standing to enforce the Unitholders Agreement. Thirdly, the court had to consider whether the resolution proposed was indeed in breach of the Unitholders Agreement. The court also needed to evaluate the appropriateness of granting a Mareva order, which restrains the defendants from dealing with a term deposit, and whether varying the order to permit the use of funds for the purchase of property and the creation of a mortgage in favour of a bank was warranted.

In its reasoning, the court found that the directors did not have the power to make the resolution as it was not within their authority. The court also concluded that the plaintiffs did not have the requisite standing to enforce the Unitholders Agreement. Regarding the proposed resolution, the court held that it was not in breach of the Unitholders Agreement. As for the Mareva order, the court declined to vary it to allow the use of funds for the specified purposes, finding that enforcement would be unduly complex. Consequently, the application for the interlocutory injunction was refused, and the appointment of a provisional liquidator was also denied.