Injunctions – A useful remedy?

We are often asked by clients to make or oppose an application for an urgent order restraining a threatened potentially unlawful act. These orders are called interlocutory injunctions. An example of this is where one of our clients discovers that a competitor is producing and selling counterfeit products. Another example is where a terminated franchisee, sets up a business identical to the franchised business in breach of a restraint clause. There are many other examples.

In very urgent cases an interlocutory injunction can be obtained within a matter of hours without notice to the other party, but these types of injunctions only last for a few days so that the other party can be served with documents and come back to Court to put up any opposition. Most applications for interlocutory injunctions are made within 3-10 days of us receiving instructions after papers have been served on the other parties.

Before a Judge will grant an interlocutory injunction, the Judge has to be satisfied that the applicant has some legal basis for making the claim – in other words, that there is a serious question to be tried. If that hurdle is jumped, the Judge has to be satisfied that the balance of convenience is in favour of granting the interlocutory injunction.For this purpose, the Judge considers evidence from both sides as to the likely impact of the interlocutory injunction being granted or not being granted. In reality, it is a balancing exercise. If the Judge believes that a monetary award could provide an adequate remedy for the applicant, the Judge may not grant an interlocutory injunction.

If the Judge considers there is a serious question to be tried and the balance of convenience favours the granting of an interlocutory injunction, the Judge will make the order upon the applicant giving an undertaking to the court to compensate the other party for any loss the other party sustains whilst the interlocutory injunction is in place, if at trial (which could be months or years later) the other party is successful. The reason that such an undertaking must be given by a successful applicant is that, on an application for an interlocutory injunction, the Judge only has a cursory look at the facts to determine if there is a serious question to be tried. The evidence is not tested through the rigours of cross-examination that occurs at a trial. Therefore it is possible that at trial, the applicant may fail and there needs to be some remedy for the respondent who has had to comply with the interlocutory injunction pending trial.

Despite this, the obtaining of an interlocutory injunction usually places the applicant in a very strong negotiating position thereafter and a large majority of cases resolve on terms favourable to the applicant.

The MST Commercial Litigation team has extensive experience in applying for and opposing applications for interlocutory injunctions. We will discuss strategy with you to ensure that the best litigation tactics are applied having regard to our clients’ commercial interests.

In subsequent editions of MST news, we will publish articles dealing with orders that freeze another party’s assets pending a trial and orders that permit searches of another party’s premises and seizure of key supporting evidence.

Author: Philip Colman