Emailgen Systems Corp v Exclaimer Ltd & Anor

Whether a party may be released from an undertaking depends on the undertaking’s terms and the order’s context. Where an interim injunction application has been disposed of by an undertaking, the giver cannot later argue that the injunction should never have been granted. Release requires good cause, typically a significant change of circumstances or a new fact which could not reasonably have been known when the undertaking was given. A stay is distinct from an adjournment: a stay does not preserve the injunction application for later determination. The court must construe the order as a whole, including the commercial purpose known to the parties.

Emailgen obtained an ex parte freezing order under section 25 of the Civil Jurisdiction and Judgments Act 1982 in support of Canadian proceedings. Exclaimer and Mr Millington provided security of £520,000 and gave an undertaking in a consent order. The English application was stayed, with liberty to apply, while the Canadian dispute proceeded.

Exclaimer later applied to be released from the undertaking, alleging that there had been no good arguable case, no risk of dissipation, no urgency and material non-disclosure. The central issue was whether the consent order had disposed of the injunction application, so that Exclaimer had compromised its right to challenge the original freezing order, or whether the application had merely been adjourned.

1. Application dismissed. Exclaimer had not established good cause for release from its undertaking.
2. The court distinguished between an order which disposes of an injunction application through an undertaking and an order which adjourns the application. In Chanel v Woolworth [1981] 1 WLR 485, the undertaking disposed of the application. The defendant therefore could not reopen the question whether the injunction had been justified. In Butt v Butt [1987] 1 WLR 1351, the motion had been adjourned, so the defendant retained that opportunity.
3. The proper approach is to construe the undertaking and the order as a whole, having regard to the background known to both parties. A stay is not an adjournment. It leaves no further proceedings unless the application is restored and does not preserve the injunction issue for later determination.
4. The undertaking in this case was given to avoid a contested English hearing and allow the substantive dispute to proceed in Canada. The reference to security lasting until agreement or further order concerned the continuation or variation of the security, not a later challenge to the original freezing order.
5. “Good cause” depends on all the circumstances, but ordinarily requires a significant change of circumstances or a new fact. The matters relied upon by Exclaimer were either known, discoverable, or part of its existing case when the undertaking was given. They did not amount to a sufficiently significant change.