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It is often said that an injunction is one of the most powerful weapons in a litigator’s armoury.

An injunction is a court order that requires a party either to do a specific act, or to refrain from doing a specific act. Interim injunctions are injunctions that are obtained before the final trial of proceedings and are intended to prevent injustice pending trial.

The teeth in an injunction order is the penal notice. This is a warning endorsed on the injunction order notifying the recipient that if they disobey the order they may be in contempt of court and may be imprisoned, fined, or have their assets seized.

In a recent case* the High Court has found a company and two of its directors and officers in contempt of court for a failure to comply with two court orders. Both orders contained a penal notice warning the company and its directors of the consequences of non-compliance with its terms. The judge found that the orders had been properly served on the company and its directors but they had not been complied with in any respect. The High Court sentenced the directors to 18 months imprisonment each on the basis that they were held responsible for the company’s failure to comply with the orders.

This particular case involved a freezing order, which is a type of interim injunction that restrains a party from disposing of or dealing with their assets pending trial. Under the terms of such an order the respondent will usually be given a short time to prepare affidavit evidence setting out the nature, value and location of their assets. The intention of such an order is to preserve the defendant’s assets pending trial until judgment can be enforced. Therefore prompt and full disclosure of all relevant financial information under the terms of the order is usually crucial for such an order to be effective.

Company directors should be aware that deliberate breaches of court orders containing penal notices are considered by the court to be serious and may result in an immediate substantial sentence of imprisonment.

For more information, email blogs@gateleyplc.com.

*ADM Rice Inc v Corporacion Comercializadora De Granos Basicos SA and others [2015] EWHC B1 (Admlty)

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This blog is intended only as a synopsis of certain recent developments. If any matter referred to in this blog is sought to be relied upon, further advice should be obtained.