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A prohibitory injunction is an order enforcing a party to refrain from doing a specific act as opposed to ordering a party to do a specific act, which is known as a mandatory injunction. Prohibitory injunctions are used to prevent a breach of confidence or to enforce a restrictive covenant such as non-solicitation of clients or customers or non-poaching of employees.
We advise claimants on obtaining and enforcing injunctions. We equally advise defendants on defences to an order of an injunction. Based on our experience of advising claimants and defendants on injunctions we have compiled an overview of the key issues to consider.
An injunction is a remedy, not a cause of action. It carries a sanction of contempt of court if it is disobeyed. Given the serious nature of the remedy:
An interim injunction is a provisional measure taken at an early stage in the proceedings, before trial and before any final decision on the merits of either side's case. It remains in force until discharged by the court. The interim injunction is intended to prevent injustice pending trial. (In practice, the main action is often not pursued.)
A final injunction continues after the conclusion of proceedings and is granted to last perpetually or until a specified date. To obtain a final injunction, the claimant's case must be proved on a balance of probabilities (a higher burden of proof than for an interim injunction). This may be possible where the application is to enforce a restrictive covenant in a contract.
The court may accept undertakings in place of, or as part of, an injunction. Undertakings are given by individuals and are subject to the penalty of contempt of court if broken. They offer the defendant the chance to restrict the order made by offering promises which may be more limited than standard orders, but sufficient to move the balance of convenience so that an order is not considered appropriate. They will usually be recorded in the order.
The criteria below relate to the exercise of the court's discretion to grant interim injunctions.
The grant of an injunction is at the discretion of the court and may be granted where it appears to be just and convenient to do so. The court should also consider whether the grant of relief is proportionate in the context of the European Convention on Human Rights.
In American Cyanamid Co v Ethicon Ltd [1975] AC 396, Lord Diplock laid down guidelines on how the court's discretion to grant interim injunctions should be exercised. These are known as the "American Cyanamid guidelines". The underlying principle is to enable the court to make an order that will do justice between the parties.
The main guidelines are:
The claimant does not need to show a prima facie case, in the sense of convincing the court that, on the evidence before it, he is more likely than not to obtain a final injunction at trial. However, the claim must not be "frivolous or vexatious". The claimant must satisfy the court that his cause of action has substance.
If the court finds that there is no serious question to be tried on the substantive claim, the injunction must be refused.
It is not appropriate for the court to undertake a detailed consideration of the law at the interim stage.
If the first guideline is fulfilled, the court then considers whether damages would be an adequate remedy for the claimant. If damages are an adequate remedy then the court is unlikely to grant the injunction. Where the wrongdoing has ceased and there is no likelihood of it recurring, no injunction will be granted.
Under UK law the court will also consider whether the defendant is likely to be able to pay any damages awarded in favour of the claimant.
If damages would be inadequate or there is doubt about the adequacy of damages, the court then seeks to balance the respective disadvantages the parties will suffer by virtue of the grant or refusal of an injunction.
The court will consider where the "balance of convenience" lies, that is, the respective inconvenience or loss to each party if the order is granted or not.
Most injunction cases are determined on the balance of convenience. Each case will depend on its facts.
Matters that the courts have found to be important include being deprived of employment, damage to the goodwill of a business, preserving confidential or financial information and the judge's intention to give directions for a speedy trial of the underlying issues.
In addition, the court will consider the claimant's ability to pay any damages that he is ordered to pay under his cross-undertaking in damages.
If the factors are evenly balanced the court should preserve the status quo. Therefore it is essential to move quickly and, if possible, apply for an injunction before any infringement or breach has taken place.
The court will consider whether the relief can be clearly expressed in an order and whether it would be enforceable.
If it is possible to assess the relative strengths of the parties' cases on the basis of the evidence available, this may be a significant factor in the exercise of the court's discretion.
There are a number of categories where the American Cyanamid principles will not apply under UK law and the court will investigate the merits of the cause of action. These include where the injunction would bring an end to the matter. The degree to which the merits of the case are investigated vary with the circumstances of each case. This will require an assessment of the merits rather than applying the test of whether there is a serious issue to be tried.
It is important for the claimant to apply sooner rather than later for the following reasons:
A claimant can apply even before his legal rights have been infringed if he has strong evidence that his legal rights are about to be infringed.
In cases of extreme urgency, the matter can be dealt with by telephone and out of court hours.
It is possible to apply for an interim injunction before issuing a Claim Form if:
A claimant will need to prove evidence to show:
Generally, an applicant must serve a copy of the application notice on the respondents as soon as practicable after it is filed and, in any event, at least three clear days before the hearing. This procedure is called an "on notice" application (formerly called an inter partes application).
It is possible to make an application without serving notice on the respondents where permitted by a provision of the CPR, Practice Direction or court order. This is called a "without notice" application (formerly called an ex parte application).The court may grant an application without notice if it appears to the court that there are good reasons for not giving notice. This may be the case if it can be established that giving notice may defeat the purpose of the application.
If an application is made without notice, the applicant must disclose all the relevant facts in relation to the application, even if some of the facts are adverse to his case. These must be included in the witness statement or affidavit. Failure to give full and frank disclosure can lead to the injunction being discharged.
Where the application is made on notice there is not such a high standard, but it will weaken the case if facts which are unhelpful to the case are ignored, since they may well be raised by the other side. It is therefore better to deal with these facts in the evidence than to try to explain them during the hearing.
An undertaking in damages is almost always required from a claimant when an interim injunction is granted. By the undertaking (also referred to as the cross-undertaking), the claimant is required to undertake to compensate the defendant for the loss incurred should it later transpire that the injunction was wrongly granted.
If the claimant has a change in circumstances which may affect his undertaking in damages, he must notify the court and the defendant.
Where there is doubt about the claimant's solvency, the defendant may seek an order that the claimant must provide security to support the cross-undertaking. To do this, the defendant must satisfy the court that the injunction is likely to cause the defendant significant loss and submit satisfactory evidence that the claimant may be unable to pay.
Under English law, it is usually necessary to prepare the following documents in order to obtain a mandatory or prohibitory injunction:
A skeleton argument is required for most High Court applications dealt with by judges. It is usual for the advocate to file it two clear days before the hearing if possible.
The Particulars of Claim can be relied on as evidence when supported by a statement of truth, but are usually insufficiently detailed. Full witness statements are usual. The witness statements must contain statements of truth.
Where the application is made without notice, the applicant has a duty of full and frank disclosure
For an application for an injunction to protect confidential information, the supporting evidence should address the following points:
Where the application is made on notice, the defendant can file evidence in opposition to the application. In an application relating to disclosure of confidential information, the defendant's evidence may deal with:
The order must set out clearly what the respondent must not do. It must specify the details: breach of confidentiality, mis-use of information, breach of restrictive covenant such as non-solicitation of customers, setting up in competition, poaching of employees, etc. It must also include a penal notice and the applicant's undertakings. It is usual and good practice to file a draft order with the application.
The injunction must have the requisite penal notice prominently endorsed on the front page. If it does not, the injunction may not be enforced by way of committal proceedings.
The order must also include the applicant's undertakings to court. An order for an interim injunction must include undertakings by the applicant to:
In addition, the court will consider whether the applicant should undertake to pay damages sustained by any person other than the respondent who suffers loss as a consequence of the order.
An injunction should be served personally on the person to whom it is addressed. Although there is no requirement stating this, effecting service in this way avoids arguments later about service.
Where other parties are likely to assist the defendant to breach the order, it is a good idea to serve those other parties too with the order for a prohbitory injunction or a mandatory injunction.
The injunction must be served within any time limit for service determined by the Court.
If it appears right to do so, an injunction can be discharged at the court's discretion under UK law when the matter again comes before the court on an application to continue the injunction on the following grounds:
If the injunction is disobeyed, under English law it usually carries a sanction of contempt of court. The injunction is usually enforced by committal proceedings, that is, by an application to commit the person who is in breach of the injunction to prison. However, this person can, in the alternative, be fined or made to pay damages. The court also has a power to order an act to be done under a mandatory injunction.
Mandatory injunctions and prohibitory injunctions are the means of enforcing confidentiality, privacy and restrictive covenants such as non-solicitation of customers or clients, non-poaching of employees and to prevent someone setting up in competition. Applications under English law must be made to the Court. Litigation is expensive and the outcome of an application for any injunction can never be guaranteed. The claimant must act swiftly to enforce its rights under the confidentiality clauses or restrictive covenants and the defendant must act swiftly in defence.
Gannons commercial litigation solicitors have the skill and experience to guide defendants and claimants through the process.
This paper is designed to provide a summary of the issues addressed. Therefore, it is not intended as a detailed commentary on the relevant law and any comments made should not be acted upon without first taking specific legal advice.