settlement, trial, injunctions Flashcards

Question

Process for without notice

Answer 1

issue claim form - If the application is so urgent it isn’t possible to issue a claim form and application notice, the court still has the power to order an injunction. - However, per PD25A, para 4.4, the applicant must usually undertake to the court to issue a claim form immediately or alternatively the court will direct the applicant to commence the claim. issue n244, file evidence and draft order hearing takes place in absence of D - C must give full and frank disclosure - any points D would have made if they had been there serve injunction on D if order granted - can be done before issuign CF if urgent as order not binding until served - need to also give them full notes of the hearing - can serve before return date only valid until return date - there is then further hearing. D can file evidence / make submissions court will discharge order or make injunc continue till trial

Answer 2

When interim injunction is granted, court requires C to give an undertaking that if, at a final trial, D wins and the court finds that the interim injunction should not have been ordered, C will pay D damages to compensate any loss the defendant suffers as a result of the injunction. (PD 25A para 5.1)

Answer 3

A defendant may give an undertaking to the court in place of an injunction. This may be because: D does not want to incur the time and costs of a contested hearing. D thinks he’s likely to lose the application so offers an undertaking to secure a better outcome than what the court might order. Helps D to come across as reasonable. They do not want to disclose arguments (as there will be no full hearing) but they will need to comply with pre-trial directions C should consider whether undertaking is worse offer

Answer 4

Under Part 81 CPR, main 2 methods: sequestration (seizure of property) – for company sequestration is usually used where the respondent is a limited company or an unincorporated association like a trade union (although it may also be used against the property of any director or officer of such an organisation if he was party to the breach). If the court grants leave for a writ of sequestration to be issued, it appoints four commissioners to handle the respondent’s finances and to extract a financial penalty for breaking the injunction. Companies may be vicariously liable for the acts of their employees (Re Supply of Ready Mixed Concrete (No 2)) committal to prison – for individual Individual respondents can be committed to prison for contempt of court. This penalty is also used against the individual officers of a defendant company who were responsible for the breach

Answer 5

general principles above and american cyanid (which dont apply to freezing injunctions and search orders)

Answer 6

1. do the American Cyanamid guidelines apply? not if there is unlikely to be trial do not apply to freezing injunctions and search orders Whether there is a serious question to be tried. Whether damages would be an adequate remedy for either side. What would be the balance of convenience of each of the parties should an order be granted? Whether there are any special factors. 2. Is the court satisfied that there is a serious question to be tried? 3. Would damages be an adequate remedy for the claimant? if yes, no injunction. if no, then need to consider if C can give sufficient undertaking as to damages 4. How far are damages (under the claimant’s cross-undertaking) an adequate remedy for the defendant? 5. Where does the balance of convenience lie? Whether the claimant or the defendant will suffer the greater harm if the decision goes against him, eg consider: Whether either will suffer irreparable harm, eg to reputation? What is the course of action which would cause the least harm? If the balance of the relative harm does not clearly favour one party, the court will uphold the status quo. If the claimant delayed in applying for the injunction, the status quo is the position as it was just before the application was issued. If there was no delay, the status quo is the position as it was before the start of the conduct which is the subject matter of the application. 6. Can the court make a decision after considering the above? If not, does one party clearly have the stronger case? 7. If an injunction is granted, consider an early trial. 8.Reach a conclusion.

Answer 7

english court must have jurisdiction applicant will usually have a cause of action (counterclaim is sufficient) - the applicant must provide an undertaking to the court to pay any damages to the other party if it is later shown that the order should not have been granted (see below).

Answer 8

1. good arguable case - court confirmed recently in Don Santos that “serious issue to be tried” needs to exist as for the jurisdictional gateways 2. D has property in the jurisdiction 3. That there is a real risk that if no order is made the defendant will dispose of his property in order to frustrate the enforcement of any judgment. 4. just and convenient

Answer 9

good arguable case - court confirmed recently in Don Santos that “serious issue to be tried” needs to exist as for the jurisdictional gateways A “good arguable case” does not require the applicant to prove that its arguments in the underlying proceedings will likely succeed. Rather, the applicant must show that its claim has a “plausible evidential basis” - argument in case law as to whether good arguable case relates to underlying action (fourie) or the application (the niedersachsen). Applications will be made without notice, otherwise point of the application would be undermined. Accordingly C is obliged to make full and frank disclosure of all relevant facts for and against his case (otherwise D can apply to have order set aside for non-disclosure and will also seek damages and costs) Disclosure obligations extend to facts discovered after making of order D has property within the jurisdiction and In the case of foreign defendants the courts will take account of the fact that, if a defendant is able to remove his property from the jurisdiction, it may be very difficult for the claimant to enforce a later judgment any type of asset can be frozen e.g. bank accounts, shares and intangible such as goodwill, crypto/NFTs The freezing order can be extended to assets in which the applicant has a proprietary interest or trust claim. For instance, the order may prohibit the disposal or diminution of value of assets obtained from the applicant. see below on WFO That there is a real risk that if no order is made the defendant will dispose of his property in order to frustrate the enforcement of any judgment. C must have clear evidence that the defendant would dispose of his property if the injunction is not granted. Usually needs evidence that D is a ‘debt dodger’ and removal of assets will be done with a corrupt or dishonest purpose. E.g. evidence that D has been dishonest with other creditors. Lord Donaldson MR held that the test for risk of dissipation is not subjective but objective: it does not depend on the intent of the respondent or his design but on the evidence that there is a real risk of dissipation of assets 4. just and convenient The Court in Re G [2022] considered precisely what is required to meet the “just and convenient” test. The two requirements are as follows: 1. that the person protected by the injunction has an interest that merits protection; and 2. that there is a legal or equitable principle which justifies exercising the power to order the defendant to do or not do something.

Answer 10

full and frank disclosure undertaking in damages and contempt of court effect of delay penal notice

Answer 11

continuing duty of full and frank disclosure i.e. facts for and against. requires good faith e.g. identifying any potential defences. The applicant must disclose facts that it knows and which it would have known had adequate enquiries been made. The extent of the enquires depends on the facts of the case (Brink’s Mat Ltd v Elcombe [1988] 3 All ER 188 (“Brink’s Mat”)). Note that without prejudice communications are generally excluded from full and frank disclosure, but the duty may require disclosure if necessary to prevent misleading the court if not full and frank disclosure, penalise in costs; set aside original injunction with replacement or no replacement e.g. in Irish Response, a freezing order (and corresponding search order) was discharged due to the applicant’s failure to disclose two material letters. applicant’s undertaking in damages and contempt of court · When a freezing order is granted, the order must contain the following undertakings as per PD25A para 5.1: o “(1) subject to paragraph 5.3, an undertaking by the applicant to the court to pay any damages which the respondent sustains which the court considers the applicant should pay. o (2) if made without notice to any other party, an undertaking by the applicant to the court to serve on the respondent the application notice, evidence in support and any order made as soon as practicable, o (3) if made without notice to any other party, a return date for a further hearing at which the other party can be present, o (4) if made before filing the application notice, an undertaking to file and pay the appropriate fee on the same or next working day, and o (5) if made before issue of a claim form– o (a) an undertaking to issue and pay the appropriate fee on the same or next working day, or o (b) directions for the commencement of the claim”. · Undertakings are required as they protect the respondent in a scenario where the court finds that the injunction should not have been granted. The most important undertaking is arguably the cross-undertaking in damages (PD25A para 5.1(a)), as it entitles the respondent to payment in the event that the respondent suffers damage as a result of an injunction that was incorrectly granted. In other words, if the respondent subsequently wins the underlying case/establishes that the injunction should not have been granted, the respondent can enforce the applicant’s undertaking and the applicant will have to provide compensation. undertakings contained in order - contempt of court if dont comply effect of delay - adverse consequences for A as risk of R dissipating in that time penal notice - cannot enforce FO without penal notice. · The injunction should also contain a penal notice, which is defined in CPR 81.2 as a “prominent notice on the front of an order warning that if the person against whom the order is made (and, in the case of a corporate body, a director or officer of that body) disobeys the court’s order, the person (or director or officer) may be held in contempt of court and punished by a fine, imprisonment, confiscation of assets or other punishment under the law”.

Answer 12

A court will make a worldwide freezing order in exceptional cases (Derby & Co Ltd v Weldon [1990] Ch 48) as they can have a significant impact on respondents who own property in different jurisdictions. There must therefore be: o A large amount of money involved [RR1] (in Santina Limited v Rare Art (London) Ltd [2023] EWHC 807 (Ch) “Mr Justice Edwin Johnson granted a worldwide freezing order, which froze the applicant’s assets up to the value of £200,000 to cover the respondent’s unpaid costs of its application for security for costs and its costs of the action.”[1]; o Insufficient property in the jurisdiction to meet the amount sought; and o A high risk of property being concealed.

Answer 13

n certain circumstances, the courts have jurisdiction to grant freezing orders against not only parties to a cause of action but also against a third party against whom the applicant assets no cause of action. In Chabra, a freezing order was granted against a third-party company where there was a good arguable case that the assets apparently vested in the name of the company were in fact beneficially the property of Mr Chabra o Therefore, those assets, or at least some of them, might be able to satisfy the applicant’s claims against Mr Chabra should the applicant be successful at trial. cardile considered q as to whether it was necessary for the respondent to have a beneficial interest in the assets held by the third party. o The court determined that it was not necessary for the respondent to have a beneficial interest in the assets held by the third party for a freezing order to be obtained over those assets.

Answer 14

PD 25A (para 6 of the annex): terms of freezing orders also apply to the respondent’s assets whether or not they are in its own name and solely or jointly owned. This was confirmed in the case of Pugachev, where a beneficial interest in a discretionary trust was deemed to come under the scope of a freezing order.

Answer 15

Enforcement o Guidelines on how the courts should exercise their discretion to allow WFO’s to be enforced were laid down by the Court of Appeal in Dadourian Group v Simms [2006]. o Before applying for a WFO, an applicant's solicitor should consider whether to seek permission at the outset to enforce the order in a foreign jurisdiction. BVI o The case of Broad Idea is one of the most influential cases regarding freezing orders – it involved a claim in Hong Kong by Convoy Collateral against its former director, Roy Cho, seeking damages totalling US$92 million. o The BVI court's authority to grant a freestanding freezing injunction against a BVI company was questioned, given the absence of enabling legislation and the company's non-participation in the substantive proceedings. o Broad Idea contested Justice Bannister's decision in Black Swan. § Black Swan Investment ISA v Harvest View Ltd (2010) (“Black Swan”)[ME1] This landmark decision introduced "Black Swan" injunctions, allowing claimants to secure freezing orders in the BVI without initiating a substantive claim in the jurisdiction, proving instrumental in international asset tracing and recovery. o The court stressed that, despite Justice Bannister's well-intentioned ruling, legislation should confer upon the BVI courts the jurisdiction to issue injunctions in support of foreign proceedings. Until such legislation is enacted, the judgment rendered Black Swan injunctions temporarily unattainable in the BVI.

Answer 16

court will apply the balance of convenience test - damage against R v benefit to A usually without notice supported by affidavit evidence and draft order - witness statement is not enough - made to the High Court n244 form cpr 25 applies as interim injunction if without notice, there is return date for with notice hearing

Answer 17

Usually on the basis that C did not disclose all material facts and that on the basis of all of the information, one of the grounds is not made out. Applications usually dealt with at trial of C’s action (but often in case of FI, D has to suffer consequences of FI until then (Ali & Fahd Shobokshi Group Ltd) if FI is set aside, judge should consider if it is appropriate to assess damages at once rather than wait till trial (Practice Direction (Mareva Injunctions and Anton Piller Order) C will normally have to pay costs and damages for loss caused by the injunction; implication is C did not properly investigate before bringing the application. other reasons = procedural irregularities, property affected by injunction does not belong to D or inordinate delay by C in pursuing claim

Answer 18

The reason why the respondent must serve the documents personally on the respondent is linked to the penal notice contained in the injunction – if the respondent is found to have breached the injunction (which would amount to contempt of court), the applicant must be able to confirm to the court that the injunction was personally served on a specific date i.e. that the respondent received and was aware of the existence of the injunction.

Answer 19

Asset disclosure § While the standard order mandates the respondent to disclose assets, specific details may be sought such as comprehensive information on bank accounts, regardless of their balance. o Rolling Disclosure orders § Seeking rolling disclosure of documents, particularly bank statements, can aid in monitoring the respondent's financial activities. Additional details about disclosed beneficial interests or other financial resources may be requested. o Asset preservation order § In cases with a proprietary claim, specific preservation of traceable proceeds may be necessary. The order may restrict the respondent from using such funds for legal costs or other expenses. o Order for further information § The court may permit questions aimed at revealing asset locations, crucial for tracing exercises. o Order for delivery up of passport § An extreme measure, appropriate when there is a risk of the respondent leaving the jurisdiction to hinder enforcement orders. o Order for attendance for cross-examination § Justified by special circumstances, usually after the respondent provides an affidavit, and the applicant is dissatisfied with the answers. o Norwich Pharmacal and Bankers Trust orders § These compel disclosure from respondents or third parties to identify assets or wrongdoers. o Disclosure of a third party's bank accounts § Exceptional circumstances may warrant such disclosure, usually initiated as a Part 8 claim. o Gagging orders § Restraining those served from informing third parties of proceedings or the order, useful in multi-party fraud cases. o Appointment of a receiver - A powerful but intrusive remedy, typically used when a freezing order alone is insufficient, and there is a measurable risk of the respondent breaching the order.

Answer 20

FI need to contain penal notice, contempt of court if breach terms of FO

Answer 21

usually have a short timeframe in which to fulfil specific obligations. This usually involves promptly preparing and submitting an affidavit[ME1] , which is a written declaration or statement that is sworn by oath. Affidavits are used for freezing orders as they require disclosure of all assets exceeding, for instance, £1,000 may necessitate revealing details about your income and monthly expenditures to the applicant to enable you to access funds for legitimate living expenses. While these disclosure requirements are standard in freezing injunctions, it is essential to note that the court holds broad discretionary powers in shaping the orders. misrep can lead to contempt of court so need to be honest and cooperative consensually discharge FO?

Answer 22

dvantages of FO preserve assets for enforcement assist in asset tracing by forcing R to disclose details of assets tactically powerful due to penal order may lead to resolution of underlying dispute can be used for digital assets e.g. crypto disadvantages draconian expensive and burdensome to give full and frank disclosure applicant needs to give undertaking to pay costs incurred with complying with order if order should not have been granted does not provide A with security over assets or priority over assets over other creditors not enforceable overseas until it is reg and recognised by foreign court

Answer 23

On 13 February 2025, HMCTS published new model orders for freezing injunctionsOpens in a new window and proprietary and freezing injunctionsOpens in a new window. This follows the publication of a new model search and imaging orderOpens in a new window on 10 February 2025 (see Legal update, New model search and imaging order published (February 2025)). new front page which now includes footnotes - one in word with footnotes and one without idea is to avoid common issues e.g. whether judge has jurisdiction to grant freezing order / explanatory notes still refer to good arguable case - test has shifted slightly because of Dos Santos to “serious question to be tried” Revised CPR 25. CPR 25 (interim remedies and security for costs) will be replaced with a streamlined version (set out in a schedule to the SI) to further the objective of simplifying the CPR. This follows the CPRC's consultation on CPR 25 (see Legal update, Civil Procedure Rule Committee: consultation on CPR 25 (Interim Remedies and Security for Costs) and CPR 4 (Forms)). Consequential amendments will be made to CPR 52.6 and 74.5. Consequential amendments will be made to CPR 4 regarding model orders.

Answer 24

the Judge in Charge of the Commercial Court, Mr Justice Henshaw, gave a speech to the Manchester Business and Property Courts Forum dealing with commercial injunctions and associated jurisdictional issues. The speech highlights the importance of establishing jurisdiction to grant an injunction with a specific focus on freezing injunctions, including the scope of assets covered by these injunctions, the likely costs orders that the court will make and the ability to set aside the injunction.

Answer 25

In Mold Investments Ltd v Holloway and others [2025] EWHC 962 (Ch), the court held that the first defendant's application to set aside a freezing order obtained against him (which alleged that the order had been obtained on fabricated evidence) was not barred by the doctrine of abuse of process. It also held that, although permission for cross-examination on interim applications required very exceptional circumstances, this was one of those very rare cases where permission should be granted (subject to conditions). The court directed a five-day hearing, with live factual and expert evidence.