Outcome: Our firm secured an interiminjunction preventing the defendant company from selling, transferring, leasingor further encumbering two properties until trial or further order of the courtin order to safeguard the specific performance of a prima facie violatedcontractual term.

The transaction

The dispute followed the acquisition of a going concernoperating in the advertising and media-services sector. Under the transactiondocuments, the seller was required to settle liabilities owed to third-partymedia providers and other creditors relating to the business before completion.The purchaser alleged that these obligations were not discharged.

After completion, the purchaser began receiving complaintsfrom acquired clients and demands from media providers concerning unpaidcampaigns and historic liabilities. It maintained that money collected foradvertising campaigns had not been passed to the relevant media outlets andthat other sums connected with the acquired business had been retained ordiverted.

The principal action sought specific performance of the saleagreement, relief concerning the payment of outstanding third-party liabilitiesand damages based on breach of contract, alleged misappropriation, unjustenrichment and related causes of action.

The immediate risk

The seller company owned two immovable properties. Corporatesearches indicated that both had existing mortgages and that the company’sundertaking was also subject to floating charges. The purchaser argued thatfurther disposal or encumbrance could leave any eventual damages judgmentunsatisfied.

Urgent interim relief was therefore sought. The applicationincluded orders restraining dealings with the company’s properties, a widerfreezing order over the individual shareholder’s assets and extensivedisclosure relief concerning assets, accounts and transactions.

The legal threshold

To obtain an interim injunction under section 32 of theCourts of Justice Law, an applicant must establish a serious issue to be tried,a visible probability of success and a real risk that full justice would bedifficult or impossible at a later stage without protection. The court mustalso consider whether granting relief is just and appropriate in the balance ofconvenience.

The court was not being asked to determine liabilityfinally. Its task was to assess whether the pleaded contractual andrestitutionary claims, viewed together with the available evidence, justifiedpreserving assets until those issues could be resolved at trial.

Our approach

We connected the requested injunction to specific, evidencedclaims rather than relying on a general allegation of financial difficulty. Thematerial identified three categories of sums which could, at the interlocutorystage, be linked to alleged retention, misappropriation or unjust enrichment.Together they represented a meaningful potential damages claim independent ofthe request for specific performance.

We also placed the company’s asset position before the courtthrough official corporate and property information. The existing mortgages,floating charges and apparent liabilities to media providers supported theargument that further dealings with the properties could materially prejudiceenforcement.

This distinction was important. Specific performance couldcompel the seller to perform contractual obligations, but it would notnecessarily compensate the purchaser for separate acts of alleged appropriationor retention. Interim protection was therefore directed to the additionalmonetary claims that might require enforcement against the company’s assets.

TargetedInjunction Proportionate to the Proven Risk

The courtpreserved the company’s properties while refusing relief that extended beyondthe evidential foundation

Serious issues requiring trial

The court found that the dispute raised serious andgenuinely arguable issues. These included the construction and performance ofthe business-sale agreement, responsibility for historic liabilities, thetreatment of client and campaign funds, and claims alleging appropriation,misappropriation, profit-taking and unjust enrichment.

The documentary record was sufficient to establish a visibleprobability of success at the interlocutory stage. The court stressed thatfinal conclusions on breach, ownership of funds and liability remained mattersfor trial.

Why asset preservation was necessary

The court considered the distinction between the contractualobligations for which specific performance was sought and the additionalmonetary claims. Preservation was not required merely to support performance ofthe agreement. It was justified in relation to separately alleged acts thatcould result in an award of damages.

The company’s two properties were already mortgaged, itsundertaking was subject to floating charges and the evidence indicated otherserious financial obligations. The defendants did not provide informationclarifying the properties’ current value or the total burdens affecting them.

Against that background, the court found a serious risk thata transfer or further encumbrance could leave an eventual damages award unpaidor make the full administration of justice difficult or impossible. The natureof the allegations—including claimed appropriation and misappropriation—alsosupported preservation under the balance of convenience.

Proportionality and limits

The application was granted only to the extent justified bythe evidence. The court restrained the corporate defendant from selling,gifting, assigning, leasing, otherwise disposing of or further encumbering thetwo identified properties until trial or further order.

The court did not impose a personal freezing order on theindividual shareholder. Although her conduct as an officer formed part of thepleaded case, there was insufficient evidence that she had personally receivedfunds or acquired a corresponding personal asset. Corporate acts did not,without more, justify freezing her private property.

The requested Norwich Pharmacal disclosure order was alsorefused. The defendants were already parties to the action, the informationsought amounted broadly to asset disclosure, and ordinary procedural mechanismsfor disclosure remained available. The court considered that the exceptionalequitable jurisdiction should not be used as a substitute for normaldisclosure.

Result

The application succeeded in part. A property-preservationinjunction was issued against the corporate defendant and will remain effectiveuntil determination of the action or further court order. The applicationagainst the individual defendant and the exceptional disclosure request weredismissed. In view of the divided outcome, each side was ordered to bear itsown costs.

Why this matters

The decision demonstrates the value of tailoring interimrelief to the evidence. A focused injunction over identified corporate propertymay succeed even where a broader freezing and disclosure package is considereddisproportionate. It also highlights the need to distinguish contractualperformance claims from separate monetary claims when explaining why assetsmust be preserved.

For purchasers of businesses, the case underlines theimportance of clear allocation of historic liabilities, verification ofthird-party balances and rapid investigation when post-completion demandsemerge. Official searches and a disciplined analysis of specific payments canprovide the evidential bridge between the underlying dispute and effectiveinterim protection.

How our firm can assist

Our Dispute Resolution team acts in post-acquisitiondisputes, breach-of-contract claims, unjust-enrichment and misappropriationproceedings, and urgent applications to preserve corporate assets. We advise ontransaction evidence, interim strategy, proportionality and enforcement riskfrom the first sign of a dispute through trial. You may contact Mary Nicolaidesat m.nicolaides@vorkaslaw.com.cyfor further information.

This case study is a general and anonymised summary of aninterlocutory decision. Names, dates, locations and identifying transactiondetails have been omitted or generalised. The underlying claims have not yetbeen finally determined. This material does not constitute legal advice.