Injunctions - A Remedy for Breach of Covenant
16th July 2021
16th July 2021
For the most part, when dealing with breaches of leasehold covenants, the ultimate remedy that will be pursued if available to the landlord will be forfeiture of the lease. The draconian consequences of forfeiture mean that it is a most powerful remedy to force compliance by the defaulting leaseholder. There are, however, a number of instances where forfeiture is not appropriate or simply not available. In those cases, where there is a non-monetary breach of covenant, an injunction instead might be the suitable remedy.
When might an injunction be pursued?
Given the requirement to first obtain a determination of the breach either in the Court or Tribunal before pursuing forfeiture of residential premises, forfeiture is not always a speedy outcome where the landlord wishes to see the breach remedied quickly. That is particularly the case when dealing with cases of nuisance, unauthorised alterations or unlawful sub-letting, for example. By contrast, an injunction application can usually result in a much quicker outcome, at least initially if an interim order is made (see below). Each case needs to be considered on its own facts and an assessment to be made as to the most appropriate remedy in any given circumstances.
Equally, forfeiture will not be available to parties who are not the landlord, such as a RMC or RTM company. It goes without saying that forfeiture is not available where a breach of a freehold covenant is pursued on a managed estate. In that event, where there is a breach of covenant given to that entity (other than non-payment of rent/service charges), an injunction would be the appropriate remedy. There may also be instances where forfeiture is not available to a landlord, for example if the right to forfeiture has been waived (see here and here).
What is an injunction?
An injunction is a Court order requiring a party to take (mandatory), or refrain from taking (prohibitory), certain action. So in the case of a breach of covenant, that order may require the defaulting party to refrain from taking that action (cease sub-letting, for example), or to take some positive steps in order to comply with the terms of the lease or transfer (undertake certain repairs for instance).
Interim and final injunctions
In appropriate cases, where an urgent remedy is required, for example to cease unauthorised works, the injunction may take the form of a two-stage application.
The first stage is an ‘interim’ injunction, which is a temporary measure designed to last a defined period, usually until the final hearing. The order is made on only limited scrutiny of the paperwork and evidence and, given the urgent nature of the application, the threshold for the making the order is much lower. The Court must consider :-
is there a serious issue to be tried?
would damages be an adequate remedy for either side?
where does the balance of convenience lie (e.g. the inconvenience done if the injunction is granted compared to the inconvenience if it is not)?
An important part of the interim injunction process is what is known as a ‘cross-undertaking’. This usually takes the form as a cross-undertaking in damages, by which the party applying for the injunction agrees to pay damages to the other party if they suffer any loss as a result of the interim injunction being granted, if it transpires at the final hearing that the interim order should not have been made.
Final injunctions are granted following the final hearing of the dispute and are generally designed to last in perpetuity.
An application can be made before there has been a breach, where there is a strong probability of a breach.
The application can be made ‘on notice’ to the defaulting party, or ‘without notice’ (ex parte). A without notice application might be appropriate, for example, in cases of serious nuisance behaviour where there is a real risk of violence such that it would not be appropriate for the perpetrator to be given notice of the application until an order prohibiting such behaviour (with an appropriate penal notice - see below) is in place. Otherwise, most applications will be made with advance notice given to the defaulting party of both the application and impending hearing.
Injunction applications and orders must be personally served on the defaulting party against whom it is made.
When will the Court award an injunction?
Injunctions are ‘equitable’ remedies meaning that the Court has a wide discretion when deciding whether or not to make the order. Therefore, even if a breach is proven, it does not necessarily follow that the injunction will be granted.
The Court has to consider that it is ‘just and convenient’ for an order to be made. That will often include, for example, proving that a cause of action exists against the defaulting party (e.g. a breach of the lease or transfer) and that damages (compensation) would not be a suitable remedy for that breach. The Court will not grant injunctions that impose obligations which are impossible, cannot be enforced or are unlawful, and often delays in bringing the action will see an application refused.
Undertakings in lieu of an injunction
In some cases, a defaulting party will be amenable to co-operation and may offer an undertaking to the Court, in lieu of an injunction. An undertaking is a promise to the Court that the party will take, or refrain from taking, certain action, and will have the same effect as an injunction (e.g. enforceable as a Court order). A party may agree to give an undertaking to avoid the costs of a fully contested application, and their co-operation may be taken into account when deciding the issue of costs.
What are the consequences for breach of an injunction?
If drafted correctly, the injunction (or undertaking) will include a penal notice. That notice warns the defaulting party that breach the terms of the order will be punishable by fine or imprisonment. Breach is therefore pursued as a civil action, for committal (to prison), for contempt of Court.
Contempt of Court is a strict liability offence, so it is not necessary to prove that the defaulting party intended to breach the order just that they did breach it.
The Court will need to satisfy itself that the defaulting party had knowledge of the terms of the Court order and knew of the facts that made their behaviour a breach. The higher, criminal standard of proof, is imposed.
If a breach is found, the Court has the power to impose a period of imprisonment. The maximum sentence is two years, and there is a raft of case law which sets out the factors to be taken into consideration when conducting the sentencing exercise. However, imprisonment is generally a means of last resort, reserved for serious flouting of Court orders. The Court may also impose a fine. Depending on which level of Court is dealing with the application, that fine could be capped at £2,500 or be unlimited.
Given the serious implications for breach of an injunction, generally compliance is seen without the need for further litigation in the form of committal proceedings. Indeed, in many case the mere threat of an injunction will see a breach remedied and dispute resolved. However, there will be instances of non-compliance. Injunction applications are technical and it is imperative that the correct procedure is followed, to ensure that an injunction order made can be enforced in the event of any later breach.
If you have any queries or have any questions relating to injunctions or any enforcement action, please do get in touch with a member of the team on 01435 987297 or firstname.lastname@example.org.
This legal update is provided free of charge for information purposes only; it does not constitute legal advice and should not be relied on as such. No responsibility for the accuracy and/or correctness of the information and commentary set out in the article, or for any consequences of relying on it, is assumed or accepted by any member of KDL Law or by KDL Law as a whole.
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