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Shivaji Shiva and Ben Holt: Stop, In the name of the law! A guide to interim injunctions

02 Apr 2020 Expert insight

Shivaji Shiva and Ben Holt from VWV explain how interim injunctions work for charities.

When you hear the word "injunction" you may think about celebrities obtaining urgent court orders to prevent a newspaper from printing something about them that breaches their privacy. 
 
Injunctions are a powerful legal tool which, if used in appropriate circumstances, can help to protect charities and the interests of their trustees and beneficiaries. There are, however, misconceptions about injunctions and in our experience some people have unrealistic expectations of when an injunction will be available.
 
The decision as to whether to apply for an injunction should not be taken lightly, so it is helpful for all charity trustees and senior managers to have a basic understanding of how they work and when they might be considered useful.
 
Injunctions can be extremely expensive and reputationally sensitive, and trustees will need to think carefully about whether applying for one would be an appropriate use of charity funds. This is particularly important because, if an application for an injunction is ultimately not successful, trustees could be personally liable for those costs. It is therefore essential to obtain proper legal advice on the position before commencing any injunctive proceedings.
 

What is an interim injunction?

An injunction is an order made by the court that requires a party to do (or stop doing) something. If an injunction is breached then the consequences can be extremely serious, resulting in a fine, or even imprisonment. 

Injunctions can either be:
  • "Final" - i.e. made by the court at the end of a trial; or
  • "Interim" -  i.e. made on an urgent, temporary basis part way through proceedings (or even before proceedings have been issued), pending a final hearing.

When can they be useful?

As it will often take many months to issue proceedings and get to a trial, interim injunctions can be useful in extremely time-critical situations - for example where your charity's assets or beneficiaries are at serious risk of immediate harm where waiting until the end of a trial for a final injunction and / or damages would simply be too late.

The court has a wide jurisdiction to grant interim injunctions in a variety of circumstances.  Common examples include:

  • freezing orders to restrict dealings with assets (usually to prevent them from being dissipated);
  • injunctions to prevent trespass to your property; and
  • orders requiring a party to "deliver up" (i.e. hand over) property.

How do you apply for an interim injunction?

Firstly: don't delay. If you do think you need to apply for an injunction, then you need to act quickly. One of the factors the court may consider is how long the matter complained of has existed. If you have not acted promptly in making an application for an interim injunction, then the court may refuse to grant one. 

Because an interim injunction will involve asking the court to make a decision before a full trial, and because the potential consequences of failing to comply with an injunction are so serious, the court will only grant them in very strict circumstances.   

The application which is to be filed at court will need to be accompanied by appropriate evidence that demonstrates there is a serious issue to be tried, and that damages are not an adequate remedy.  Preparing the application will therefore usually involve undertaking a significant amount of work at short notice, which can inevitably be costly.
 
When making the application you will usually also need to provide a "cross undertaking in damages":  essentially promising the court that, if it is later found that the interim injunction was wrongly granted, you will be liable for any losses incurred by your opponent as a result of the injunction. This is potentially an extremely significant liability to be taking on, and one you must ensure the charity is able to meet (and that it is in the charity's best interests to do so) before giving the undertaking.
 
Ordinarily, the application would need to be served on your opponent in advance, and the application would then be listed for a court hearing. However, there are certain situations where this would not be appropriate because doing so would give your opponent notice of what you are intending to do and could even defeat the purpose of the injunction itself. 
 
In these scenarios you can apply for a "without notice" injunction, where you are granted an interim injunction without having to give your opponent any prior notice at all.  However, in making a without notice application the court will expect you to provide full and frank disclosure of all material facts, including ones which may not necessarily help your case.
 

What about your regulatory obligations?

Whose interest is it anyway?

In deciding whether or not to apply for an injunction, you must consider whether it is in the best interests of the charity to do so. This seems obvious, but can sometimes be quite difficult in practice. 

We quite often see situations where, for example, the matter complained of affects a particular trustee (or trustees) personally, as well as the charity. This can create an inherent conflict of interest: whilst it may well be in the interests of the individual(s) to pursue an injunction, it may not be in the best interests of the charity to become embroiled in expensive, public litigation - both from a reputational perspective and as a use of the charity's funds. As a matter of good governance, and to protect your own position as a trustee, you will want to ensure that any decision to proceed with an injunction - and the reasons for doing so - are properly documented so that you can demonstrate you have complied with your obligations. 
 
In certain situations, it may also be sensible for the trustees to make a "Beddoe application" before commencing any injunctive action. This essentially involves the trustees asking the court to approve steps to be taken in litigation, and so obtain costs protection.  If the application succeeds, then the trustees should be effectively indemnified for the costs that are incurred in relation to the litigation.  Failure to do this can result in trustees being personally liable for those costs, which can be significant.
 
Charity proceedings
 
You will also need to consider whether an application for an injunction would fall within the definition of "charity proceedings" set out in section 115 of the Charities Act. If it does, then you will generally need the permission of the Charity Commission first, before you proceed. 
 
Generally, "charity proceedings" means anything relating to the internal administration or domestic affairs of the charity, such as the appointment or removal of trustees, or internal disputes about the control or misuse of a charity's property or resources. However, if in any doubt, it is better to seek advice on the position first before incurring the expense (and potentially significant liabilities to both the charity and trustees personally) involved in an application for an injunction.
 

Other issues for you to consider

What is your cause of action?  

An interim injunction is a remedy rather than a cause of action which means that, in order to obtain one, you must have an underlying claim. In our example of a celebrity obtaining an interim injunction against a newspaper, their underlying claim against the paper would usually be for misuse of private information. In recent months, we have advised a number of charities which had obtained an interim injunction months or years previously but had not yet clarified the nature of the underlying claim. Before applying for an injunction, you must be certain that you have a viable legal cause of action against your opponent. If you do not, you will fail in the application, likely to be ordered to pay your opponents costs as well as potentially reducing any leverage in the dispute and damaging reputation (see below).  

Are you prepared to see it through? 

An interim injunction is by definition a temporary remedy, which is only in force pending a final hearing. If you are applying for an interim injunction before proceedings have been issued you will either need to issue your claim against your opponent at the same time as making your application (which again involves further time and costs), or give an undertaking to the court that you will do so within a set timeframe. You will then need to proceed with your claim - through to a trial if necessary - in the usual way. Obtaining an interim injunction without giving sufficient thought to the underlying claim and your strategy for pursuing it can be an expensive mistake leaving the charity embroiled in costly and complex legal proceedings without a clear exit route. An interim injunction can be subsequently discharged by the court if it considers you have seriously delayed pursuing your claim, so you must be prepared to continue with your claim if an interim injunction is granted.

Impact on reputation 

As with any court litigation, applications for injunctions are generally a matter of public record once filed at court.  Any hearings at court on the injunction will also usually be held in public. An interim injunction is often seen as a "nuclear" option so be aware of how this may be perceived publicly and think about whether any stakeholders or regulators (such as the Charity Commission) should be given advance warning about your intentions.

Need some guidance?

Injunctions can be a useful tool for charities looking to protect their beneficiaries, assets or reputation.  However they can also be time consuming and extremely expensive.  It is important that charities comply with their governance and regulatory obligations when deciding whether to seek an injunction, and that they seek specialist advice as appropriate.

Shivaji Shiva and Ben Holt partners at charity law specialists VWV.

This article has been supplied by a commercial partner

 

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