Flogas v Warrington (t/a Robin Sutton Gases)

At the interim stage, a prohibitory injunction requires a serious question to be tried, damages to be inadequate, and the balance of convenience to favour the claimant. A mandatory injunction requires a stronger case and will usually be refused where compliance would be uncertain or require continuing judicial supervision. The court cannot avoid those principles by expressing positive contractual obligations in prohibitory language. Where the claimant’s own evidence shows that its loss would be financial, damages are an adequate remedy. An injunction should also be refused where compelling continued performance would expose the defendant’s business to serious commercial risk and the balance of convenience favours the defendant.

Flogas sought interim injunctions against Vincent Warrington, a dealer supplying liquefied petroleum gas under an agreement dated 14 January 2005. The relief included mandatory orders requiring him to promote and stock Flogas products, and prohibitory orders enforcing both negative covenants and positive obligations expressed in prohibitory form.

Warrington had stopped purchasing Flogas gas and had begun obtaining supplies from Calor Gas. He contended that the agreement might already have expired, and raised issues concerning alleged oral terms, misrepresentations and repudiatory breach. The central questions were whether the interim relief satisfied the principles governing prohibitory and mandatory injunctions, whether damages were adequate, and where the balance of convenience lay.

1. Mandatory and prohibitory relief. The principles in American Cyanamid Company v Ethicon Ltd [1975] AC 396 applied to the prohibitory injunctions. The claimant had to show a serious question to be tried, that damages would be inadequate, and that the balance of convenience favoured relief. For mandatory relief, a strong case was required under Shepherd Homes Ltd v Sandham [1971] 1 Ch 340.
2. The mandatory orders sought would create uncertainty about what constituted active promotion, a sufficient range of stock, the dealer’s requirements, and identification of the premises. They would risk repeated applications concerning compliance. The principles explained in Co-operative Insurance Society Ltd v Argyll Stores Holdings Ltd [1998] 1 AC 1 were therefore directly applicable.
3. The court could not evade those difficulties by framing positive contractual obligations as prohibitions. There was no serious question to be tried in relation to the mandatory injunctions or the prohibitory orders which in substance enforced positive obligations.
4. There was a serious question to be tried concerning the construction of the agreement’s term clause, the alleged oral arrangements, repudiatory breach and misrepresentation. The principles concerning construction and background circumstances stated in Investors’ Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 were relevant. However, the claimant had not shown the high degree of assurance required for mandatory relief.
5. On the evidence, Flogas’s alleged loss from Warrington’s continued breach was financial and damages were therefore an adequate remedy. The application consequently failed. In any event, the balance of convenience favoured Warrington because compelled purchases at Flogas’s prices might make his business unviable and increase his vulnerability to pressure to sell it.
6. Warrington was bound by the agreement because he had signed it, whether or not he subsequently received a copy. The substantive application was dismissed. His costs were ordered on the indemnity basis because the application was misconceived and bound to fail on the evidence.

First-instance interim injunction application in the High Court. No appellate history was stated in the judgment.