knowledge | 20 March 2020 |
COVID-19: Injunctions in Ireland - An Overview
While the work of the courts has been greatly scaled back in response to the outbreak of COVID-19, at the time of writing, the Courts Service has indicated that the High Court will continue to deal with certain urgent applications including injunctions and their enforcement. Businesses should therefore rest assured that where urgent matters relating to their business arise, the courts will be available to assist them where appropriate. In this briefing, we provide an overview of the law relating to injunctions.
An injunction is an order of the court requiring a person to refrain from doing (prohibitory injunction), or to do, a particular act (mandatory injunction). The former is the more common type of relief granted by the courts. An injunction is a form of equitable relief and provides the applicant with a remedy where their legal rights would not be adequately protected 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 before trial 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 (without the other side being present in court). 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 prohibitory injunctions was recently restated by the Supreme Court in Merck Sharp & Dohme v Clonmel Healthcare.1 See our related briefing here.
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 usually in his own jurisdiction to restrain his opponent who is bringing proceedings in a foreign jurisdiction from continuing with his action. The jurisdiction is exercised where it is appropriate to avoid injustice. It is not the appropriate remedy to restrain proceedings in another EU Member State where matters are governed by Brussels I recast.
A Mareva injunction is directed towards a defendant whom it is feared may remove, conceal or dissipate his assets prior to any attempt to enforce a judgment against him. It can be granted in advance of the substantive trial of the action but also after judgment if there is a risk that assets will be removed in order to avoid execution of judgment. It takes the form of an order restraining the defendant from dissipating assets below a certain level. This is usually the level of the anticipated judgment a party wants to enforce and can include an amount towards anticipated costs.
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 an 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.
How can we help?
The Disputes Group at McCann FitzGerald can assist organisations in addressing their concerns in and around a wide range of regulatory and litigation issues business may face in responding to COVID-19. Alternatively, your usual contact in McCann FitzGerald will be pleased to provide further information.
-  IESC 65.
This document has been prepared by McCann FitzGerald LLP 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.