Unit 4 – Consolidation CDR

OUTCOME 1 – procedure for obtaining and serving?

Almost always made without notice

WS = witness statement

FI = freezing injunction

SO = search order

Need to prepare	App notice – Form N244 Affidavit in support PD25A para 3.1 (more serious than WS, sworn reasons why app without notice)
Where to apply?	- High court judge (PD25A 1.1) - Masters and district judges in high court have power to grant injunctions 1) by consent 2) in connection with charging orders and appointment of receivers 3) in aid of execution of judgements (PD25A 1.2) - Not in country court except in very limited situations
Timing	Application can be made at any time (CPR 25.2): Before proceedings have started (if satisfy 25.2.2 i) matter is urgent or ii) necessary in interest of justice) - likely During proceedings; or After judgement given. Nb. Court has no jurisdiction when applicant doesn’t intend to issue proceedings Issue claim form or undertake to do so (PD25A para 4.4(1) Issue at least 2 hours before the hearing (PD25A para 4.3(1) Affidavit must be in issued in support (PD25A – para 3.1) Why no notice given, evidence to support Court must feel there is good reasons for not giving notice Draft order Court will hear app If order granted court sets return date (C undertakes to issue app notice for the continuation of the order with a return date) C/any TP’s affected (banks who hold assets for D for a FI etc, this isn’t an undertaking, just something applicant can do in order to more effectively enforce the injunction.) must personally serve all docs (or if search order supervising sol will do this) The FI or SO The app notice – N244 Copy of the affidavit Any exhibits Full note of the hearing (if without notice must include full note of the arguments before the court)
WHAT HAPPENS NEXT?	FI takes effect immediately/SO date and time will be set There will be a full with notice hearing on the return date This will usually be 14 days after the initial hearing Costs will be dealt with at return hearing – not fair to deal with at initial hearing as d won’t be there if without notice
WHERE WILL ANY HEARING TAKE PLACE?	General rule- hearing to be in public (CPR 39.2.1) May be in private if...(CPR 39.2.3), e.g. (a) publicity would defeat the object of the hearing; (e) made without notice and hearing would be detrimental to the defendant

OUTCOME 2 – Grounds to be satisfied to persuade the court

FREEZING INJUNCTION		SEARCH ORDER
NATURE OF REMEDY	Prevents D from disposing of his property pending trial of C’s action against him - usually restricted to D property within jurisdiction and limited in value to likely amount of judgement - usually obtained without notice and urgency and secrecy are necessary	NATURE OF REMEDY	Allow C to enter D premises for property belonging to C or evidence that D has been harming C. If D doesn’t comply then may face imprisonment for contempt of court - s.7 CPA 1997 - Requires D to allow C’s named reps to enter and search, C is not permitted to use force though - order used to recover property belonging C which D is using to harm C. - also used to obtain evidence of wrongdoing
RELATED REMEDIES	- Orders preventing D using his shares or voting rights they give in a way which may harm C - If D has already disposed of property then IA 1986 allows court in certain circumstances to set aside disposition in aid of FI	NATURE OF REMEDY
INNOCENT TP’s	People involved with D are covered by order even if they are completely innocent of fraud - FI should NOT usually be used as banks as D’s or in respect of routine banking transactions - IF becomes public knowledge that Co-D subject to FI then public confidence in business may be affected and C should ask for FI app to be held in private	RELATED REMEDIES	- May be combined with freezing injunction. - May be combined with orders for disclosure and or further info - Even possible to obtain an order which prevents D from leafing country for short period of time so he can comply with SO
GROUNDS		GROUNDS
STRENGTH OF C’s CASE	1. C must have a good arguable claim 2. As app without notice C must make detailed investigations before seeking order and full disclosure of all relevant facts (both for and against case) [failure results in order being set-aside for non-disclosure] 3. C’s obligation to full disclosure extends to facts discovered after making of the order	EXTREMELY STRONG PRIMA FACIE CASE	Check Exam Facts
RISK THAT PROPERTY WILL DISAPPEAR	- C must show that D has property in the jurisdiction and that he may deal with it in a way that hinders enforcement - Court will not allow FI to be used to jump insolvency queue or as a means of putting unfair pressure on D to settle - Evidence that D is a debt dodger and that removal of assets will be done with a corrupt or dishonest purpose (dishonest can be with C or other creditors) - Relevant how easily D could move his assets out of C’s reach (more likely with foreign D’s) - Info about trading rep of business and difficulties of enforcement in D home country are helpful	C WILL SUFFER (CONTINUE TO SUFFER) SERIOUS HARM IF ORDER NOT MADE	Check Exam Facts
RISK THAT PROPERTY WILL DISAPPEAR		D HAS MATERIALS UNOBTAINABLE BY OTHER MEANS	- Alternative would be to apply on notice for order for delivery up of the goods s.4 Torts (interference with goods Act 1977 (provided by CPR 25.1(i)(e) - BUT it’s a real possibility that D may destroy or dispose of materials/continue to exploit confidential info - C will suggest that if app made on notice D has opportunity to dispose materials being sought. - Furthermore court must be satisfied that harm likely to be caused to D and business is not excessive/out of proportion to legitimate object of order

PREP TASK – Cause of action

= copyright

LB,DW,WMB = parties in the prep task handed out in the workshop

Misuse of confidential info	Inducement to breach contract	Breach of
WMB must show	WMB must show	WMB must show
Materials had necessary quality of confidence - yes	LB knew of contract between WMB and DW - D had no knowledge of the contract	Materials were original -
Materials imparted to DW in circs importing an obligation of confidence - yes	LB intended to procure DW to breach contract - Delia came to D	Materials were artistic works
LB knew materials were confidential and improperly retained/used them - NO, thought LB thought they were family photos	WMB suffered damage - WMB have clearly not suffered loss as a result of the above	exists in materials WMB produce for DW books - yes
DW & LB used the materials without WMBs permission - NO, LB didn’t realise they needed permission		WMB owns - yes
		LB copied substantial part of the materials - yes
		A qualitative not quantitive test -yes
		LB ARE INNOCENT INFRINGER BUT LOSES WILL BE VERY LITTLE AS WE HAVEN’T SOLD THE BOOK YET - so it would be drastic action for WMB to take this draconian action based purely on the action

Has applicant made out the core test for that type of injunction?

Obviously C did when they got the court to grant the order but still can argue

FREEZING INJUNCTION:

good arguable case AFTER full disclosure
respondent has assets within the jurisdiction & there is a real risk D will dispose of property (i.e. an intention to deal with property to frustrate enforcement of judgement)

Arguments against:

Private homes are security to genuine business expenditure (the one for sale is just to fund a move by 2 of the partners)
Cash payments are made to USA for genuine business expenditure
Business premises are tied up in business
Retirement Home and payments Spain – not in jurisdiction and was bought 3 years ago so before this dispute

we would argue yes we want the FI set aside as no good arguable case and no arguments we are moving assets around BUT IN THE ALTERNATIVE

SEARCH ORDER

extremely strong prima facie case AFTER full disclosure

Case isn’t strong – refer back to the arguments above for FI
SO not be used a fishing expedition

applicant will suffer serious harm if the order is not made

loses once you look at the numbers isn’t serious harm (it is a low amount loss)
this is all based on the fact Delia would resign with them when she potentially wouldn’t

respondent has materials unobtainable by any other means

SO was drastic, if C had approached D in a more rational way then we may have been able to reach a compromise
There was an alternative to a SO (order for delivery up s.4 torts of delivery of goods act 1977), this is on notice

we want the SO set aside

PROHIBITORY INJUNCTION

AC guidelines
OUTCOME 3 – Conditions court will apply upon applicant

FREEZING INJUNCTION		SEARCH ORDERS
C duty of full disclosure: The applicant must disclose all matters that are material to the court in deciding whether to grant the order (including anything detrimental to applicant). Materiality is for the court to decide and the duty is a continuing one until the first hearing on notice n/b d can claim non-disclosure (in order to set-aside or vary the order)
Return date (usually 14 days initial hearing)
C’s cross undertakings to damages – PD25A para 5.1/bank guarantee	For SO the undertaking as to damages will have to cover oppressive execution of the order and damages for innocent TP’s - Colombia Picture case shows that aggravated damages may be awarded against C who fails to make proper disclosure or executes order oppressively
C should provide details of any info he has about D assets (address or property or...

#10466 - Unit 4 – Freezing Injunctions And Search Orders - Commercial Dispute Resolution

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