Sometimes an infringement of a plaintiff’s rights is so urgent that it needs to be dealt with before the usual trial process has run its course. In those cases, a plaintiff can apply to the Court for an interim injunction.
This post looks at what an interim injunction is and the types of situations where the Court will typically grant one, the factors affecting the decision about to whether to apply for an injunction, and some practical pointers for those applying for or opposing an injunction application.
What is an interim injunction?
An interim injunction is a court order which prevents a party from doing something until a full trial can be held. Interim injunctions can be sought in the High Court or the District Court, although most are in the High Court.
The injunction is interim, in the sense of it providing a holding pattern until a certain date or until the full trial takes place. Applications are dealt with on an urgent basis and on the basis of written evidence rather than witnesses being examined and cross-examined in court. It is more a case of best foot forward, rather than no stone left unturned.
In order to succeed a plaintiff must show that its rights are being infringed and that it will not properly be compensated by an award of damages if it succeeds at hearing (which would typically be 12 to 18 months later).
What orders can be made?
A plaintiff can apply for any orders which might be made following a trial, but bearing in mind that the Court will always look to balance the rights of the plaintiff against those of the defendants and third parties affected by the orders. The Court is wary about shutting down a business, even where it is alleged to have infringed a plaintiff’s rights, and will look to restrict the orders to whatever is strictly necessary.
Typical interim injunction cases
In intellectual property cases, injunctions orders will often relate to use of particular get-up or a trading name, use or distribution of confidential information or sale of products which allegedly infringe a plaintiff’s rights such as copyright or patents.
How the Court approaches an application for interim injunction
An application for injunction is usually heard at an early stage of the case. The Court has developed a test to balance the rights of the parties, bearing in mind that the decision needs to be relatively quick (compared to a full trial at least).
In New Zealand the leading case is Klissers Farmhouse Bakeries Limited v Harvest Bakeries Limited  2 NZLR 129 (CA), where the Court of Appeal adapted the UK test set out in the House of Lords decision American Cyanamid Co v Ethicon Limited  AC 396.
In deciding whether or not to grant an injunction, the Court will look at:
1. Whether there is a serious question to be tried (i.e. a tenable legal claim).
2. The balance of convenience, which is essentially the relative impact on the plaintiff and defendant of granting (or declining) the application, as well as the impact either way on third parties.
3. The overall justice of the case.
In most cases the Court will find that there is a serious question to be tried, and the real issue is looking at the balance of convenience. The overall justice of the case involves the Judge stepping back and considering matters overall.
Injunction decisions are often determinative
The Court’s decision on an interim injunction often has a major impact on the ultimate outcome of the case, with many cases settling between the interim injunction being issued and the case reaching trial – quite often, very soon after the interim injunction application is resolved.
Factors affecting decision to apply for an interim injunction
A decision to apply for an interim injunction is never taken lightly.
No guarantees of success
Firstly, injunction orders are discretionary so there are no guarantees that a Judge will intervene. There are plenty of examples of cases where the Court has refused to grant an injunction.
A barrister with relevant experience will be able to give a more informed view on how the Court is likely to approach the matter, and which arguments to focus on to give the best chance of a favourable outcome.
Coupled with this, preparation of the application and its supporting evidence generally involves a considerable amount of work. This is justifiable if it leads to a prompt resolution on favourable terms, but front-loading the cost of the case does involve a certain amount of risk.
Undertaking as to damages
Because of the serious consequences of an interim injunction for a defendant, the Courts are anxious to ensure that the interim injunction process is not abused. To this end a plaintiff is required to give an undertaking as to damages, which is an agreement to pay damages which the defendant suffers through complying with the Court’s orders if the plaintiff does not ultimately succeed at trial.
Instruct counsel at an early stage
Whether acting for a plaintiff or a defendant, it is important to involve counsel as soon as possible. For a plaintiff this would ideally be prior to the initial cease and desist letter being sent.
There are two main reasons for this. First, the barrister will be able to provide independent advice on whether the Court is likely to grant an interim injunction so that a firm decision can be made about whether to make an application. There is nothing worse than threatening to apply for an interim injunction and failing to follow through with the threat, so it is crucial that this decision is made in an informed manner.
Second, it ensures that the undertakings sought in the letter correspond with what will be sought in the application, which in turn bears some relationship to what the Court will actually be prepared to order.
Be pragmatic and adaptable
This advice applies to both plaintiffs and defendants.
Because the application is made at an early stage, the facts will be developing. Parties need to be prepared to reassess their positions as matters proceed.
Parties should also consider whether it is preferable to resolve the matter commercially by the defendants providing undertakings to the Court. This requires all parties to take realistic advice on what the Court is likely to order rather than just the strict legal position. It underlines the importance of having proper independent advice.
Get the evidence right
In addition, it is important to spend time preparing the evidence properly. As with any evidence statement the witness’s own words should be used as much as possible, but it is also important to keep the affidavits focused. The Judge will only have limited time to prepare for the case given the urgent nature of interim injunction applications, and there will be limited time for going through the affidavits in the hearing.
Your barrister will be able to advise whether expert evidence is required.
Focus on the balance of convenience
Most interim injunction cases are decided on the balance of convenience, which is the Court’s assessment of the impact on the parties of the making or declining of the orders. The Court will be concerned with losses to the plaintiff which cannot be compensated by way of damages, or equally whether the defendant will suffer losses which the plaintiff will not be able to pay if the defendant is prevented from doing something for a period but succeeds at trial.
A major part of the assessment of the adequacy of damages (for both parties) is the financial ability to follow through on any promises to pay damages if so ordered. Evidence relating to the financial position of the parties can be included on a confidential basis but will almost always be relevant to the Court’s ultimate decision.