TCC refuses interim injunction in software development contract dispute

February 17, 2022

In Transparently Ltd v Growth Capital Ventures Ltd [2022] EWHC 144 (TCC), the Technology and Construction Court rejected an application for an interim injunction.

Transparently Limited applied for a mandatory interim injunction requiring Growth Capital Ventures Limited to deliver up software, source code and documentation required for completion of an IT platform.

The parties had entered into a software development agreement (SDA) and a conditional equity purchase agreement (CEPA). There were delays with the delivery of the software. TL terminated the agreement for material breach. TL also claimed delivery up of the software and damages for breach of contract.

TL applied for an interim injunction. O’Farrell J refused the application, saying:

·      TL had not identified an arguable case that it was entitled to delivery up of the software, source code and documents, so as to satisfy the court that there is a serious issue to be tried. On the contrary, the terms of the software development agreement and CEPA indicated that GCV had much the better argument on this issue. Therefore, the court did not have a high degree of assurance that TL would establish its right at trial.

·      TL had produced incomplete and unsatisfactory evidence as to its financial position and its ability to raise funds, so as to demonstrate that it would collapse if the injunction were refused. The estimates provided by TL in its evidence showed that it could quantify its loss so as to support a claim for damages by way of compensation. Therefore, damages would be an adequate remedy for TL if the injunction were not granted and it succeeded at trial. However, the limited financial information produced by TL indicated that it would not have funds to satisfy any award of damages to GCV. Therefore, damages would not be an adequate remedy for GCV if the injunction were granted and it succeeded at trial.

·      The balance of convenience lay in maintaining the status quo. TL had a simple solution if the court did not order delivery up as sought; it could comply with its obligations under the software development agreement and the CEPA. TL could allot and issue the shares as required by the CEPA to GCV in return for which it would obtain the software, code and documents that would allow it to raise further funds and complete what it anticipated would be a very profitable project.

Taking into account all of those matters, the court considered that the least risk of injustice in the case lies in refusing the interim relief sought.