Hillcourt (Docklands) Ltd v Teliasonera AB

When considering whether to stay execution of a judgment pending trial, the court may apply principles similar to those governing an interim injunction under American Cyanamid v Ethicon Ltd [1975] AC 396. A stay may be appropriate where enforcement is continuing and the underlying claim may ultimately invalidate the judgment or transaction. The court may impose a cross-undertaking in damages. It need not require restoration of property or security where substantial cross-claims would be available on rescission and the undertaking provides adequate protection. Related contractual processes, such as a rent review, may also be restrained where the underlying lease might be void ab initio and the process would incur substantial unnecessary costs.

TeliaSonera applied for interim relief in connected proceedings concerning a long lease, an arbitration award and enforcement proceedings. It sought to restrain enforcement of the award and the order granting leave to enforce it, to stay execution, and to restrain a pending rent review.

TeliaSonera alleged that Hillcourt had paid a substantial commission to its agent in circumstances giving rise to rescission of the agreement for a lease and the lease. It had also commenced proceedings to set aside the award. The applications raised whether execution should be stayed pending trial, whether the rent review should proceed, and what protective terms were appropriate.

1. Stay of execution. The court granted a stay of execution of the order of Deputy Master Bartlett dated 12 August 2004 and any judgment made under it, pending trial and disposal of the connected actions. The principles applicable were similar to those governing an interim injunction under American Cyanamid v Ethicon Ltd [1975] AC 396. The stay was not premature because enforcement in Sweden was continuing.
2. The court rejected conditions requiring TeliaSonera to restore the property to its previous state or provide security for that obligation. If TeliaSonera succeeded at trial, the lease and agreement for a lease would be avoided. TeliaSonera would then have substantial cross-claims capable of being set off in the process of restitutio.
3. Hillcourt had not shown a likely interim loss from inability to deal with or remortgage the property, or from expiry of the planning permission. A cross-undertaking in damages by TeliaSonera was an adequate protective condition.
4. Rent review. The court granted an injunction restraining further steps in the rent review, or accepted an undertaking having the same effect. The lease might be held void ab initio and the review could generate substantial costs. If the lease remained effective, Hillcourt could recover any arrears and interest established by a later review. The injunction was also subject to a cross-undertaking in damages.
5. The application for a separate injunction restraining enforcement was refused, but equivalent protection was granted by the stay. TeliaSonera was awarded costs of approximately £28,000.