Lennox Lewis v Eliades

For an interlocutory injunction, the claimant must show a real issue to be tried; the claim must be more than fanciful. The court then assesses the balance of convenience, including the relative ability of the parties to satisfy any damages undertaking and the risk that refusal of relief may cause irrecoverable loss.

Procedural defects in an without-notice order, including omission of a cross-undertaking in damages or inadequate notice of the right to apply for variation or discharge, do not automatically require discharge. The court may consider whether the defect was promptly remedied, caused loss, or made the relief disproportionate. Where the evidence raises a serious issue as to beneficial ownership, injunctive relief may properly continue.

The claimant obtained a New York judgment against the defendant, followed by an English judgment enforcing that debt. A receiver was appointed over charged properties, and the defendant was restrained from dealing with debts and charges granted to Managa Properties Limited.

The claimant alleged that the defendant was beneficially interested in the Managa debts and charges, despite their formal ownership by Managa. Managa applied to discharge the without-notice order, arguing that the evidence was insufficient and that there had been material procedural non-compliance, including failure to provide a cross-undertaking in damages and failure to give proper notice of the right to apply to vary or discharge the order.

1. The application to discharge the injunction was dismissed. The evidence disclosed a serious issue to be tried concerning whether the defendant was beneficially interested in the debts and charges.
2. The court applied the principles in American Cyanamid v. Ethicon [1975] AC. The threshold was a real issue to be tried, equivalent in substance to the requirement that the case be more than fanciful. The defendant’s inconsistent evidence about the companies, their ownership and his connection with them provided a sufficient evidential basis.
3. The balance of convenience favoured continuation of the injunction. The claimant could satisfy the cross-undertaking in damages. Refusal of relief might allow funds to be removed from the jurisdiction and become irrecoverable. The restraint did not deprive Managa of the debt or its security, and any loss caused by the restraint would be covered by the undertaking.
4. The omission of a cross-undertaking in damages was a defect because the order operated against a third party rather than merely as post-judgment execution against the judgment debtor. The undertaking was given promptly, and there was no evidence of loss. Discharging the order would therefore be disproportionate.
5. The order also failed properly to notify the defendants of their right under the Civil Procedure Rules 1998 to apply to vary or discharge it. In the circumstances, that omission was not significant. The defendant was sophisticated and had access to experienced legal advice.
6. The court retained a discretion to re-impose relief despite a breach of the requirements governing without-notice applications. Had it been necessary to exercise that discretion, the order would have been re-imposed because the established breaches did not justify depriving the claimant of relief.

The application concerned an order made without notice by Grigson J in the Queen’s Bench Division on 13 May 2004. A subsequent return date was before Lightman J, who did not determine the application because of its length. The present court dismissed the application to discharge the order.