Summary

It was not appropriate to grant an interim injunction preventing a company from using various chattels of a hotel where the hotel operator had commenced proceedings for delivery up and restitutionary damages. There was a serious issue to be tried as to who had the better right to possession, save in relation to stationery, consumables and the tills, and damages would be appropriate if the operator established ownership of the rest of the chattels.

Facts

The applicant hotel (N) applied for an interim injunction preventing the respondent company (M) from using various chattels and stock in a hotel and for delivery up of that stock. N operated a hotel business under an informal trading and management agreement with the tenant with whom the leasehold premises were vested. The freeholder was in administration. During the course of the administration no rent was paid either by the tenant or by N and arrears of over £1 million built up. The freehold reversion was sold to M, which also took an assignment of the claim to rent arrears and a debenture that the tenant had granted. M commenced forfeiture proceedings for non-payment of rent and subsequently made demand of the tenant under the debenture. Before giving the tenant a chance to consider the demand M began the process of appointing joint administrators. Before the administrators were properly appointed they agreed with M that the tenant would consent to the making of an immediate order for possession. M took possession of the premises and ordered N's staff to leave. M appropriated the business and immediately began trading. N commenced proceedings and sought an order for delivery up and damages calculated on a restitutionary basis. N contended that it owned the chattels which it used in the running of the hotel business or, alternatively, if M was correct and the tenant owned the chattels, then N had the right to hire them under the management agreement and the management agreement had not been terminated.

Held

(1) The questions that had to be determined were whether it was clear who had the better right to possession of the chattels, or whether there was a serious issue to be tried about that matter; if there was a serious question to be tried what was the correct approach to relief. On the evidence there was a serious question to be tried save in relation to stationary and consumables. The position in relation to those items was clear cut in favour of N and as such an order for the delivery up was appropriate. An immediate inquiry was ordered into what of the consumables belonging to N were appropriated by M. (2) Damages would be an adequate remedy if N established ownership, or a right to use the remainder of the chattels, with the exception of the tills. The tills were repositories of N's trading data and accordingly an order for the delivery up of the tills was appropriate. On the evidence M would be able to pay any damages awarded and, on the basis of that decision, it was not appropriate to grant an injunction in respect to the balance of the chattels.

Judgment accordingly