Anka Mandleson v Padel Solutions UK Limited & Anor

MR JUSTICE ADAM JOHNSON:

1. This case concerns a falling out between certain members of Padel Solutions UK Ltd (which I will refer to as “ the Company ”). The Company was established in 2017 as the operator of the Stratford Padel Club (“ the Club ”). The Club has now been hived off from the Company and operates as an unincorporated community amateur sports club. Interest has grown and I understand there is now a database of over 43,000 registered players.

2. The Company owns a lease of property in the Stratford area. The Club operates nine padel courts on that property for which it pays certain fees. The lease, however, is presently due to come to an end in August next year (2026) and there is some doubt about whether it will be renewed, because of plans by the local council which is the freeholder to develop the site for other use.

3. The Company has 16 shareholders. Some 13 of them, comprising a little over 75% of the issued capital, have reached an in principle agreement to sell their shares to a buyer called Atlas Padel Group Ltd (which I will refer to as “ Atlas ”). Under Article 9 of the Company’s Articles, where a majority representing more than 75% of the issued shares wish to transfer their interests to a proposed purchaser who at the time has made “ an offer on arm’s length terms ”, then the selling shareholders can compel the other shareholders to sell as well. This is referred to as a “ drag along right ”. Under Article 9.1 the right is engaged insofar as shareholders “ wish to transfer all their interest in Shares ... to a Proposed Purchaser ”.

4. In this case a notice under Article 9, referred to as the “ Revised Drag Notice ”, was served on the three non-selling shareholders, including the Claimant/Applicant Ms Mandelson, on 23 rd October 2025. The completion date notified under the Revised Drag Notice is tomorrow, 4 November 2025. If the Revised Drag Notice is treated as effective then, all other things being equal, the Company would be empowered under Article 9.10 to execute any relevant documents and transfers on behalf of any unwilling shareholders. Ms Mandleson applies to the Court for an urgent injunction to prevent that happening. She argues that the Revised Drag Notice is ineffective. Whether it is or not is, of course, a matter for another day at trial. The question for now is whether there should be an interim injunction pending trial.

5. The choice for the Court is between two competing alternatives in such a case. One is to grant the injunction and the other is to refuse it. Assuming there is a serious issue to be tried, the Court is required to decide which alternative is likely to cause the least injustice, recognising that the Claimant may eventually win or lose at trial, but that at the time the injunction is made the outcome of trial cannot be known. The principles are well understood and derive from American Cyanamid v. Ethicon [1975] AC 396 , pp. 407 and 408. If it appears that the Claimant will be adequately compensated by a payment of damages at trial, then the usual course is to refuse the injunction, because even if the Claimant is successful, they will still have an adequate remedy and no harm will be done. If damages are not an adequate remedy, however, then the calculation is different. There is then a risk of injustice to the Claimant, but that must be balanced against the risk to the Defendant or relevant third parties, of being made subject to an injunction which is eventually discharged at trial because the Claimant’s claim is found not to be made out after all. That risk is again addressed by considering whether the problem can be adequately compensated by a payment of damages. Part of that assessment is to require the Claimant to give a cross-undertaking in damages and to assess whether that cross-undertaking needs to be fortified - for example, by funds being paid into Court or into some other blocked account.

6. In this case there is a dispute at all stages of this analysis.

7. Before stating my conclusions, I will set out some brief background. As I have said, the Claimant/Applicant is Ms Mandleson. She is the owner of 20.17% of the Company’s share capital. There are two other shareholders who likewise do not wish to sell, but hold much smaller shareholdings. They are Deepti Janak and Shoko Okamura.

8. Among the selling shareholders one prominent figure is Mr Javier Fernandez Aguirre who has a 29.14% shareholding, making him the largest shareholder in the Company. Another of the selling shareholders is his fellow director, Mr John Kenneth Davis, who has a 7.55% holding.

9. Both Ms Mandleson and Mr Aguirre have been involved in the Company since it was established, but have since fallen out. According to Ms Mandleson, she was co-Chief Executive Officer until March 2022, but she says she was then dismissed by Mr Aguirre without the approval of the board. Mr Aguirre remains as CEO. Ms Mandleson was herself a director from January 2018 until December 2024. She says in her evidence that she provided working capital and loans for the Company during periods of financial difficulty and thus describes herself as the Company’s “ lead investor ”.

10. In light of the falling out, Ms Mandleson started a claim in the Employment Tribunal in March 2025. She has also, in correspondence at the same time, threatened to pursue an unfair prejudice petition. She has further indicated a willingness to buy out Mr Aguirre’s and Mr Davis’s shareholdings. Mr Aguirre and Mr Davis meanwhile have said that they may be willing to do the opposite and are willing to entertain discussions to that end.

11. It was against this broad background that drag notices under Article 9 came to be served. A first notice was served on 13 th October, but later withdrawn because of perceived technical deficiencies. The Revised Drag Notice, as I have mentioned, is dated 23 rd October. It sets out an offer by Atlas to acquire the entire issued share capital of the Company for some £1 million, with £500,000 payable on completion on 4 th November and the balance in two equal instalments on 4 th May 2026 and on 4 th November 2026. Under the relevant transfer agreement with Atlas (I will call it the SPA), no security is offered in respect of the unpaid amounts and the SPA contains no warranties by the sellers beyond limited warranties concerning their title to the shares to be sold. As far as the majority selling shareholders are concerned, their position, as explained today by the Company, is that this represents an entirely fair and, indeed, generous deal entered into after a period of negotiation. The price offered is a high one and represents at least market value and in fact may represent an excess over market value. The absence of security, they say, is simply a feature of the bargaining power between the parties, and the limited warranties are actually beneficial from the sellers’ point of view. None of those factors, they submit, support the conclusion that the proposed sale is not on arm’s length terms.

12. Ms Mandleson, however, says that given the background I have described, the circumstances are extremely suspicious and concerning. She says this all looks like a device to acquire her shares and exclude her completely from the Company’s business in the future. She says she finds it suspicious that the sellers have apparently not sought to negotiate with any parties aside from Atlas. She says it is implausible that Mr Aguirre, who was one of the founders of the Company, would in fact want to sell his shareholding outright, especially when he has been reluctant to engage with the possibility of selling to Ms Mandleson herself. She says that the £1 million valuation in fact looks to be an undervalue. She says it is concerning that no security is being sought from Atlas, which is a newly incorporated entity with no trading history. She says that the lack of warranties about the Company’s business is unusual and troubling in a transaction of this kind, and this suggests there may be some hidden agenda. As to that, she points to the fact that the individuals standing behind Atlas are a Mr Danyal Sheriff and a Mr Gary Zucconi, who are both known to Mr Aguirre and are described by Ms Mandleson in her evidence as in fact longstanding friends and close associates of his.

13. Having set out the background, I will now explain the result and my conclusions.

14. The result is that, in my opinion, there should be an interim injunction, but on terms which require the Applicant’s cross-undertaking to be fortified by means of a bank guarantee or payment into Court. My reasons are as follows.

15. To begin with, I am persuaded that there is a serious issue to be tried; that is to say, I think there is a claim which is realistic and not merely fanciful. I have not found this an easy point, but my logic is as follows.

16. The financial terms of the proposed Atlas transaction do, indeed, look very generous from the point of view of the selling shareholders. That is particularly so when viewed in light of certain recent valuations. One such valuation is by a firm call Hilton Smythe dated 18 th August 2025. This shows forecast adjusted EBITDA for the Company for the period up to June 2026 of £682,415. Given the uncertainty surrounding renewal of the lease, however, Hilton Smythe took what they call “ an orderly wind down basis of valuation ”. That applied a multiple of 0.5x to 0.75x to the adjusted EBITDA figure, giving a valuation range of between £341,207 and £511,811, these figures incorporating value for the Company’s brand, technology platform and database of 43,000 registered players. There is a later valuation by the Company itself which presents a similar (or perhaps even less appealing) picture.

17. As I pointed out in argument, this presents some difficulties, both from the point of view of the Claimant and from the point of view of the Company. From the Claimant’s point of view, these valuation figures present a challenge to the proposition that the Atlas offer is not at arm’s length, because it suggests the selling shareholders have in one way or another driven a hard bargain and obtained a high value. From the Company’s point of view, however, it rather begs the question why Atlas would be willing to pay such a generous amount if the business of the Company is in fact in wind down. One possible answer is presented by the Hilton Smythe report itself. This provides as follows, describing an alternative to the wind down basis of valuation: “ The alternative would be to relocate, secure a new lease at a new facility which we are advised the Company is exploring. The new site will need full development which is estimated to cost £2 million. The Company is not in a position to afford that, but seek investment ”.

18. Another useful piece of evidence is contained in an email from one of the Company’s directors, Mr Dominic Gurney-Champion, dated 16 October 2025, in which he said the following: “ With regard to the Company and the Board, the Company has a strategy (approved by shareholders) to explore expansion and see if there is a viable expansion/relocation strategy that shareholders would support. We are engaged in that process and if there is a viable route forwards then we would be asking shareholders to support this ”.

19. It therefore appears to be accepted that on one possible permutation, the Company may relocate and expand and for that purpose will need to raise more capital. It is certainly possible, I infer, that the existing shareholders, even if they sell their current shareholdings to Atlas in the ongoing process, will be invited to participate in any such future capital raising. Granted, that is all in the future and it may well be right that there is no current agreement or understanding about anything, but one thing seems tolerably certain, which is that if Ms Mandleson is forced to sell her present interest she will not be invited to invest again and, therefore, will lose any future interest in the Company.

20. On one view, one might say there is nothing wrong with that outcome and that the selling shareholders are entitled to act as they wish, whatever their motivations and whatever the end result, and that they are not required in deciding what to do to have regard to Ms Mandleson’s interests beyond ensuring that she gets a fair price for her shares.

21. I absolutely see the force of that point, but on the present facts I am cautious about rejecting the proposed claim for at least three reasons.

22. The first is that I have no figures that give me an independent view of the value of the Company on a going concern basis, assuming that some alternative location may be found for its operations. On that footing, the valuation may be higher than the £1 million presently on offer. For example, applying a multiple of 2.5x to the Hilton Smyth figure for adjusted EBITDA (£682,415) would give a much more generous valuation. Neither do I have any clear picture at the moment of quite where the Company’s expansion plans have reached or what the likelihood is of them actually materialising. These are all matters likely to affect value as it seems to me and it is possible, therefore, that the present figure is an undervalue.

23. The second point is a broader one, which is that I am persuaded by Ms Staynings’ submission that the question of what is an arm’s length offer may involve some degree of enquiry which goes beyond looking at the amount of the offer. It may involve examining how it has come about and whether in putting it together some or all of the selling shareholders have had regard to whether it is a fair and reasonable offer from the point of view of any unwilling shareholders. As far as Ms Mandleson is concerned, that would support an argument that the Atlas offer is unfair and unreasonable, because although on the face of it generous financially, it would deprive her of any ownership interest in the Company in the future during its possible phase of expansion. Obviously, I do not say that any such case is presently made out, only that it is arguable and supports the pleading advanced by Ms Staynings at paragraph 4(b) of the Claim Form, namely that the Articles are subject to an implied term that any drag notice may not be served unless the offer is one which all the selling shareholders consider to be fair and reasonable for the shares of any unwilling shareholders.

24. The third point is an additional issue affecting Mr Aguirre particularly. I accept the proposition advanced in the Claim Form that as far as he is concerned, there is a heightened case for thinking that his participation may be problematic in another way, namely that he does not in fact intend to transfer all of his interest in his shareholding to Atlas (that being a further requirement of a drag notice under Article 9.1). The point here is based on the inference that it is unlikely that Mr Aguirre, as one of the founders of the business and presently its largest shareholder, who is also CEO and a director, would be willing to relinquish any ownership interest unqualifiedly and yet remain involved in management during a period of possible expansion. Mr Aguirre has now said in a Witness Statement that there are no side deals or understandings and I give full weight to that evidence for the purposes of this application, given that it is supported by a statement of truth. All the same, in my opinion, the unusual circumstances of this case mean it is appropriate that the Claimant should be entitled to test that case under cross-examination at trial. I think there is sufficient in the background to justify that conclusion and to support the pleas at paragraphs 4(c) and (d) of the Claim Form. Let me emphasise that I am making no final judgment about anything. These are only preliminary observations on whether there is a serious issue to go to trial. My concern today is simply to try and take the steps necessary to ensure that there is the least risk of injustice following a trial, whoever turns out to be right or wrong.

25. So let me turn to the question of adequacy of damages. Here I do not consider that damages would be an adequate remedy for Ms Mandleson. I consider that Ms Staynings is correct to emphasise that what is immediately at stake is her proprietary and ownership interest in her existing shares. What is being said is that a right has accrued to compel her to sell those shares and relinquish her ownership interest. If that is wrong and there is no such right, then she will have lost her property without good reason. That is a matter which on principle is not measurable purely in terms of damages.

26. In my opinion, the point in fact goes further however, because the present ownership interest carries its own rights, including, most importantly, the benefit of a right of pre-emption under Article 5, exercisable if the existing shareholders wish to sell their interests to a third party. Part of Ms Mandelson’s case is that the Article 5 pre-emption right has in fact already been triggered by service of the (invalid) Revised Drag Notice, so that she has a present right to acquire the shares offered for sale to Atlas by the majority shareholders. On this basis, if Ms Mandleson loses her own shares, she will lose the benefit of that right of pre-emption as well. The value of that right is, I think, very difficult to quantify in financial terms. It would include on certain permutations the benefits to Ms Mandleson of having a much larger shareholding in the Company than at present, possibly even a controlling interest, which in turn would give her a high degree of influence over the manner in which the Company is managed in the future. Bearing all that in mind, I find it very difficult to evaluate what might actually be lost if Ms Mandleson’s shares are transferred now, but it later turns out that should not have happened after all.

27. As to the selling shareholders, however, in my opinion the situation is much more straightforward. They have an offer on the table which values the Company as a whole at £1 million. If an injunction is granted that offer will be, or may be, lost. If it is, then the resultant losses can be measured as the difference between an overall valuation of the Company of £1 million and the Company’s actual value at the relevant time. That is a measure of financial loss capable of compensation, as it seems to me, by an award of damages.

28. Mr Parker KC in submissions suggested that, in addition to the selling shareholders, the Company may have claims of its own. I accept that it may do, but such claims are not clearly articulated at present, and I do not immediately see what they would comprise. I therefore do not consider that the Company’s position should make a difference to my overall view.

29. Pausing there, it seems to me that in light of the conclusions expressed so far, the correct course is to make an injunction, but I do consider that the Claimant’s cross-undertaking should be fortified.

30. There is evidence of property assets within the jurisdiction with a value of roughly £1.2 million. That may be sufficient to cover any damages amount payable to the other shareholders, but I think one should be cautious given the very early stage these proceedings are at. So I think a buffer should be made available to allow for contingencies.

31. Ms Staynings has referred to the value of Ms Mandleson’s existing shareholding, which she says should be taken into account, but that value is somewhat uncertain. There is also evidence of a number of cash and other accounts at Mirabaud Bank, but it is unclear to me where those accounts are held. It seems that although there is a branch of Mirabaud Bank in London, the accounts may be in Switzerland or elsewhere overseas. In any event, taking all those matters into account, in my opinion, the proper course is to require fortification in an amount of £500,000, to be provided either by way of payment into Court or by way of bank guarantee, within a reasonable period of time to be fixed. I will hear submissions on that topic and, to the extent necessary, on the other terms of the proposed Order. - - - - - - - - - - - - - - - - (This Judgment has been approved by the Judge.) Digital Transcription by Marten Walsh Cherer Ltd 2 nd Floor, Quality House, 6-9 Quality Court, Chancery Lane, London WC2A 1HP Telephone No: 020 7067 2900 DX: 410 LDE Email: [email protected] Web: www.martenwalshcherer.com