Caldwell v Tracey

• Jurisdiction: Ireland
• Judgment Date: 16 April 2010
• Date: 16 April 2010
• Docket Number: [2007 No. 6605 P]
• Court: High Court

Caldwell v. Tracey

Joanne Caldwell, Ryan O'Hara, Fiona Malone, Gary Malone, Martin O'Reilly, Miriam O'Reilly, Kevin Dawe, Mark Foran and John Foran

Plaintiffs

and

David Tracey trading as DTS International Property Services

Defendant

[2010] IEHC 533,

[2007 No. 6605 P]

High Court

Injunctions - Interim injunction - Undertaking as to damages - Enforcement of undertaking - Principles to be applied - Whether injunction ought to have been granted - Whether court ought to exercise its discretion to enforce undertaking as to damages - Rules of the Superior Courts 1986 (S.I. No. 15), O. 52, r. 3.

The plaintiffs paid deposits to the defendant on foot of contracts for the purchase of certain apartments. They subsequently withdrew from the contracts, issued proceedings for the return of the deposits and obtained a Mareva type interim injunction against the defendant restraining him, inter alia, from removing or disposing of assets to the value of the aggregate of the deposits. The plaintiffs gave an undertaking to the court as to damages. The plaintiffs notified various financial institutions of the making of the interim injunction before serving the defendant with a copy of the order. The plaintiffs thereafter applied for an interlocutory injunction. The defendant gave an undertaking not to reduce his assets below the specified sum and the interim injunction lapsed. The plaintiffs were successful in the substantive action. The defendant applied to the court to enforce the undertaking as to damages given by the plaintiffs on the granting of the interim order.

Held by the High Court (Laffoy J.), in dismissing the defendant's application, 1, that: (i) the court could not compel an applicant to give an undertaking but it could refuse to grant an injunction unless he did; (ii) the undertaking did not found any cause of action. It did, however, enable the party enjoined to apply to the court for compensation if it was subsequently established that the interlocutory injunction should not have been granted; (iii) the undertaking was not given to the enjoined but to the court; (iv) the question whether the undertaking should be enforced was a separate question from the question whether the injunction should be discharged or continued.

Cheltenham & Gloucester Building Soc. v. Ricketts[1993] 1 W.L.R. 1545 and Estuary Logistics v. Lowenergy Solutions Ltd. [2007] IEHC 410, [2008] 2 I.R. 806approved.

2. That where injunctions remained in being until the trial, the propriety of its original grant and the question of the enforcement of the undertaking would not be considered before the conclusion of the trial. Even then, the court might occasionally wish to postpone the question of enforcement of the undertaking to a later date. Where an interlocutory injunction was discharged before the trial the court could: (a) determine forthwith that the undertaking as to damages should be enforced and could proceed at once to make an assessment of the damages; (b) determine that the undertaking should be enforced but then direct an inquiry as to damages in which issues of causation and quantum would have to be considered. A decision that the undertaking should be enforced was a precondition for the making of an order of an inquiry as to damages; (c) adjourn the application for the enforcement of the undertaking to the trial or further order; (d) determine forthwith that the undertaking was not to be enforced. The fact that the injunction granted was a Mareva injunction was only one factor and its discharge was not conclusive of the question whether an inquiry ought to be ordered at that stage.

Cheltenham & Gloucester Building Soc. v. Ricketts[1993] 1 W.L.R. 1545 and Estuary Logistics v. Lowenergy Solutions Ltd. [2007] IEHC 410, [2008] 2 I.R. 806approved.

3. That the first step in seeking to enforce an undertaking as to damages was for the court, at the request of the party against whom the order was made, to determine whether the order should have been made. That determination must be based on the evidence which was before the court when the order was made. However, in practical terms, the assessment of that evidence would include consideration of the defendant's challenges to it and the responses which the plaintiff put forward to those challenges, where the defendant contended that the plaintiff did not make full and frank disclosure of material facts on the ex parte application.

Columbia Pictures Inc. v. Robinson [1987] Ch. 38 andCheltenham & Gloucester Building Soc. v. Ricketts[1993] 1 W.L.R. 1545 approved.

4. That if the court found that the injunction order should not have been made, the second step was to determine whether the undertaking as to damages should be enforced. That determination was made having regard to all the circumstances. If there were matters on which the court could not yet make a final determination, but which would be material to the question whether it was just to enforce the undertaking, then the court should not take the decision at that stage.

Financiera Avenida SA v. Shiblaq, Times Law Reports, January 14, 1991 and Cheltenham & Gloucester Building Soc. v. Ricketts [1993] 1 W.L.R. 1545 approved.

5. That in determining whether the undertaking should be enforced, the court was exercising its equitable jurisdiction. It was a question of discretion. The overarching principle was that the discretion would be exercised in accordance with ordinary equitable principles.

Financiera Avenida SA v. Shiblaq, Times Law Reports, January 14, 1991 and Cheltenham & Gloucester Building Soc. v. Ricketts [1993] 1 W.L.R. 1545 approved.

6. That delay in seeking to enforce the undertaking as to damages was a factor which the court might take into account in determining whether it would be equitable to enforce the undertaking.

7. That if the trial judge were satisfied that fraudulent activity had occurred at the hands of the defendant, same might be an appropriate factor to set against inadequate disclosure by the plaintiff in considering whether to enforce the undertaking as to damages.

Estuary Logistics v. Lowenergy Solutions Ltd. [2007] IEHC 410, [2008] 2 I.R. 806 approved.

8. That if the court held that the undertaking should be enforced, it then proceeded to the inquiry as to damages, which was an assessment which was concerned with matters of causation andquantum only. The applicant should adduce some evidence to show an arguable case that he suffered loss falling within the undertaking as to damages. Damages were awarded on a similar basis to that on which damages were awarded for breach of contract.

Cheltenham & Gloucester Building Soc. v. Ricketts[1993] 1 W.L.R. 1545 and Estuary Logistics v. Lowenergy Solutions Ltd. [2007] IEHC 410, [2008] 2 I.R. 806approved.

9. That in a case where it was determined that the injunction should not have been granted the undertaking was likely to be enforced, though the court retained a discretion not to do so. If the claimant had succeeded in his claim and there was a real risk of dissipation, then ordinarily the court would not enforce the undertaking.

Cheltenham & Gloucester Building Soc. v. Ricketts[1993] 1 W.L.R. 1545 and Estuary Logistics v. Lowenergy Solutions Ltd. [2007] IEHC 410, [2008] 2 I.R. 806approved.

10. That if there had been a compromise agreement in respect of the continuance of the injunction, it was a matter of interpretation of that agreement as to whether the parties had agreed that no claim was to be made to enforce the undertaking. Where the agreement was silent on this it was a question of inferring whether the parties intended that the respondent had abandoned the right to make such a claim.

Cornhill Insurance Plc v. Barclay (Unreported, Court of Appeal, 6th October 1992) approved.

11. That it was normal practice to notify the defendant's bank of a without notice order concerning a specified account before notifying the defendant himself.

Obiter dicta: 1. That, if the defendant had established that the interim order should not have been granted, the court would be likely, in determining whether to enforce the undertaking, to consider whether the plaintiffs could establish "special circumstances", although the fundamental principle was that the court had a discretion.

2. That where the parties compromised an application for an interlocutory injunction following the grant of an ex parteinterim injunction, or an application for the discharge of an interim injunction granted ex parte, the prudent course was to expressly address, and apprise the court, as to the status of the undertaking as to damages.

Cases mentioned in this report:-

American Cyanamid v. Ethicon Ltd. [1975] A.C. 396; [1975] 2 W.L.R. 316; [1975] 1 All E.R. 504.

Bambrick v. Cobley [2005] IEHC 43, [2006] 1 I.L.R.M. 81.

Cheltenham & Gloucester Building Soc. v. Ricketts[1993] 1 W.L.R. 1545; [1993] 4 All E.R. 276.

Columbia Pictures Inc. v. Robinson [1987] Ch. 38; [1986] 3 W.L.R. 542; [1986] 3 All E.R. 338.

Cornhill Insurance Plc v. Barclay (Unreported, Court of Appeal, 6th October, 1992).

Estuary Logistics v. Lowenergy Solutions Ltd. [2007] IEHC 410, [2008] 2 I.R. 806; [2008] 2 I.L.R.M. 130.

Financiera Avenida SA v. Shiblaq, Times Law Reports, 14 January, 1991; Court of Appeal (Civil Division) Transcript No. 973 of 1990, C.A.

Norwest Holst Civil Engineering Ltd v. Polysius Ltd,Times Law Reports, 23 July, 1987; Court of Appeal (Civil Division) Transcript No. 644 of 1987, C.A.

O'Mahony v. Horgan [1995] 2 I.R. 411; [1996] 1 I.L.R.M. 161.

Tracey v. Bowen [2005] IEHC 138, [2005] 2 I.R. 528.

Universal Thermosensors Ltd. v. Hibben [1992] 1 W.L.R. 840; [1992] 3 All E.R. 257.

Motion on notice

The facts have been summarised in the headnote and are more fully set out in the judgment of Laffoy J., infra.

On the 6th September, 2007, the plaintiffs issued proceedings by way of plenary summons against "David Tracey and DTS International Property...