NoCopyrightSounds Limited v AEI Music Limited & Anor

For an interim injunction, the court may grant relief without applying the ordinary balance-of-convenience analysis where the claimant has no arguable defence to its claim. That principle is not confined to cases in which the claimant’s rights have already been judicially established. Where a defence is arguable, however, the court should not conduct a mini-trial before disclosure and evidence are complete. It should assess whether granting or withholding relief is more likely to produce a just result. Relevant considerations include whether damages adequately compensate each party, the parties’ ability to meet any damages award, the relative strength of their cases, the potential harm caused by continuation of the disputed conduct, and the practical effect of preserving the existing position pending trial.

The claimant sought an interim injunction concerning its intellectual property rights in sound and audio-visual recordings and musical compositions. It alleged that contractual arrangements authorising the defendants to exploit those rights had been terminated, or could be terminated, and that one defendant owed substantial sums which it could not immediately pay.

The defendants disputed the contractual effect of heads of agreement, the validity and reasonableness of termination notices, and the existence of material breach. They accepted that there were serious issues to be tried and argued that damages were adequate and that the balance of convenience favoured continuation of the existing arrangements. The court therefore considered whether the claimant had no arguable defence, the adequacy of damages, and the balance of convenience.

1. No arguable defence. The principle in Manchester Corp v Connolly [1970] Ch 420 is not confined to cases where the claimant’s rights have already been pronounced upon. A claimant facing no arguable defence may be entitled to interim relief without waiting for trial. The defendants’ contractual arguments, including reliance on the heads of agreement, novation and estoppel, were sufficiently arguable. The court therefore declined to grant the injunction on that basis and did not conduct a mini-trial before disclosure and evidence were complete.
2. Interlocutory approach. Applying the approach summarised in National Commercial Bank Jamaica Ltd v Olint Corporation Ltd [2009] 1 WLR 1405 at [16], the question was whether granting or withholding an injunction was more likely to produce a just result. The defendants accepted that there was a serious issue to be tried.
3. Adequacy of damages. Damages were unlikely to be adequate for the claimant. The evidence indicated possible loss of licensees, suspended payments and harm extending beyond readily quantifiable financial loss. There was also substantial doubt about the defendants’ ability to pay. Conversely, damages were likely to be adequate for the defendants if the injunction were wrongly granted because their loss would probably be financial and the claimant appeared able to pay, whether by set-off or from reserves.
4. Balance of convenience. The claimant’s case was the stronger. The parties’ financial positions, the potential harm caused by continued exploitation of the rights, and the defendants’ imminent loss of those rights were relevant factors. Those considerations outweighed the defendants’ reliance on the established status quo.
5. Disposition. The interim injunction was granted in the terms agreed by the parties. It would operate until the contractual relationship expired, on the accepted basis, at the end of July 2026.