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The High Court reasserts the principle that, except in particular circumstances, interim injunctions must be incidental to an underlying cause of action

  • United Kingdom
  • Financial services disputes and investigations
  • Litigation and dispute management - Other

22-08-2017

Octagon Overseas Limited & Anor v Alan Coates [2017] EWHC 877 (Ch)

Facts of the case

  • A number of occupational sub-leaseholders applied to the First Tier Tribunal (Property Chamber) (“FTT”) for the appointment of a property manager. This was granted with effect from 1 October 2016 (the “Management Order”).
  • The property manager (“R”) sought an injunction on 4 October 2016 in the County Court to enforce the Management Order because of concerns that certain steps had not been taken in accordance with it. The injunction was granted and a penal notice attached to it. The freeholder and head-leaseholder appealed to the High Court to have the injunction set aside.

The decision

The appeal was allowed and the injunction set aside. The court found, inter alia, that:

  • there was no underlying cause of action, nor any lacuna requiring the County Court to grant an injunction; and
  • by granting the injunction, the County Court had (i) gone beyond assisting with the enforcement of the Management Order, in circumstances where the Order expressly provided that R had liberty to apply to the FTT for further directions in the event the Order was not itself sufficient and (ii) provided R with new rights not provided by the Order.

Analysis and practical advice

  • The case is a reminder that, save in particular circumstances, injunctions are not freestanding but depend “on there being a pre-existing cause of action” with the right to obtain an injunction being “merely ancillary and incidental” to such cause of action (per Lord Diplock in Siskana v Distos Conpania Neviera SA [1979] AC 210, 255).
  • The exceptions to this rule include freezing injunctions or injunctions granted for the purposes of preserving evidence. These can be made in one jurisdiction, whilst the merits of a substantive claim are determined in another. In addition, the courts have shown themselves prepared to grant injunctions in new areas where it is necessary and appropriate to do so to avoid an injustice, i.e. where there is a lacuna. There therefore continues to be a development of the law in this area with the courts not “straightjacketed” by the dictum of Lord Diplock in Siskana.
  • The judgment also highlights the need to ensure the terms of any injunction are (i) clear so that a respondent knows what it needs to do/not do, and (ii) balance the need to protect the applicant’s legal or equitable rights with the risk of injustice to the respondent. Applications for injunctions which are vague and/or too broad in scope risk being refused in the first instance, or alternatively struck down at any return hearing.

 

 

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