An Impairment of a Substantive Right and the Defendant Damages - Essay Example

?Introduction If a plaintiff wants to enjoin a party from doing something, then the plaintiff must present an undertaking to the court. This is moneydeposited with the court, that the court can, in his or her discretion, give to the defendant if the injunction is dismissed or the defendant prevails in a trial on the merits. There are a variety of reasons why the court may award this, but the fact remains, that this award is discretionary. What follows is a discussion about undertakings, why they are necessary, what function they serve, and how they operate. Discussion The practice of requiring an undertaking before being granted an interim injunction began in the 19th Century with the case of Novello v. James (1854) 5 De G.M. & G. 876 and its brethren (Novello v. James (1854) 5 De G.M. & G. 876). This undertaking is not given to the party against whom the injunction is sought, but to the court who is overseeing the proceedings from which the injunction came (Zuckerman, 1994, p. 546). The reason that the plaintiff has to give this undertaking is in the event that either the injunction is dismissed for any reason, or that the defendant wins in a trial on the merits. In either of those cases, it must be shown that the defendant was kept from exercising his or her lawful rights, and was harmed by this. Therefore, the money given as an undertaking must be equivalent to what monetary damage that the defendant would experience because of this loss of rights. This undertaking is a safeguard for defendant’s rights, as the court is sworn to give both parties equal treatment, and it is a matter of “elementary fairness” that this undertaking is given (Kirklees Borough Council v. Wickes Building Supplies Ltd. [1991] 3 W.L.R. 985). However, the entitlement to damages is not independent of the undertaking (Fletcher Sutcliffe Wild Ltd. v. Burch [1982] F.S.R. 64), and whether or not the defendant is entitled to the undertaking is not decided by the material event, such as the injunction being dismissed or the defendant prevailing on the merits, but, rather, is a discretion of the court (Attorney General v. Albany Hotel Co. [1986] 2 Ch. 696). This discretion is not limited in any way (Cheltenham and Gloucester Building Society v. Ricketts [1993] 1 W.L.R. 1545. This means that the court does not necessarily have to grant the defendant the damages that have been deposited, even if the defendant prevails on the merits and even if the injunction is dismissed, and this discretion about whether or not to award the defendant is essentially unbridled. This brings up the question of what the undertaking is meant to compensate. The injunction usurps the defendant’s rights in some way, and this is a harm that is suffered by the defendant. For instance, perhaps the defendant is enjoined from keeping open his business after he has already opened it, because the plaintiff seeks an injunction based upon the fact that defendant is, say, operating a business that is not zoned for a particular area. As it turns out, the zoning for the area is proper, and the existence of the business in this area is also proper. Yet Defendant has now lost several days or even weeks of business. This is a clear harm to the defendant, yet the court does not have to award the defendant the undertaking if the court deems this to be fit, and this discretion is not limited, therefore the defendant probably could not prevail on an appeal on the matter, as appeals courts are loathe to interfere with judicial discretion. This is obviously an injustice, but, since an undertaking is not a function of tort, criminal or contract law, it is difficult to classify it, so it is difficult to state what is proper when examining judicial discretion on the issue. One clear way that the defendant may get the undertaking would be when it is clear that the injunction should never have been granted (Norwest Holst Civil Engineering Ltd. v. Polysius [1987] CA Transcript 644. However, there is a difficulty in ascertaining when an injunction should not have been granted. While there is a clear demarcation when the plaintiff suppressed material facts that, if the facts were known, would result in the injunction not being granted, it is less clear when there is not a material suppression of facts, but the court looked at the balance of rights and came down on the side of the injunction (Zuckerman, 1994, p. 548). In the former case, the defendant should definitely be entitled to the undertaking, and some authority states that this is the only case where the defendant would be entitled to the undertaking, and not when there is a mistake of law (Smith v. Day (1882) 21 Ch. D. 421) In the latter case, the injunction should not have been granted, because defendants’ position at trial prevailed. Nevertheless, the judge used his discretion in the balance of equities and decided that plaintiff’s position seemed to be stronger. This is a much less clear cut case of the fact that the injunction should not have been granted then the case where there is a material suppression of facts, and this might result in the judge not giving the undertaking to the defendant, despite the fact that the defendant is harmed. These two cases also invoke different reasons for the defendant being entitled to receive the undertaking. In the latter case, it turns out that the defendant was enjoined from doing an act that he was entitled to all along, and the undertaking is meant to compensate the defendant for the damages that he or she has realized because of the enjoinment of his rights. So, in the case of the business owner who was forced to shut down, the undertaking will compensate him for his lost business. This would be substantive (Zuckerman, 1994, p. 550). However, in the case where there was a grave suppression of material fact on the part of the plaintiff, the defendant may still be entitled to the undertaking, even if he cannot necessarily show that he would prevail on the merits, therefore does not dispositively show that he or she was entitled to his right. In the case of an impairment of a substantive right, the defendant has suffered substantial damages, therefore, according to Zuckerman (1994), the court should not be able to have discretion on whether or not to award this defendant the undertaking (Zuckerman, 1994, p. 550). This would be akin to denying the defendant damages when he was clearly due them. Therefore, the better way of looking at undertaking is that it is to be enforced unless there are extraordinary circumstances (Griffith v. Blake (1884) 27 Ch.D. 474). Therefore, the burden should be on why the undertaking should not be enforced, instead of the burden lying on why the undertaking should be enforced. As for the measure of damages, Zuckerman (1994) argues that the party against whom the injunction was brought should be brought whole, which means that he or she would be in the same position as if the injunction was never brought (Zuckerman, 1994, p. 552). This has contrary authority, as there is some thought that the measure of damages should be the subject of equitable discretion (Victorian Onion and Potato Grower’s Association v. Finnegan [1992] V.L.R. 814). However, as the court is sworn to protect both party’s rights equally, Zuckerman (1994) argues that this test is insufficient, as it does not bring the defendant whole and the defendant could possibly have a loss in this situation. On the other hand, if the plaintiff obtains an injunction by improper means, such as the case where the plaintiff conceals material facts in bringing the injunction, and these facts, if known, would mean that the court would not have brought the injunction, the undertaking can still be awarded to the defendant, even if the plaintiff prevails on the merits of the claim. So, for this case, the measure of damages would be different, because the defendant cannot show that he was damaged by the injunction, because he would have lost on the merits of the case. Yet the plaintiff got the injunction improperly, so the defendant may still be awarded damages (Zuckerman, 1994, p. 556). This is because the plaintiff would be guilty of contempt or abuse of process, for he is clearly using the court in a manner that was not intended (Grainger v. Hill (1838) 4 Bing. N.C. 212). Conclusion The undertaking of damages is an important means of keeping injunctions in check. In other words, a plaintiff has to consider, long and hard, about whether or not it would be worth it to go for an injunction when he essentially has to put up substantial money into the court in order to do so. That said, the fact that the court has discretion about whether or not to award the defendant the undertaking is a peculiar aspect of the law. If the defendant prevails on the merits, then the undertaking has the function of making the defendant whole again, and there should not be discretion on whether or not this undertaking is awarded the defendant, as the defendant is clearly being compensated for his damages. However, if the injunction is dismissed because the plaintiff concealed facts, but the plaintiff goes ahead and wins at trial, then the undertaking is meant to compensate something entirely different, or, rather, is meant to not be compensation for the defendant, but be a sanction on the plaintiff. In that case, the measure of damages are different and it would be more difficult to know how much of the undertaking to award the defendant. Regardless, the matter should not be a matter of pure judicial discretion, but, rather, be an award that is only given in extreme circumstances. Read More