Court of Appeal assesses damages for the  breach of a cross-undertaking where freezing  injunction should not have been made and  whether general damages can be awarded

As is customary, the respondents had provided a crossundertaking in damages in return for the grant of a  freezing order against the appellants. At first instance, the  judge ordered the respondents to pay the appellants almost  GBP 30,000 for losses suffered as a result of the freezing  order (which, it was subsequently shown, had been made  without justification). On appeal, having reviewed prior  caselaw, the Court of Appeal agreed with the judge that  the starting point for an assessment of those damages was  that set out by Lord Diplock in Hoffmann-La Roche v Secretary  of State [1975]: “The assessment is made upon the same  basis as that upon which damages for breach of contract  would be assessed if the undertaking had been a contract  between the plaintiff and the defendant that the plaintiff  would not prevent the defendant from doing that which he  was restrained from doing by the terms of the injunction”.

However, there was a caveat to that basic position: “Logical  and sensible adjustments may well be required, simply  because the court is not awarding damages for breach of  contract. …The court is compensating for loss caused by  the injunction which was wrongly granted. It will usually  do so applying the useful rules as to remoteness derived  from the law of contract, but because there is in truth  no contract there has to be room for exceptions. In my  judgment, the law also meets the justice of the matter. A  defendant wrongly injuncted should be compensated for  losses that he should not have suffered, but a claimant  should not be saddled with losses that no reasonable  person would have foreseen at the time when the order  was made, unless the claimant knew or ought to have  known of other circumstances that was likely to give  rise to the particular type of loss that occurred in the  case at hand. A claimant may, however, find himself  liable for losses which would not usually be foreseen in  particular cases. One such case may be if a loss, not usually  foreseeable, arises before a defendant has had any real  opportunity to notify the claimant of the likely loss or  sensibly to apply to the court for a variation”.

Applying these principles to this case, an additional  GBP 10,000 was awarded. However, the Court of Appeal  also said that the appellants could not claim for loss of  individual investment or earning possibilities if those  possibilities had never been mentioned to the respondents.  They could not simply argue that, given the respondents’  attitude to the administration of the freezing order, there  had been no point in discussing potential investments  with them.

The Court of Appeal further held that general damages  for distress and anxiety were recoverable in respect of a  cross-undertaking (even though such damages are not  usually recoverable for a breach of contract). In this case,  there had been the aggravating feature of the “needlessly  aggressive approach” of the respondents’ solicitors to the  administration of the order. The Court of Appeal ordered  GBP 15,000 to be paid to each of the three appellants under  this head (instead of the GBP 8,000 ordered by the judge).