What is an Injunction?

16 April, 2024 | Nigel Stone

Injunctions are orders made by the Court to stop or compel a particular act by a person or entity. Examples of injunctions include forcing a company to stop trading in breach of its obligations or compelling a person to sell an asset. They can be temporary or until further notice by the Court.

It may be possible to convince a Court to hear an injunction within hours if the matter is serious enough, or if justice will be thwarted if the injunction is not granted without delay.  An example might be to keep certain assets from leaving New Zealand where there is evidence they are about to be removed.

The shorter the duration between application and injunction hearing, the greater the burden on the Applicant to establish the injunction is required so rapidly.  Parties seeking an injunction should inform the other party of their application as soon as possible, and collate as much evidence as time will allow in support, in order to increase the likelihood the Court will grant the injunction.

Injunctions are usually granted on an urgent basis. As a result, injunction applications tend to be given very careful scrutiny by judges. In some cases the matter might be determined with the judge only looking at written material.  However, it is more likely that the parties will be given hearing time before the Court to make oral argument based on their written submissions.  It may even be possible that oral evidence is given with cross-examination of witnesses if the parties can convince the judge that justice requires it.

To successfully obtain an injunction, the party making the application must establish:

• That there is a serious question to be tried or, put another way, that the claim is not “vexatious” or “frivolous.”
• that the “balance of convenience” is in the applicant’s favour. This requires consideration of the impact on the parties of the granting of, and the refusal to grant, the injunction.

The judge will also make an assessment of the overall justice of the case, and consider any effect on third parties.

Applicants should assume that they will have to make an undertaking as to damages to obtain the injunction – in other words, they may have to undertake to pay for any loss suffered by the injuncted party, if the injunction is granted but later overturned. Applicants may also have to provide evidence that they have the financial resources to pay the amount of potential damages if the injunction is later overturned.

A party that applies for an injunction and loses should expect to be compelled by the Court to pay a significant contribution towards the other party’s legal costs and disbursements,  although judges sometimes defer this until trial.

While it is possible to commence an injunction without having filed the substantive claim which initiates the trial process, injunctions are usually accompanied by the full claim itself. In any event, it is good practice to have gone through the discipline of preparing the substantive case before launching into an injunction application.

If you are served with an injunction and you have not yet sought legal advice, you should do so immediately.  Likewise, if you need urgent advice about applying for an injunction, please contact us.