[1996] 1 All ER 853

The plaintiff was a company engaged in the development, production and sale of computer software for use in the printing and publishing industry, its main product being a software package, QC 2000, which enabled print shops to quote, manage and schedule their production. On 24 August 1995 the defendants, who were employees of the plaintiff, removed from the plaintiff's premises certain computer and other equipment, including a full set of QC 2000 software, company accounts and client mailing lists. By letters dated 25 August the defendants resigned their employment, claiming that their salaries had been paid with dishonoured cheques or had not been paid at all and intending to use the removed equipment as leverage against the payment of moneys due to them from the plaintiff. The plaintiff claimed that the defendants were using or attempting to use the client lists and the software to sell QC 2000 (or something copied or plagiarised from it) to its own clients, and estimated its total lost profit as a result of the defendants' actions at not less than £50,000. The plaintiff commenced proceedings for delivery up of the equipment and sought orders restraining the defendants from contacting any of the plaintiff's clients or using or disclosing its trade secrets to any third party and sought interlocutory relief in the same terms. Before the hearing of the interlocutory application, the court ordered the defendants to deliver up the property removed from the plaintiff's premises.

Held - (1) The court was not precluded from considering the strength of each party's case when deciding whether to grant an application for interlocutory relief, but should rarely attempt to resolve difficult issues of fact or law, and any view as to the strength of the parties' cases should be reached only where it was apparent from the affidavit evidence and any exhibited contemporary documents that one party's case was much stronger than the other's. It followed that the major factors relevant to the court's discretion were (a) the extent to which damages were likely to be an adequate remedy for each party, and the ability of the other party to pay, (b) the balance of convenience, (c) the maintenance of the status quo and (d) any clear view the court was able to reach as to the relative strength of the parties' cases (see p 865 f g, post); F Hoffmann-La Roche & Co AG v Secretary of State for Trade and Industry [1974] 2 All ER 1128 considered; American Cyanamid Co v Ethicon Ltd [1975] 1 All ER 504 explained.
   (2) In the circumstances, the plaintiff's case, while arguable in the sense that the facts at trial could possibly support the allegations made, was weak in relation to some claims, and in relation to others it was impossible at an interlocutory stage to come to a conclusion as to whether there was substance in the claim or853 the defence. As far as the balance of convenience was concerned, while it was clear that either of the injunctions sought could effectively deprive the defendants of their means of earning a living, the plaintiff's assertion of substantial and immediate damage was unsubstantiated and, moreover, was inconsistent with the delay evident in the issue of proceedings. In view of the financial difficulties facing both parties it was likely that neither side would be able to meet an order for damages, and having regard to the fact that, by the time proceedings were commenced, the defendants were well advanced in their attempt to create a new livelihood and would not be the only competitors to the plaintiff's market, to allow the defendants to enter that market would not significantly affect the status quo. On that basis it would not be appropriate to grant the relief sought by the plaintiff and its application would accordingly be dismissed (see p 867 b f, p 868 c d f to j and p 869 a b e to g, post); American Cyanamid Co v Ethicon Ltd [1975] 1 All ER 504 applied.

Notes
For the principles governing the grant of interlocutory injunctions, see 24 Halsbury's Laws (4th edn reissue) para 853, and for cases on the subject, see 28(4) Digest (2nd reissue) 156-157, 4993-5072.

Motion
By writ and notice of motion each dated 7 November 1995 the plaintiff, Series 5 Software Ltd, commenced proceedings against the defendants, Philip Clarke, Kishore K Hirani, Eric Harrold, Malcolm Thomas Wheeler and Paul Jenkinson, seeking delivery up of certain chattels allegedly wrongfully removed from the plaintiff's premises and interlocutory orders restraining the defendants from (i) contacting any of the plaintiff's customers and (ii) using or disclosing to any third party certain of the plaintiff's alleged trade secrets. Before the hearing of the interlocutory application, Mr D K R Oliver QC sitting as a deputy judge of the High Court ordered the delivery up by all five defendants of the property removed from the plaintiff's premises. The hearing proceeded against the first, fourth and fifth defendants only. The facts are set out in the judgment.

854

LADDIE J. By writ dated 7 November 1995 the plaintiff, Series 5 Software Ltd, commenced proceedings against the defendants for delivery up of certain chattels allegedly wrongfully removed by them from the plaintiff's premises, to restrain them from contacting any of the plaintiff's customers and to restrain them from using or disclosing to any third party certain of its alleged trade secrets. By notice of motion of the same date the plaintiff has sought interlocutory relief which closely follows the relief sought on the writ. I am concerned now with the application for interlocutory relief. Interlocutory relief is no longer sought against the second and third defendants and I only have to consider the position of the first, fourth and fifth defendants. Since the notice of motion was served there have been, somewhat unusually, five rounds of evidence. It appears that throughout that time the three defendants still involved in these proceedings have been conducting their defence on their own behalves without the assistance of legal advice. Before me Mr Staddon appeared on behalf of the plaintiff and the three defendants appeared in person. Before turning to the issues raised on this application, I should mention that Mr D K R Oliver QC sitting as a deputy judge of the High Court ordered the delivery up by all five defendants of certain property which they had removed from the plaintiff. Although much has been handed back, it is said on behalf of the plaintiff, but denied by the defendants, that some of the removed property has not yet been returned. This is a matter which I will have to consider later.
   The basic outline of the dispute between the parties is as follows. The plaintiff is a company which is engaged in the development, production and sale of computer software for use in the printing and publishing industry. It commenced trading in June 1992. Its main product is a software system called QC 2000 which enables print shops to quote, manage and schedule their production. It claims that it employed Mr Jenkinson, the fifth defendant, in February 1995 as a technician, Mr Clarke, the first defendant, in June 1995 as a sales manager, and Mr Wheeler, the fourth defendant, as a computer programmer. The employment did not last long. By letters of 25 August 1995 all the defendants resigned. The three defendants say that this was because they had all been treated very shabbily. Their salaries were paid with cheques which were not honoured or they simply were not paid at all. There is little dispute as to this. Mr Staddon admits to what he called occasional irregularities in the way the defendants were paid. It is also admitted that none of the defendants have been paid their salary for August, ostensibly on the ground that they did not complete work. In any event, the way in which the defendants were treated had been so poor that they took the law into their own hands. On 24 August they removed from the plaintiff's premises certain computer and other equipment as a bargaining chip against the payment of moneys due to them from the plaintiff.
   The plaintiff says that what was removed in the computer hardware and various back up tapes was almost everything to do with the plaintiff and QC 2000. In particular it says that the defendants removed-

It says that the defendants in effect took the company lock, stock and barrel. It alleges that the defendants are using or attempting to make use of the client lists and the software to sell QC 2000, or something copied or plagiarised from it, to its clients. It says, through one of its directors, Sharon Rodin:

   A very different picture is painted by the defendants. As I have already mentioned, they say that they only took the computers and other equipment as a kind of security for their outstanding salaries. They say that they have not breached any obligation of confidence owed to the plaintiff. They have returned all the equipment to the plaintiff pursuant to Mr Oliver's order. They have not copied any software belonging to the plaintiff. On the contrary, they say that it is they who have been misused and ill-treated by the plaintiff and that the current proceedings are being used to ensure that the defendants have difficulty in finding alternative employment.
   I should make it clear that although the plaintiff alleges that its source code has been copied and used by the defendants in the preparation of their own software, no allegation of copyright infringement has been made. Mr Staddon has said that in due course an application to amend the proceedings to make such an allegation may be made but, in any event at this stage, no such claim is advanced.

Applications for interlocutory relief
   It is a matter of common knowledge and frequent comment that there was an apparent sea-change in the courts' approach to the grant of this form of relief in 1975 as a result of the speeches of the House of Lords in American Cyanamid Co v Ethicon Ltd [1975] 1 All ER 504, [1975] AC 396. Since then it has been suggested on a number of occasions that it is now no longer appropriate to consider as a significant factor the apparent strength or weakness of the plaintiff's case as disclosed by the affidavit evidence filed on the application for interlocutory relief. At an early stage in the hearing before me, I asked Mr Staddon whether he was submitting that the court could take account of the relative strength of the parties' cases in deciding whether or not to grant interlocutory relief in view of that decision of the House of Lords. It was clear that Mr Staddon's preferred position was that all that his client had to overcome was the lesser hurdle of demonstrating at least an arguable case on its claims. However, he also said that, whatever the strict interpretation of American Cyanamid, it is known that some courts still pay regard to the relative strengths of the parties' cases. I am not sure that he was prepared to accept that this was legitimate, even though it is common knowledge that it happens frequently in practice.
   I understand Mr Staddon's reluctance to come off the fence on this issue. However, I do not believe it is satisfactory to exercise the court's discretion to856 grant an interlocutory injunction by paying lip-service to the guidance given in American Cyanamid while in practice applying different criteria. The courts must know what the ground rules are and then apply them. Therefore, before deciding whether or not an interlocutory injunction of any sort should be ordered in this case, it is necessary to consider what factors are relevant to the court's exercise of its discretion and how those factors should be assessed.
   It appears to me that it is proper to look again at American Cyanamid to see what it decided. For this purpose it is convenient to consider first what was the practice of the courts before 1975.
   The power of courts to grant interlocutory injunctions goes back a long way. It was seen as part of the original and proper office of the Court of Chancery (see Hilton v Earl of Granville (1841) Cr & Ph 283 at 292, 41 ER 498 at 502). From an early date, the apparent strength of the plaintiff's rights was a major factor which the courts took into consideration in deciding whether or not the discretion should be exercised in favour of granting the injunction. This is reflected in Kerr on Injunctions (3rd edn, 1888) pp 11-12, at which the following was said:

   This approach was indorsed in numerous cases in the first three-quarters of the twentieth century. In particular, there were many cases in which the Court of Appeal indicated that, in a normal case, the plaintiff would not obtain interlocutory relief unless he showed he had reasonably good prospects of success at the trial. There was obvious sense in this approach, since if the court came to the preliminary view on the hearing of the application for interlocutory relief that the defendant was likely to win at the trial it would normally be unjust that he should be restrained pending the trial even if the plaintiff gave a cross-undertaking in damages. This should not have been an inflexible rule. In some cases where the plaintiff's prospects of success at the trial were not very good, the risk of severe irreparable damage to him in the meantime if an interlocutory injunction was not granted might be so great and the risk of equivalent damage to the defendant if such an injunction was granted was so small that the court could still grant¬Žnterlocutory relief. Conversely, if the plaintiff had an apparently strong case, the circumstances might still justify refusal of interim relief. This was explained by Megaw LJ in Hubbard v Vosper [1972] 1 All ER 1023 at 1030, [1972] 2 QB 84 at 97-98 as follows:

   The necessity, in a normal case, of the plaintiff showing the existence of a prima facie case was so well accepted that it was reflected in many practitioners' textbooks prior to American Cyanamid. It was also to be found in the 1940 Yearly Practice of the Supreme Court p 921 (the so-called Red Book), which said:

Similarly, The Annual Practice 1937 p 914 stated:

   An example of this approach is Zaidener v Barrisdale Engineers Ltd [1968] RPC 488, a case concerning the application for an interlocutory injunction in a patent action, in which Willmer LJ, in a judgment with which the rest of the Court of Appeal, including Diplock LJ (as he then was) agreed, said (at 495):

   The same approach is to be found in J T Stratford & Son Ltd v Lindley [1964] 3 All ER 102 at 106-107, 111, 118, 116, [1965] AC 269 at 323-325, 331, 342, 338, in which Lord Reid referred to a sufficient prima facie case or just a prima facie case, Viscount Radcliffe agreed with Lord Reid, Lord Pearce referred to a prima facie case, as did Lord Upjohn, and Lord Donovan appears to have been of the same view.
   It appears that, over time, some courts took to saying that the plaintiff needed to demonstrate a strong prima facie case as opposed to merely a prima facie case. Furthermore, sometimes the courts appeared to approach the grant of interlocutories as if there were strict parameters or rules which governed when they should or should not be granted, the court being left little room for manoeuvre. For example, in Cavendish House (Cheltenham) Ltd v Cavendish-Woodhouse Ltd (1968) [1970] RPC 234 at 235, in which an application for an interlocutory injunction in a passing-off action came before the Court of Appeal, Harman LJ (with whom Salmon LJ and Baker J agreed) said:

858

   This tendency towards inflexibility where the grant of interlocutory injunctions is concerned was considered and disapproved of by the Court of Appeal in Hubbard v Vosper [1972] 1 All ER 1023 at 1029, [1972] 2 QB 84 at 96 in the following terms, when Lord Denning MR said:

Both other members of the Court of Appeal agreed with Lord Denning MR. Megaw LJ commented ([1972] 1 All ER 1023 at 1031, [1972] 2 QB 84 at 98):

This view was roundly supported in Evans Marshall & Co Ltd v Bertola SA [1973] 1 All ER 992, [1973] 1 WLR 349, in which the Court of Appeal (Sachs, Edmund Davies and Cairns LJJ) allowed an appeal from a refusal by Kerr J to grant interlocutory relief. Under the heading 'Approach to the exercise of discretion' Sachs LJ said ([1973] 1 All ER 992 at 1003-1004, [1973] 1 WLR 349 at 378):

   However, although in the majority of cases the court could legitimately consider at the interlocutory stage whether or not the plaintiff had made out a prima facie case or a strong prima facie case, this did not exhaust the possibilities. For example, in Manchester Corp v Connolly [1970] 1 All ER 961, [1970] Ch 420 the courts had to consider whether or not to grant an injunction in a case where, at the interlocutory stage, it was clear that the plaintiff was almost certain to win the action. In that case Lord Diplock, sitting in the Court of Appeal, said ([1970] 1 All ER 961 at 963-964, [1970] Ch 420 at 427):

Widgery and Megaw LJJ concurred.
   In summary, most courts continued to refer to the strong prima facie case rule up to the end of 1974 but this was not seen as a mandatory requirement but rather as a particularly significant factor which the courts should take into consideration when exercising the discretion.

1975 in the House of Lords
   It is, of course, comparatively rare for applications for interlocutory relief to reach the House of Lords. However, 1975 was an exception. In that year two cases, both of which involved an analysis of the courts' power to grant interlocutory injunctions, were heard more or less one after the other. The first was F Hoffmann-La Roche & Co AG v Secretary of State for Trade and Industry [1974] 2 All ER 1128, [1975] AC 295. It was an important case in which the House of Lords had to consider whether the Crown could be ordered to give a cross-undertaking in damages when it sought interlocutory relief. The panel consisted of Lord Reid, Lord Morris of Borth-y-Gest, Lord Wilberforce, Lord Diplock and Lord Cross of Chelsea. In the course of that case their Lordships considered the circumstances in which interlocutory injunctions were granted and the conditions to which their grant could be subject. In particular Lord Diplock said ([1974] 2 All ER 1128 at 1150, [1975] AC 295 at 360-361):

Then, having explained that the imposition of the cross-undertaking is designed to mitigate the risk to the defendant, Lord Diplock proceeded:

860

   This was consistent with the approach which was followed in many, but not all, cases before American Cyanamid. The court had to pay regard to the strength or otherwise of the plaintiff's case as revealed by a consideration of all the affidavit evidence.
   Judgment in Hoffmann-La Roche was given just before the long vacation on 3 July 1974.
   That brings me to American Cyanamid, the hearing for which commenced after the long vacation on 12 November 1974. It can be assumed that the panel read the parties' briefs before that date. The panel consisted of Lord Diplock, Viscount Dilhorne, Lord Cross, Lord Salmon and Lord Edmund-Davies-that is, it included two members of the panel which decided Hoffmann-La Roche. If the House of Lords intended to say that it was inappropriate on an application for interlocutory relief, save in rare cases, to take into account the apparent strength of the plaintiff's case, it would mean that Lord Diplock performed a volte face on this issue in a matter of four months. In my view it is inconceivable that Lord Diplock and Lord Cross could have forgotten what was said in the Hoffmann-La Roche judgment a few months earlier. Therefore, if they were saying the opposite of what was said in Hoffmann-La Roche, they must have been aware that they were doing so but chose not to mention that fact or explain it in American Cyanamid. That is a proposition I find difficult to accept. It seems to me that it is therefore appropriate to consider whether what Lord Diplock said in Hoffmann-La Roche is incompatible with what he said in American Cyanamid only a few months later. For this it is necessary to consider the American Cyanamid decision with some care.
   The American Cyanamid case was concerned with the alleged infringement of the main claim in the plaintiff's patent for absorbable surgical sutures. In response to the allegation of infringement, Ethicon presented a classic squeeze argument beloved of patent lawyers. It said that its sutures did not fall within the monopoly defined by the claim-that is it did not infringe, or, in the alternative, if the claim was construed widely enough to include its product, the patent was invalid on a number of grounds under the Patents Act 1949.
   In the House of Lords, as in the High Court and the Court of Appeal, both parties had addressed the question of whether the plaintiff had demonstrated a strong prima facie case. In the course of his judgment, Lord Diplock said ([1975] 1 All ER 504 at 510, [1975] AC 396 at 407):

861

   The first question to be answered is precisely what was 'such rule' the existence of which the House of Lords disapproved. This can be found in the early part of Lord Diplock's judgment. In the High Court, Graham J had held that the plaintiff had made out a strong prima facie case and went on to say that the balance of convenience favoured the grant of interlocutory relief. The way in which the Court of Appeal dealt with the application was set out in the following passage in Lord Diplock's judgment ([1975] 1 All ER 504 at 507-508, [1975] AC 396 at 404-405):

As Lord Diplock put it ([1975] 1 All ER 504 at 508, [1975] AC 396 at 405):

Lord Diplock then made it clear that it was in order to enable the existence of that rule of law to be considered that leave to appeal had been granted.
   The result of applying that rule of law was that in the Court of Appeal the motion lasted for two working weeks while the parties argued questions of polymer chemistry, infringement and validity. In the House of Lords the defendant tried to do the same thing. The note of argument there shows that sophisticated arguments of patent ambiguity, construction, inutility, false suggestion, insufficiency and unfair basis were advanced. In effect, the Court of Appeal had abandoned any attempt to evaluate the pros and cons of granting an interlocutory injunction and had said that there was a mandatory initial hurdle at which the plaintiff had fallen. The flexibility and absence of strict rules which had been advocated by the Court of Appeal in Hubbard v Vosper was ignored. If such862 a rule of law as envisaged by the Court of Appeal in American Cyanamid did exist, it would inevitably force the parties to engage in trying to prove at the interlocutory stage all those issues which were for determination at the trial. In a case as complicated as American Cyanamid it was likely to be impossible to show a strong prima facie case of infringement and validity and any attempt to do so would force the parties to expound at length on complicated technical and legal issues. But those were issues which at an interlocutory stage the court could not hope to resolve. It would have followed that if such a rule of law existed, interlocutory injunctions in patent cases, or in any other complicated case, would become a thing of the past no matter how severe was the damage to be suffered by the plaintiff in the interim.
   When Lord Diplock said that there was no such rule, he was referring to the so-called rule of law which the Court of Appeal had followed. In dismissing this approach, the House of Lords approved of the decision in Hubbard v Vosper and in particular that part of the decision in which the Court of Appeal deprecated any attempt to fetter the discretion of the court by laying down any rules which would have the effect of limiting the flexibility of the remedy (see [1975] 1 All ER 504 at 510, [1975] AC 396 at 407).
   Once it had disposed of the inflexible rule as applied by the Court of Appeal in the instant case, the House of Lords went on to consider what principles a court should bear in mind when deciding whether to grant interlocutory relief. First, it said ([1975] 1 All ER 504 at 510, [1975] AC 396 at 408):

It should be noticed from the emphasised words in that passage that this approach was not said to be invariably the correct one and furthermore the words used suggest that where damages for the plaintiff was not an adequate remedy the apparent strength of the plaintiff's claim might well be a relevant consideration.
   Having considered the issue of adequacy of damages, Lord Diplock proceeded as follows ([1975] 1 All ER 504 at 511, [1975] AC 396 at 408):

   The reality is that the balance of convenience issue will need to be considered in most cases because evidence relating to the adequacy of damages normally will be contradictory and there will be no possibility of resolving the differences by cross-examination. In the result, normally there will be doubt as to the adequacy of damages. It follows that in most cases it will be the exercise of taking into account all the issues relevant to the balance of convenience which will be the863 major task of the court faced with an application for interlocutory relief. As Lord Diplock went on to point out ([1975] 1 All ER 504 at 511, [1975] AC 396 at 408-409):

   In many cases before American Cyanamid the prospect of success was one of the important factors taken into account in assessing the balance of convenience. The courts would be less willing to subject the plaintiff to the risk of irrecoverable loss which would befall him if an interlocutory injunction was refused in those cases where it thought he was likely to win at the trial than in those cases where it thought he was likely to lose. The assessment of the prospects of success therefore was an important factor in deciding whether the court should exercise its discretion to grant interlocutory relief. It is this consideration which American Cyanamid is said to have prohibited in all but the most exceptional case. So it is necessary to consider with some care what was said in the House of Lords on this issue.
   Lord Diplock said ([1975] 1 All ER 504 at 511, [1975] AC 396 at 409):

It appears to me that there is nothing in this which is inconsistent with the old practice. Although couched in terms 'it may not be improper', this means that it is legitimate for the court to look at the relative strength of the parties' case as disclosed by the affidavits. The warning contained in the second of the quoted sentences is to avoid courts at the interlocutory stage engaging in mini-trials, which is what happened, at least in the Court of Appeal, in American Cyanamid itself. Interlocutory applications are meant to come on quickly and to be disposed of quickly.
   The supposed problem with American Cyanamid centres on the following statement by Lord Diplock ([1975] 1 All ER 504 at 511, [1975] AC 396 at 409):

If this means that the court cannot take into account its view of the strength of each party's case if there is any dispute on the evidence, as suggested by the use of the words 'only' and 'no credible dispute', then a new inflexible rule has been864 introduced to replace that applied by the Court of Appeal. For example, all a defendant would have to do is raise a non-demurrable dispute as to relevant facts in his affidavit evidence and then he could invite the court to ignore the apparent strength of the plaintiff's case. This would be inconsistent with the flexible approach suggested in Hubbard v Vosper [1972] 1 All ER 1023, [1972] 2 QB 84 which was cited with approval earlier in American Cyanamid [1975] 1 All ER 504 at 510, [1975] AC 396 at 407. Furthermore, it would be somewhat strange, since American Cyanamid directs courts to assess the adequacy of damages and the balance of convenience, yet these too are topics which will almost always be the subject of unresolved conflicts in the affidavit evidence.
   In my view Lord Diplock did not intend by the last-quoted passage to exclude consideration of the strength of the cases in most applications for interlocutory relief. It appears to me that what is intended is that the court should not attempt to resolve difficult issues of fact or law on an application for interlocutory relief. If, on the other hand, the court is able to come to a view as to the strength of the parties' cases on the credible evidence, then it can do so. In fact, as any lawyer who has experience of interlocutory proceedings will know, it is frequently the case that it is easy to determine who is most likely to win the trial on the basis of the affidavit evidence and any exhibited contemporaneous documents. If it is apparent from that material that one party's case is much stronger than the other's then that is a matter the court should not ignore. To suggest otherwise would be to exclude from consideration an important factor and such exclusion would fly in the face of the flexibility advocated earlier in American Cyanamid. As Lord Diplock pointed out in Hoffmann-La Roche, one of the purposes of the cross-undertaking in damages is to safeguard the defendant if this preliminary view of the strength of the plaintiff's case proves to be wrong.
   Accordingly, it appears to me that in deciding whether to grant interlocutory relief, the court should bear the following matters in mind. (1) The grant of an interlocutory injunction is a matter of discretion and depends on all the facts of the case. (2) There are no fixed rules as to when an injunction should or should not be granted. The relief must be kept flexible. (3) Because of the practice adopted on the hearing of applications for interlocutory relief, the court should rarely attempt to resolve complex issues of disputed fact or law. (4) Major factors the court can bear in mind are (a) the extent to which damages are likely to be an adequate remedy for each party and the ability of the other party to pay, (b) the balance of convenience, (c) the maintenance of the status quo, and (d) any clear view the court may reach as to the relative strength of the parties' cases.
   In coming to this conclusion I am encouraged by the following considerations.
   (1) The House of Lords in American Cyanamid did not suggest that it was changing the basis upon which most courts had approached the exercise of discretion in this important area.
   (2) The only issue which it was expressly addressing was the existence of the inflexible rule of law which had been applied as a mandatory condition by the Court of Appeal.
   (3) It would mean that there was no significant inconsistency between the Hoffmann-La Roche and American Cyanamid decisions.
   (4) It would be consistent with the approval given by the House of Lords to the decision in Hubbard v Vosper and, implicitly, the decision to the same effect in Evans Marshall & Co Ltd v Bertola SA [1973] 1 All ER 992, [1973] 1 WLR 349 (a decision of Lord Edmund-Davies when in the Court of Appeal).

865

   (5) It would preserve what is one of the great values of interlocutory proceedings, namely an early, though non-binding, view of the merits from a judge. Before American Cyanamid a decision at the interlocutory stage would be a major ingredient leading to the parties resolving their differences without the need for a trial. There is nothing inherently unsatisfactory in this. Most clients ask for and receive advice on prospects from their lawyers well before there has been cross-examination. In most cases the lawyers have little difficulty giving such advice. It should also be remembered that in many jurisdictions on the continent trials are conducted without discovery or cross-examination. There is nothing inherently unfair in a court here expressing at least a preliminary view based on written evidence. After all, it is what the courts managed to do for a century and a half.
   (6) Allowing parties to come to an earlier view on prospects would assist in reducing the costs of litigation. This is an issue to which much attention is being given at the moment.
   (7) It would mean that the approach of the courts in England and Wales to the grant of interlocutory relief would be the same as that followed in Scotland. In NWL Ltd v Woods [1979] 3 All ER 614 at 628, [1979] 1 WLR 1294 at 1310 Lord Fraser of Tullybelton commented on the practice in Scotland and compared it with what he understood to be the English practice since American Cyanamid, namely that the court is prevented from considering the strength of the parties' cases. He said:

I can think of no reason in principle why the practice here should differ from the practice in Scotland.

The plaintiff's claims
   With these considerations in mind I can turn to the claims made by the plaintiff in this case. The first injunction it seeks is to restrain the defendants from-

   It is not suggested by the plaintiff that there is any express restraint on any of the defendants in their contracts of employment fettering their right to solicit866 orders from or otherwise deal with any customers of the plaintiff. This claim is based solely on the proposition that the defendants took the customer lists in the computers and back up tapes which they had removed from the plaintiff's premises, those lists have been used by the defendants to contact customers and that the lists are confidential. I have no doubt that the plaintiff's case is arguable in the sense that it is possible that the facts at the trial may support the allegation it makes. However, at this stage I am not impressed with its strength for the reasons set out below.
   There is no evidence as to the number of customers the plaintiff has and it is not suggested that the defendants have approached a significant number of them. Indeed, notwithstanding the five rounds of evidence, the details of who the defendants have approached is scant in the extreme. First, Miss Rodin says that she was told by a Mr Fletcher that he was told by a Mr Pulbrook of Z Card Europe that he had been telephoned by Mr Clarke on 1 September. I assume, although it is not stated, that Z Card Europe is one of the plaintiff's customers. What the contents of the telephone call were is not alluded to. Secondly, Miss Rodin says that a Mr Robinson at Oxford City Council would no longer take her calls but that he had told a colleague that he would not purchase QC 2000 as he had been told the company was going out of business. It is not suggested, except sub rosa, that this was done by any one of the remaining three defendants and, in any event, it is not suggested that the defendants have offered Oxford City Council any product of their own. Thirdly, the Civil Aviation Authority, which was a client of the plaintiff, sent a letter saying that Mr Clarke had offered them something similar to the plaintiff's product. Fourthly, it is suggested that the West Midlands Examination Board was approached by both Mr Clarke and Mr Jenkinson with a view to selling it software similar to QC 2000.
   Furthermore, even if those four companies were all customers of the plaintiff, there is no evidence that the defendants have taken any information off the computers or back up tapes they removed. Mr Clarke claims to have had a long experience in the print trade. He says he did not need to take any information from the plaintiff's files. In addition there is no evidence that there was anything confidential about the names of these four possible customers.
   The second injunction sought is to restrain the three defendants pending the trial from-

Before me there was no dispute that some of the source codes which have been used in the design of QC 2000 have been used by the defendants in one of the products they have. However, it is asserted, and some of the documentation exhibited on the motion supports this, that this material was written by a Mr Boreham. Mr Boreham is another person who is in dispute with the plaintiff. The plaintiff admits that Mr Boreham complains that he has not been paid £7,000 which the plaintiff owes him. It is also said that he has included a Romalpa-type clause in his contract with the plaintiff and that it therefore does not own the codes in issue. As to them, the defendants say that they have been given permission by Mr Boreham to use his codes. There is, however, no documentation to support this claim and Mr Boreham has not sworn any evidence in support of it. Although I am prepared to assume that any codes used by the plaintiff were867 confidential, it is completely unclear at the moment who owns those codes and to whom any obligation of confidence is owed.
   As far as the algorithms are concerned, the position appears to be as follows. Some algorithms need to be used in both the plaintiff's and the defendants' software. The defendants say that their algorithms have been worked out from material readily available to printers. They say that they have not used any algorithms which might be said to belong to the plaintiff. The plaintiff asserts that the algorithms used by the defendants must be theirs. Once again I am not impressed with the strength of the plaintiff's case although it may be arguable. In particular, although the plaintiff has had copies of the defendants' software made available to it and it has engaged the services of a Mr Christopher Read of Dunstan Thomas to inspect it, no list of common algorithms has been supplied to the court. At the moment there is virtually no evidence upon which the court could come to the view that there is substance in the plaintiff's claim.
   The third form of relief sought by the plaintiff is a continuation, in effect, of the order for delivery up made by Mr Oliver. This is dependent upon its being shown that the defendants still retain the plaintiff's property in their possession. As to this there is simply assertion and counter assertion.
   From the matters set out above it will be understood that in relation to some of the plaintiff's claims it appears that their case is weak and in respect of other issues it is impossible at this stage to come to a conclusion one way or another as to whether there is substance in the claim or the defence.
   As far as the balance of convenience is concerned, it is clear that either of the first two injunctions sought by the plaintiff may well have the effect of depriving the defendants of means of earning a living. Their new venture will be strangled near birth. They claim already to have been damaged by the existence of these proceedings and it is inevitable that they will be further damaged, and probably severely, if an injunction under either of those heads is granted. On the other hand the plaintiff claims, as I have already indicated, that it has suffered catastrophic damage as a result of the defendants' activities and that damages in excess of £50,000 has been inflicted. I must say that I am far from impressed with this claim. No attempt has been made to justify the £50,000 figure. It appears to have been conjured out of thin air. Furthermore, I would have been much more impressed with the assertion of catastrophic damage if the plaintiff's actions had matched their words. If such immediate and serious damage was inflicted by the defendants one could reasonably have expected the plaintiff to have reacted vigorously and speedily. In fact all that happened was that four days after the letters of resignation, the plaintiff's solicitors wrote a letter requesting the return of the removed computer equipment. Some six days after that, on 4 September, they sent further letters including a generalised reminder of the defendants' obligations of confidence and an unparticularised claim to own copyright, although they did not specify in what that copyright resided. Thereafter some two months passed without any further activity. Mr Staddon very properly accepted that there was no explanation for this delay. In my view the delay is inconsistent with the plaintiff's assertion of substantial and immediate damage. Furthermore if, as claimed, the defendants' activities had caused tens of thousands of pounds of loss it should have been easy to give some details of the nature of that loss. No such details have been provided.
   If, however, the defendants are still in possession of any of the plaintiff's property, I can see no reason why at this stage it should not be returned.

868

   As far as the ability to pay damages is concerned, the position appears to be as follows. There is no doubt that most of the defendants have very little means. With the exception of Mr Clarke they do not assert otherwise. Mr Clarke claimed before me that he has equity of £140,000 in his house and that he is likely to receive some £185,000 in royalties from another venture in February or March. No documents are provided to support either of these suggestions. The position of the plaintiff on the other hand is no better. I have already referred to the fact that it has stopped cheques and has failed to pay the defendants their salary for their last month at work. But this is not all. It is clear from the evidence that the plaintiff is in financial difficulties in other respects. It admits that Mr Boreham claims he is owed some £7,000 and there is a dispute as to £100,000 with one of its customers, Acorn Web Offset. Since the most recent accounts show that the turnover for the year ended 31 May 1994 was £92,000 (down from £95,000 the preceding year) and the profit for the financial year after taxation was £3,447, it is hardly surprising that Mr Staddon did not try to assert that the plaintiff would be able to meet any cross-undertaking in damages. Instead he said that Miss Rodin and her husband, Mr Lang, were prepared to give personal guarantees. However, neither of those individuals even asserted that they had any significant assets and such evidence as there is in the case suggests that whenever Miss Rodin or Mr Lang needed money for the company they went to Miss Rodin's father for funds. This is a case where it is likely that neither side will be able to meet an order for damages.
   Finally I should consider the status quo. In this case by the time the proceedings were commenced the defendants were well advanced in their attempt to create a new livelihood. Furthermore I have no evidence which indicates that the defendants are the only competitors which the plaintiff will have to meet in this market. It may be that there are numerous competitors. To allow the defendants to enter the plaintiff's market will therefore not significantly affect the status quo.
   Having considered all these factors, it appears to me that this is not a case where it would be appropriate to grant either the first or second form of relief sought by the plaintiff. On the other hand, the defendants have made it clear that they do not now wish to retain any of the plaintiff's property and claim to have returned it all. In the circumstances, there can be no objection to there being a continuation of the injunction granted by Mr Oliver for delivery up. If, as the plaintiff asserts, the defendants have retained any of its property, they will do so at risk of being held in contempt of court.

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