knowledge | 31 May 2016 |
An injunction is an order of court requiring a person to refrain from doing (prohibitory injunction), or to do, a particular act (mandatory injunction). It is a form of equitable relief and provides the applicant with a remedy where a grievance cannot be met by the common law remedy of damages.
It is normally the plaintiff who seeks an injunction although a defendant is not precluded from seeking an injunction on foot of a counterclaim.
Injunctions are sought primarily in circumstances where maintenance of the status quo until the full hearing of the matter is required in order to protect the rights of the applicant and to avoid irreparable harm to them in the intervening period leading to the full hearing.
An Injunction is not a Cause of Action
An injunction is a remedy rather than a cause of action. It protects a right. Therefore, in order to seek an injunction, a right or interest must be established and a breach or imminent breach of such right identified.
Types of Injunctions
An interim injunction is sought where there is an urgent need for injunctive relief and is often granted on an ex parte basis. This type of injunction is granted for a short period of time typically until the hearing of a motion for similar interlocutory relief. In any event, the interim order will only have effect until a further order has been made by the court at which time it will expire.
As applications for interim injunctions are generally made on an ex parte basis there is a requirement of utmost good faith and disclosure of all material information by the applicant irrespective of whether the information would be in favour or against the granting of the injunction. It is for the court to decide whether the information is “material”, not the applicant.
When injunctive relief is granted on an ex parte basis there is a need to continue to promptly prosecute the case either by progressing to an interlocutory hearing or by advancing the substantive proceedings.
An interlocutory injunction is granted to preserve the status quo pending a full determination of the matter in question. An interlocutory injunction is usually stated to last until the determination of the issues in the proceedings after a full trial or until further order. The order is granted when proceedings are in being but before the full hearing of the issues involved. It is temporary in nature and not a determination of the merits of the proceedings although resolution of the substantive issues in the proceedings may result from the interlocutory hearing.
An application for an interlocutory injunction is generally made on notice to the parties against whom the injunctive relief is sought and several rounds of affidavit evidence may be exchanged before the hearing of the application. The test to be applied in Ireland for the granting of interlocutory injunctions was set out by the Supreme Court in Campus Oil Ltd v Minister for Industry and Energy (No 2).
There are three elements to the Campus Oil test:
- There is a fair/bona fide/serious question to be tried (threshold test);
- Damages are not an adequate remedy
On this issue the Court will look at whether a plaintiff will be adequately compensated by an award of damages for any loss suffered between the hearing of the interlocutory injunction and the trial of the action if an injunction is not granted at the interlocutory stage. If the plaintiff would be adequately compensated, the interlocutory injunction will be refused. This is subject to the provision that the defendant would be in a position to pay such damages;
- If damages would not fully compensate either party, then the court may consider the balance of convenience.
The court will consider each step of this cumulative test in turn and will only get to the point of assessing where the balance of convenience lies if the applicant has satisfied the court that damages would not be an adequate remedy.
The court will approach the balance of convenience issue on the basis of trying to achieve a solution which minimises the risk of injustice.
A perpetual injunction (permanent injunction) is one which is granted at the final determination of the case as opposed to at an interim or interlocutory stage. It may be granted after it has been shown that the party seeking the order has an interest in the right, the right has been infringed and continues to be infringed or there is a risk it will be infringed and that the future infringement will be continuous.
Failure to secure an interim or interlocutory injunction is no bar to the granting of a perpetual injunction at the final determination of the matter at issue.
Quia Timet Injunction
A quia timet injunction is an injunction which will prohibit a projected actionable wrongful act where such an act is threatened, apprehended or imminent. It can also be sought to prevent the repetition of wrongful acts.
Anti-suit injunctions are a device by which a party can apply for an injunction in his own jurisdiction to restrain his opponent who is bringing proceedings in a foreign injunction from continuing with his action. The jurisdiction is exercised where it is appropriate to avoid injustice.
A Mareva injunction is directed towards adefendant whom it is feared may remove,conceal or dissipate his assets prior to anyattempt to enforce a judgment againsthim. It can be granted in advance of thesubstantive trial of the action but also afterjudgment if there is a risk that assets willbe removed in order to avoid execution ofjudgment. It takes the form of an orderingrestraining the defendant from dissipatingassets below a certain level (usually thelevel of the anticipated judgment a partywants to enforce).
A Mareva injunction will not, for example, improve in principle the position of a party who knows that a company is to be wound up and in some way conceives of a Mareva injunction as being a means of protecting their assets to the exclusion of other creditors. The Mareva injunction simply improves the chances of there being funds available.
Applications for Mareva injunctions cause significant disruption and reputational damage for defendants and this can clearly lead to abuse of the remedy by plaintiffs. The courts are alive to that fact.
Anton Piller Order
Preserving key evidence and ensuring that trials are not frustrated due to a lack of evidence is a key factor in litigation. An Anton Piller order is a form of mandatory injunction requiring the defendant to permit the plaintiff or his agents to enter the defendant’s premises with a view to inspecting and potentially removing items of evidence. The orders are granted in very limited circumstances.
Undertaking as to Damages
When applying for an injunction on an interim or interlocutory basis, the party seeking the injunction must also be in a position to provide an undertaking as to damages. This allows the opposing party to be compensated for any damage caused as a result of the injunction where the plaintiff fails on the merits at trial and/or it is found that the earlier injunction should not have been granted. It is important to carefully assess the extent of this damage and the potential liability being assumed by giving an undertaking as to damages, before doing so. Depending on the facts of a case the potential liability could be very significant.
When applying for an injunction typically the party giving the undertaking as to damages will need to provide some information to the Court to demonstrate it is sufficiently well resourced (financially) to meet any order for damages that may be made on foot of the undertaking and this can sometimes involve disclosing commercially sensitive information or it can be as straightforward as exhibiting your organisation’s published accounts.
It is only in exceptional cases that the undertaking as to damages will be dispensed with. Where, however, the case involves an issue of public law, the court may take the view that the adequacy of damages and the ability of either side to discharge an award of damages is irrelevant.
In certain circumstances, if there are any doubts about the plaintiff’s resources, the court may require either security or the payment of money into the court to “fortify” the undertaking, or as an alternative, an undertaking from a more financially secure person or corporate body, such as a parent corporation of the application. Such a requirement is quite rare.
Breach of an Injunction
An injunction is binding on any person having notice of the making of the order. A non-party who acts contrary to an injunction when they know of its existence and terms can be guilty of contempt. If there is a breach then the proper procedure is to bring contempt proceedings rather than to seek a further injunction.
It is necessary to ensure that the terms of any injunction granted are sufficiently clear so that a defendant knows what he has to comply with. It will be harder to argue that a defendant was in breach of an injunction if its terms are unclear.
This briefing is for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.