Factual and Procedural Background
The Plaintiff, a company engaged in bespoke computer software design and construction, brought an interlocutory injunction motion against the Defendants, who included two former employees and a limited company through which they operated post-employment. The first and second Defendants had been employed by the Plaintiff until 6th February 2012, when they left to establish their own business. Their contracts contained confidentiality clauses imposing indefinite obligations to protect the Plaintiff’s confidential information both during and after employment.
Pre-litigation correspondence commenced with the Plaintiff’s solicitors alleging breaches of confidentiality by the first and second Defendants, particularly regarding client solicitation and use of confidential information. The Defendants denied misuse of confidential information and indicated readiness to contest any proceedings.
The Plaintiff initiated proceedings by plenary summons on 17th February 2012 and issued a notice of motion seeking interlocutory injunctions restraining the Defendants from using confidential information, soliciting clients, entering contracts with solicited parties, and requiring the return of confidential information.
Affidavits were filed by both parties, including an affidavit from a director of the Plaintiff and affidavits from the Defendants and a Corporate Affairs Manager of a third party organisation involved in a contract with the Defendants. The interlocutory motion was adjourned to allow inspection of the Defendants’ computers for confidential information, which did not occur before 23rd March 2012.
On 23rd March 2012, the interlocutory motion was settled by an undertaking given by the Defendants to the Court, defining “Confidential Information” and including obligations to return such information and maintain its confidentiality indefinitely. The Court made an order incorporating this undertaking and indicated intentions to amend the order to make the undertaking a rule of court and remove a stay on further proceedings.
The substantive proceedings continued, with the Plaintiff delivering a statement of claim alleging breaches of contract and duty and seeking damages related to various third parties.
Legal Issues Presented
- Whether the undertaking given by the Defendants to the Court in settlement of the interlocutory injunction motion is equivalent in effect to a court order and enforceable as such.
- Whether costs of the interlocutory injunction application should be awarded to the Plaintiff, reserved to the trial judge, or otherwise determined, given the settlement by undertaking and ongoing substantive proceedings.
Arguments of the Parties
Plaintiff's Arguments
- The undertaking given to the Court is equivalent to a court order and enforceable as such, citing Biba Ltd. v. Stratford Investments Ltd and Wadria v. Minister for Justice, Equality and Law Reform.
- The Plaintiff sought an award of costs for the interlocutory injunction application on the basis that the undertaking resolved the motion in their favour.
Defendants' Arguments
- The Defendants did not seek costs of the interlocutory injunction application but argued no order for costs should be made.
- Alternatively, costs should be reserved to the trial judge.
- They contended the interlocutory injunction application should not have been brought and, if pursued, would not have succeeded.
- They relied on differences between the terms of the undertaking and the relief originally sought in the notice of motion.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Biba Ltd. v. Stratford Investments Ltd [1973] Ch 281 |
Undertakings given to the Court are equivalent to injunction orders and enforceable as such. |
The Court agreed that the undertaking given by the Defendants had the same legal effect as an injunction order. |
| Wadria v. Minister for Justice, Equality and Law Reform [2011] IEHC 60 |
Consent to injunctions and undertakings to the Court have the same legal effect. |
The Court respectfully agreed with this proposition, reinforcing the equivalence of undertakings and injunctions. |
| Campus Oil v. Minister for Industry (No. 2) [1983] I.R. 88 |
Interlocutory injunctions maintain the status quo pending trial. |
The Court cited this as the foundational principle for interlocutory injunctions, emphasizing their temporary nature. |
| Dubcap Ltd. v. Microchip Ltd (Unreported, Supreme Court, 9th December 1997) |
Costs of interlocutory applications are normally reserved to the trial judge due to potential new evidence at trial. |
The Court acknowledged this as the normal procedure prior to rule 1(4A) of Order 99, relevant to cost decisions. |
| Allied Irish Banks and Ors. v. Diamond (Ex tempore ruling, 7th November 2011) |
Costs of interlocutory injunction applications that turn on factual merits should generally be reserved to the trial judge. |
The Court relied on Clarke J.'s reasoning to support reserving costs due to unresolved factual issues. |
| Garibov v. Minister for Justice, Equality and Law Reform and Ors [2006] IEHC 371 |
Reasonableness of commencing and persisting in judicial review proceedings as a test for awarding costs when proceedings become redundant. |
The Court distinguished this test as inapplicable to interlocutory injunction costs where substantive proceedings continue. |
| Kavanagh & Ors. v. Cras Iompair ireann [2009] IEHC 625 |
Costs of interlocutory injunctions adjourned to trial may be dealt with by the trial judge. |
The Court referenced this case as an example of reserving costs to the trial judge. |
Court's Reasoning and Analysis
The Court analysed the nature of interlocutory injunctions as temporary measures to maintain the status quo pending trial, referencing established principles such as those in Campus Oil. It acknowledged that undertakings given to the Court have the same legal effect as injunction orders, citing Biba Ltd. and Wadria.
The Court considered the statutory framework governing costs, particularly rule 1(4A) of Order 99, which requires costs to be awarded upon determination of interlocutory applications unless it is not just to do so. The Court noted the diversity of interlocutory injunction outcomes and the frequent reservation of costs to the trial judge due to unresolved factual issues that may only be fully assessed at trial.
In this case, the interlocutory injunction application was resolved by consent through an undertaking, without the Court adjudicating on the merits of the injunction application. The substantive proceedings remained ongoing, with claims for damages beyond the scope of the undertaking.
The Court found it inappropriate to adjudicate on costs at this interlocutory stage because:
- No determination was made on whether the injunction would have been granted or refused, so no “event” had occurred to guide costs liability.
- The issues on the interlocutory application had become moot due to the agreement, making it unnecessary and inappropriate to express views on the merits at this stage.
- The interlocutory injunction related to factual issues still to be resolved at trial, supporting the approach of reserving costs as endorsed in Allied Irish Banks v. Diamond.
- The alleged breaches in the substantive claim extended beyond the undertaking’s scope, and the Defendants denied wrongdoing, further complicating a just costs adjudication now.
The Court emphasized that while costs may be awarded at the interlocutory stage in some cases, this was not such a case. It advised parties settling interlocutory injunction applications while substantive proceedings continue to expressly address costs in their agreements to avoid unnecessary litigation and judicial resource expenditure.
Holding and Implications
The Court’s final decision was to RESERVE THE COSTS of the interlocutory injunction application, including the current application for costs, to the trial judge.
The direct effect is that no immediate costs award is made in relation to the interlocutory injunction application; instead, costs will be determined after the substantive trial when a full assessment of the merits and outcomes can be made. The Court did not set new precedent but reinforced the established principle that interlocutory injunction costs are often best reserved to the trial judge, particularly where factual disputes remain unresolved and substantive proceedings continue.