Mozafarian Jewellers LLC v Designed By Josh Ltd

Interlocutory mandatory injunctions require particularly careful scrutiny and a higher degree of assurance than prohibitory injunctions. The court must first determine whether there is a serious issue to be tried. It must then assess whether damages would be adequate, weigh the balance of convenience, and consider the respondent’s protection under the cross-undertaking in damages. Applications seeking early disclosure or particularisation should not be presented as interim injunctive relief where they are final in substance. A best-endeavours order will be inappropriate where compliance may depend on actions by third parties and the order would be difficult for the court to police.

The claimant brought proceedings arising from a failed collaboration for the production of a highly valuable dress. It alleged breach of contract, procurement of breach of contract and malicious falsehood after the defendant reported concerns about the payment of £1 million to its bank. The claimant alleged that this led to a restriction on its account with Mashreq Bank.

Before service of the particulars of claim, the claimant sought interlocutory orders requiring information and documents about the defendant’s complaints to banks and law-enforcement agencies, together with an order requiring the defendant to use best endeavours to procure removal of the account restriction. The central issues were whether the causes of action were seriously arguable and whether the mandatory relief sought was justified under the principles governing interim injunctions.

1. The application was refused. All three forms of relief sought were mandatory, so the court required a higher degree of assurance than would ordinarily be required for a prohibitory interlocutory injunction.

2. The procurement of breach of contract claim was not seriously arguable. Even assuming English law applied, Mashreq Bank’s contractual terms gave it broad discretion to restrict or freeze the account. On the evidence, the bank appeared to have acted within those terms. Any possible unreasonableness in the defendant’s communication to Santander was a separate issue.

3. Malicious falsehood was treated, for the purposes of the application, as raising a serious issue to be tried. The proposed contractual term preventing the defendant from countermanding or depriving the claimant of the benefit of the £1 million payment was also regarded, with hesitation, as sufficiently arguable.

4. The court applied the remaining stages of the American Cyanamid approach. The claimant’s prejudice was limited because the restriction concerned only the £1 million, other funds remained available, and the claimant had offered to transfer the money into a solicitor’s account or into court. The balance of convenience therefore did not favour relief.

5. The information and disclosure orders were, in substance, applications for early disclosure or further particularisation. They had insufficient nexus with the requested unfreezing of the account and were not properly framed as interlocutory relief. The court expressed no view on whether a properly framed future disclosure application could succeed.

6. The best-endeavours order was also refused. It could require the defendant to procure an outcome dependent on banks and other third parties, and would be difficult to police. The appropriate dispute concerning the freeze was one for the claimant to address against Mashreq Bank. The prejudice to the defendant outweighed that to the claimant.