Test for taking funds out of court following cross-undertaking as to damages


The claimant sought and obtained various interim injunctions against the defendants. It was required to provide a cross-undertaking as to damages and this was fortified by the payment into court of USD 10 million. The claimant subsequently applied for a payment out of court of USD 9 million from this amount. It was argued that there was no evidence to suggest the defendant would be caused any loss as a result of the injunctions and that the defendant wished to oppose the payment out in order to cut off a source of funding for the claimant's action.

Barling J therefore considered the appropriate test for the application. Prior caselaw has indicated the need for the claimant to demonstrate "some significant change of circumstances" which it could not have known about when the payment in or undertaking was given. The claimant had also referred to commentary in the White Book that "laxer principles" may apply where the order (as it did here) contains an express "liberty to apply". However, the judge held that the use of that phrase did not advance matters significantly, and the claimant had been right to describe that as a "small point".

On the facts, the judge concluded that there had not been a material change of circumstances to justify the claimant withdrawing part of the fortification which it had undertaken to provide. Nor was it relevant that the cross-undertaking might not be called upon (or not be called upon for the full amount paid into court). Although the claimant had expressed a wish to use the money paid in to fund the cost of the proceedings, it had not argued that tying up the funds created any hardship for it or stifled its claim. Accordingly, the application was refused.