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Injunctions Pending Trial: Be Careful What You Ask For

The remedy of a pre-trial injunction is a formidable weapon in the armoury of a plaintiff; such an injunction prevents a defendant from doing something (or more rarely compels him to do something) until trial, at which point it may be found that the plaintiff had no right to such an injunction.

From at least Roman times and developed in the English Courts of the thirteenth century the courts have long afforded plaintiffs such a remedy but on certain conditions. These are now, in usual cases: (1) there is a serious issue to be tried; (2) the “balance of convenience” tilts in favour of granting the injunction; and (3) any damages awarded at trial would not be an adequate remedy for the plaintiff. However, this type of injunction comes at a price for the plaintiff, who will almost invariably be required to undertake to compensate the defendant for any loss it sustains in consequence of the injunction, if the Court later finds that it should not have been granted. 

The question of how such loss is to be assessed came before Justice McMillan in the recent Cayman Islands case of Ennismore Fund Management Ltd v Fenris Consulting Ltd, where in a 103-page judgment he set out, by reference to extensive English and Cayman authority, the principles to be applied in addressing the damages to be awarded to a defendant wrongly injuncted. 

The Court will apply a broad, common sense approach, without over-eager scrutiny of the evidence of loss, and the process should be as straightforward and simple as possible. The Judge was critical of the plaintiff’s approach, which he held departed from established authority, and sought to emphasise and, even to amplify, the difficulty, which he considered made the task more difficult for the court and for the plaintiff itself.

In the event, the Court assessed the loss sustained by the defendant who would have invested the funds which had been injuncted, at 210.5% of the injuncted amount (Euros 2,316,596), plus an uplift of 10% to reflect the investment strategy that the defendant would have adopted. That was a heavy price to pay for the injunction.

Plaintiffs should take careful note of the consequences of obtaining an injunction which should not have been brought. 

Injunctions Pending Trial: Be Careful What You Ask For

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