What is an injunction?

An injunction is a Court Order prohibiting a person from doing something or requiring a person to do something.  As a first stage, an interim (or temporary) injunction will be obtained which will last until a further Court Order is made or the trial is heard in full.

Types of injunction

There are many types of injunction but in this briefing paper we concentrate on the following:-

  • Search Orders (requiring a party to admit another party to premises for the purposes of preserving evidence).
  • Freezing Order (to restrain disposal of assets).
  • Orders for disclosure of documents before proceedings (where it appears to the Court to be likely that a potential party to proceedings has in their possession documents which are relevant to a claim).
  • Orders preserving property.
  • Orders of disclosure of documents by a non-party.
  • Springboard Relief (An injunction to prevent a former employee who has used confidential information to their own advantage from gaining a head start in competition with their former employer).

Sectors

Injunctions can be obtained in many types of case including:  Corporate (e.g. restraining unlawful acts by a director or board of a company); Commercial (e.g. protecting a company against the import of cheap, replica body parts); Employment (e.g. where a company wishes to stop a former director from setting up in competition with it); Property (e.g. prevent neighbours from causing a nuisance); Construction (e.g. preventing someone from carrying out building works); Intellectual property (e.g. where company A obtain an injunction to restrain company B from passing off company A’s goods as its own).

Applying for an injunction:-

If there appears to be grounds for applying for an injunction, it is essential that evidence to support an application to the Court is gathered rapidly and that there is no delay in making an application to the Court.

An application can be made once proceedings have begun or before the start of court proceedings if the matter is urgent.

If an application is made without notice, it is essential that full, fair and accurate disclosure of all material information is made to the Court.  The party seeking the injunction will file its evidence at Court together with a Witness Statement or Affidavit setting out in detail why it seeks an injunction.

A party seeking an injunction is required to give a cross-undertaking in damages (i.e. to be prepared to compensate the party against whom the injunction is obtained if it is subsequently found that the injunction should not have been granted).

Obtaining an injunction

Depending on the nature of the dispute, an injunction may be obtained with or without notice to the other side.

If it is granted without notice, a hearing is likely to be fixed approximately 10 days later to give the person who is being injuncted an opportunity to explain his position to the Court.

During this time, the opponent will file and serve its evidence.  Discussions may take place between the parties to try to resolve some or all of the issues.  During this time directions may be agreed between the parties to enable the case to come to trial.

Alternatively, a Defendant may offer an undertaking to the Court (e.g. to refrain from acting in a particular way until trial).  If the Defendant breaches the undertaking, action may be taken by the Claimant in respect of such a breach (e.g. company A alleges that X (a former employee) has acted in breach of a restrictive covenant by dealing with the customers of the company.  X gives an undertaking to the Court not to do so before trial.  However, he subsequently approaches a customer in breach of the terms of the undertaking.  The company refers the matter back to the Court to determine what action should be taken in respect of the breach.)

What if I am served with an injunction?

If you are served with an injunction you should see legal advice immediately.  You will need to inform your solicitor of everything that may be relevant to your case.

You should not do anything that may amount to a breach of the injunction.

Specific orders:

Search orders

The Court may grant an interim remedy in the form of an Order requiring a party to admit another party to premises “for the purposes of preserving evidence”.  Applications for Search Orders are made without prior notice.  Applications must be supported by Affidavit evidence setting out full details of the facts relied on by the person seeking the Order.

If a person disobeys a Search Order, they may be in contempt of court because there will be a real possibility that evidence will be destroyed or disposed of.

Invariably an independent solicitor (not associated with the case) will be appointed by the Court to supervise* the search and ensure that it is conducted fairly.

The Search Order will usually contain a date for the Court to hear the cases of both parties.

Freezing orders

A Freezing Order (formerly Mareva Injunction) is an interim order that prevents a party from disposing of; or dealing with or diminishing the value of his assets (which can include money, land and specific items (e.g. moveable chattels).  The Order is obtained so that these assets are preserved and available to satisfy any money judgment.

A Freezing Order’s sole purpose is to prevent the dissipation of assets which would otherwise be available to meet a judgment.

Generally an application for a Freezing Injunction will be made without notice.

Again, Applicants are under a duty to provide full notes of the hearing to any party that would be affected by the relief sought.

To succeed, the Applicant must have a “good arguable case”.

It is essential that the Defendant is entitled to a proper opportunity to present its case at the with notice hearing.

The Freezing Injunction takes effect at the moment it is pronounced – even though it has neither been drawn up nor served on the Defendant.

Normally an Interim Order in the form of a Freezing Injunction will also contain an Order requiring the Defendant to provide information concerning assets.

A person who disobeys a Freezing Order may be dealt with by contempt of court proceedings.

Given the serious damage that could have been done to a Defendant’s business and reputation by the grant of a Freezing Order against him, a cross-undertaking in damages must normally be offered by the Claimant.

Order to inspect

Order to inspect and take samples of property

The Court, on the application of any person, has the power to make an Order providing for:

a)     The inspection, photography, preservation, custody and detention of property which appears to the Court to be property which may become the subject matter of subsequent proceedings in Court and to which any question may arise in any such proceedings; and

b)    Take samples of any such property.

Orders for disclosure

Orders for disclosure of documents before claim

The Court shall have the power to order a person who appears to the Court to be likely to be a party to the proceedings and to be likely to have or to have had in their possession, custody or power any documents which are relevant to an issue arising or likely to arise to disclose whether those documents are in their possession, custody or power.

Springboard injunctions

This is a type of injunction that is designed to remove or limit the advantage or head start that an employee has obtained through unlawful activities – typically through the misuse of the employer’s confidential information.

A springboard Injunction is unlike other kinds of injunction because its objective is to restore a level playing field between the parties rather than to prevent unlawful activity.

The following must be established:

  • That there has been unlawful behaviour by the former employee or director (e.g. misuse of confidential information or reach of duty);
  • That an unfair competitive advantage has been obtained;
  • That the nature and period of the competitive advantage is more than short term;
  • That the advantage still exists at the date when the Springboard Injunction is sought and will continue unless the relief is granted.

The nature and length of the springboard shall be fair and just in all the circumstances.

Costs

There is always urgency in obtaining injunctions.  As such, the amount of work to be done is concentrated into a short period of time and involves a highly intensive amount of work, examining documents, preparing witness statements, serving papers and often attending numerous hearings in a short timeframe.

The costs of applying for an injunction can be high although the rewards in terms of minimising damage to a client’s business and bring about an effective settlement more speedily than may otherwise be the case can often be highly advantageous.

About the author

Andrew Spooner Consultant

Andrew specialises in commercial disputes including complex claims for breach of contract and negligence particularly in the manufacturing and engineering industries, shareholder disputes and other claims arising out of corporate transactions and partnership disputes.