In a claim for damages and/or restitution of payments allegedly obtained by fraud, the claimant obtained a proprietary and freezing injunction against both defendants at a without notice hearing in return for a cross-undertaking in damages of £100,000, later increased to £125,000 pending the conclusion of an adjourned inter partes hearing. The parties having agreed that the injunction should cease to apply to the second defendant, the issue, inter alia, was whether the injunction should be continued against the first defendant. The first defendant was content in principle that the injunction should continue but only if there was provided an unlimited undertaking in damages from a third party who had the means to support one. The claimant contended that the first defendant had not made a sufficient case for further fortification of the claimant’s cross-undertaking.
On the inter partes hearing and on the issue whether the injunction should continued to apply to the first defendant and if so on what conditions—
Held, injunction continued subject to variations. The court might require, as a condition for granting or continuing an injunction, that the cross-undertaking given by the applicant is fortified by the provision by someone other than the applicant of an unlimited, or a limited, undertaking, or by the making of some other form of limited provision, to meet any loss that the injunction might cause. Any fortification was not necessarily limited in amount. The court had a wide discretion as to the conditions on which it might grant or continue an injunction. The question of any requirement for fortification of the applicant’s cross-undertaking and the extent of any such fortification that the court might require remained a matter of discretion for the judge who granted the injunction. The principles that applied to applications for fortification none the less required an informed and realistic estimate to be made of the likely amount of the loss that the application for fortification might suffer given the unlimited cross-undertaking it already had. Identifying what level of fortification there was a good arguable case for enabled no more, and no less, than what appeared to be the necessary amount of security to be provided. The principles that applied to fortification were thus different from those that applied to the cross-undertaking normally required of an applicant for an injunction. Applying those principles, the defendants, as the party seeking fortification, had not shown a good arguable case that there was a sufficient risk that the loss which they had suffered, and were likely to suffer, as a result of the injunction if wrongly granted which the claimant’s cross-undertaking of £125,000 might not cover. To require the claimant to provide more fortification would be disproportionate in the circumstances. Accordingly, the defendants’ request, that maintaining the injunction in force should be made conditional on a further unlimited undertaking from a person with sufficient means to support an undertaking, was refused (paras 26–28, 44, 46, 47, 62).
Max Mallin QC (instructed by Kemp Little llp) for the claimant.
David Reade QC and Alexander Robson (instructed by Clintons) for the defendants.