Critically assess whether the guidelines established by the House of Lords in American Cyanamid Co. v. Ethicon Ltd.[1975] for the grant of an interlocutory or interim injunction have been followed in subsequent decisions. (July 2007 exam)

"Considering the ratio decidendi of American Cyanamid v. Ethicon Ltd., and the current trends indecisions on interlocutory applications, it can fairly be urged that the House of Lords did not succeed (even if it was so desired) in getting rid of the "prima facie" or "probability of success" test in determining applications for interlocutory injunctions". Discuss. (May 2006 exam)

“In 1975 all our principles were shattered and our experience overthrown by the judgment of the House of Lords in American Cyanamid vEthicon”. Comment. (July 2006 exam)

In JT Stratford v Lindley [1965] AC 269, the House of Lords (Lord Upjohn) said “An appellant seeking an interlocutory injunction must establish a prima facie case... That being so, an injunction may be granted if it is just and convenient so to do, the remedy being purely discretionary. The balance of convenience in these cases is always of great importance”.

In American Cyanamid [1975] 2 WLR 316, however, Lord Diplock said:

“Your Lordships should in my view take this opportunity of declaring that there is no such rule. The use of such expressions as “a probability”, “a prima facie case”, or “a strong prima facie case” in the context of the exercise of a discretionary power to grant an interlocutory injunction leads to confusion as to the object sought to be achieved by this form of temporary relief. The court must no doubt be satisfied that the claim is not frivolous or vexation; in other words, that there is a serious question to be tried. It is no part of the court’s function at this stage of the litigation to try to resolve conflicts of evidence on affidavit as to facts on which the claims of either party may ultimately depend nor to decide difficult questions of law which call for detailed argument and mature considerations. These are matters to be dealt with at trial.”

Lord Diplock went on to say that the court would then consider the balance of convenience, starting with whether damages would adequately compensate the plaintiff or defendant for the loss sustained between the time of the injunction and the time of trial if the injunction were refused or granted respectively. Next the court would consider all matters relating to the balance of convenience (too numerous to list there, he said) and any special factors. Finally the court would look at the status quo.

The rest of the Law Lords agreed with Lord Diplock. A great debate arose, however, as to whether the House of Lords meant for the guidelines to be followed in all cases. Lord Denning in particular felt that there were cases where the guidelines were not appropriate, where he could use a prima facie case instead. In some instances he sought to exclude American Cyanamid altogether, while in other cases he thought he could use the idea of “special factors” to revert to the prima facie case method.

In Fellowes v Fisher [1976] QB 122, the plaintiffs sought to enforce a covenant in restrict of trade whereby the defendant was not to do any legal work within a certain radius. All of the CA thought that the covenant was too wide and unenforceable. They would have denied the injunction on the grounds that P had not made out a prima facie case. However, they felt constrained to follow Am-Cy.

Browne JL said:

“I cannot believe that the House intended to lay down rigid rules for the exercise of this discretionary remedy. Lord Diplock himself said twice that the remedy is discretionary, and referred with apparent approval to the decision of this court in Hubbard v Vosper which ‘deprecated any attempt to fetter the discretion of the court by laying down any rules which would have the effect of limiting the flexibility of the remedy...’ Further the principles which he stated seem to have in themselves some elements of flexibility. I would therefore go on to consider the balance of convenience generally, and in my view it is in favour of refusing an interlocutory injunction.”

However, Lord Denning took a different view. He said:

“As I read the pronouncement of the House in the Am-Cy case, it is not proper to have regard to the relative strength of each party’s case save as a last resort.: “where it is apparent on the facts disclosed by evidence as to which there is no credible dispute that the strength of one party’s case is disproportionate to that of the other party. The court is not justified in embarking on anything resembling a trial of the action on conflicting affidavits in order to evaluate the strength of either party’s case.

Where is the reconciliation to be found? The House did say that “there may be many other special factors to be taken into consideration in the particular circumstances of individual cases.” That sentence points the way. These individual cases are numerous and important. They are all cases where it is urgent and imperative to come to a decision. The affidavits may be conflicting. The questions of law may be difficult and call for detailed consideration. Nevertheless, the need for immediate decision is such that the court has to make an estimate of the relative strength of each party’s case. If the plaintiff makes out a prima facie case, the court may grant an injunction. If it is a week case, or is met by a strong defence, the court may refuse an injunction. Sometimes it means that the court virtually decides the case at that stage. At other times it gives the parties such good guidance that the case is settled. At any rate, in 99 cases out of 100, the matter goes no further.”

            ...

There is yet another way out. The House did say that “if the extent of the uncompensatable disadvantage to each party would not differ widely, it may not be improper to take into account in tipping the balance the relative strength of each party’s case...”

In my opinion, this is one of those ‘individual cases’ in which the courts should go by the principles stated by the House in Statford. I ma of the opinion that he plaintiffs have not made out sufficiently a prima facie case. ... Apart from this, it is a case of “uncompensatable disadvantages” where damages on either side would not be an adequate remedy, so the proper course is to have regard to the relative strength of each party’s case.”

Similarly, in his dissenting judgment in Hubbard v Pitt [1976] QB 142 Lord Denning said:

“All I would say is that I think this case does not come within the ruling in the American Cyanamid case. In the first place this is one of the ‘individual’ cases in which there are special factors to be taken into consideration. So much so that the court should assess the relative strength of each party’s case before deciding whether to grant an injunction. The plaintiffs should not be granted an interlocutory injunction unless they can make out a prima facie case. In the second place there are ‘uncompensatable disadvantages’ which are so evenly balanced that it is appropriate to have regard to the strength of each party’s case.”

But, Lord Denning was sharply criticized by Stamp LJ in the same case who said:

“Lord Denning M.R. does not think it right to accept the passages I have extracted from the speech of Lord Diplock in the American Cyanamid case [1975] A.C. 396, as of general application. In support of that conclusion he, in effect, points to the passage in Lord Diplock’s speech, where he says, at p. 409: ‘there may be many other special factors to be taken into account in the particular circumstances of individual cases.’ I can only say that, reading the latter passage in the context in which it appears, it appears to me clear beyond peradventure that Lord Diplock was there referring to special factors affecting the balance of convenience and not to special factors enabling the court to ignore the general principles there laid down or, more particularly, to ignore, in the consideration of an application such as that with which we are here concerned, the admonition not to require of a party seeking an interlocutory injunction that he should have made out ‘a prima facie case’ or ‘a strong prima facie case.’ It is in my view the duty of the Court of Appeal to follow and apply the practice laid down in the American Cyanamid case. The House of Lords may depart from its own decisions and if it has done so this court, like all other courts, must, in my judgment, follow the decision in the later case. I ought perhaps to record, though it does not in the view I take affect the matter, that in Kwik Lok Corporation v. W.B.W. Engineers Ltd., March 10, 1975; Bar Library Transcript No. 121 of 1975, where it was, as I think quite rightly, not suggested that the American Cyanamid case was otherwise than applicable, the Court of Appeal (Russell L.J. and Stamp L.J.), rejoicing, if I may so put it, that the House of Lords had authoritatively and with one voice laid down the correct approach in such matters, unhesitatingly adopted that approach. Because both those elements are here present it is not necessary to consider to what extent the American Cyanamid case is

applicable where there is no relevant conflict of evidence and no difficult question of law.”

In that case, Orr LJ followed the American Cyanamid guidelines without comment. The case concerned a group of social workers picketing an estate agent. Lord Denning refused to grant the injunction, saying that it fell into the category of libel, and different standards were to be applied. However, the other judges felt that American Cyanamid was to be used and that the balance of convenience favoured P given the limited means of D and the fact that they could still picket elsewhere.

In fact, there are cases where American Cyanamid is excluded and a prima facie case is needed. These include the following:,

1. Mandatory interlocutory injunctions (De Falco v Crawley BC [1980] QB 460)

2. Cases where there is no arguable defence (Official Custodian for Charities v Mackay [1985] Ch 169)

3. Cases where the trial is unlikely or delayed (Cayne v Global Natural Resources [1984] 1 All ER 225)

4. Cases where the loss is unquantifiable (Lewis v Heffer [1978] 1 WLR 1061)

It would seem then that as a whole, there was not a great unhappiness with the guidelines laid down in American Cyanamid. The Court of Appeal generally followed the guidelines and certainly the House of Lords never made further pronouncement on the topic.

Nevertheless, the debate still rages, and it has been questioned whether the House of Lords meant to widen the scope of injunctions or to narrow it. Previously, injunctions could only be granted where there is a strong case on the merits. Now, in default of a strong case on the merits where there is a serious issue to be tried coupled with considerations based upon the balance of convenience. So the question is asked whether the previous criteria still existed with American Cyanamid only being used where the strong prima facie case could not be found.

In Factortame No. 2, Lord Goff, although upholding American Cyanamid regarded its primary purpose as being: “to remove a fetter which appears to have been imposed in certain previous cases, viz, that a party seeking an interlocutory injunction had to establish a prima facie case for substantive relief.”

And Laddie J in Series 5 Software v Clarke [1996] 1 All ER 853 observed: “In my view, Lord Diplock did not intend by the last quoted passage to exclude consideration of the strength of the cases in most applications for interlocutory relief. It appears to me that what is intended is that the court should not attempt to solve difficult issues of fact or law. If on the other hand, the court is able to come to a view as to the strength of the parties’ cases on the credible evidence, then it can do so.”