#10467 - Unit 3 – Injunctions - Commercial Dispute Resolution

Unit 3 – Consolidation CDR

AC guidelines = American Cyanamid guidelines

VERY common large exam question (common arguments for and against) – either just this workshop or this + workshop 4

• often they will not tell you it is an injunction question and/or what injunction is being sought

• may sometimes just be arguments on one side (either or against)

• use the AC guidelines as your question structure and then just conclude at the end

• an injunction is a court order, breach of which is punishable as a contempt of court

OUTCOME 1 – When is it appropriate to apply for mandatory/prohibitory injunctions?

• Injunctions are common in commercial cases because they can be used to protect confidential and commercially sensitive information, and to guard against the dissipation of assets.

• Generally only available to C

When can they be sought?

• At any time after proceedings have been commenced

• In exceptional circumstances, even before proceedings have been commenced

• When made before trial they are called “interim injunctions”

• Remain in force until trial (or further order)

Types:

1. Prohibitory/negative – prevents D from taking certain steps (e.g. soliciting customers of C)

2. Mandatory – require D to do something (e.g. remove an obstruction to C’s light)

• Must specify exactly what D has to do and time within he must do it

• Granted only if C would suffer serious harm should it not be granted

• Court will not require D to incur expenditure which is disproportionate to harm C will otherwise suffer

3. Quia timet – require D to take steps to prevent harm occurring (e.g. to provide support for C’s land in order to prevent subsidence)

• Where D has as yet done no hurt to C but is threatening and intended to do works which will cause irreparable harm to C or his property if carried to completion

• Where C has been fully recompensed (at law and equity) for damage but where he alleges that an earlier action of D may lead to future causes of action

• Granted only to restrain an apprehended or threatened injury only where the injury is certain or imminent or where mischief of an overwhelming nature is likely to be done

General principles for applying to injunctions: always mention this in the exam answer

1. C must have locus standi (interest + cause of action)

• Maatshappij De Zeven Provincien VN – C must show that D is either:

1. Threatening to invade (or has invaded) C’s legal or equitable rights

2. Threating to behave (or has behaved) in an unconscionable manner

2. They are a discretionary (equitable) remedy

3. Damages must be an inadequate remedy

Courts powers:

• S.37 SCA 1981, injunction can be granted in all cases where just and convenient to do so

• May be granted unconditionally or on T&C’s as court sees fit.

• S.38 CCA 1984 gives county court same power to gran injunctions as high court BUT NOT freezing orders or search orders

Criminal offences:

• Private individual cannot usually obtain, AG seeks (sometimes the LA under s.222 LGA 1972)

• Individual can get injunction restraining criminal acts only if he can show that:

1. Offence was created to protect a particular class of people; and

2. He is a member of that class; and

3. He has suffered special damage as a result of D’s crime

Breaches of Treaty of Rome:

Garden cottage foods ltd v Milk Marketing Board 1984 – any person who would be harmed by breach is entitled to injunction restraining it

PREP TASK:

Country Hotels v David Winterman –

• D must cause a substantial + unreasonable interference with C’s use +enjoyment of land

Factors for court to consider: (Mention these in AC guideline 1)

• reasonable of conduct

• sensitivity of C – cannot be abnormally sensitive [but once you have established the action then you can recover all your loses, including pure economic loss – as long as they are foreseeable]

• location

• extent of harm/excessiveness of D’s conduct

• duration of harm

• D’s motives (C’s motives could also be relevant as this is an equitable remedy – need clean hands)

• social value of use interfered with

• some fault on D’s behalf

Now we apply for an injunction

OUTCOME 2 – Procedure for obtaining interim prohibitory injunctions

Part 25 – injunctions

Part 23 – interim apps

1. issue claim form (or give promise to court to issue shortly after injunction hearing)

2. app notice N244 with WS (making application 2.2 in resource pack) R23.6/PD25A para 2.1

3. draft order + disk PD25A para 2.4

4. Personal service on the other side ASAP (at least 3 days before hearing PD 25A para 2.2), draw their attention to the penal notice (this means it is contempt of court to breach – individuals can go to prison and companies can have their assets sequestered) on the front for enforcement purposes, also if D doesn’t turn up to hearing personal service means the court knows that D did receive the notice because there will be an affidavit from the person who served the notice

5. D can serve WS in opposition

Providing cross-undertaking in damages

• At the final trial, D may win and injunction may have caused him loss in the meantime. If so, he needs compensation for any loss he has suffered.

• Therefore C will need to give an undertaking to compensate D for any harm caused by injunction if it is discharged

• C ability meet potential liability under this undertaking is taken into account (evidence of his financial circumstances)

• Court can order that C pay money into court or provide some other form of security to show that undertaking isn’t worthless

• The court can take into account C’s financial ability to satisfy any order made under the cross undertaking in deciding whether to grant the injunction, however C will not be deprived of injunction simply because he is short of money

• Cross undertaking is not required where injunction is sought to enforce the law by an agency such as department of state or LA or securities and investments board

• If D does win he can enforce C’s undertaking as to damages by applying for a court inquiry, by a master or district judge. He will have to prove his loss, he if can then C will have to compensate even though he acted in good faith throughout

• Exemplary damages are possible if C was not acting good faith

• Even D who were not subject to the injunction may be able to claim damages under C undertaking (e.g. A gets injunction to prevent B making goods, If C usually buys those goods from B he may be able to claim damages from A)

The cross undertaking is there to compensate D and therefore he will not get an award of indemnity costs

OUTCOME 3 – Should interim applications be made with/without notice?

• Normally obtained on notice (D given notice of hearing)

• Last until trial of C’s action unless set aside earlier by the court

• However, r 25.3(1) court may grant without notice if there is good reason, e.g.

• Insufficient time to give notice

• Giving notice would enable D to harm the C in some way (destroying evidence which would support C’s case)

• C case must be strong enough to justify the court not hearing D’s case (departure from the rules of natural justice)

• C MUST disclose all relevant facts, including matters favourable to D. Failure to do this will result in injunction being set aside with orders for costs against C who will also have to pay damages to D for any harm caused

• S.22(1) trade Union and Labour Relations (consolidation) Act 1992 prohibits injunctions without notice where D likely to claim he’s acting in contemplation or furtherance of trade dispute unless all steps which in circumstances were reasonable have been taken with a view to securing notice of application and an opportunity to be heard given to D

• Injunction without notice takes one of two forms:

1. Court may fix a date for a further hearing with all parties present where D argues that injunction should be set varied or set aside. (this is the return date)

2. Court may simply tell D that he can apply on notice for order to be varied or set aside.

Notice is only 3 days (Part 25) so not long at all

BUT:

If without then there must be:

• Full disclosure by C

• A return date set by the court

If going without then must be a good reason:

• Extreme urgency

• Potential harm by D to C when he finds out you applied for injunction

(The reason must be justified in the WS supporting the app)

PREP TASK - Application on notice:

• We are in late November, he isn’t getting the female boar until December so we can give him 3 days notice

• Only possible reason would be if C had insider info suggesting he could get the female boar to the farm within 3 days

• Then we could go either without notice or abridged notice (court shortens the 3 days to 1 or 2)

OUTCOME 4 – Advise on prospects of obtaining/opposing interim prohibitory injunctions

Injunctions are a discretionary remedy

• C must comply with the usual equitable maxims

• Matters which might persuade the court to refuse include the following:

• He who comes to equity must come with clean hands:

• If C has behaved dishonestly or spitefully he may be refused an injunction

• D’s behaviour and motivation is also a factor. If he has been harming C out of malice this may persuade the court to prevent an injunction in a borderline case

• Dishonesty on C’s behalf could be an ulterior motive (e.g. put D out of business)

• Acquiescence:

• C knew D was infringing his rights and failed to object, this led D to believe that C did not object

• Delay of itself is not enough.

• The delay must lead D to believe that he has not done any wrong and as a result of that belief he has acted to his detriment and it would not be unfair to allow C an injunction

• Just because an injunction was once appropriate doesn’t mean it will be granted if there is a delay...