Interm remedies, injunctions, security for costs (W10)

Question 1

CPR 25.2 - Time when an order for an interim remedy may be made

Answer 1

(1) An order for an interim remedy may be made at any time, including–
(a) before proceedings are started; and
(b) after judgment has been given.

(2) However–
(a) this is subject to any rule/PD/enactment which provides otherwise
(b) the court may grant an interim remedy before a claim has been made only if–
(i) the matter is urgent; or
(ii) it is otherwise desirable to do so in the interests of justice and
(c) unless the court otherwise orders, a defendant may not apply for any of the orders listed in CPR 25.1(1) before he has filed either an acknowledgment of service or defence.

(3) Where it grants an interim remedy before a claim has been commenced, the court should give directions requiring a claim to be commenced.
(4) In particular, the court need not direct that a claim be commenced where the application is made under s.33 Senior Courts Act 1981 or s.52 County Court Act 1984 (order for disclosure, inspection etc before commencement of a claim)

Question 2

CPR 25.3 - How to apply for an interim remedy

Answer 2

(1) The court may grant an interim remedy on an application made without notice if it appears to the court that there are good reasons for not giving notice.
(2) An application for an interim remedy must be supported by evidence unless the court orders otherwise.
(3) If the applicant makes an application without giving notice, the evidence in support of the application must state the reasons why notice has not been given.

Question 3

25APD.4 - Urgent applications and applications without notice

Answer 3

• Two categories:
  (1) Applications where a claim form has already been issued
  (2) Applications where a claim form has not yet been issued.
  In both cases, where notice has not been given to the respondent.
• Normally dealt with at a court hearing but cases of extreme urgency can be dealt with by telephone.
• Applications dealt with at a court hearing after issue of a claim form:
  (1) application notice, evidence in support and a draft order should be filed with the court 2 hours before the hearing wherever possible;
  (2) if an application is made before notice has been issued, a draft order should be provided at the hearing, and the application notice and evidence in support must be filed with the court on the same or next working day or as ordered by the court; and
  (3) except in cases where secrecy is essential, the applicant should take steps to notify the respondent informally of the application.
• Applications made before the issue of a claim form:
  (1) Unless the court orders otherwise, either the applicant must undertake to the court to issue a claim form immediately or the court will give directions for the commencement of the claim;
  (2) where possible the claim form should be served with the order for the injunction;
  (3) an order made before the issue of a claim form should state in the title after the names of the applicant and respondent “the Claimant and Defendant in an Intended Action.”
• Applications made by telephone:
  (1) when it is not possible to arrange a hearing, application can be made between 10am and 5pm weekdays by telephoning the Royal Court of Justice and asking to be put in contact with a High Court judge of the appropriate Division. In County Court proceedings, the appropriate County Court hearing centre should be contacted.
  (2) where an application is made outside those hours the applicant should either–
  (a) telephone the Royal Court of Justice where he will be put in contact with the clerk to the appropriate duty judge in the High Court;
  (b) the Urgent Court Business Officer of the appropriate Circuit who will contact the local duty judge;
  (3) where the facility is available, the judge will likely require a draft order to be faxed to him,
  (4) the application notice and evidence in support must be filed with the court on the same or next working day, together with two copies of the order for sealing,
  (5) injunctions will be heard by telephone only where the applicant is acting by counsel or solicitors.

Question 4

25APD.5 - Orders for injunctions

Answer 4

• An order for an injunction, unless the court orders otherwise, must contain:
  (1) an undertaking by the applicant to the court to pay any damages which the respondent sustains which the court considers the applicant should pay,
  (2) if made without notice to any other party, an undertaking by the applicant to the court to serve on the respondent the application notice, evidence in support and any order made asap,
  (3) if made without notice to any other party, a return date for a further hearing at which the party can be present,
  (4) if made before filing the application notice, an undertaking to file and pay the appropriate fee on the same or next working day, and
  (5) if made before issue of a claim form–
  (a) an undertaking to issue and pay the appropriate fee on the same or next working day, or
  (b) directions for the commencement of the claim.
• An order for an injunction made in the presence of all parties to be bound by it or made at a hearing of which they have had notice, may state that it is effective until trial or further order.
• An order for an injunction must set out clearly what the respondent must do or not do.

Question 5

CPR 25.3.2 - Notice

Answer 5

• Widespread use of mobile devices makes it unlikely that there will ever be a practical reason why an applicant should not at least give informal notice to a respondent.
• the applicant should take steps to notify the respondent informally of the application.
• if the applicant makes an application without giving notice, evidence in support of the application must state the reasons why notice was not given.
• the court should not entertain an application of which no notice has been given unless either giving notice would enable the defendant to take steps to defeat the purpose of the injunction or there has been literally no time to give notice before the injunction is required.

Question 6

CPR 25.3.3 - Evidence

Answer 6

• An application for an interim remedy must be supported by evidence unless the court orders otherwise.
• General rule is that evidence at hearings other than trial is to be by witness statement.
• However, parties may, if they wish, rely solely on the matters set out in (a) their statement of case or (b) their application, provided they are verified by a statement of truth.

Question 7

CPR 25.3.4 - Interim remedy order hearings in private

Answer 7

• General rule: hearing will be in public
• May be appropriate to be in private if publicity would defeat the object of the hearing, that it is on application without notice and it would be unjust to the respondent for it to be public, that it involves confidential information and publicity would damage that confidentiality.
• Court has an inherent power to order that information should not be disclosed.

Question 8

CPR 25.3.5 - Applicant’s disclosure duties where application is made without notice

Answer 8

• To grant an interim remedy in the form of an injunction without notice is ‘to grant an exceptional remedy’
• On all applications without notice, it is the duty of the applicant to make full and frank disclosure of all matters relevant to the application; this includes all matters of fact and law which are or may be adverse to the applicant.

Question 9

CPR 25.3.5.1 - Applicant’s disclosure duties where application made on short notice

Answer 9

• An application notice must be served as soon as practicable after it is filed and must be served at least 3 days before the court is to deal with the application.
• Where a respondent is given ‘short notice’ of an application, it cannot be expected that he will be properly prepared and able to put all relevant factual and legal information before the court.
• Therefore, the applicant is not released from their duty for full and frank disclosure even on short notice.
• However, there is no duty for the applicant to provide duplicate information where the respondent deals with it.

Question 10

CPR 25.3.6 - Discharge of injunction for material non-disclosure

Answer 10

• In an interim injunction case, if the duty of full and fair disclosure is not observed, the court may discharge the injunction, even if the injunction was rightly imposed.
• It is no excuse for an applicant to say that they were not aware of the importance of the matters they omitted to state.
• In deciding the consequences of any such breach, the court must take account of all relevant circumstances, including the gravity of the breach, the explanation offered, and the severity and duration of prejudice caused. It would only be in exceptional circumstances that the court would not discharge the order.

Question 11

CPR 25.3.7 - Applications to set aside for material non-disclosure not to be made without proper reason

Answer 11

Increasing tendency of litigations against whom interim injunctions have been granted to ‘allege material non-disclosure on rather slender grounds.’ Judges will be alert to this.

Question 12

CPR 25.3.8 - Discharge and re-grant of an injunction

Answer 12

• Where serious and culpable non-disclosure sufficient to result in the court discharging an injunction granted without notice has been established, the question whether a fresh injunction should be granted is likely to arise.
• If justice requires that a fresh injunction should be granted to protect the applicant from harm, it might be thought unjust to refuse it on the grounds of non-disclosure.
• However, in the event of any substantial breach, the court strongly inclines towards setting its order aside and not renewing it, so as to deprive the defaulting party of any advantage that the order may have given them.

Question 13

CPR 25.12 - Security for costs

Answer 13

(1) A defendant to any claim may apply under this section for security for his costs of the proceedings.
(2) An application for security for costs must be supported by written evidence.
(3) Where the court makes an order for security for costs, it will-
(a) determine the amount of security; and
(b) direct–
(i) the manner in which; and
(ii) the time within which
the security must be given.

Question 14

CPR 25.13 - Conditions to be satisfied

Answer 14

(1) The court may make an order for security for costs under CPR 25.12 if–
(a) it is satisfied, having regard to all the circumstances of the case, that it is just to make such an order; and
(b) (i) one or more of the conditions in paragraph (2) applies; or
(ii) an enactment permits the court to require security for costs.

(2) The conditions are–
(a) the claimant is–
(i) resident out of the jurisdiction; but
(ii) not resident in a State bound by the 2005 Hague Convention
(c) the claimant is a company or other body and there is reason to believe that it will be unable to pay the defendant’s costs if ordered to do so;
(d) the claimant has changed his address since the claim was commenced with a view to evading the consequences of litigation;
(e) the claimant failed to give his address in the claim form or give a correct address in that form;
(f) the claimant is acting as a nominal claimant, other than as a representative claimant, and there is reason to believe he will be unable to pay the defendant’s costs if ordered to do so;
(g) the claimant has taken steps in relation to his assets that would make it difficult to enforce an order for costs against him.

Question 15

CPR 25.13.1 - Discretionary power to order security for costs

Answer 15

• Two pre-requisities: (i) having regard to all the circumstances, it is just to make an order and (ii) one or more of the conditions applies, or an enactment permits the court to require security for costs.
• A circumstance of increasing importance is the ability of the respondent to comply with any order made.
• Another matter for consideration is the likelihood of the respondent’s claim succeeding.
• Parties however should not attempt to go into the merits of the case unless it can be clearly demonstrated that there is a high degree of probability of success or failure.
• A claimant will not be required to provide security for costs where, at the time of the application, the claim appears highly likely to succeed.
• An order is unlikely to be refused on the basis that the defendants are wealthy enough to survive without such protection, or are protected by some other means.
• It will ordinarily be just to order security unless the claimant can show that to do so would stifle the claim. They bear the burden on the balance of probabilities. They will need to show that they cannot provide security and they cannot obtain appropriate assistance to do so.

Question 16

CPR 25.13.12 - Condition (c): insolvent or impecunious company

Answer 16

• The applicant must show that ‘there is reason to believe that the claimant company will be unable to pay the defendant’s costs if ordered to do so.’
• the defendant does not have to show this on a balance of probabilities, but will fail to establish the ground if they cannot adduce sufficient evidence to give the court reason to believe that the claimant company “will be unable” to pay costs; evidence giving the court reason to believe they “may be unable” is not sufficient.
• Questions on the ability to pay are decided at the time of the application but must consider the future event of whether the claimant company will be able to pay at the end of trial; this calls for an assessment of what the claimant company may be expected to have available at that time in the future.
• A defendant who fails to make such an application will not normally be entitled to an order for costs payable by the liquidator or receiver of the company personally.

Question 17

CPR 25.13.13 - Particular discretionary factors where condition (c) is relied on

Answer 17

(1) whether the claimant’s claim is bona fide and not a sham
(2) whether the claimant has a reasonably good prospect of success
(3) whether there is an admission by the defendants in their defence or elsewhere that money is due
(4) whether there is a substantial payment into court or an ‘open offer’ of a substantial amount
(5) whether the application for security was being used oppressively, e.g. so as to stifle a genuine claim
(6) whether the claimant’s want of means has been brought about by the conduct of the defendant, such as delay in payment or in doing their part of any work
(7) whether the application for security is made at a late stage in the proceedings.

Question 18

CPR 25.13.13 - Examples where condition (c) is relied on

Answer 18

• A factor which militates against making an order under (c) is where the company has a co-claimant which has sufficient assets to meet any liability for the applicant’s costs.
• The court may order a claimant company in litigation to give security for costs.
• Where an order for security for costs might result in oppression, the court is entitled to refuse to grant the order. It is sufficient for the claimant to be able to show that there is a probability it will be not be able to pursue the claim if the order is granted; it does not have to prove it with certainty.
• In considering this, the court should consider whether the claimant would be able to raise the money from outside sources as well as its own resources e.g. shareholders
• In cases where there is a history of flouting proper court procedures or otherwise demonstrating a want of good faith, the court may order a form of security for costs but the power should be exercised with great caution.

Question 19

CPR 25.13.14 - Proving insolvency or impecuniosity

Answer 19

• The court will take account of evidence adduced by both sides.
• However, the test to be applied is lower than the balance of probabilities test.
• The fact that a company is in liquidation is prima facie evidence, unless evidence to the contrary is given.
• If there is dispute as to the interpretation of the company’s accounts, a single joint expert may be appointed.
• In some cases the liquidators may be able to prove that the company has sufficient free assets out of which to pay the defendant’s costs if ordered to do so.

Question 20

CPR 23.13.18 - Condition (g): taking steps as to assets which hinder enforcement

Answer 20

• The steps taken may be the dissipation of assets, their transfer overseas or into the names of third parties, or their transfer or removal to places unknown to the defendant.
• Principles to be applied:
  (i) It has to be steps that make the order difficult to enforce, it is not sufficient that the claimant has merely taken steps that are dishonest or reprehensible.
  (ii) the test is objective: not concerned with motive but with the effect of the claimant’s actions
  (iii) if it is reasonable to infer on all the evidence that the claimant has undisclosed assets, failure to disclose them could lead to the inference that he has put them out of reach of his creditors
  (iv) there is no temporal limitation as to when the steps were taken: they may have been taken before proceedings had commenced or were in contemplation
  (v) however, motive, intention and time are all relevant factors
  (vi) the court may take into account whether the claimant’s want of means has been brought about by any conduct of the defendant
  (vii) security should not be given where this would have the effect of stifling the claim
  (viii) the court can order any amount by way of security up to the full amount claimed
  (ix) the burden is on the claimant to show that he is unable to provide security not only from his own resources but by way of raising money from others, e.g. relatives and friends
  (x) when a party seeks to ensure that any security that may be required is within his resources, he must be full and candid as to his means; the court should scrutinise what it is told with a critical eye and may draw adverse inferences from unexplained gaps

Question 21

CPR 23.13.18 - Other considerations

Answer 21

• The proof of a specific intent to stultify future orders for costs will generally increase likelihood that an order for security for costs will be made.
• The fact an application under this ground will involve confidential financial information is not by itself a sufficient reason to persuade the court to make a direction for the application to be heard in private.

Question 22

CPR 25.1 - Available interim remedies

Answer 22

• Interim injunction
• Interim declaration
• An order:
  (i) for the detention, custody or preservation of relevant property
  (ii) for the taking of a sample of relevant property
  (iii) for the inspection of relevant property
  (iv) for the carry out of an experiment on or with relevant property
  (v) for the sale of relevant property of a perishable nature or which for any good reason is desirable to sell quickly
  (vi) for the payment of income from relevant property until a claim is decided
  (d) authorising a person to enter any land or building in the possession of a party to the proceedings
  (e) under s.4 Torts Act 1977 to deliver up goods
  (f) a freezing injunction, i.e. (i) restraining a party from removing assets from the jurisdiction or (ii) restraining a party from dealing with assets
  (g) directing the party to provide information about relevant property or assets subject to an application for a freezing injunction
  (h) a search order
  (i) an order for disclosure or inspection of documents/property against a party or non-party
  (j) an order for interim payment
  (k) an order for a specified fund to be paid into court or otherwise secured where there is a dispute over a party’s right to the fund
  (l) an order permitting a party seeking to recover personal property to pay money into court pending the outcome of proceedings and in return the property to be given up to him
  (m) an order directing a party to prepare and file accounts relating to the dispute
  (n) an order directing any account to be taken or inquiry to be made by the court
  (o) an order on enforcement of IP rights

Question 23

CPR 25.1.9 - Interim injunctions

Answer 23

• ‘a court order prohibiting a person from doing something or requiring a person to do something’
• must be worded so that the person enjoined knows precisely what he is to be prevented from doing or required to do.

Question 24

CPR 25.1.10 - Jurisdiction to grant interim injunction

Answer 24

• court may grant an injunction in all cases where it appears to the court to be just and convenient to do so
• any such order may be made either unconditionally or on such terms and conditions as the court thinks just
• the court has a jurisdiction to grant interim injunctions to a party who has been unsuccessful at trial and appeal is pending
• generally, any injunction that could be granted in the High Court can be granted in the County Court

Question 25

CPR 25.1.11 - Principles and guidelines to be applied on interim injunction

Answer 25

• Orders restricting freedom of expression (e.g. privacy and anonymity orders) are a derogation from the principle of open justice and require exceptional circumstances
• Courts are more reluctant to impose mandatory injunctions than prohibitory injunctions
• Court must seek to give effect to the overriding objective
• On an application for an interim injunction, the court should not seek to resolve ‘critical disputed questions of fact or difficult points of law’
• If a claimant has delayed in seeking a freezing injunction, this may cast doubt on the expressed concern as to risk of dissipation of assets.
• Previous dissipation of assets suggests a propensity to dissipate and therefore a substantial risk of dissipating in relation to remaining assets.

Question 26

CPR 25.1.14.1 - Undertaking by defendant in lieu of injunction

Answer 26

• where a claimant accepts a defendant’s offer of security and a consent order, it is important that the parties should be clear as to whether the claimant’s application to continue the interim injunction is thereby disposed of or whether it is simply adjourned
• the court may refuse to grant an interim injunction on the condition that the defendant pays a certain amount of money on a running basis if it wishes to continue selling the products which would otherwise be subject to an injunction
• determining whether it is one or the other involves construing the terms of the undertaking in the context of the order as a whole
• an undertaking is a solemn promise which a litigant volunteers to the court. A court has no power to impose any variation of the terms of a voluntary promise. A party who wishes to be released from an undertaking in lieu of an injunction, perhaps with an offer of a different undertaking substituted, may make an application for release to the court supported by evidence
• the court’s discretion to vary undertakings voluntarily given during proceedings is to be exercised only in certain circumstances, and the same considerations apply to applicants to vary an interim order made by consent.
• of particular importance is: (1) the context in which the undertaking was given and (2) whether the undertaking was (a) required by or offered to the court independently of the agreement with the other party or (b) as part of a collateral bargain between the parties. In the case of (a), the court is primarily concerned with the importance of ensuring that an undertaken solemnly given to the court is observed unless and until the court sees fit to discharge or release it. In the case of (b), the court is primarily concerned with the issue of justice between the parties and whether variation will deprive the beneficiary of the undertaking of the benefit of the bargain voluntarily made.
• The court will be concerned with the circumstances in which the application is made.
• The discretion to vary is exercisable only on a significant change of circumstances.

Question 27

CPR 25.1.14.2 - Discharge or release from, and appeals in relation to, undertakings

Answer 27

• court has no power to impose a variation of the terms of a voluntary promise.
• a litigant who wishes to cease to be bound by their undertaking should apply for release and may accompany the application with an offer of a further undertaking in different terms
• in the absence of extraordinary circumstances, a claimant who has given an undertaking in order to obtain an injunction or other order, is not normally entitled to pursue an appeal against that undertaking
• generally a change in circumstances must be shown
• a litigant who wishes to dispute the contents of an undertaking before an appeal court has two possible routes: (1) to decline to give the undertaking, accepting that the injunction will be refused or (2) to refuse to give the undertaking, but to invite the judge to make an order in equivalent terms or to make the injunction conditional on fortification. In either case, the refusal or the condition may be challenged on appeal.

Question 28

para 15-7 Vol 2: American Cyanamid guidelines

Answer 28

• A defendant can be sent to prison for breach of an interim injunction.
• It is sometimes impossible to make an order which may not do some injustice to one party or the other.
• Procedure to be adopted is that from American Cyanamid:
  (1) Is there a serious question to be tried? If yes:
  (2) Would damages be an adequate remedy for a party injured by the court’s grant of or failure to grant an injunction?
  (3) If not, where does the balance of convenience lie?
• The first question indicates a threshold requirement.

Question 29

para 15-8 Vol 2: expansion on American Cyanamid principles

Answer 29

• It is no part of the court’s function at this stage to try to resolve conflicts of evidence.
• The object of the interim injunction is to protect the claimant against injury by violation of their right for which they could not be adequately compensated in damages if the uncertainty were resolved in their favour at trial. Claimant’s need for such protection must be weighed against the corresponding need of the defendant to be protected against injury resulting from them having been prevented from exercising their own legal rights for which they could not be adequately compensated under a claimant’s undertaking in damages.
• The court must weigh one need against the other and decide where the balance of convenience lies.
• The court must be satisfied that the claim is not frivolous or vexatious; in other words, that there is a serious question to be tried.
• Unless the material available to the court at the hearing for an application fails to disclose that the claimant has any real prospect of succeeding in their claim, the court should go on to consider where the balance of convenience lies.
• It would be exceptional for appeal to be granted which turned upon where the balance of convenience lay.
• If there is no possible defence to the claim, there is no serious question to be decided at the trial. In those circumstances, the claimants are prima facie entitled to an injunction.

Question 30

para 15-24 Vol 2: Mandatory injunctions

Answer 30

• In some circumstances, a mandatory injunction may be granted to prevent an apprehended legal wrong where none has occurred at present and the applicant is without a remedy at law.
• the court must predict whether granting or withholding an injunction is more or less likely to cause irredeemable prejudice
• the basic principle is that the court should take whatever course seems likely to cause the least irremediable prejudice to one party or the other
• the court may by order grant an injunction if it appears to the court to be just and convenient to do so
• the overriding consideration is which course is likely to involve the last risk of injustice if it turns out to be wrong
• it is legitimate when granting a mandatory injunction to consider whether the court does feel a high degree of assurance that the claimant will be able to establish this right at trial
• even where the court is unable to feel a high degree of assurance, there may still be circumstances in which it is appropriate to grant a mandatory interim injunction where the risk of injustice if it is refused sufficiently outweighs the risk of injustice if it is granted.
• circumstances can arise where it is necessary that some form of mandatory order should be made to deal with a situation which cannot on the practical realities be left to wait until trial.

Question 31

paras 15-25 and -26 Vol 2: Cross-undertaking as to damages

Answer 31

• The court is normally only prepared to grant an interim injunction if the applicant is prepared to offer a cross-undertaking in damages
• The court has no power to order a party to give a cross-undertaking: it is something that an applicant must be prepared to give in return for the grant of an injunction
• a cross-undertaking is required for the protection not only of the respondent, but of any other person who may suffer loss in consequence of the order.
• an order granting an interim injunction may be made either unconditionally or on such terms and conditions as the court thinks just
• where a claimant is granted relief by way of interim injunction, it is the practice to make this subject to a condition in the form of the claimant’s undertaking to pay damages to the defendant for any loss sustained by reason of the injunction if it subsequently transpires that it ought not to have been granted.

Question 32

para 15-27 Vol 2: undertakings in interim injunctions generally

Answer 32

• A cross-undertaking is not given by the applicant to the respondent: it is given by the applicant to the court.
• It may be enforced by one who is not party to the proceedings
• When an undertaking given to the court is not complied with, there must be an enquiry by the court as to why that happened and what, if any, sanction or consequential order should be imposed
• An undertaking as to damages given by a claimant cannot be varied, but a claimant who wishes to cease to be bound may apply to the court to be released from it, accompanying that application with an offer to be bound by different terms
• The court cannot compel an applicant to give a cross undertaking but it can refuse to grant an injunction without one
• The willingness of the applicant to give a cross undertaking is a very material consideration for the court in determining whether an interim injunction should be granted
• As an extra condition, the claimant may be required to fortify the undertaking by giving security.

Question 33

para 15-30 - applicant unable to offer credible undertaking

Answer 33

• where an applicant for an interim injunction is impecunious or of limited means, they may be unable to give a credible undertaking, or unwilling to give an undertaking to the limit of their means
• the court will not deny a legally aided claimant an interim injunction to which they would otherwise be entitled simply on the grounds that their undertaking in damages would be of limited value
• if an applicant for an injunction says they do not wish to, or are not in a position to, give an unlimited cross-undertaking in damages, the burden is on them to show that external funds are not available, and why they should be able to provide a cross-undertaking in a lesser amount.