The Merits of Equitable Fairness in the Context of Injunctions - Essay Example

? The Merits of Equitable Fairness in the Context of Injunctions Injunctions are equitable remedies the usually order specific performance on the part of one party or forbid a party conducting a specific act. Injunctive relief is discretionary and is ordered pursuant to specific principles established by the judiciary. The merits of equitable fairness in the context of injunctions are obvious by an examination of the main types of injunctions established by the courts.1 Injunctive relief as an equitable remedy is used in a variety of cases including family disputes, contract, tort and property cases. At times injunctive relief can be obtained in cases in connection with damages or as a substitute for damages.2 The merits of the fairness of injunctive relief are contained in Section 37(1) of the Supreme Court Act 1981 which provides that: The High Court may be order (whether interlocutory or final) grant an injunction or appoint a receiver in all cases in which it appears to the court to be just and convenient to do so.3 Section 37(1) of the Supreme Court Act 1981 therefore contemplates that injunctive relief will only be granted when the court considers it fair to do so. Fairness is derived from the use of the terms “just” and “convenient”. In order to understand how the terms just and convenient amount to fairness in the proceedings it is necessary to examine how courts exercise the jurisdiction for granting injunctive relief as provided for under Section 37(1) of the Supreme Court Act 1981. To this end, the main types of injunctions are prohibitory, mandatory, perpetual, interim and quia timet.4 Prohibitory Injunctions A prohibitory injunction is an order compelling a party not to carry out an act that he or she is contractually bound not to do.5 For example, a party who is contractually obliged to sing only for one party is by implication contractually bound not to sing for anyone else and thus can be prohibited from singing for another party.6 Thus equitable fairness in the grant of a prohibitory injunction is measured by reference to what is fair with respect to the terms of the agreement between the parties and not what is fair to the individual against whom the injunction is applied. Even so, the mere fact that one party seeks a prohibitory injunction speaks to a break down in the relationship between the parties. As Charleton observed, a prohibitory injunction seeks to regulate one party by forcing that party to go back to behaviour that is consistent with the terms of a contract. Presumably, the party has either failed to act in certain way or has stopped acting in that way. By ordering a prohibitory injunction, the parties are expected to continue as if nothing had come between them when one party is forced to act in a way that he or she no longer wishes to act.7 It can be argued that the prohibitory injunction achieves equitable fairness because it remedies situations in which, a party to an agreement discontinues a contractual obligation to the detriment of the other party who has invested significant resources in reliance on the continued commitment on the part of the offending party not to do something in particular. However, according to Lord Cairns LC in Dolman v Allman, a prohibitory injunction will be granted “as a matter of course” and the court is not concerned about: ...a question of the balance of convenience or inconvenience, or the amount of damge or of injury.8 Prohibitory injunctions are therefore not concerned about what is fair and just between the parties, but rather, what is fair and just in terms of the contractual obligations of the parties. Mandatory Injunctions A mandatory injunction is an injunction compelling one part to “undo the effects of breaching a negative undertaking”.9 Unlike a prohibitory injunction, courts are less inclined to grant a mandatory injunction.10 Courts will typically refuse to grant a mandatory injunction and will only grant a mandatory injunction if the court is satisfied that the party against whom the injunction is sought has essentially run “roughshod” over the other party’s rights.11 The court will also only make an order for a mandatory injunction if it is satisfied that the failure to do so would cause extraordinary prejudice to the claimant.12 In Shepherd Homes Ltd. v Sandham Megarry J expresses that view that the grounds upon which a mandatory injunction will be denied is designed to meet the demands of justice and to ensure fairness. Megarry J ruled that a mandatory injunction would be denied if the damages to the complainant are trivial and: ...the existence of a disproportion between the detriment that the injunction would inflict on the defendant and the benefit that it would confer on the plaintiff. The basic aim is to produce a fair result.13 The mandatory injunction does appear to be aimed at securing fairness between the parties. Fairness is obviated by the fact that the courts do not order a mandatory injunction where the plaintiff’s benefit from the injunction would not produce equity between the parties. Where on party’s losses does not correspond with the benefits to be gained by the other party, a mandatory injunction would be denied. Thus, in considering whether or not to grant a mandatory injunction, the court is focused on fairness to both parties. The equitable fairness of the rules regulating mandatory injunctive relieve clearly lean toward achieving a fair result. For example in Sharp v Harrison [1922] 1 Ch. 502, the court the plaintiff’s application for a mandatory injunction relative to requiring the defendant remove a window that was installed in breach of contract. The mandatory injunction was refused because the defendant’s conduct did not produce damages. Moreover, the mandatory injunction was denied because the defendant promised to ensure that there were no damages by virtue of the breach of contract. Finally, the mandatory injunction was denied because the damages it would bring for the defendant was disproportionate to the benefits the injunction would confer on the plaintiff.14 Perpetual Injunctions A perpetual injunction also known as a “final injunction” is granted at the actual trial and is not an interlocutory order.15 The perpetual injunction is typically granted at any trial or hearing in which the court delivers its judgment on the merits of the case. Thus a perpetual injunction is distinguished from an interim injunction on the grounds that the interim injunction is issued before the actual trial and is only meant to be in effect for the duration of the trial.16 In this regard, a perpetual injunction could be mandatory, prohibitory or quia timet.17 Moffat, Bean and Dewar caution however, that a perpetual injunction, although intended to provide relief for the plaintiff can result in intrinsic unfairness to the claimant. The unfairness arises out of the fact that in many cases, the trial is delayed with the result that there is a long time between the filing of process to the final judgment. During this time, there are several opportunities for the defendant to undermine the plaintiff’s rights.18 In this regard, the perpetual injunction can produce unfairness to the claimant, particularly if the claimant is seeking a prohibitory injunction. By the time the court makes an order for perpetual injunctive relief, it may be too late in that the conduct that the conduct the claimant seeks to prohibit will continue for as long as the case is delayed. The defendant may even be intentionally responsible for the delay in the trial and could carry on with his or her prohibited conduct in the meantime. Interim Injunctions Interim injunctions are issued on a temporary basis pending the final resolution of the issues between the parties at trial.19 A claimant seeking an interim injunction will typically be required to make a “cross-undertaking” which is in favour of the other party. The undertaking is usually a promise to indemnify the other party in the event the interim injunction is upheld or war granted improperly. Therefore the indemnification obligation will be applicable in the event the court withdraws the interim injunction or the plaintiff subsequently admits that the interim injunction was not necessary after all.20 The unfairness of the interim injunction is manifested by the fact that the interim injunction can be obtained ex parte (in the absence of the other party) and the court is not concerned with the merits of the case.21 The court in determining whether or not to grant an interim injunction will only seek to balance the disadvantages the denial of an interim injunction would cause the claimant and the disadvantages the grant of an interim injunction would cause the defendant should the court grant an interim injunction.22 However, if the court does not consider the merits of the main case, it is hardly possible to fairly determine the extent to which an interim injunction would cause hardship to the defendant. If the defendant has a defence that would essentially defeat the plaintiff’s claim, it would likely mean that the plaintiff’s claim for an interim injunction should not be granted. This is particularly true with respect to a Mareva injunction. A Mareva injunction is: ...an interlocutory (normally ex parte) injunction restraining a defendant in civil litigation disposing of assets so as to render itself judgment proof.23 Although the claimant will not have a claim to the defendant’s assets, it is an unfair order nonetheless if the claimant does not succeed in obtaining a judgment against the defendant. The defendant would have been unfairly deprived of his or her right to dispose of his or her own property based on an application heard by the High Court in the defendant’s absence and in the absence of hearing the merits of the case and in particular the defendant’s defence to both the main issues and the application impacting his property. The Anton Piller order which is a mandatory injunction is not much fairer than the Mareva injunction. An Anton Piller order is an injunction requiring the defendant to permit the claimant to enter his or her premises and inspect evidence pertinent to the main trial. However, an Anton Piller Order will not be granted unless the court is apprised of the merits of the case and is convinced that the claimant has a significant chance of success at the main trial. Moreover the court must be satisfied that there is an actual danger that the defendant would either dispose of or destroy the evidence sought by the claimant and the order is made typically made ex parte. The Anton Piller injunction first arose out of the Court of Appeal’s decision in Anton Piller KG v Manufacturing Processes Ltd.24 An Anton Piller injunction, like a Mareva injunction should be granted with extreme caution as they are interlocutory orders and can be abused by the applicant. Caution is also advised because, Mareva injunctions and Anton Piller injunctions are both aimed at actions against property and possessions of an individual without his consent and without his knowledge as they are usually ex parte applications.25 The ability of the court to order the freezing of assets (Mareva Injunction) and the inspection of property/documents (Anton Piller Injunction) without the party against whom these orders are directed present at the hearing raises questions of fairness and in particular challenges concepts of natural justice. Conclusion Although injunctive relief is intended to ensure fairness as it is based on equitable principles of justice and appeals to the conscience of the court, there are serious difficulties in terms of fairness and principles of justice. The mere fact that the courts may issue any order against another party without that party present speaks to unfairness. However, the equitable remedies underlying injunctions go a bit farther than allowing applications to heard ex parte. Injunctions permit the court to make orders that deprive the absent party of property and allow intrusion into the absent party’s private life without first hearing from that party. Thus questions relative to the merits of equitable fairness in the context of injunctions are valid. Bibliography Textbooks Andrews, N. The Three Paths of Justice: Court Proceedings, Arbitration and Mediation in England. (London, UK: Springer, 2012). Chen-Wishart, M. Contract Law, (Oxford, UK: Oxford University Press, 2007). Hepburn, S. J. Principles of Equity and Trusts. (New South Wales, Australia: Cavendish Publishing, 2001). Hudson, A. Equity and Trusts. (Abingdon, Oxon: Routledge-Cavendish, 2010). Moffat, G.; Bean, G. and Dewar, J. Trusts Law: Text and Materials, (Cambridge, UK: Cambridge University Press, 2005). Ramjohn, M. Cases and Materials on Equity and Trusts. (Abingdon, Oxon: Routledge-Cavendish, 2008). Sime, S. A Practical Approach to Civil Procedure, (Oxford, UK: Oxford University Press, 2007). Articles/Journals Capper, ‘The Need for Mareva Injunctions to be Reconsidered’, (2005) 73 Fordham Law Review, 2161-2181. Charleton, P. ‘Employment Injunctions: An Over-Loose Discretion,’ (2009) Judicial Studies Institute Journal, 1-25. Cases American Cyanamid Co. v Ethicon Ltd. [1975] AC 396. Anton Piller KG v Manufacturing Processes Ltd.[1976] Ch. 55. Dolman v Allman [1878] 3 App. Cas 709. Durell v Pritchard [1865] L. R. 1 Ch. 244. Langley v Wagner [1852] EWHC (ch) J96. Luganda v Service Hotels Ltd. [1969] Ch. 209. Sharp v Harrison [1922] 1 Ch. 502. Shepherd Homes Ltd. v Sandham [1971] Ch 340. Statutes Supreme Court Act 1981. Read More