injunctions (inteirm and freezing)

Question 1

nature of injunctions

Answer 1

EQUITABLE - equitable maxims apply (e.g. “clean hands”, “equity will not act in vain”)

DISCRETIONARY - even if all requirements are met, there is no automatic right to an injunction

Question 2

equitable factors

Answer 2

1. Delay (by applicant) – “delay defeats equity”
2. Acquiescence (by applicant),
3. Inequitable conduct by the applicant (“those who come to equity must come with clean hands”)
4. Hardship
5. Equity does not act in vain
6. court cannot enforce the order

Question 3

effect of interim injunctions

Answer 3

TEMPORARY injunction granted before trial

PROVISIONAL - continues in force for a limited period (until further order or trial)

‘prohibitory’ - prevent from doing something

‘mandatory’ requires other side to do something

Usually made in circumstances of urgancy

Question 4

effect of freezing injunctions

Answer 4

CPR 25.1(1)f – an interim order restraining a party from:

ONE – removing assets located within the jurisdiction out of the jurisdiction

TWO – dealing with assets whether they are located within the jurisdiction or not

Purpose: prevent respondent’s assets being dissipated to frustrate enforcement of any judgement applicant might obtain (so order is usually restricted to assets not exceeding value of the claim against respondent together with provision for costs)

Question 5

Mareva Compania (background)

Answer 5

CA decided it had power to grant an interim injunction restraining dissipation of assets in Mareva Compania

this power is now acknowledged in statute, s.37 SCA 1981, and in CPR 25.1(1)f)

Question 6

jurisdiction to grant interim injunction

Answer 6

CPR 25.1(1)a

HC - derive inherent jurisdiction from s.37 SCA 1981 (granted if ‘just and convenient’ to dos o)

CC - s.38 CCA 1984 (as amended) - CC can make any order HC can make

applications for injunctions must generally be made to be judge rather than District Judge or Master

Question 7

jurisdiction to grant freezing injunctions

Answer 7

CPR 25.1(1)(f)

• HC - generally available
• CC - can be granted by CC but will be allocated to a Circuit Judge (2B PD 8.4)

Worldwide applicability guidelines – Dadourian Group v Simms

Question 8

when and who can apply for interim injunction?

Answer 8

either C or D

AFTER issuing proceedings or BEFORE (pursuant to CPR 25.2(1)a), if the matter:

(i) is urgent or if it is
(ii) otherwise necessary to do so in the interests of justice (CPR 25.2(2)b)

If made before, court will usually direct applicant to issue and serve CF ASAP and to proceed with main action quickly

Question 9

how is the interim injunction application made?

Answer 9

with or without notice

Injunction may be granted on application without notice if it appears to the court that there were good reasons for not giving notice (CPR 25.3(1))

Matter of principle: no order should be made in civil proceedings without notice to other side unless there is a very good reason for departing from general rule that notice must be given

Question 10

what is a good reason not to give notice ?

Answer 10

• Notice might itself defeat the ends of justice
• Notice would defeat purpose of injunction (e.g. freezing/searching orders) – e.g. dissipate assets
• No time to give notice (urgent matter) – e.g. the case is for disclosing confidential info – once disclosed, lost forever (rare, usually can give some form of notice even if informally and by telephone)

Question 11

if without notice what duties does applicant have?

Answer 11

1. explain (in evidence in support) why notice was not given
2. full and frank disclosure (disclose to court all matters relevant to the application, including all matters, whether of fact or of law that may be, or are, adverse to it + applicant must fairly present facts they disclose)
3. procie full notes of hearing to any party affected by relief sought

Question 12

Memory Corporation v Sidhu (No.2)

Answer 12

full and frank disclosure

“High duty” requiring applicant to draw to the court’s attention “significant factual, legal, and procedural aspects of the case”

Question 13

full and frank disclosure

Answer 13

Disclose fully to the court all matters relevant to the application, including all matters, whether of fact or of law that may be, or are, adverse to it + applicant must fairly present facts they disclose

• important bc other side doesn’t have opp to put evidence before court (court is wholly reliant on info provided by C)
• A might make points R wouldn’t have thought of!)
• if duty not observed, court may discharge injunction

Question 14

Kazakhstan Kagazy v Arip

Answer 14

full and frank disclosure

A does not have to rehearse a detailed analysis of possible inferences that R may seek to rely on

Question 15

• Sita v Serruys

Answer 15

full and frank disclosure

court has full discretion

court allowed an injunction despite material and deliberate non-disclosure (C had a good arguable case for injunction!) but claimant ordered to pay costs of application on indemnity basis

Question 16

contents of order (interim injunction)

Answer 16

1. penal notice on front page (if R doesn’t comply, contempt of court = imprisoned/fined)
2. undertakings (to issue AN ASAP, to issue CF ASAP, serve CF, AN, order, evidence in support on R, undertaking in damages)
3. duration
4. operative part of the order

Question 17

evidence for inteirm app - what contain?

Answer 17

• Cause of action
• What injunction is sought
• Why injunction should be granted
• Why notice was not given
• Ability to satisfy a cross-undertaking in damages

Question 18

freezing injunction - brief summary

Answer 18

made against a R who is prepared to dissipate assets to frustrate any judgement the applicant may obtain

to be effective - application generally made without informing R (and before CF served)

• app can still be made during course of proceedings
• made to judge sitting in private

Question 19

docs for freezing injunction

Answer 19

• AN (must set out why w/o notice + details)
• draft order
• undertaking to pay damages
• affidavit in support (evidence)
• CF (after issue but before serve or R is alerted)
• statement of costs

Question 20

pros of injunction

Answer 20

• onerous remedy
• maintains client’s position/ensures pot of assets to enforce against
• contempt of court if breach
• psychological impact on R
• promotes settlement
• remedy without having to prove case at trial
• can be obtained within 48 hours - useful if urgent
• can be granted without notice

Question 21

disadvantages of injunctions

Answer 21

• onerous tests
• full and frank disclosure (duty to investigate facts and fairly present evidence)
• duty to provide full notes
• high costs and time-consuming (highly time-pressured, lots of evidence required, court won’t grant it lightly)
• freezing injunctions require 3P cooperation
• remedy only provisional and temporary
• no guarantee of success (discretionary)
• undertakings (incl. undertaking in damages)
• compensate 3P for costs incurred (if freezing injunction)
• interim injunction actually might give more publicity

Question 22

legal guidelines for prohibitory interim injunction

Answer 22

EQUITABLE
DISCRETIONARY
OO

CAUSE OF ACTION

American Cyanamid guidelines (Lord Diplock)

1. serious Q to be tried
2. damages adequate remedy? a) for A, b) for R
3. balance of convenience?
4. if too finely balanced/inconclusive:
   - preserve status quo
   - merits of case
   - special factors

Question 23

serious question to be tried

Answer 23

“the claim is not frivolous or vexatious”

NOT a difficult hurdle to surmount (low threshold)

In comparison: “good arguable case” (for freezing injunction) is a higher test

Question 24

damages - adequate remedy for A?

Answer 24

if yes - unlikely to be granted
if no - go on to next stage

damages inappropriate if:
- harm is serious and likely to continue

• irreparable
• difficult to assess/cannot be quantified (e.g. loss of goodwill/reputation)
• R has no means to pay damages
• no competitor has similar product so damages = substantial
• if breach of confidence - court’s historic approach = grant injunction

Question 25

damages - adequate remedy for R?

Answer 25

Would R be adequately compensated under applicant’s undertaking as to damages if it transpires that injunction was wrongly granted?

if YES, ADEQUATELY compensated from damages from A’s undertaking = likely to grant injunction

if no - consider next stage

if A in position to pay R, no reason to refuse interim prohibitory injunction on this ground

Question 26

balance of convenience lie

Answer 26

Matters to consider and their weight varies from case to case

if both parties can (1) meet award of damages (2) bear financial burden of injunction pending trial –> swings balance of convenience towards injunction

court considers:

• equity of situation (is it unjust?)
• length of time till final trial heard
• public interest

will one party be disproporionatly harmed?

Question 27

status quo

Answer 27

Position before R started conduct that A is complaining about (“status quo ante”)

E.g. stop using confidential information

PROBLEMATIC: relevant point of time might be difficult to determine and may vary

Question 28

merits of case

Answer 28

(as revealed by written evidence adduced for interim application)

BUT MUST NOT CONDUCT MINI-TRIAL

• This should only be done where it is apparent upon facts disclosed by evidence as to which there is no credible dispute that the strength of one party’s case is disproportionate to that of the other party
• Not usually done – a last resort

Question 29

exceptions to american cyanamid

Answer 29

• Restraint of trade cases
• Where grant or refusal of injunction would result in final disposal of the claim
• Where no arguable defence to applicant’s claim
• Privacy claims

Question 30

freezing injunctions - LEGAL GUIDELINES

Answer 30

DISCRETIONARY
EQUITABLE

Mareva Compania requirements:

1. substantive cause of action
2. good arguable case
3. r has assets within jurisdiction
4. real risk R may remove from jurisdiction, dispose of, dissipate, or hide his assets in a way that will hinder enforcement of any judgement the applicant may obtain

Question 31

substantive cause of action against the respondent justiciable in England and Wales

Answer 31

bc freezing injunction = remedy not cause of action

limited circumstances - court may grant injunction against 3P who will not be D if assets held on bare trust for D

Question 32

Good arguable case against respondent

Answer 32

One which is “more than barely capable of serious argument, and yet not necessarily one which the judge believes to have a better than 50% chance of success”

(Mustil J, Ninemia Maritime Corp v Trave)

more burdensome test than ‘serious question to try’

Question 33

Respondent has assets within the jurisdiction

Answer 33

Stems from equitable maxim: “equity will not act in vain”

• If injunction will not be effective, it will not be granted
• Assets include: money, shares, securities, cars, vessels, aircraft, jewellery, paintings, etc.,
• Check any knowledge of assets is up to date

Question 34

There is a real risk that the respondent may remove from the jurisdiction, dispose of, dissipate, or hide his assets in a way that will hinder enforcement of any judgement the applicant may obtain

Answer 34

circumstantial and difficult limb of the test

factors;

• evidence of dishonesty?
• incidents of debt default by R
• evidence R started to remove/dispose of assets
• where assets are located
• where R is based?

Can be difficult – if you argue R has started to remove/dispose of assets, then that contradicts your argument for requirement 3 (that respondent has assets in the jurisdiction)

NB. applicant has obligation to make full and fair disclosure, this will oblige applicant to tell court ANY evidence suggesting no risk (as well as risk)