Reading time: 11 minutes

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.

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. 

Once the trial is over and the proceedings are finished, an interlocutory injunction has no effect. This is because there is no determination or decision pending. Part of the court’s determination will be whether or not to make a perpetual injunction.

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.

Injunctions are not an essential step in court proceedings. You should first consider the additional costs and delays that injunctions may cause. And further, whether you should divert your time and resources to getting the main court proceedings underway instead.

Five 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:

  1. Do you have a seriously arguable (meaning ‘genuine’ or ‘viable’) case with an issue warranting determination at a court trial?
  2. Have you, as the applicant requesting the injunction, made an unsuccessful attempt to resolve the issues (if it is appropriate to do so)?
  3. Do the circumstances warrant the granting of an injunction due to urgency (or other factors)?
  4. Would the payment of money (known as ‘damages’) be adequate compensation for you at the end of the court proceedings?
  5. 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.

You should remember that judges require evidence to make decisions. It is your responsibility, as the applicant, to convince the judge that you have a serious case. Clearly outlining your claim and including supporting evidence in your application will improve your chances of being granted an interlocutory injunction. A judge may even ask about what evidence or circumstances would be detrimental to your case, to critically evaluate your claim.

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.

These requests should be made in writing. They can also be more formal correspondence such as lawyers’ letters of demand and cease and desist letters.

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.

For example, you believe you have a genuine claim to money, property or assets currently owned or held by the other side. You are concerned that the other side may move or hide these assets as soon as you commence court proceedings. Meaning that even if you win the case, there may be nothing left to give you. In these circumstances, asking the other side not to transfer the funds, move the property or otherwise dispose of the assets would be counter-intuitive and impractical, as it might trigger the very conduct you hope to avoid.

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).

The review hearing is where you (the applicant) and the subject of the injunction (likely the other side in the court proceedings, but not always) will have a chance to argue your respective cases before the judge. The judge will then decide, based on both arguments and associated evidence, whether or not to extend the interim injunction into an interlocutory injunction for the foreseeable future.

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.

For example, suppose someone is threatening to release your confidential information (such as business know-how or data), and the release of such information would completely reduce its value to zero and put your entire business at risk. In these circumstances, the court may be more likely to grant the injunction to prevent serious consequences from happening. This is because they cannot easily be undone with the payment of money.

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.

Put simply; the court conducts a cost-benefit analysis of whether the: 

  • injunction will be in the interest of justice; 
  • impact on the other side outweighs such benefits and principles.

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.

The court also typically requires the applicant of an injunction to give an ‘undertaking as to damages’. This simply means that you may be obliged to compensate the other side for their loss or legal fees if: 

  • if you are granted the injunction; 
  • the inconvenience causes financial loss for the other side; and 
  • the court later determines that you should not have been granted the injunction in the first place (if you lose the main case).

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, contact LegalVision’s dispute resolution lawyers on 1300 544 755 or fill out the form on this page.

Frequently Asked Questions

What types of interlocutory injunctions are there?

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. 

What is an ‘ex parte’ application?

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.

What is an interim injunction?

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.

Webinars

Key Considerations When Buying a Business

Thursday 11 November | 11:00 - 11:45am

Online
Learn which questions to ask when buying a business to avoid legal and operational pitfalls, so you can hit the ground running. Join our free webinar.
Register Now

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.

The majority of our clients are LVConnect members. By becoming a member, you can stay ahead of legal issues while staying on top of costs. From just $119 per week, get all your contracts sorted, trade marks registered and questions answered by experienced business lawyers.

Learn more about LVConnect

Need Legal Help? Get a Free Fixed-Fee Quote

If you would like to receive a free fixed-fee quote or get in touch with our team, fill out the form below.

Our Awards

  • 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice Winner – Australasian Lawyer
  • 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review
  • 2021 Law Firm of the Year - Australasian Law Awards
  • 2019 Most Innovative Firm - Australasian Lawyer