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Penelas v. Cruise

John Adair successfully represented the applicant, Mr. Penelas, in this motion for a mandatory interlocutory injunction restoring him as a director of the respondent company, Stanmech Techologies Inc. The court was satisfied that Mr. Penelas had satisfied the elevated "strong prima facie case" test required of parties seeking mandatory (as opposed to prohibitory) injunctions that require another party to take some sort of positive action.

The individual parties in this case are equal business partners in Stanmech, and were both directors and officers until the individual respondent, Mr. Cruise, purported to unilaterally oust Mr. Penelas. Mr. Cruise claimed he had the right to do so because he was President of the holding company (NT&T) that held the shares in Stanmech. Mr. Cruise voted all of those shares against Mr. Penelas' wishes and interests, even though both were both officers, directors, and equal shareholders of NT&T.

The court's decision on this motion restored Mr. Penelas as a director pending the court's ultimate disposition of the parties' underlying dispute. In doing so, the court accepted that there was a strong prima facie case that the court would ultimately set aside Mr. Cruise's corporate maneuvering to oust Mr. Penelas, either because the maneuvers were not technically valid or because Mr. Cruise acted in a conflict in implementing them.