Topic 2: Contract Injunctions

Question 0

What are mandatory and prohibitory injunctions?

Answer 0

• Mandatory injunctions : require D to do something affirmative.
• Prohibitory injunctions : restrain D from something that D shouldn’t be doing. (enforcing a negative obligation)

Question 1

What are the types of injunctions?

Answer 1

1. Mandatory and Prohibitory
2. Interim, interlocutory and Perpetual
3. Ex Parte or Inter Partes
4. Apprehended Breach or actual breach
5. Mareva Injunctions

Question 2

What is the difference between interim, interlocutory and perpetual injunctions?

Answer 2

• Perpetual injunction: they can remain, in theory, indefinitely. It is a form of FINAL RELIEF.
• Interim - very short term in case of urgency. It is to maintain the status quo until D served and has chance to appear before a court.
• Interlocutory - maintain status quo from the time D appears in court, until final determination of matter.

Question 3

For an interlocutory injunction, what are the two questions a court must answer first before granting and what case?

Answer 3

1. Is there a serious issue to be tried? (low hurdle, not whether P would succeed)
2. Does balance of convenience favour granting an injunction?

Active Leisure Sports v Sportsman Australia

Question 4

What are the facts of Active Leisure Sports v Sportsman Australia?

Answer 4

• P sold sports goods and the Defendant was retailer who bought goods from P.
• Invoices included a Romalpa clause which said seller retains title to goods until it receives payments for those goods.
• D had possession, but P retained title until payment
• P supplied goods to D, but D went into financial difficulty and went into receivership.
• In the meantime, it still continued to trade because receiver had to rid it D of financial difficulties.
• When D went into receivership, some invoices unpaid, so title to some of the goods still held by P.
• P applied for interlocutory injunction to restrain receivers from offering those goods for sale.

Court held:
- Yes clearly there was legal issue to be tried
- balance of convenience:
P argued irreparable harm if interlocutory injunction not granted because they would lose security if D sold goods during trial
D argued if injunction granted, defeat the whole point of receiver ship because it was to get the company out of financial difficulties by selling. If injunction, wouldn’t have anything to sell
- At first instance, injunction denied.
Appeal held: a risk of irreparable injury to P is NOT a determinative factor. D’s need to continue to trade outweigh importance.
- Injunction denied.

Question 5

What is Ex Parte or Inter parte injunctions?

Answer 5

• Ex parte - injunction granted where only one party is before court, usually an interim injunction
• Inter parte - where both parties are present before a court in granting an injunction

Question 6

Any difference between apprehended or actual breach in terms of obtaining an injunction?

Answer 6

No difference, injunction can be obtained in either.

• Apprehended breach : breach hasn’t occurred but good reason to believe so
• Actual breach : has been breach at time of application for injunction

Question 7

What is a Mareva Injunction?

Answer 7

• This is a ‘freezing’ injunction preventing D from removing assets from it’s jurisdiction by freezing their assets such as bank accounts.

Applicant must show:
1. D is preparing to remove assets from jurisdiction.

Question 8

What is the main type of injunction concerned with?

Answer 8

Perpetual injunctions for BREACH of NEGATIVE STIPULATIONS

Question 9

What must the Applicant show to get a perpetual injunction for a breach of a negative stipulation?

Answer 9

1. Infringement of a legal right
2. Inadequacy of common law relief
3. Discretionary factors don’t affect grant

Question 10

What is a NEGATIVE stipulation?

Answer 10

Ample Petroleum v Mutton: Where the stipulation can be complied with by doing nothing.

Question 11

What are the facts of Ampol Petroleum v Mutton?

Answer 11

• AP entered into contract with owner of petrol station to provide petrol.
• Contract contained term: owner of petrol station wouldn’t sell station to anyone without obtaining AP’s consent.
• AP concerned for losing an outlet for petrol.
• D sold petrol station to a purchaser without obtaining AP’s approval
• A brought claim for injunction for breach of a negative stipulation

Court held:

• Contractual stipulation being forced had to be negative in substance meaning: is it possible for person subject to the stipulation to comply with it by doing nothing.
• In this case, yes, petrol station owner could go about it’s ordinary affairs and comply with it i.e. don’t have to do anything positive

Question 12

What is the issue with infringement of a legal right?

Answer 12

• If injunction is to enforce performance of a positive contractual obligation, then courts treat it as specific performance
• We’re concerned with: trying to enforce a negative contractual obligation (NOT to do something). Therefore can get injunction RESTRAINING BREACH of THAT NEGATIVE stipulation.

Question 13

Is the Inadequacy of common law relief same as SP and what is a case?

Answer 13

Yes.
Here it is where:
- P will suffer loss that is difficult to calculate; or
- It is too speculative (i.e. can’t tell how much damages if the negative stipulation had been complied with)

case: Ampol Petroleum:
- Ampol’s loss was an outlet for their petrol
- Hard to calculate long term effects such as profits in the future. Too speculative so damages in appropriate
- Only way to ensure Ampol got what it bargained for was to grant injunction restraining sale to an unapproved buyer.

Question 14

What discretionary factors are there?

Answer 14

Same as SP.
Note some don’t apply, some do such as:
1. Lack of mutuality
2. Constant supervision

Question 15

What are the cases for discretionary factors for an injunction to restrain breach of a negative stipulation?

Answer 15

1. Lumley v Wagner
2. Cowell v Rosehill Racecourse
3. Page on Records v Britton

Question 17

What are the facts of Cowell v Rosehill Racecourse?

Answer 17

• Cowell went to watch races at Rosehill Racecourse.
• He paid to get in but behave badly
• Owners of racecourse removed him before it had ended.
• He was removed with degree of violence
• He brought claim for damages in assault and also applied for injunction.

Court held:

• If Mr C could obtain injunction restraining race course owners from removing him, then damages would succeed, so they dealt with injunction.
• His legal right had been infringed; he had paid but ejected.
• Negative stipulation was: race course owners had undertaken not to remove him until end of meeting
• To comply, the could not have ejected him and done nothing
• CL damages inadequate because unique meeting, even if go to another one, not the same.
• However discretionary factor: P had positive obligation to act well, D’s obligation dependent on whether P performed = mutuality problem
• Mutuality problem because D couldn’t get SP of Mr C’s obligation because of constant supervision problem.
• So unlike D would get SP, therefore no mutuality
• Therefore no award for injunction restraining D from ejecting Mr C.

Question 18

What are the facts of Page One records v Britton?

Answer 18

• Pop Group called Troggs managed by P.
• Term of contract was Troggs would not engage in any other person during the 5 year period they was contracted to P.
• D wanted to terminate, so P hadn’t breached contract
• P brought claim for injunction from D terminating management contract

court held:

• T had negative obligation not to engage any other person.
• P’s positive obligation were to provide services and quality of performance mattered.
• Courts asked (turning situation around): could T enforce obligations of P by SP? No because constant supervision problem.
• Lack of mutuality, so court would not award SP to the defendants, and hence no award of injunction restraining Troggs from breaching negative contractual stipulation

Question 19

What is the relevance of Lumley v Wagner?

Answer 19

Example of discretionary factor for injunction for breach of negative stipulation.

• P owner of a theatre in UK. He engaged D to sing in his theatre.
• Contract for 3 months containing term that D would NOT sing in any other theatre during that 3 months.
• D sang in another theatre as well.

Court held:

• Injunction granted.
• The stipulation didn’t require her to sing in his theatre, but just not to sing anywhere else.
• D had a positive obligation to sing under contract, so SP can’t be given because concerned with quality. She didn’t just have to sing, but had to be of certain quality, therefore issue of constant supervision.
• HENCE WHY court stressed it was enforcing a negative obligation.