Undertaking as to Damages

Prior to granting a litigant an interim injunction, the court will usually require the applicant to give the Court an undertaking as to damages. That undertaking may well be called upon by the defendant if the court determines that the applicant for interim relief was not entitled to the interim relief. Often it is this “usual undertaking” which presents a potentially unknown risk to an applicant prior to making an application for interim relief, as the financial risk presented by giving undertaking is unquantified at the time the application is made.

An interim injunction is wrongly made when, if all of material facts and considerations were not put before the court at the time of the application (that is, fully and properly investigated), with the result that the court would not have made the order for interim relief, and the court would have declined to grant the injunction, or granted the injunction on more restrictive or narrower terms.

Usually, a successful defendant at trial will be entitled to call upon the undertaking, however circumstances may exist where interim relief was properly granted, and it was subsequent events which rendered final relief to the claimant inappropriate. In these circumstances, it is arguable that successful applicant for relief should not be required to compensate the successful defendant, on the basis that the relief was properly obtained.

The court maintains a discretion not to make any order pursuant to the undertaking where it otherwise might where the conduct of the respondent in respect to the order or continuation of the injunction would make it inequitable to make a pecuniary order. Such matters always remain in the discretion of the court in respect to equitable relief.