SC Johnson & Son Inc v Hillshire Brands Company & Anor

Interim mandatory relief should be refused where damages provide an adequate remedy, including where delay merely increases a quantifiable loss. An order requiring a party to pursue third-party litigation or arbitration must be framed with sufficient precision to identify the steps required for compliance. The court will generally avoid controlling difficult or uncertain proceedings against a third party, particularly where the defendant’s decisions are affected by competing contractual obligations. A party cannot use interim relief to control settlement decisions where the underlying obligation is not presently specifically enforceable.

SC Johnson & Son Inc bought a shoe-care business from Sara Lee under a sale and purchase agreement. The defendants were required to procure the transfer of certain trademark rights held by Zetra, but Zetra refused to transfer them. Arbitration proceedings had been commenced against Zetra.

The claimant originally sought specific performance. By the hearing, it sought permission to amend the claim to damages, continuation as a Part 7 claim, and interim orders requiring updates about the arbitration, its prosecution with reasonable expedition, and restrictions on settlement. The central issues were whether damages were an adequate remedy and whether the proposed interim orders were sufficiently certain and appropriate.

1. Disposition. The claim was permitted to continue as a Part 7 claim for damages. The requests for mandatory interim relief were refused. There was no order for interim relief, subject to the defendants’ undertaking to transfer the rights if they recovered them.
2. Adequacy of damages. The loss caused by delay in completing the transfer could be quantified. If the arbitration succeeded and the rights were recovered, damages would relate principally to the period of delay. If recovery failed, damages would remain the claimant’s remedy. The possibility that the rights might affect the future sale value of the business did not make damages inadequate.
3. Precision and supervision. An injunction must enable the defendant to understand precisely what must be done. The proposed order to use best endeavours to prosecute an international arbitration would create uncertainty and invite repeated applications about the propriety of procedural decisions. The principle in Co-operative Insurance v Argyll Stores Ltd [1998] AC 1, supported by Morris v Redland Bricks Ltd [1970] AC 652, was applicable.
4. Third-party proceedings and settlement. The court will generally not require a defendant to conduct difficult or uncertain litigation against a third party to perform its contract, nor control how that litigation is conducted: Wroth v Tyler [1974] Ch 30. The proposed restraint on settlement would improperly control the defendants’ decisions in the arbitration, which involved their rights and obligations towards other parties, including Unilever. The claimant’s remedy for breach was damages.
5. The defendants’ voluntary provision of bi-monthly updates, subject to arbitration confidentiality, did not require a formal order.