(Supreme Court of Victoria) The court had appointed a receiver without requiring a cross-undertaking in damages. The order was then set aside, and compensation was sought. There had been no cross-undertaking.
Held: If it had power to award compensation it would do so. However, after an exhaustive review of authorities from three continents, the court unanimously concluded that the court had no such power; and that a person against whom an injunction is granted but later discharged is ‘without remedy’ in the absence of a cross-undertaking.
Kaye J: ‘It is therefore clear from the authorities to which I have referred that the practice followed for nearly 150 years of requiring a plaintiff seeking an interim or interlocutory injunction to give an undertaking as to damages has been based on the view that otherwise the defendant would be without remedy in the event of the order having been improperly made.’
Murphy J: ‘Next, restitutio in integrum has been espoused as a principle by the appellants. The cases relied upon to support the assertion that it is just and equitable to award monetary compensation for any loss caused the appellants do not in my view go this far in terms. It must be conceded that it is an established principle that it is just and equitable to allow interest upon money ordered to be repaid to a defendant who has been wrongly ordered to pay a capital sum to a plaintiff’ and
‘The fallacy in the appellants’ case appears to me to rest in the fact that they cannot point to a right entitling them in equity to monetary compensation. What the respondents have done is come to the court seeking payment of an alleged debt, and in the course of such action have sought interlocutory equitable relief in support of that claim. The court has ruled that the interlocutory equitable relief sought was wrongly granted, and have set it aside, but this did not constitute the breach or infringement of any recognisable right in equity which might have entitled the appellants/defendants to monetary compensation or might have obliged the respondents to put the appellants ‘in as good a position pecuniarily as that in which he was’ (they were) ‘before the injury’: Nocton v Lord Ashburton  A.C. 932, at p.952.’ and
‘Nowhere have the researches of counsel found a relevant precedent in which, in the absence of an undertaking, an award of monetary compensation has been made to compensate a defendant for loss occasioned [to] his property by the making of an erroneous order that has been subsequently set aside’
Brooking J: ‘With all due respect to W.S. Gilbert’s Lord Chancellor, in practice the law is not always the true embodiment of everything that’s excellent. Mistakes are made from time to time.’ and
‘The first question is that of the limits of the principle expressed by Lord Cairns in Rodger’s Case. For the passage cannot be read as asserting that the court will always ensure, so far as possible, that no suitor suffers as a result of the act of the court a loss for which there is no redress. The law being what it is, and judges being what they are, many wrong judgments and orders are given and made. These can be corrected on appeal. But there are and must be limits to how far the courts will go in putting matters right on appeal.’ and
‘But while the cases show that the courts will often, by way of setting things right on appeal, go beyond the mere substitution of the right judgment or order for the wrong one, it is not the law that the court will always ensure, so far as possible, that no suitor suffers as a result of the act of the court a loss for which there is no redress. Any such unlimited principle is inconsistent with the law’s recognition of the torts of malicious abuse of process and malicious institution of proceedings, with their uncertain, but certainly limited, scope: Metall und Rohstoff v Donaldson Lufkin and Jenrette  3 W.L.R. 563, at pp. 611-15. And any such unlimited principle would mean that an appellate court would be entitled or obliged to award compensation or damages whenever it set aside an erroneous judgment or order which had caused damage to the appellant which was not regarded for this purpose as too remote. Yet many final judgments or orders that may be set aside on appeal are apt to cause great damage to the unsuccessful party in circumstances where it is unthinkable that the appellate court should have power to award damages or compensation. An order winding up a corporation is about as drastic an order as one could imagine. Such an order will rarely be stayed pending an appeal, and great and irremediable damage may be done to the corporation by the order in the meantime. But I have never heard it suggested that if a winding up order is set aside on appeal the appellate court may award damages or compensation against the party who obtained it. At the trial of an action a final injunction to prevent the commission of a nuisance may put the defendant out of business. May the court of appeal not only set aside the injunction but also award damages for the destruction of the defendant’s business? A judgment for possession of business premises may mean financial disaster for the defendant who claims that his lease has not been duly determined. If there is no stay and the defendant succeeds on appeal, is he to be awarded damages on the principle that the court must take care that ‘no act of the Court in the course of the whole of the proceedings does an injury to the suitors in the Court.’
Murphy J, Kaye J, Brooking J
 1 VR 386
Cited – Nocton v Lord Ashburton HL 19-Jun-1914
The defendant solicitor had persuaded his client to release a charge, thus advancing the solicitor’s own subsequent charge on the same property. The action was started in the Chancery Division of the High Court. The statement of claim alleged fraud . .
Cited – Smithkline Beecham Plc and others v Apotex Europe Ltd and others PatC 26-Jul-2005
Application was made to join in further parties to support a cross undertaking on being made subject to interim injunctions.
Held: On orders other than asset freezing orders it was not open to the court to impose cross-undertakings against . .
Cited – Smithkline Beecham Plc Glaxosmithkline UK Ltd and Another v Apotex Europe Ltd and others (No 2) CA 23-May-2006
The parties to the action had given cross undertakings to support the grant of an interim injunction. A third party subsequently applied to be joined, and now sought to take advantage of the cross undertakings to claim the losses incurred through . .
Lists of cited by and citing cases may be incomplete.
Commonwealth, Litigation Practice, Equity
Updated: 11 February 2022; Ref: scu.231217