Brothers Enterprise Limited v New World Hospitality UK Limited, decided in 2017, raises important points for practitioners advising on applications for injunctive relief.
The facts of the case
This was a restored application for an interim injunction, heard by Roth J.
The claimant (Brothers) ran a restaurant known as Oliver’s Steakhouse. The defendant (New World) owned a hotel known as The Royal Norfolk Hotel. Both businesses ran from properties that were next to each other on London Street in Paddington. The application revolved around an easement relating to toilet facilities. In a nutshell, Oliver’s Steakhouse’s customers used the toilets that were within the Royal Norfolk Hotel.
Access to the Royal Norfolk Hotel was via an internal door from the restaurant. In 2017, the hotel went through a major refurbishment. There were discussions between the owners of both businesses as to what might be involved in these works.
In February 2017, a representative of New World sent an email to a representative of Brothers formally advising of the issue relating to the access to toilets within the hotel. No response was provided to New World by Brothers.
In July 2017, the project manager of the renovations wrote to Oliver’s Steakhouse explaining that work would be commencing on 17 July 2017 and due to finish at the end of September 2017. Toilet facilities were discussed within this letter. Brothers claimed that they did not receive this letter.
Five days later, when the staff at Brothers were preparing the restaurant for its opening time, they found that the toilets in the hotel were inaccessible.
Brothers instructed solicitors and, on 24 July 2017, an application was made for an interim injunction. A hearing was listed for 2.00 pm on 24 July 2017.
Notice of the hearing was sent to New World’s solicitors at 12:30 pm on 24 July by email. That email “bounced back” and New World’s solicitors were only informed of the application at 1:30 pm. Understandably, New World was not able to attend the hearing.
The return date was listed for 31 July 2017. At this hearing, the injunction was not renewed. This was largely due to other issues regarding fire safety certificates, which meant that the restaurant could not immediately open anyway.
The judgment of Roth J
The hearing before Roth J was a restored application for an interim injunction. Ultimately Roth J did not allow the injunction to pass for various reasons:
- The conduct of the claimant.
- An alternative solution to the problems with the toilets had been suggested by the defendant.
- Damages would be easy to quantify in this situation and were the relevant remedy in this case.
What is interesting is Roth J’s discussions on procedure and how injunctions are decided in this area of law.
The importance of providing notice to an opponent
At paragraph 36 of his judgment, Roth J discussed the provision of notice in cases of this nature. The judge’s attention had been drawn to the way the claimants had conducted themselves in the proceedings.
The judge was asked to consider their failure to give proper notice of the application on 24 July and the failure at the hearing of the application on the same day to make full and frank disclosure to the court.
He noted that the claimant’s witness statement and draft order were prepared on 21 July 2017, yet an attempt to notify the defendant’s solicitors was only sent at 12:30 pm on 24 July; an hour and a half before the injunction application.
Roth J commented that this was wholly inappropriate conduct in the circumstances. There was nothing desperately urgent about seeking relief on 24 July. He stated:
“The interference had begun on 17 July. The restaurant, even when interim relief was granted, did not re-open and there is no reason that I can see why the Claimant could not come to Court on 25 July and given at least one day’s notice… It cannot be emphasised too strongly that where interim relief is being sought only in the most wholly exceptional circumstances can there be justification for not giving notice to the other side. Such circumstances include a case where giving notice would risk defeating the very substance of the relief that is being sought, as in a Freezing Order or a Search Order, or possibly where dissemination of confidential information is imminent.”
This explanation by the judge is a refreshing reminder of CPR 25.3 which clearly states:
“25.3(1) The Court may grant an interim remedy on an application made without notice if it appears to the Court that there are good reasons for not giving notice…
3. If the Applicant makes an application without giving notice the evidence in support of the application must state the reasons why notice has not been given.”
Furthermore, Practice Direction 25A paragraph 4.3(3) makes clear that, except in cases where secrecy is essential, an applicant should take steps to notify the respondent informally of any application.
It is clear from the facts of this case that there was no need for secrecy. Brothers could and should have provided New World with more notice than an hour and a half.
Duty of full and frank disclosure
The judge then went on to discuss disclosure. New World had raised this as a failure on the Brothers’ solicitor’s behalf. Prior to the application for an injunction on 24 July, New World’s solicitors had written to Brothers’ solicitors stating:
“If you proceed with an application to the Court, kindly bring to the attention of the Court all of the correspondence of today and ideally please apply upon notice to us”.
When the matter came for the hearing at the initial application, Norris J, the judge hearing the application, explained that he had not read the witness statements. However, counsel for Brothers did not take the judge to New World’s solicitors’ correspondence. Roth J made it quite clear that:
“It is quite insufficient on a without notice application to leave material that should relevantly be drawn to the attention of the judge simply buried in an exhibit.”
Counsel at the initial hearing had also explained to Norris J that Brothers could not open the restaurant because of licence conditions affecting the absence of direct access to toilets. This was what had been stated in the witness statement of the claimant regarding licensing issues. This point was not correct. The restaurant was not able to be opened in any case because of fire regulations.
It is a clear legal principle that on an application for an injunction, an applicant is under an obligation of full and frank disclosure. This obligation demands that an applicant discloses all matters to the court even if they damage the applicant’s case. The White Book commentary at CPR 25.3.5 makes it clear:
“An Applicant must disclose to the judge ‘any facts known to him which might affect the judge’s decision whether to grant relief or what relief to grant’ (Fitzgerald v Williams).”
The duty of full and frank disclosure is also referred to in paragraph 16.6 of the Chancery Guide and paragraph 13.1.5 of the Queen’s Bench Guide. It is also referred to in Practice Direction 25A paragraph 3.3, which states:
“The evidence must include all material facts of which the Court should be made aware”.
Arguably, Roth J took this a step further. His judgment is clear: not only should such evidence be included in witness statements, but counsel should draw the attention of such evidence to the court.
Roth J therefore thought that the failure to give adequate notice and failure to provide full and frank disclosure did in fact go to the question as to whether it was just and equitable to grant injunctive relief. As he said:
“The overall conduct of the parties, it seems to me, must be a matter of relevance”.
He then directed himself to “Shelfer guidelines”.
The Shelfer guidelines were outlined in Shelfer v City of London Electric Lighting Company. They provide that if the injury to the plaintiff’s legal right is small; and is one which is capable of being estimated in money; and is one which can be adequately compensated by a small money payment; and the case is one in which it would be oppressive to the defendant to grant an injunction; then damages in substitution may be given.
The Shelfer guidelines have governed the laws of injunctions, in part, for 125 years. However, their relevance has been watered down somewhat over the years. This doctrine could be seen as being in a state of flux. Between 2000 and 2010, a spate of cases narrowed the applicability of Shelfer.
Most notably, in the case of Coventry v Lawrence, Shelfer was criticised and it was suggested that judges should “avoid a mechanical application of the out of date test for awarding damages”. Furthermore, it was stated that the default position should be that an injunction should be granted where a right is infringed.
Despite this, Roth J did direct himself to the Shelfer guidelines. He asked whether it would be oppressive to the defendant to grant an injunction. In answering this question, the judge was clear that because of the failure to give proper notice and the fact that the building at the centre of this litigation was old and at some point would undergo building works, an injunction should be refused.
Application of Brothers Enterprises Limited v New world Hospitality UK Limited
Since Roth J’s judgment in Brothers, the case has been applied to Apex Moss Limited v URC Thames North Trust and Formsnet Residential Limited on 23 February 2018.
Foster J stated in her judgment in this matter:
“I have also found assistance in a recent exposition of the Neuberger Coventry principles as they were applied by Roth J in Brothers v New World Hospitality. In the context of interference with an easement in the course of refurbishment works, he rejected a submission to the effect that, refusing the injunction where breach of property rights was involved, was tantamount to an expropriation.”
Clearly, Roth J considered this case “in the round”. The claimant’s solicitors did not give enough notice to the defendant’s solicitors, nor did they provide full and frank disclosure in the initial application for an injunction. In addition to this point, when the injunction was granted at the first instance, the restaurant was not able to be opened due to other issues.
In relation to the Shelfer guidelines being re-animated, it is clear that when considering an injunction, they make a good starting point. They are a clear, albeit mechanical way of assessing whether an injunction would be an appropriate remedy. Despite their dilution in the case of Coventry, it is clear that they should be the starting position for any litigator considering an injunction.
This case highlights the important issues of notice and full and frank disclosure when making an application under CPR 25. A client’s expectations must be managed carefully. What may appear as an absolute urgent situation to a client may end up being a costly experience for them.