Chapter 8: Interim applications Flashcards

Question

2.2 Conditions to be satisfied

Answer 1

The court will only make an order where any of the following conditions are satisfied: * The defendant has admitted liability to pay damages (or some other sum of money) to the claimant. * The claimant has obtained judgment against that defendant for damages to be assessed (or for a sum of money other than costs) to be assessed. * It is satisfied that, if the claim went to trial, the claimant would obtain judgment for a substantial amount of money against the defendant from whom he is seeking an order for an interim payment, whether or not that defendant is the only defendant or one of a number of defendants to the claim.

Answer 2

There are also two further conditions relating to cases where the claimant is seeking an order for possession of land or where the claimant is seeking an order in a case where there are two or more defendants, but these are beyond the scope of this section

Answer 3

The applicant must provide evidence alongside its application. The evidence must deal with the following (25B PD 2.1): * The reasons for believing that the conditions for making an interim payment are satisfied; * The sum of money for which final judgment is likely to be given; * The sum of money sought by way of an interim payment; * The items or matters in respect of which the interim payment is sought;

Answer 4

* Any other relevant matters; * In claims for personal injuries, details of special damages and past and future loss; and * In claims under the Fatal Accidents Act 1976, details of the person(s) on whose behalf the claim is made and the nature of the claim. Any documents in support of the application should be exhibited, including, in personal injuries claims, the medical report (25B PD 2.1).

Answer 5

A claimant seeking an interim payment would make a request for a voluntary payment from the defendant first. If the defendant does not agree, for example if it is defending the claim, the claimant would make an application to the court for an interim payment (CPR 25.7)

Answer 6

Although the claimant can make a request to the defendant for a voluntary interim payment at any stage in the proceedings (including pre-action), the claimant cannot apply to the court for an interim payment before the end of the period for the defendant filing an acknowledgment of service (CPR 25.6(1)).

Answer 7

The claimant can make more than one application for an interim payment order. If the claimant applies for an interim payment, then the normal rules relating to interim applications apply (see the section relating to interim applications) subject to modifications / additional requirements set out below where the text struck through, in red, shows the ‘normal’ rules

Answer 8

The court must not make an interim payment of more than a reasonable proportion of the likely amount of the final judgment, taking into account any contributory negligence, set-off or counterclaim – (CPR 25.7). It may order payment in instalments.

Answer 9

The court must not make an interim payment of more than a reasonable proportion of the likely amount of the final judgment, taking into account any contributory negligence, set-off or counterclaim – (CPR 25.7). It may order payment in instalments.

Answer 10

Unless the defendant agrees, an interim payment made by a defendant in the course of the proceedings (whether voluntarily or by court order) will not be disclosed to the trial judge until all questions of liability and quantum have been decided (CPR 25.9).

Answer 11

An interim payment is an order that can be applied for by the claimant. * An interim payment is a payment on account of damages, debt or other sum which defendant may be held liable to pay to a claimant. * If a claimant wishes to apply for an interim payment it must satisfy the court of one of the conditions in CPR 25.7.

Answer 12

* The procedure provides that the claimant must serve the application notice and evidence on the defendant at least 14 days before the interim hearing. * Any interim payment order must be of no more than a reasonable proportion of a likely final judgment. * An interim payment does not get disclosed to the judge at trial.

Answer 13

Security for costs: An application made by a person in the position of defendant (the applicant) who is concerned that the claimant (the respondent) will not be willing / able to pay the defendant’s costs should the claim be successfully defended (CPR 25.12). The court can order that security be given in various ways, but most commonly it requires a payment into court by the claimant, so that those funds are available to meet any costs order later made in the defendant’s favour.

Answer 14

* By a defendant against a claimant (which is the usual case) * By a claimant against a defendant in respect of a counterclaim * By a third party against a defendant in respect of an additional claim (CPR 20)

Answer 15

The defendant must satisfy the court of two matters before an order for security for costs can be made: (a) Having regard to all the circumstances of the case, it is just to make and order (CPR 25.13(1)(a)) (b) One or more of the prescribed conditions in the rules are satisfied (CPR 25.13(1)(b) and (2))

Answer 16

As with any interim application, the court will also consider the overriding objective and, therefore, whether it would be dealing with the case justly and at proportionate cost by making a security for costs order. We will consider the conditions first before moving on to what is ‘just’.

Answer 17

The prescribed conditions for security for costs are: * The claimant is resident out of the jurisdiction (but is not resident in a State bound by the 2005 Hague Convention) (CPR 25.13(2)(a)) * The claimant is a company and there is reason to believe it will be unable to pay the defendant’s costs if ordered to do so (CPR 25.13(2)(c)) * The claimant has taken steps in relation to its assets that would make enforcement of a costs order against it difficult (CPR 25.13(2)(g))

Answer 18

* The claimant has changed address since claim was commenced with a view to evading the consequences of the litigation (CPR 25.13(2)(d)). * The claimant failed to give an address in the claim form (CPR 25.13(2)(e)). * Claimant is acting as a nominal claimant and there is reason to believe it will be unable to pay the defendant’s costs if ordered to do so (CPR 25.13(2)(f)). Let’s look at three of the prescribed conditions for security for costs in more detail.

Answer 19

Meaning of resident: * For an individual this is their habitual or normal residence. * For a company this is where the company’s central management and control is exercised and it is usually, but not necessarily, where it is incorporated.

Answer 20

Essentially, this means not in England and Wales. The rationale for this requirement is that the defendant may have greater difficulty enforcing any costs order if the claimant is not in England or Wales. Security for costs is not available under this ground if the claimant is resident in a state bound by the 2005 Hague Convention, which at the time of writing includes the UK, all EU members states, Mexico, Singapore and Montenegro. This is because there are some (albeit limited) reciprocal arrangements between these states which would ease the enforcement of a costs order. This is a recent (ie post-Brexit transition period) change.

Answer 21

The defendant must show: a) The company’s inability to pay costs; and b) the amount of the likely costs. The defendant must show the company ‘will be unable’ (as opposed to ‘may be unable’) to pay its debts when the order is made against it. However, the defendant does not have to show on a balance of probabilities that the claimant company is unable to pay

Answer 22

The defendant may be able to show that there is ‘reason to believe’ that the claimant company will be unable to pay even if the claimant company can adduce substantial evidence to the contrary (Jirehouse Capital v Beller [2008] EWCA Civ 908). This makes security for costs more available for defendants.

Answer 23

The purpose of this condition is to prevent injustice to a defendant where the assets available to enforce any order for costs have been or are being put beyond the reach of enforcement, for example, the dissipation of assets, the transfer overseas or into the names of third parties or the transfer to places unknown to the defendant.

Answer 24

Even if one of the prescribed conditions is made out, the court is not obliged to give security; security will only be granted by the court if: it is satisfied, having regard to all the circumstances of the case, that it is just to make such an order.

Answer 25

The main consideration that the court will take into account is the ability of the respondent to comply with any order for security for costs. The court should not normally make the continuation of a claimant’s claim dependent on a condition which it is impossible for the claimant to fulfil, because this effectively restricts the claimant’s access to the justice system. An impairment of a claimant’s right of access which is disproportionate to the need to protect the defendant is likely to be a breach of Article 6 ECHR (right to a fair trial).

Answer 26

The court has the difficult task of balancing the potential injustice to the claimant in being prevented from carrying on with the claim if it cannot pay the security as against the injustice of the defendant being at risk on costs if no security is provided. This is likely to be particularly problematic where the basis for the application is the claimant’s impecuniosity.

Answer 27

Apart from the ability to comply with the order, the court will look at other factors (Sir Lindsay Parkinson v Triplan [1973] 2 All ER 273). For example, admission of liability by the defendant or substantial open offers (those the court can be made aware of) will make the defendant’s application less likely to succeed. Delay also makes the application less likely to succeed – the application should be made promptly, as soon as the facts underpinning the application are known.

Answer 28

A claim which appears not to be genuine, or which has little prospects of success, will make the defendant’s application more likely to succeed. If the defendant has itself been responsible for the claimant’s financial difficulties, this will make the application less likely to succeed.

Answer 29

If a party applies for security for costs, then the normal rules relating to interim applications apply (see the section relating to interim applications). In addition, note that the application notice should state which ground(s) or enactment applies. The application must be supported by written evidence (CPR 25.12(2)). Evidence will normally be given by way of witness statement which should cover:

Answer 30

The ground eg for the impecunious company ground, the witness statement is likely to exhibit the accounts to show the claimant is unable to pay * The factors in the exercise of the court’s discretion * The likely costs to trial eg the witness statement is likely to exhibit a statement of costs or to refer to an approved costs budget * The amount of security requested.

Answer 31

If the court makes an order for security for costs it will determine the amount of security as well as the manner in which and the time within which the security is given (CPR 25.12(3)). The amount is entirely within the court’s discretion and the court will fix a sum it thinks just taking into account:

Answer 32

* The amount of the defendant’s likely costs * The security can be for the whole action or up to a point in time eg up to disclosure * The amount can cover costs incurred (including pre-action) and future costs * A deduction can be made for the likely reduction upon assessment of costs or the possibility of settling * Other factors eg delay may mean that security is not given for costs already incurred but is given for future costs.

Answer 33

The manner in which security is given can be: * A payment into court * A payment to the defendant’s solicitor * A bank guarantee * An undertaking to pay costs The most frequent order is for a sum to be paid into court by a required date.

Answer 34

* The applicant in a security for costs application is the defendant. * Security for costs is the appropriate application where the defendant has concerns that if it successfully defends the claim and the claimant is ordered to pay the defendant’s costs, the claimant will not be willing / able to do so. * The defendant must satisfy the court that, having regard to all the circumstances of the case, it is just to make an order. Factors that the court will consider include the claimant’s ability to pay, the prospects of the claim succeeding and any delay in making the application.

Answer 35

* The defendant must also show that one or more of the six conditions prescribed by the rules applies. * Any security for costs order will also provide for the amount, type and timing of the security payment. * The application must be supported by evidence, usually a witness statement.

Answer 36

Injunction: An order of the court requiring a party to do or to refrain from doing a given act. Breach of an injunction is potentially punishable as contempt of court, so breach can result in a fine and/or imprisonment.

Answer 37

A temporary measure taken at an early stage in the proceedings (including pre-action) before trial and before any final decision on the merits of either party’s case to restrain the respondent from causing irreparable or immeasurable damage to the applicant by continuing conduct or ceasing conduct that has led to the dispute. It is usually made in circumstances of urgency and lasts until trial or further order.

Answer 38

A final injunction (usually made at trial) that continues with no limitation of time. These are not covered in this section.

Answer 39

Requires the respondent to refrain from doing an act eg An employer has brought a claim against an employee for breaching a confidentiality clause in an employment contract. The employer obtains an interim prohibitory injunction preventing specified uses of information pending trial.

Answer 40

Requires the respondent to do a specific act eg In a claim alleging that a supplier of computer software failed to deliver up software at the end of the parties’ relationship, the claimant obtains an interim mandatory injunction requiring the software to be delivered up pending trial.

Answer 41

Allow both prohibitory and mandatory injunctions where a wrong has been threatened but not yet committed eg In a claim alleging that the threatened closure of a bank account would be a breach of statutory duty, the customer obtains an interim mandatory injunction requiring the bank to keep the account open

Answer 42

An injunction may be granted where it is just and convenient (s.37 of the Senior Courts Act 1981). In American Cyanamid Co v Ethicon Ltd [1975] AC 396, Lord Diplock laid down guidelines, now known as the ‘American Cyanamid guidelines’, on how the court should exercise its discretion to grant an interim injunction. The following summary will be considered in more detail below.

Answer 43

An injunction is not a cause of action - it is a remedy. Therefore, an applicant cannot sue for an injunction. The applicant must have a pre-existing cause of action. The court must be satisfied that this is not “frivolous or vexatious” and that “there is a serious question to be tried”. In many cases, this is not a difficult hurdle to surmount. However, if this test cannot be met, the injunction will generally be refused (and the court will not go on to consider steps 2 and 3).

Answer 44

When considering the adequacy of damages, the court will firstly consider the issue from the applicant’s perspective and, depending on the outcome of this analysis, the court might then go on to consider the same issue from the respondent’s perspective:

Answer 45

The court will generally refuse an injunction if the applicant could be adequately compensated by damages for any loss caused by the refusal to grant an interim injunction. However, damages may be inadequate if the respondent has no means of paying them or the harm being caused is irreparable, cannot be quantified, or is serious and likely to continue.

Answer 46

If an injunction is granted, the respondent is going to be prevented from doing something, or required to do something, until trial – but it might transpire that the injunction should never have been granted, most likely if the applicant fails at trial. The court will ask itself whether the respondent could be adequately compensated by the applicant if it transpires that the injunction was wrongly granted. If so, then this suggests the injunction should be granted.

Answer 47

If it appears that damages would be adequate for neither party, then the court will consider a very broad range of factors to try to ascertain whether granting or not granting the injunction carries the lesser risk of injustice ie to ascertain where the ‘balance of convenience’ lies.

Answer 48

The guidelines just stated should be considered in the context of an injunction being an equitable remedy, so equitable principles apply, including that; (a) An injunction will not be obtained when it would serve no practical purpose; (b) The court might refuse to grant an injunction if the applicant has not come to court with ‘clean hands’ (c) Excessive delay may lead to a refusal of the application.

Answer 49

An injunction is also a discretionary remedy: there is no automatic right to an injunction just because all the ‘guidelines’ have been met. An application for an interim injunction must be supported by written evidence setting out the facts to justify the relief sought (CPR 25.3(2)), keeping in mind the guidelines and considerations set out above. In addition, if the application is made without notice, the evidence must state the reason why notice has not been given (CPR 25.3)

Answer 50

An application for an interim injunction is an interim application so the starting point is that the procedure is the same as any for any other interim application (see the section relating to interim applications). However, because an interim injunction is a form of interim remedy (CPR 25.1(a)), and one with potentially very serious consequences, there are some additional procedural considerations.

Answer 51

A court will often decide to grant an interim injunction only if the applicant offers an crossundertaking to pay damages to the respondent for any loss sustained by reason of the injunction if it is subsequently held that the applicant ought not to have been granted an interim injunction - for example, if proceedings are discontinued, or the injunction is discharged before trial, or if it is decided at trial that the applicant had not been entitled to restrain the respondent from doing what it was threatening to do.

Answer 52

The cross-undertaking is made to the court. It is there for the protection of the respondent, but the court can also require (as a condition of granting the injunction) an undertaking to be given for the protection of any other person who may suffer loss because of the order (25A PD 5.1 and 5.2).

Answer 53

The application for an interim injunction can, like any interim application, be made without notice if this is justified. If the application is made without notice and the injunction is granted, it will be granted initially for a limited period only and the court will fix a second hearing called the ‘return date’. The respondent will be given notice of that hearing and the opportunity to attend it to make representations, and at that second hearing, the court can make the following orders:

Answer 54

* Maintain order (to keep the injunction in place until the trial of the substantive matter). * Discharge the injunction vary the terms of the injunction. * Enforce the applicant’s undertaking in damages if it transpires that the injunction should not have been granted. * Accept an undertaking by the respondent not to do the acts in question, in place of the injunction

Answer 55

In the case of a without notice application, the applicant must make full and frank disclosure of all matters of fact or law relevant to the application – including those which are or may be adverse to the applicant. This is required for any interim application made without notice, and its importance is particularly pronounced when something as important as an interim injunction is at stake.

Answer 56

The applicant’s legal representatives must prepare a full note of the hearing as soon as possible and this should also be served on the respondent (and any other party affected by the order) without delay. The full note of the hearing ensures the respondent knows what case they have to meet at the next, with notice, hearing.

Answer 57

In cases of exceptional urgency, not only can a party apply for an interim injunction without notice but a party can apply before a claim form has even been issued. The court will only grant an interim remedy before a claim has been issued if the matter is (CPR 25.2(2)(b)): * Urgent; or * It is otherwise desirable to do so in the interests of justice. In these circumstances, the applicant must undertake to the court to issue a claim form immediately.

Answer 58

* An interim injunction requires a party to do (mandatory) or to refrain from (prohibitory) an act on a temporary basis, usually until trial. * An injunction may be granted where it is just and convenient. * An injunction is both an equitable and a discretionary remedy. The guidelines for the courts’ exercise of discretion are:

Answer 59

- Step 1: is there a serious question to be tried? - Step 2: would damages be an adequate remedy for the applicant and can the respondent afford to pay? If not, would damages be an adequate remedy for the respondent if it later transpires the injunction was wrongly granted and can the applicant afford to pay? - Step 3: where does the balance of convenience lie? * A court will often refuse to order an interim injunction unless the applicant undertakes to pay damages to the respondent if it transpires the injunction should not have been awarded.

Answer 60

Summary judgment: Enable the court to dispose of claims or issues without the need for a full trial (CPR 24.1). If summary judgment is granted on an issue, that issue is no longer considered at trial. This saves costs. Summary judgment furthers the overriding objective because it allows the court to deal with weak cases or issues proportionately and expeditiously. Either party can apply for summary judgment if it considers that the other party’s position in relation to the claim or particular issues is sufficiently weak.

Answer 61

There is considerable overlap between the two provisions. Many cases fall within both strike out (CPR 3.4) and summary judgment (CPR 24). It is often appropriate for a party to combine these two applications.

Answer 62

The court can strike out the whole or part of a statement of case which discloses no reasonable grounds for bringing or defending a claim (CPR 3.4(2)(a)), or which is an abuse of the process of the court or otherwise likely to obstruct the just disposal of the proceedings (CPR 3.4(2)(b)) (there are also other grounds for strike out). The court may give summary judgment against a claimant or defendant where that party has no real prospect of succeeding on their claim or defence (CPR 24.2).

Answer 63

Judgment in default can be the consequence of the defendant failing to respond to a claim. Judgment in default is therefore procedural: if a defendant fails to file an acknowledgment of service and/or a defence in accordance with the CPR time limits, the claimant can obtain judgment in default by either request or application (depending on the nature of the claim). The court does not consider the merits of the case when ordering judgment in default.

Answer 64

What must be established in order for the court to dispose of a claim or issue without the need for a trial? The grounds for summary judgment are (CPR 24.2

Answer 65

It means the position is fanciful, imaginary or false. To defeat the application, the respondent does not have to show that its case will probably succeed; just some chance even if it is improbable. The word real means more than merely arguable.

Answer 66

* Defendant needs more time to investigate * Expert evidence is required * Multi-party litigation * Scrutiny of key documents is required * Defendant has a right to trial by jury eg fraud (this is not an exhaustive list)

Answer 67

The evidence supporting an application for summary judgment must address the grounds set out above. The application notice or supporting evidence (usually a witness statement) must also: * Identify concisely any point of law or provision in a document on which the applicant relies; and * State the application is made because the applicant believes that on the evidence the respondent has no real prospect of success and knows of no other compelling reason why the claim / issue should be disposed of at trial.

Answer 68

The claimant can apply for summary judgment after the defendant has filed an acknowledgment of service or defence (or earlier with the court’s permission) (CPR 24.4). The defendant can apply any time after proceedings have commenced. The court can fix a hearing of its own initiative (CPR 1.4(2)(c) and CPR 3.3).

Answer 69

Ideally, the claimant or defendant should apply for summary judgment either before or at the same time as filing the Directions Questionnaires to avoid incurring unnecessary costs (26 PD 5.3(1)). If the application is made on filing Directions Questionnaires, the court will delay allocating the matter to a track until after the summary judgment hearing.

Answer 70

The claimant can apply for summary judgment after the defendant has filed an acknowledgment of service or defence (or earlier with the court’s permission) (CPR 24.4). The defendant can apply any time after proceedings have commenced. The court can fix a hearing of its own initiative (CPR 1.4(2)(c) and CPR 3.3).

Answer 71

Ideally, the claimant or defendant should apply for summary judgment either before or at the same time as filing the Directions Questionnaires to avoid incurring unnecessary costs (26 PD 5.3(1)). If the application is made on filing Directions Questionnaires, the court will delay allocating the matter to a track until after the summary judgment hearing.

Answer 72

If the claimant fails to comply with a relevant pre-action protocol, the application for summary judgment by the claimant will not normally be considered before the defence has been filed or time for doing so has expired (24 PD 2(6)). The effect of a summary judgment application is to create a pause in the proceedings while the application is being decided so that:

Answer 73

The effect of a summary judgment application is to create a pause in the proceedings while the application is being decided so that: * If the claimant applies for summary judgment before the defendant has served a defence, the time for the defendant to file a defence is extended until after the hearing (CPR 24.4(2)). * If the defendant applies for summary judgment, the defendant does not have to file either an acknowledgement of service or a defence until after the summary judgment hearing.

Answer 74

If a party applies for summary judgment, then the normal rules relating to interim applications apply as set out at the beginning of the chapter subject to the modifications / additional requirements shown on the diagram.

Answer 75

The application notice must: * Include a statement that it is an application for summary judgment under Part 24; and * Direct the respondent’s attention to the CPR which require the respondent to file and serve any evidence at least seven days before the summary judgment hearing (24PD 2). These provisions make it clear to the respondent what is at stake in the application and how the respondent can oppose the application. This is particularly important because an application for summary judgment has particularly significant potential consequences.

Answer 76

The application fails. The issues must continue to trial. The court will give directions to take the claim forward.

Answer 77

If the defendant applies for summary judgment and succeeds, the claim is dismissed. The defendant has ‘won’.

Answer 78

If the claimant applies for summary judgment and succeeds, then judgment is entered for the claimant: the claimant has ‘won’.

Answer 79

The judge has decided that the respondent may succeed but it is improbable that it will do so: the court will refuse summary judgment and allow the respondent to continue only subject to conditions ordered by the court, such as paying a sum of money into court. Note. The potential orders assume the application related to the whole claim. It could relate only to specific issues, in which case the same principles apply to the issue concerned.

Answer 80

* Summary judgment is the disposal of cases or issues without trial. * The claimant or defendant can apply for summary judgment or the court can fix a summary judgment hearing of its own initiative. * The grounds for summary judgment are that the claimant has no real prospect of succeeding on the claim or issue or the defendant has no real prospect of successfully defending the claim or issue and there is no other compelling reason why the case or issue should be disposed of at trial.

Answer 81

* An application for summary judgment is made using an application notice supported by evidence and a draft order. * The procedure requires both parties to file and serve evidence within specific deadlines before the summary judgment hearing. * The court can order judgment on the claim, dismissal of the claim, dismissal of the application or a conditional order.