Case Nos: CA-2025-001485 - [2025] EWCA Civ 1108

As already mentioned, it was conceded before the Judge that Corja has no substantial assets. Further, Shift and Corja do not challenge the Judge’s conclusion that no substance can be attributed to the cross-undertaking offered by Shift. There is thus no good reason to think that, were Yodel to succeed at trial, it could obtain compensation from Shift or Corja for any loss it might have suffered as a result of the grant of any injunctive relief.

Mr Rivett argued, however, that the Court must necessarily look at “the risk of serious and uncompensated detriment to the defendant” when considering what, if any, weight should be attached to the fact that a person applying for an injunction has limited, or no, assets. In that connection, Mr Rivett submitted, it is incumbent on a respondent to such an application to put forward evidence showing the loss it stands to suffer and, if there is concern about the applicant’s ability to pay any damages awarded under the cross-undertaking, the respondent should apply for fortification. It being necessary to consider the kind and degree of loss which might be sustained both when assessing the adequacy of the cross-undertaking and when determining whether fortification should be ordered, the principles governing fortification are, so Mr Rivett maintained, in point in either case: inadequacy and fortification are essentially two sides of the same coin. The Court must therefore ask itself whether the respondent has (a) shown to the standard of a good arguable case a sufficient level of risk of loss, (b) shown to the same standard that any loss would probably have been caused by the granting of the injunction and (c) supplied sufficient evidence to allow an intelligent estimate of the quantum of the losses to be made. The Court should consider an applicant’s ability to meet an award under its cross-undertaking only if the respondent has discharged the burden on it in respect of these three matters, Mr Rivett said.

In the present case, Mr Rivett submitted, the Judge did not even attempt to form a view as to the kind and degree of loss that Yodel might suffer if injunctive relief were wrongly granted. Had he done so, Mr Rivett said, he could only have concluded that the case on loss advanced on Yodel’s behalf was seriously lacking in substance and credibility.

Mr Rivett referred in this context to a passage from Mr McCourt’s witness statement of 22 May 2025 in which this was said:

“Another way to look at it is to consider Yodel’s actual EBITDA losses in March and April, since those reflect some of the improvements that Yodel’s business had already achieved …. The average EBITDA loss for those two months was about £5.5 million per month. If Yodel could not make further improvements to its business, its ‘burn rate’ over the six-month period from June to November (inclusive) would be about £33 million.”

“By contrast”, Mr McCourt explained, “over the same period under the ‘2+10’ [i.e. the “transformation plan” portrayed in the April 2025 summary] the EBITDA forecast for those months was a loss of just about £5 million”.

Mr Rivett argued that Mr McCourt’s expectations have already been falsified by events. While the April 2025 summary of the “transformation plan” predicted that Yodel would break even in July, it is apparent from a witness statement made by Mr McCourt on 14 July that Yodel was in fact still loss-making that month. Mr McCourt said in that statement:

“In McCourt 1 [i.e. his statement dated 22 May 2025] (at paragraph 42.2), I estimated that (as at that time), if Yodel was unable to make further improvements to its business, its actual EBITDA losses would be c. £33m between June and November 2025 based on a ‘burn rate’ of £5.5m per month. While Yodel has progressed the integration since 11 June 2025, and this has helped to reduce that ‘burn rate’ (in July 2025 we estimate the EBITDA loss will be £3.3m), it remains significantly loss making and we will not be able to do anything about this if the integration is now paused (i.e. these losses will continue to accumulate).”

Mr Rivett further contended that, if Yodel incurred further losses while an injunction was in place, they would not be caused by the injunction.

For his part, Mr Thompson submitted that there was ample evidence that Yodel stood (and now stands) to suffer loss from the grant of injunctive relief. In the first place, by preventing Yodel from proceeding with the “transformation plan”, an injunction would cause the company to continue to incur losses until the end of this year. Secondly, there is a prospect of Yodel losing customers if the “transformation plan” has to be paused. Thirdly, there is a risk that Yodel would have to go into administration and that its business would then have to be realised on a forced sale basis.

In my view, the evidence both as it was before the Judge and as it has since been supplemented fully supports the conclusion that Yodel stood, and stands, to incur losses were an injunction to be granted. True it is that, by 14 July 2025, the company was expected to make a loss of £3.3 million that month when in April it had been hoped that it would by then break even. As, however, Mr Thompson pointed out, the undertakings which Yodel gave in response to the applications for injunctions may explain some or all of the difference. In any event, it is apparent from the evidence that the “transformation plan” has been the subject of detailed and careful consideration, that InPost has had sufficient faith in it to invest very substantial sums and that InPost has previously succeeded in merging another logistics business, that of Menzies Distribution Limited, with its own. The evidence also indicates that, were an injunction granted, Yodel would be unable to complete the “transformation plan” in time for the peak period for deliveries in the run-up to Christmas. There is also good reason to think that Yodel might well lose significant customers as a result of an injunction. Mr Kuschel explained as follows in his 22 May witness statement:

“[M]any customers were dissatisfied with Yodel, especially after the 2024 peak period. My team and I are already in the process of having a series of discussions with key customers, working hard to give them confidence about Yodel’s capability to meet their needs during peak 2025. Major retailers generally plan for peak around this time (the second quarter of the year). If they form the view that there is material uncertainty around Yodel as a result of any injunction, many customers are likely to consider that they should move their volumes to competitors, rather than risk poor performance by Yodel in the peak period.”

In all the circumstances, it seems to me that there is a very real prospect of an injunction causing Yodel to suffer sizable losses and, moreover, that it would be unable to recover compensation for such losses from Shift or Corja under their cross-undertakings. This is not, therefore, a case in which the respondent “would be adequately compensated under the [applicant’s] undertaking as to damages for the loss he would have sustained by being prevented from doing [what was sought to be enjoined] between the time of the application and the time of the trial” (to adapt words of Lord Diplock in American Cyanamid). To the contrary, there is good reason to believe that the grant of injunctive relief would cause Yodel loss for which it would not be compensated.

I do not consider it either necessary or helpful to address the principles applied in relation to applications for fortification in this context. It is not surprising that, where an application is made for fortification, the applicant must demonstrate certain matters to the standard of a good arguable case and with sufficient evidence. What is at issue in the present case, however, is whether Shift and Corja should have been (or should be) granted relief for which they have applied. If a respondent to such an application fails to adduce evidence of likely loss, that will doubtless count against it, especially if it alone has the relevant information, but that does not mean that the respondent bears any legal burden of proof or, more specifically, that the Court must proceed on the footing that the respondent will not suffer any uncompensatable loss unless it can supply “sufficient evidence to allow an intelligent estimate of the quantum of the losses to be made”. Such an approach does not seem to me to be supported by either authority or principle.

That said, the Judge said in paragraph 78 of the Judgment that he was “satisfied that Yodel has shown a good arguable case for fortification and that its evidence, and particularly that of Mr McCourt, does satisfy the criteria relevant to the exercise of the Court’s discretion to order fortification” and that, had he needed to do so, he “would have ordered the provision of fortification of the cross-undertaking in damages which has been offered”. In my view, those conclusions were open to the Judge.