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Cyanamid plus principles to be applied in “now or never” injunction cases

Practitioners will be well aware of the American Cyanamid guidelines, which are routinely applied by the courts in injunction cases. The guidelines are not a statutory test to be rigorously applied but practitioners will be aware of their importance and will seek to ensure that their evidence and arguments cover the key points, namely: whether there is a serious question to be tried and if so, the “balance of convenience” test.

However, there are circumstances in which the American Cyanamid guidelines may need to be modified, or may not apply at all. Recently, in Global Gaming Ventures (Group) Ltd and another v Global Gaming Ventures (Holdings) Ltd and another, the Court of Appeal provided guidance on the approach the courts should take in one of these circumstances, namely, when considering an application for injunctive relief where the applicant is seeking the entirety of the relief in the underlying claim. These are cases where the relief must be given now, or there is no benefit to it being obtained at all. In such cases, the courts should not assume, as the American Cyanamid guidelines presuppose, that there will be a subsequent trial of the substantive issues. Accordingly, this is a scenario which practitioners must also keep in mind to ensure that their evidence and arguments in support of, or in opposition to, such an application are tailored towards the correct questions.

The courts have established that in such cases, the American Cyanamid test can be modified to the so-called American Cyanamid plus test. The plus test provides that the courts should have such regard to the merits of the case as is possible, in an attempt to take the course which runs the least risk of injustice to the parties.

Global Gaming Ventures provides the most recent example of the court applying the plus test and consequently overturning the decision of the lower court. The case concerned an application for immediate injunctive relief in the form of an order for disclosure and inspection of documents relating to the operation and financing of a casino. The immediate urgency was the ongoing marketing and imminent sale of shares in one of the casino group companies.

Arnold J, the judge at first instance, did note that the relief sought on the application was the entirety of the relief sought in the Part 8 claim. However, his decision to dismiss the application was challenged on the basis (amongst others) that he was wrong to deal with the application on ordinary American Cyanamid principles. It was argued that he should have instead applied the “plus test” and concentrated on the relative strength of each party’s case, rather than merely asking himself whether there were serious issues to be tried and then deciding the application on the balance of convenience.

The Court of Appeal agreed that this was a case where the ordinary American Cyanamid principles should be modified. The purpose of the disclosure was to monitor the imminent sale of the shares, and by the date of any trial the sale would have taken place. Accordingly, no opportunity would exist for “a more leisurely or detailed consideration” of the strength of the claim before the conclusion of the sale process. The Court of Appeal therefore held that the appellants were:

“… entitled to have the potential consequences of the relief they were seeking weighed against the relative strength of their case for disclosure and not simply by reference to what course would do the least harm”.

In the leading judgment, Patten LJ, at paragraph 45, stated that if the applicant were able to demonstrate to the judge that their claim had a significant prospect of success, it should have been taken into account when determining where the balance of convenience lay.

The Court of Appeal therefore considered the strength of the causes of action relied upon. It held that there was a strong claim for disclosure. The appeal was allowed and disclosure was ordered.

By their very nature, applications for injunctive relief are urgent and practitioners will have far less time than usual to familiarise themselves with the matter. The traditional starting place in determining the merits of seeking an interim injunction, and advising a potential applicant, will still be a consideration of the American Cyanamid test. However, this case highlights the importance of the practitioner also standing back and considering whether, in their application for injunctive relief, their client is seeking the entirety of the relief in the underlying claim. In such circumstances, the practitioner will need to consider whether the American Cyanamid plus test will be applicable. If so, the practitioner will then need to ensure that their evidence and arguments are directed to the strength of their case and the course which runs the least risk of injustice to the parties.

As an aside, Global Gaming Ventures is also a useful reminder to practitioners on the role of undertakings in injunction cases. In Global Gaming Ventures, an issue was raised as to one of the applicant’s purpose for seeking disclosure of the documents. It had been alleged that his claim for access to the documents was sought for “an improper purpose”. The applicant (who is a solicitor) offered an undertaking to the court, only to use the documents and information disclosed for the purposes of discharging his duties as a director. The Court of Appeal noted, at paragraph 47, that the risk of unauthorised disclosure was “considerably diminished” by the undertaking which the applicant offered to the court. Practitioners should therefore ensure that they consider whether there is a particular undertaking that their client can give, which may strengthen their position on an application.

Boodle Hatfield Rebecca Foden

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