If you are planning to commence court proceedings, then you will have suffered some sort of loss that needs to be remedied by that other person or business (the ‘other side’). However, a court trial can be a lengthy and expensive process. So, what happens if the other side has already done something wrong and is continuing to break a promise with you or the law? Additionally, what if they have only threatened to do or may do something like this in the foreseeable future? In this case, an order from the court preventing the other side from making the situation worse before the trial has concluded may be appropriate. Such an order is typically referred to as an interlocutory injunction.
Before granting an interlocutory injunction, a court will closely consider the circumstances. They will also look at any relevant conduct in the lead up to the application. This article will explore:
- the purpose of interlocutory injunctions; and
- five things a court will consider before granting an interlocutory injunction.
If you are a company director, complying with directors’ duties are core to adhering to corporate governance laws.
This guide will help you understand the directors’ duties that apply to you within the Australian corporate law framework.
Source of The Court’s Interlocutory Power
Interlocutory can be interpreted as meaning ‘pending the result of’ court proceedings. A party will seek an interlocutory injunction in addition to a claim for damages. The claim for damages may be in respect of any losses you incur as a result of the unlawful conduct. Under New South Wales law, the Supreme Court has the power to grant interlocutory injunctions at any stage of court proceedings. The court can do this when it views it is ‘just or convenient’ to do so. This process is spelled out further below.
An interlocutory injunction requires an application to the court, which is called an ‘interlocutory application’. Therefore, a court can make an injunction order before making a determination on all of the court proceeding’s issues.
Effect and purpose of Interlocutory Injunctions
Interlocutory injunctions can be:
- prohibitive (‘restrictive’) in effects;
- restorative (‘prescriptive’) in effects; or
- a combination of both.
Restrictive refers to restraining or preventing certain conduct or actions being done by the subject of the injunction. For example, when the other side has:
- threatened to do something; or
- appears likely to do something
that may be a breach of promised obligations or the law.
A prescriptive injunction may instead require the other side to do something to fix or make right any issues their alleged wrongdoing has caused you. This occurs even when they may deny that they did anything wrong.
The overall purpose of restrictive and prescriptive interlocutory injunctions is to preserve the position of both sides in the dispute until a judge determines the main disagreement. Without injunctions, the relevant issues may also continuously develop and change during the proceedings. This can add complexity, duration and expense to the court process.
Continue reading this article below the formFive Elements a Court Considers
As mentioned, the court may award an interlocutory injunction when it believes it is ‘just or convenient’ to do so. This phrase might appear vague. However, judges and legal commentators have discussed it in many cases over the years. Generally speaking, there are five questions that a court will evaluate before granting an injunction which are as follows:
- Do you have a seriously arguable (meaning ‘genuine’ or ‘viable’) case with an issue warranting determination at a court trial?
- Have you, as the applicant requesting the injunction, made an unsuccessful attempt to resolve the issues (if it is appropriate to do so)?
- Do the circumstances warrant the granting of an injunction due to urgency (or other factors)?
- Would the payment of money (known as ‘damages’) be adequate compensation for you at the end of the court proceedings?
- In the court’s opinion, does the balance of convenience suggest that the injunction should be granted or refused?
We will explore the above questions in more depth below.
1. What Exactly Does the Court Mean When They Say ‘Serious Question to be Tried’?
When proceedings commence, the court will not be in a position to order an injunction. This is because the parties both require the opportunity to provide evidence why an injunction should or should not be made. Therefore, an application for an interlocutory application might be appropriate. It invites the court to decide if you have a viable and reasonable court claim that should be explored further.
2. Should You Try to Resolve the Issues Before Applying to the Court?
In many circumstances, the court requires you to attempt resolution of the dispute and related issues, prior to litigation. This aligns with the court’s policy of minimising legal fees and costs to both parties. It also saves the court’s time for matters which require intervention by a judge.
Generally, you should attempt to communicate with the other side. You should notify them of your plans to apply for an injunction, unless they do (or stop doing) certain things that are causing you damage.
Ex Parte Application
However, the court also acknowledges that it is not always possible to ask the other side to stop what they may be doing without creating the very problem you want to avoid. In these circumstances, the court may not require you to make such a request before going to them.
The court could even grant you an injunction without notifying the other side. This is known as an ‘ex parte application’. The maker of an ex parte application needs to show why there is sufficient evidence and justification for the court to grant an injunction without allowing the other side to dispute the injunction or provide their counter-argument against the application.
3. Are the Circumstances Urgent Enough to Warrant the Injunction?
The circumstances surrounding your claimed issues are very relevant for the court to decide whether an injunction is even necessary. The potential issues or threatened conduct by the other side may not occur for a significant period of time. In that case, the judge may decide that an injunction is not necessary. Rather, you should proceed with the case without it.
The court may also consider, where circumstances are urgent enough, that an interim injunction is more appropriate at the start. An interim injunction is more temporary in nature than an interlocutory injunction because it is ‘for now’ and not pending the result of court proceedings. Usually, it is accompanied by a set date for a review hearing. When the court grants an interim injunction, the restrictions or prescriptions are in place for a limited time (generally until the reviewing hearing).
4. Can You Be Financially Compensated Later and Thus Do Not Need an Injunction?
It is important to demonstrate that financial compensation is not a sufficient remedy to the conduct over which an injunction is sought. This question is a critical one that the court will consider, and a point that you must show that the answer is ‘no’.
An injunction is more likely to be granted when the consequences of the current or threatened conduct cannot be undone or fixed purely by financial means. The argument that you include in your application should have evidence that supports this assertion.
Business reputation is another valuable item that courts can try to put a monetary value on. However, there is a lot of uncertainty with this approach. As such, protecting a business’ reputation with an injunction may be preferred. After all, prevention is often better than treatment.
5. What Does ‘Balance of Convenience’ Mean?
Balance of convenience is a legal term used to describe how a court would weigh up the convenience for you of being granted the injunction, in comparison to the inconvenience that it may cause for the other side. In practice this does not refer to the consideration of the merits or viability of your case (as discussed earlier). Instead it considers the interests of both parties.
In order to do this, the court will look closely at what the injunction will require or prevent the other side from doing. The court may also decide that a less prescriptive or less restrictive injunction would be more appropriate. They could grant an interlocutory injunction on less severe terms as part of a compromise solution when evaluating the balance of convenience.
Key Takeaways
Interlocutory injunctions can serve a valuable purpose in avoiding additional issues or complications arising whilst the parties in dispute are preparing for or involved in court proceedings to resolve their disagreement. This can reduce or prevent further loss and damage that you might need to claim in court, generally making the process faster and simpler.
Whether an injunction is prescriptive or restrictive will depend on the nature of your complaints or concerns regarding the other side’s current or threatened conduct. You should make sure that your application clearly sets out why the injunction is important, and includes evidence to support your argument. You should also be mindful of any obligations to compensate the other side for an injunction and the risks associated with court proceedings.
If you need assistance preparing or responding to an interlocutory injunction, our experienced dispute resolution lawyers can assist as part of our LegalVision membership. You will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. Call us today on 1300 544 755 or visit our membership page.
Frequently Asked Questions
Interlocutory injunctions can be prohibitive (‘restrictive’) in effects which means it prevents certain conduct. It can also be restorative (‘prescriptive’) in effects, meaning it requires the other side to do something. Additionally, it could be a combination of both.
This is when the court grants you an injunction without notifying the other side. The maker of an ex parte application needs to show why there is sufficient evidence and justification for the court to do so.
An interim injunction is more temporary in nature than an interlocutory injunction. Usually, it is accompanied by a set date for a review hearing and the restrictions or prescriptions are in place for a limited time.
We appreciate your feedback – your submission has been successfully received.
