DPP Business Tax

Article on Injunctions Explained

An application can be made to the Court seeking an order that an individual or a company stops doing, a prohibitory injunction, or to do, a mandatory injunction, a particular act or thing. Anyone that breaches an injunction can be held in contempt of Court which in some circumstances can lead to imprisonment.

An injunction may be obtained before a case goes to trial. This type of injunction is known as an “interlocutory” or “interim” injunction. It can remain in force for a specified period of time or it can remain in force until the matter comes to trial or the Court makes any further order. When the case comes to trial, the Court will decide whether or not to make a “final” injunction.

An application for an injunction can be made before or after Court proceedings have been issued. The Court can grant an injunction before the start of Court proceedings where the matter is urgent or if it necessary in the interests of justice. In some instances, the injunction can be applied for on ex parte basis. This is a Latin phrase which means that the application is applied for without notice being provided to the opposing party. This can be done where there is a real and serious risk that the party against whom the injunction is being sought will dissipate assets or destroy evidence if they had notice of the forthcoming application.The Courts are extremely cautious in such circumstances and the onus is on the applicant and his legal advisors to make full and frank disclosure of all of the relevant facts to the Court, including any matters that may go against the applicant’s case. Any failure to do so will lead to the injunction being dismissed and costs being awarded against the applicant. The Court could also award any damages that the other party may have suffered as a result of the injunction.

Where an application is made on an “inter partes” basis, the Court will hear submissions from both parties.
In cases that are not so urgent, the application for the injunction may be made “ex parte on notice”. This is where the opposing party may be allowed make limited representations.

The following general principles are applicable to all injunctions:

  1. The party applying for the Injunction must have a valid underlying claim. The applicant must be able to show that it has a substantive cause of action (i.e. one capable of founding an action before the Court).
  2. Injunctions are a discretionary and equitable remedy. Accordingly, the Court is not obliged to grant an injunction and will use its discretion to only grant an injunction where it appears to be just and convenient to do so.
  3. There should not be any delay in applying for an injunction. The Court may refuse to grant the injunction if there is any significant delay.
  4. The party applying for the injunction must come with “clean hands” (i.e. they must have acted properly themselves).
  5. Damages must not be an adequate remedy

The Court will not grant an injunction if an award of financial compensation would be an adequate remedy (i.e. if the party applying for the injunction can be redressed in full, simply by an award of damages).

If an “ex parte” injunction is granted the Court will then fix a return date for a further hearing where all parties can attend to present their cases. The interim injunction will continue until the return date hearing. The Court may allow the interim injunction to last indefinitely until the final hearing of the matter, but with a provision that the opposing party can apply to the Court to vary or discharge the undertaking.

One of the normal conditions imposed by the Court for anyone applying for an injunction is that they provide to the opposing party a “cross- undertaking in damages”. This is in general terms a promise to the Court and the other side that the applicant will pay any damages caused, if the Court should decide at a later date for whatever reason that the injunction should not have been granted or should be discharged. The party giving such an undertaking may also have to prove to the Court that it has the means to be able to pay such a liability. This will be a factor that the Court will take into consideration when deciding on whether to grant the injunction.

If an application has to be made on an urgent basis there may not be time to issue proceedings or issue the application in the normal. In these circumstances, the applicant will have to undertake to the Court that the proceedings and the application will be issued urgently after the injunction is granted. Any application for an urgent injunction must usually be supported by evidence in the form of a witness statement or affidavit. There is no need for any witnesses to attend the hearing, it will be dealt with on paper only.

Applying for or resisting an injunction is, without doubt, expensive as the legal team will have to act on an urgent basis putting aside any other work and proceeding on many occasions out of normal office working hours. Costs can easily run into many thousands of pounds. The costs will be determined by the individual facts and circumstances of each case subject to matters such as the complexity of the issues involved, the number of witnesses and how quickly the injunction is required.

It is extremely important that anyone considering an application seeking an injunction should obtain legal advice before proceeding.

If you would like to discuss any matters in this article or require any advice in relation to business litigation or injunctions please contact Shahid Miah or Taj Barring.

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