SDI Retail Services Ltd v King & Ors

For an interim injunction, the court must first decide whether there is a serious issue to be tried, without conducting a preliminary trial. It must then assess the adequacy of damages for each party, including the effect of contractual caps or exclusions and difficulties in quantifying loss. If necessary, it must balance the competing risks and may preserve the status quo. The American Cyanamid guidelines are flexible principles rather than a rigid formula. An injunction may be granted where the claimant’s damages are difficult to assess, the defendant can be adequately protected by a cross-undertaking, and an early return date limits the period of restraint.

SDI Retail Services Ltd applied urgently for an interim injunction against Rangers Football Ltd and related defendants. The dispute concerned a retail operations, distribution and intellectual property licence agreement under which SDI operated Rangers’ retail activities and claimed a contractual matching right in respect of third-party offers.

Rangers had notified SDI of a third-party offer and indicated that it intended to accept it unless SDI exercised its matching right. SDI alleged that the notice was contractually defective because it did not provide details of each element of the offered rights separately. The central issues were whether there was a serious issue to be tried on construction, whether damages would be an adequate remedy, and where the balance of convenience lay.

1. Interim injunction granted. The court granted relief under section 37(1) of the Senior Courts Act 1981, pending an early return date.
2. There was a serious issue to be tried concerning the construction of the matching-right provisions. The interaction between the provisions requiring separate details of each element and those enabling SDI to match offered rights individually gave SDI’s construction substantial arguability. The court expressly declined to conduct a mini-trial or give a binding view on the ultimate construction.
3. The American Cyanamid guidelines governed the application. They require consideration of whether the claim is serious, the adequacy of damages for the claimant, the adequacy of the cross-undertaking for the defendant, and, where necessary, the balance of convenience. The guidelines are not a rigid formula.
4. Damages were not an adequate remedy for SDI at the interim stage. The potential losses included profits, lost sales, goodwill and reputational harm. Quantification was particularly difficult because SDI did not know which rights it would have matched, the agreement potentially permitted repeated renewals, and contractual exclusion and limitation clauses might restrict recovery.
5. The defendants had not shown that damages would be inadequate for them. A satisfactory cross-undertaking had been offered by SDI’s parent company. The proposed restraint was also short, since the return date was to occur within days.
6. Any uncertainty in the respective damages remedies therefore did not displace the balance of convenience. The court considered it a matter of prudence to preserve the status quo by restraining the defendants until the early return date.
7. The urgency of the application was justified by the threatened imminent contractual breach. Sufficient notice had been given under CPR 23.7(4).
8. The court emphasised that its interim conclusions were not binding indications of the outcome at the return hearing, where fuller submissions and evidence could be presented.