Strand, London, WC2A 2LL
B e f o r e :
|THE ARENA CORPORATION LIMITED|
|(in provisional liquidation)||Claimant|
|- and -|
|(also known as Peter James Schroeder and James Schroeder)||Defendant|
A G Bompas QC and Andrew de Mestre (instructed by Berg & Co) for Defendant
Hearing dates: 12, 13, 14 and 17 March 2003
Crown Copyright ©
Mr Alan Boyle QC:
THE ISSUES ON THE APPLICATION
(1) Whether Arena demonstrates, on the totality of the material now before the court, that this is an appropriate case for the continuation of the freezing order until trial. This turns on whether Arena has shown a good arguable case that Mr Schroeder practised the alleged fraud, and whether Arena has shown a risk that in the absence of the order sought Mr Schroeder would dissipate his assets rendering a later money judgment nugatory.
(2) Whether there was a material non-disclosure, or a material misrepresentation, of relevant facts on the without notice application on 5 December 2002 such as to disentitle Arena to relief on this application.
(1) Whether there was material non-disclosure or misrepresentation on the without notice application, and the extent and seriousness of it in the context of the case as it was then presented. This question essentially turns on an examination of the materials placed before the court on 5 December 2002 and an assessment (informed by all the material now available) of whether there was culpable non-disclosure and misrepresentation.
(2) Whether on all the evidence now available, and absent any non-disclosure and misrepresentation, there is a case for a freezing order. This question essentially turns on whether Arena has now established a good arguable case on the merits and a risk of dissipation of assets.
(3) To state the relevant legal principles which the court should apply in deciding whether to grant an injunction until trial in circumstances where there has been non-disclosure or misrepresentation at the without notice stage.
(4) To identify and assess the weight of the various factors which in the circumstances of this case need to be taken into account in deciding whether now to grant an injunction until trial.
THE ALLEGED FRAUD
EVENTS PRIOR TO THE COMMENCEMENT OF PROCEEDINGS
"We have maintained regular control over the warehouse and we have a file containing all of the AADs and AGD's provided to Customs and Excise which relate to the movement of excise suspended goods to and from this warehouse."
"I can state that from examination of the copy AADs held at the Nieuwpoort Customs office, and the records held at the bond, these five AADs are the only AADs relating to goods that arrived at the TIN bonded warehouse in Nieuwpoort for Arena. The other AADs that were shown to me by Kevin Davies, supposed to represent shipments by Arena to TIN, are false. This means that all of the AADs except the five noted above as ROOTHAERT 0002, 4, 6, 8, & 10, and which are for goods that did not arrive at the TIN bonded warehouse.
I have obtained an imprint of the stamp used in the TIN bond to authenticate AADs, found on the premises at the TIN bond when I visited on 2nd May 2002. I have presented Keven Davies with a copy of this imprint, identified as 'N ROOTHAERT 0024.'
On Wednesday 8th May 2002, following a report prepared by myself the TIN bonded warehouse had its licence to trade removed. The principal reason for this was that the bond owners had failed to keep proper records and, in particular, failed to keep a stock book. This record is for recording every movement of goods into and out of the bond and is a requirement under Belgian law."
"It may well be he will instruct me that he would be willing to come to the UK to discuss with you any concerns you have. I just don't know at the moment. Until the Crown make their intentions clear and you have indicated you will make those intentions clear in the fullness of time there is very little I can do."
THE WITHOUT-NOTICE APPLICATION
(1) Ms Marston alleged that Mr Schroeder was involved in various other criminal activities for which he was known to various authorities and which, in one case, he had actually admitted. Some of these allegations were incorrect, and unsupported by any material on the basis of which they could properly be made. Other allegations were supported by some material, which was not identified. Linked to these allegations was a statement that Mr Schroeder had used three different names, implying that he was someone who resorted to the use of aliases.
(2) Ms Marston alleged that the TIN stamps on the copy 3 AADs returned to the warehouse of despatch were forgeries procured by Mr Schroeder. In fact, analysis during the hearing before me showed that the TIN stamps alleged by Ms Marston to be forgeries were in all probability genuine, in the sense that the stamps on the copy 3 AADs had been made by the stamp with which Mr Roothaert had made an impression on 2 May 2002. The material which showed this was in the possession of HMCE at the time Ms Marston swore her affidavit.
(3) Ms Marston alleged that Arena had been involved in the creation of false AADs and the stamping on them of forged customs stamps. In fact, the copy 3 AADs in respect of the TIN consignments had no Belgian customs stamps at all.
(4) Ms Marston made no reference to the fact that HMCE had procured the Danish police to raid Mr Schroeder's home in Denmark nor to the fact that they had uplifted 60 lever arch files of documents. She herself was unaware of that raid at the time she swore her affidavit. However, she deposed to a belief that Arena would destroy or conceal relevant books and records as a ground for the relief sought, which included orders for the delivery up of all books papers records or other documents of Arena which were within his possession or control.
(5) Ms Marston failed to refer to or exhibit the correspondence which showed that Mr Schroeder was willing to be interviewed by HMCE in Denmark.
(6) Ms Marston failed to inform the court that it was HMCE's intention to commence bankruptcy proceedings against Mr Schroeder in Denmark and to take action against him in Gibraltar.
(1) MR SCHROEDER'S ALLEGED CRIMINAL ACTIVITIES
Alleged involvement in money laundering, cigarette smuggling and diversion fraud
[Arena] is a company incorporated in the Isle of Man but which has no business or assets there. It is owned and controlled by Mr Schroeder, who is or appears to be resident in Denmark, and who is known to the authorities in Northern Ireland, Belgium, Denmark and the Isle of Man as well as here. It is believed that he is involved in money laundering, serious cigarette smuggling and, as here, diversion fraud. He is believed to reside at Valbo Alle 4 2665 Vallenbank Stand, Denmark and his registration at that address was confirmed last week by our solicitors' Danish colleagues who checked the telephone listing. Mr Schroeder is listed variously as Peter Schroeder, Peter James Schroeder . and James Schroeder; with the same telephone and mobile numbers." [Emphasis added].
"Risk of dissipation
I consider that, by his conduct in relation to the affairs of TAC, and because of what is known about him, Peter Schroeder has shown himself to be a person who cannot be trusted. I believe that this is clearly evidenced by the steps which TAC have been taken [sic] to obtain false AADs. HMCE is gravely concerned about the fact that Peter Schroeder has provided false information to HMCE. He has admitted money laundering in the context of another matter involving cigarette smuggling There are however no criminal proceedings pending against him in this jurisdiction ..." [Emphasis added].
"The Judge said that, although it appeared Mr Schroeder was well known to the Excise authorities here and in other jurisdictions, the evidence of Mrs Marston was something of a summary of a fraud which Customs believed had occurred and that he was being asked to take a lot on trust."
This must be or include a reference to paragraph 3 of the affidavit.
Isle of Man
Mr Schroeder's alleged aliases
"Enquiries in Denmark show Peter Schroeder lives at Valbo Alle 4, 2665 Vallenbank Stand, Denmark. Enquiries by our Danish lawyers show him registered at that address as 'Peter Schroeder', 'Peter James Schroeder' and 'James Schroeder'."
"In relation to his name, he is variously registered in Denmark as Peter Schroeder, Peter James Schroeder and James Schroeder at Valbo Alle 4, with the same 'phone numbers. For the purposes of identifying your client for service, it was wholly appropriate to specify the various names under which he has chosen to register his residence."
Ms Brittain makes the same point in paragraph 7 of her witness statement.
Mr Schroeder has registered himself under peter S, James S and Peter James S. And registered 4 different phone numbers, 3 mobile phones and 1 ordinary line."
It is clear that the information obtained was the result of the way in which the database was organised and had nothing to do with any action on the part of Mr Schroeder himself, who had not "registered himself' in different ways. Mr Borch made an error which was then carried into Ms Marston's affidavit.
(2) ALLEGED FORGERY OF THE TIN STAMPS
"... In order to create the impression that goods were being sold and moved to bonded warehouses in the EU, [Arena] has been involved in the creation of false documents. In particular, in order for a movement of goods to qualify for duty-suspended treatment the relevant regulations require the use of 'accompanying administrative documents' (AADs) which evidence and justify the relevant duty suspended movement. [Arena] had been involved in the creation of false AADs in and the stamping on them of forged customs stamps."
At paragraph 22, she describes the method used in the usual type of diversion fraud:
"From my experience, I can say that AADs in respect of Duty suspended goods unlawfully diverted onto the UK home market (without payment of UK Duty and VAT), are normally returned to the [warehouse of despatch] bearing false stamps and signatures. This is to avoid official attention being drawn to these removals."
At paragraph 28, she says:
"From the records which relate to goods owned by [Arena], it appears that the 18 TIN consignments were declared as being exported to TIN in Belgium between the 24th January 2002 and the 11th April 2002. HMCE believe that the 18 Consignments were bogus and that the relevant AADs were fraudulently created ..."
At paragraph 31 she says:
"Part C of the AAD [page 168] is endorsed with a stamp which purports to be that of TIN …"
At paragraph 36 she says:
"Mr Roothaert has obtained a print from the stamp used at the TIN warehouse to stamp the AAD documents on arrival. This print is produced to his statement and shown at page 166a of my exhibit. It can be seen that there are significant differences between the true stamp and the one that appears on AADO2/0012 at page 167."
At paragraph 40, she says:
"It is quite clear that none the product covered by the AADs (save AAD 004/43) have been received at their intended destinations and the AADs have been discharged by false stamps."
At paragraph 43, she says:
"In respect of the relevant Consignments which have been the subject of investigation to date, it has been determined that approximately £1,823,605.10 of Duty and VAT net of AAD 004/03, has been fraudulently evaded using forged documentation."
At paragraph 47, she says:
"I consider that, by his conduct in relation to the affairs of [Arena] ... Peter Schroeder has shown himself to be a person who cannot be trusted. I believe that this is clearly evidenced by the steps which [Arena] have been taken [sic] to obtain false AADs. HMCE is gravely concerned about the fact that Peter Schroeder had provided false information to HMCE ..."
"When I looked at the document which I received (exhibited at 166a) and compared it with the stamps on the copy AADs which I had, it did look different and I remember having the belief that the stamps were forged although I cannot now the source [sic] of the belief and whether it was an LE Officer and if so whom. The fact that the faxed stamp did look different added to that belief."
(3) ALLEGED FORGERY OF CUSTOMS STAMPS
[Arena] had been involved in the creation of false AADs in [sic] stamping on them of forged customs stamps." [Emphasis added]
At paragraph 17, she pointed out that Belgium had adopted the provision for the tax authorities of a Member State to stamp the copy 3 with their official stamp prior to return of the AAD to the warehouse of despatch.
At paragraph 22, she says:
"... AADs in respect of Duty suspended goods unlawfully diverted onto the UK market (without payment of UK Duty and VAT) are normally returned to the [warehouse of despatch] bearing false stamps ..."
At paragraph 26, she says:
"Information supplied to HMCE by the Ministry of Finance at Customs and Excise Control in Poperinge, Belgium confirms that the goods did not arrive at the TIN tax warehouse and that the AADs documents representing consignments from [Arena] were false."
At paragraph 28, she says:
"HMCE believe that the 18 Consignments were bogus and that the relevant AADs were fraudulently created."
At paragraph 31, she says:
"The Court will note from the AAD that the details of the consignment, the haulier and the [destination warehouse's] excise number (BE/AC/G1/1233) are marked upon the AAD. Part C of the AAD [page 168] is endorsed with a stamp which purports to be that of TIN. Furthermore the AAD purports to show that it has been presented to the Belgian Tax Authorities, but it bears no official Customs stamps." [Emphasis added].
(4) FAILURE TO INFORM THE COURT OF THE RAID IN DENMARK
"I am concerned that if [Arena] and its officers were to be aware of the full nature of HMCE's investigations at this stage, then it is entirely possible that [Arena] books and relevant records would be destroyed or concealed".
This statement would obviously not have been made if Ms Marston had been aware of the raid and that 60 lever arch files of documents had been uplifted from Mr Schroeder's home. Although Ms Marston had no intention to mislead, the affidavit was in the event seriously misleading. The fact that the raid had taken place was self-evidently relevant to whether it was appropriate to make an order for delivery up by Mr Schroeder of Arena's documents. No attempt has been made to explain how it was that Ms Marston, the officer of HMCE in the Civil Asset Recovery Team with responsibility for this case, was not told by the law enforcement department of the raid in Denmark. The result of this failure was that relief was sought and obtained from the court without disclosure of an event of obvious materiality.
(5) FAILURE TO REFER TO MR SCHROEDER'S OFFER TO BE INTERVIEWED
(6) FAILURE TO REFER TO INTENDED PROCEEDINGS IN DENMARK AND GIBRALTAR
OTHER MATTERS RELIED ON BY MR BOMPAS QC
Kirby report of conversation with Byrne
"I am aware from my enquiries that the 3 directors of [Arena] (one of whom is the Secretary) are all from a corporate services firm in the Isle of Man called 'Chesterfields'. It appears that Mr Schroeder is the only person beneficially interested in the company and that he directs its affairs. Simon Kirby of Manx Customs tells me (and I believe) that Mr Byrne informed him that a) Peter Schroeder had told him the company was dormant and b) when the assessment was served Peter Schroeder asked him to just put all post in a drawer and ignore it ..."
"Simon Kirby of Manx Customs tell me (and I believe) that Mr Byrne informed him that a) Peter Schroeder had told him the company was dormant and b) when the assessment was served Peter Schroeder asked him to shred the file on TAC maintained by Chesterfields which Mr Byrne refused to do."
Position of appeals
"The Company's appeal(s) have apparently been lodged but not yet received by our internal Solicitor' [sic] office in Manchester who would deal with tribunal issues. I am also advised by Simon Kirby (& I believe) that Mr Byrne informed him, that the registered officers of the Company have not given any instructions for the lodgement of any appeal or action or retaining of solicitors."
"The Judge referred to the appeals and questioned whether there might not be a bona fide defence. Mr Girolami said the assessments have apparently been appealed although the appeals have not been received. The Judge asked whether there were not time limits; and Mr Girolami said that there were, but that those in Court did not know whether the appeals had been lodged in time, whether there had been an extension or whether appeals were now being made out of time.
The Judge then said so the appeal is not a genuine appeal, but a time delaying exercise? Mr Girolami said, yes, if we are right and there is fraud going on."
Results of further inquiries
"The results of the enquiries made to date demonstrate the modus operandi of the fraudulent activity being carried out by [Arena] through the actions of the officers and associates. HMCE's enquiries are continuing in respect of Duty suspended consignments of excise product to other Member States. Early indications are that the AADs in relation to these consignments also bear false stamps and signatures, thus creating a further Duty and VAT liability. Mutual Assistance requests have been lodged with the relevant Authorities, requesting that HMCE's Officers be allowed to visit these other Member States to obtain evidence that further suspicious [Arena] consignments were not received by the respective [warehouse of destination]."
Insufficient description of the alleged impropriety of Arena and Mr Schroeder
Points relating to the SERIO consignment
Matters relating to Mr Roothaert's evidence
"Mr Roothaert was shown a number of AADs for consignments which the Company alleges were exported to TIN. Mr Roothaert states that none of the AAD documents appearing on the list, under which the goods referred to on the same list were despatched to TIN on the account of [Arena], were found either in the records at the local customs office at Nieuwpoort or in the records kept by TIN. Mr Roothaert states that this means that all the AAD documents shown to him which purported to represent consignments from [Arena] destined for TIN, are false and that the goods referred to in these documents the 18 consignments never arrived at the TIN tax warehouse". [Emphasis added].
RELEVANT LEGAL PRINCIPLES – FULL AND FAIR DISCLOSURE
"In considering whether there has been relevant non-disclosure and what consequence the court should attach to any failure to comply with the duty to make full and frank disclosure, the principles relevant to the issues in these appeals appear to me in to include the following.
(1) The duty of the applicant is to make "a full and fair disclosure of all the material facts": see Rex v Kensington Income Tax Commissioners, Ex parte Princess Edmond de Polignac  1 K.B. 486, 515 per Scrutton L.J.
(2) The material facts are those which it is material for the judge to know in dealing with the application as made: materiality is to be decided by the court and not by the assessment of the applicant or his legal advisers: see Rex v. Kensington Income Tax Commissioners, per Lord Cozens-Hardy M.R., at p. 504, citing Dalglish v. Jarvie (1859) 2 Mac. & G. 231, 238 and Browne-Wilkinson J. in Thermax v. Schott Industrial Glass Ltd.  F.S.R. 289, 295.
(3) The applicant must make proper inquiries before making the application: see Bank Mellat v. Nikpour  F.S.R. 87. The duty of disclosure therefore applies not only to material facts known to the applicant but also to any additional facts which he would have known if he had made such inquiries.
(4) The extent of the inquiries which will be held to be proper, and therefore necessary, must depend on all the circumstances of the case including (a) the nature of the case which the applicant is making when he makes the application; and (b) the order for which application is made and the probable effect of the order on the defendant: see, for example, the examination by Scott J. of the possible effect of an Anton Piller order in Columbia Picture Industries Inc. v. Robinson  Ch 38; and (c) the degree of legitimate urgency and the time available for the making of inquiries: see per Slade L.J. in Bank Mellat v. Nikpour  F.S.R. 87, 92-93.
(5) If material non-disclosure is established the court will be "astute to ensure that a plaintiff who obtains [an ex parte injunction] without full disclosure … is deprived of any advantage he may have derived by that breach of duty:" see per Donaldson L.J. in Bank Mellat v. Nikpour, at p. 91 citing Warrington L.J. in the Kensington Income Tax Commissioners' case  1 K.B. 486, 509.
(6) Whether the fact not disclosed is of sufficient, materiality to justify or require immediate discharge of the order without examination of the merits depends on the importance of the fact to the issues which were to be decided by the judge on the application. The answer to the question whether the non-disclosure was innocent, in the sense that the fact was not known to the applicant or that its relevance was not perceived, is an important consideration but not decisive by reason of the duty on the applicant to make all proper inquiries and to give careful consideration to the case being presented.
(7) Finally, it "is not for every omission that the injunction will be automatically discharged. A locus poenitentiae may sometimes be afforded". per Lord Denning M.R. in Bank Mellat v. Nikpour  F.S.R. 87, 90. The court has a discretion, notwithstanding proof of material non-disclosure which justifies or requires the immediate discharge of the ex parte order, nevertheless to continue the order, or to make a new order on terms
"When the whole of the facts, including that of the original non-disclosure, are before [the court, it] may well grant ... a second injunction if the original non-disclosure was innocent and if an injunction could properly be granted even had the facts been disclosed" per Glidewell L.J. in Lloyds Bowmaker Ltd. v. Britannia Arrow Holdings Plc., ante, pp. 1343H-1344A."
"I would like to repeat what has been said on many occasions. When an ex parte application is made for a Mareva injunction, it is of the first important that the plaintiff should make full and frank disclosure of all material facts. He ought to state the nature of the case and his cause of action. Equally, in fairness to the defendant, the plaintiff ought to disclose, so far as he is able, any defence which the defendant has indicated in correspondence or elsewhere. It is only if such information is put fairly before the court that a Mareva injunction can properly be granted."
In the same case Donaldson J. said this (at p 90):
"This principle that no injunction obtained ex parte shall stand if it had been obtained in circumstance s in which there was a breach of the duty to make the fullest and frankest disclosure is of great antiquity. Indeed, it is so well enshrined in the law that it is difficult to find authority for the proposition; we all know it; it is trite law. But happily we have been referred to a dictum of Warrington L.J. in R. v. Kensington Income Tax Commissioners, Ex parte Princess Edmond de Polignac  1 K.B. 486 at 509. He said:
'It is perfectly well settled that a person who makes an ex parte application to the court - that is to say, in the absence of the person who will be affected by that which the court is asked to do - is under an obligation to make the fullest possible disclosure of all material facts within his knowledge, and if he does not make that fullest possible disclosure, then he cannot obtain any advantage from the proceedings, and he will be deprived of any advantage he may have already obtained by means of the order which has thus wrongly been obtained by him. That is perfectly plain and requires no authority to justify it.'"
Slade L.J. said this (at p 92):
"I think it is of the utmost importance that on any ex parte application for an interim injunction the applicant should recognise his responsibility to present his case fully and fairly to the court and that he should support it by evidence showing the principal material facts upon which he relies. Most particularly, I think that this duty falls on an applicant seeking a Mareva injunction which, if granted, may have drastic consequences for a defendant, by freezing assets in this country which are not necessarily even the subject matter of the action."
"The scope of the duty of disclosure of a party applying ex parte for injunctive relief is, in broad terms, agreed between the parties. Such an applicant must show the utmost good faith and disclose his case fully and fairly. He must, for the protection and information of the defendant, summarize his case and the evidence in support of it by an affidavit or affidavits sworn before or immediately after the application. He must identify the crucial points for and against the application, and not rely on general statements and the mere exhibiting of numerous documents. He must investigate the nature of the cause of action asserted and the facts relied on before applying and identify any likely defences. He must disclose all facts which reasonably could or would be taken into account by the Judge in deciding whether to grant the application. It is no excuse for the applicant to say that he was not aware of the importance of matters he has omitted to state. If the duty of full and fair disclosure is not observed the Court may discharge the injunction even if after full enquiry the view is taken that the order made was just and convenient and would probably have been made even if there had been full disclosure..."
"It cannot be emphasized too strongly that at an urgent without notice hearing for a freezing order, as well as for a search order or any other form of interim injunction, there is a high duty to make full, fair and accurate disclosure of material information to the court and to draw the court's attention to significant factual, legal and procedural aspects of the case."
THE CASE FOR A FREEZING ORDER - GOOD ARGUABLE CASE
(1) He would instruct the warehouse to despatch the goods to TIN, by phone or fax.
(2) The warehouse would confirm the date of despatch to him by phone.
(3) He would let Tony know by phone that the goods would arrive at TIN that day or the following day, depending on the time.
(4) He would confirm with John at TIN by phone that the goods had arrived around the time that he expected them to arrive.
(5) He would confirm to Tony that the goods had arrived and that he should arrange payment.
(6) Payment for consignments would be made in sterling cash in the UK "by a smart looking Indian gentleman wearing a turban" to Mr Judd "who I had telephoned to let him know a payment was expected".
(7) Mr Judd would check the amount and confirm receipt to Mr Schroeder of the correct amount.
(8) Mr Schroeder would then send a fax to John at TIN instructing him to release the goods. After a number of transactions, this release instruction would be made by phone.
(9) Mr Judd would pay the sums into his company account in the UK and then remit them to Arena's account in Belgium, or for payment of amounts outstanding from Arena to suppliers in the UK. If Arena owed money to Ampleaward Limited/Award Drinks, Mr Schroeder would authorise payment of these sums from the monies received by Mr Judd.
The first order
The second order
The amount and timing of the cash payments made to Mr Judd
provisional liquidator's office which attempted to reconcile the amount of the invoices with the cash payments received by Mr Judd as recorded in his ledgers (LMB 1, p 99A), and to the witness statement submitted by Mr Schroeder on 4 March 2002 in opposition to the petition to wind up Arena. In paragraph 134 of that witness statement, Mr Schroeder purported to reconcile the amount of the invoices for all consignments sent during the period in which the assessed consignments were sold with the amounts of cash received by Mr Judd on behalf of Arena. Mr Schroeder produced a schedule (Schedule A) setting out the invoice numbers, invoiced amounts and cash payments, which showed a total invoiced amount of £803,240 and total cash payments of £803,240. Schedule A shows the invoiced amounts and cash coming in to Mr Judd in round sums which do not correspond to the amounts of the individual invoices. Mr Girolami QC further submitted that Mr Schroeder in this witness statement represented a complete change of position from that adopted in his witness statement of 5 January 2003.
|Date||Invoice Value £||Cash £||Invoice||Ref|
1Mr Schroeder says that invoice 4080 included a consignment of Bacardi costing £72,240 which was not sent to TIN, but remained at LBV/Seabrooks: see paragraph 8.6 of his witness statement of 12 March 2003. His schedule accordingly only refers to 2 of the 3 orders referred to in that invoice."
THE CASE FOR A FREEZING ORDER – RISK OF DISSIPATION OF ASSETS
RELEVANT LEGAL PRINCIPLES – EXERCISE OF DISCRETION
"(5) If material non-disclosure is established the court will be astute to ensure that a plaintiff who obtains [an ex parte injunction] without full disclosure is deprived of any advantage he may have derived by that breach of duty:" see per Donaldson L.J. in Bank Mellat v. Nikpour, at p. 91 citing Warrington L.J. in the Kensington Income Tax Commissioners' case  1 K.B. 486, 509."
"It is perfectly well settled that a person who makes an ex parte application to the court – that is to say, in the absence of the person who will be affected by that which the court is asked to do – is under an obligation to the court to make the fullest possible disclosure of all material facts within his knowledge, and if he does not make that fullest possible disclosure, then he cannot obtain any advantage from the proceedings, and he will be deprived of any advantage he may have already obtained by means of the order which has thus wrongly been obtained by him. That is perfectly plain and requires no authority to justify it."
"So for my part I would reject Mr. Rattee's submission. The rule requiring full disclosure seems to me to be one of the most fundamental importance, particularly in the context of the draconian remedy of the Mareva injunction. It is in effect, together with the Anton Piller order, one of the law's two 'nuclear' weapons. If access to such a weapon is obtained without the fullest and frankest disclosure, I have no doubt at all that it should be revoked. In this particular case a cause of action was never put forward initially; then a wrong cause of action was put forward. Finally, a third cause of action was put forward which might perhaps have supported the grant of an injunction if put forward initially.
The defence was known to the plaintiffs at the time when they originally applied, but they never told the court what it was."
"I would accept Mr. Rattee's argument to this extent: There may sometimes be a slip or mistake – in the application for a Mareva injunction – which can be rectified later. It is not for every omission that the injunction will automatically be discharged. A locus poenitentiae may sometimes be afforded: but not in this particular case. It is quite clear that the plaintiffs themselves had the greatest difficulty in showing what their cause of action was. At first they did not show any cause of action. Next they claimed that the moneys had been loaned to Mr. Nikpour. Finally they said against Mr. Nikpour that he had wrongly credited the sums to his account. It seems to me that, in all the circumstances, the judge was quite entitled to say that the injunction was not properly obtained: and that this is not a case where the plaintiffs should be given any locus poenitentiae to come in."
"If the duty of full and fair disclosure is not observed the Court may discharge the injunction even if after full enquiry the view is taken that the order made was just and convenient and would probably have been made even if there had been full disclosure."
Clearly, the judge accepted that it could be appropriate to discharge an ex parte injunction even where there was no intention to mislead.
"A party who seeks relief ex parte is under a duty to the court to make the fullest disclosure of all material facts. He must disclose any defence he has reason to anticipate may be advanced. If he does not comply, he will be deprived of the fruits of his order without consideration of the merits and irrespective of whether, had he made such disclosure, he would or would not have obtained the order. It matters not whether the non-disclosure is deliberate or innocent. The court may allow a limited latitude for a slip, but only where the party seeking relief has corrected the error quickly."
"Alternatively, he submits that, even if an injunction initially granted is discharged, the court should be ready to consider a further application for an injunction based upon the facts as they appear at the time of the application to discharge the first injunction."
"In my view these authorities support the propositions of law advanced by Mr. Burke as set out above. However, Mr. Twigg's last submission is also correct in my view, i.e., even though a first injunction is discharged because of material non-disclosure, the court has a discretion whether to grant a second Mareva injunction at a stage when the whole of the facts, including that of the original non-disclosure, are before it, and may well grant such a second injunction if the original non-disclosure was innocent and if an injunction could properly be granted even had the facts been disclosed."
This passage has been cited with approval in a number of subsequent cases, in particular in support of proposition (7) in Ralph Gibson L.J.'s list in Brink's Mat v Elcombe  1 W.L.R 1350.
"As I said in a judgment given in this court only last week, I would endorse as emphatically as I can the views expressed by Lord Denning M.R. and Donaldson L.J. in Bank Mellat v. Nikpour  F.S.R. 87, that the making of an application for a Mareva injunction requires the fullest and frankest disclosure to the court on the part of the applicant. If an injunction is obtained and there has been material non-disclosure by the applicant, then prima facie the injunction ought to be discharged.
This is an instance – of particular importance because of the draconian nature of a Mareva injunction – of the general rule as to ex parte applications which is very clearly set out in the judgments of this court in Rex v. Kensington Income Tax Commissioners, Ex parte Princess Edmond de Polignac  1 K.B. 486 to which Glidewell L.J. has referred. That must, I apprehend, as a matter of jurisdiction be a rule of practice rather than a rule of law, and, in so far as the judgments in the Polignac case show that the rule is derived from the practice of the old Court of Chancery in relation to the grant of injunctions, there must, I apprehend, be an element of discretion which, despite nondisclosure, might allow an injunction to stand in an exceptional case, as in effect was done in Eastglen International Corporation v. Monpare S.A. (1987) 137 N.L.J. Rep. 56. That does not, however, arise in the present case."
"The judge seems to have thought that non-disclosure is only material as a basis for discharging the injunction if it affects some point which it is necessary for the applicant for the injunction to establish if he is to succeed in his claim. Therefore he said that the failure to disclose that the defendants knew about the company was not material, because it would have been no defence for the third party to say in answer to the charge of fraud: 'It was not I, it was my tame company who did it.'
With all respect, I do not agree with the judge that the duty of disclosure is so limited. The applicant owes a duty of fullest and frankest disclosure: if he puts in matters of prejudice he must put them in as fully as is necessary to be fair. He cannot pile on the prejudice and then when it is pointed out that he has told only half of the story and has left out matters which give a quite different complexion, say 'Oh, well, it is not material. It is only prejudice, and so, on a strict analysis of the pleadings, does not have to be regarded.'
In my judgment, therefore, the defendants were guilty of serious and material non-disclosure on that application to Kennedy J. for the Mareva injunction."
"The rule that an ex parte injunction will be discharged if it was obtained without full disclosure has a two-fold purpose. It will deprive the wrongdoer of an advantage improperly obtained: see Rex v. Kensington Income Tax Commissioners, Ex parte Princess Edmond de Polignac  1 K.B. 486, 509. But it also serves as a deterrent to ensure that persons who make ex parte applications realise that they have this duty of disclosure and of the consequences (which may include a liability in costs) if they fail in that duty. Nevertheless, this judge-made rule cannot be allowed itself to become an instrument of injustice. It is for this reason that there must be a discretion in the court to continue the injunction, or to grant a fresh injunction in its place, notwithstanding that there may have been non-disclosure when the original ex parte injunction was obtained: see in general Bank Mellat v. Nikpour  F.S.R. 87, 90 and Lloyds Bowmaker Ltd v Britannia Arrow Holdings Plc, ante, p. 1337, a recent decision of this court in which the authorities are fully reviewed. I make two comments on the exercise of this discretion. (1) Whilst, having regard to the purpose of the rule, the discretion is one to be exercised sparingly, I would not wish to define or limit the circumstances in which it may be exercised. (2) I agree with the views of Dillon L.J. in the Lloyds Bowmaker case, at p. 1349C-D, that, if there is jurisdiction to grant a fresh injunction, then there must also be a discretion to refuse, in an appropriate case, to discharge the original injunction."
"The principle is, I think, a thoroughly healthy one. It serves the important purposes of encouraging persons who are making ex parte applications to the court diligently to observe their duty to make full disclosure of all material facts and to deter them from any failure to observe this duty, whether through deliberate lack of candour or innocent lack of care.
Nevertheless, the nature of the principle, as I see it, is essentially penal and in its application the practical realities of any case before the court cannot be overlooked. By their very nature, ex parte applications usually necessitate the giving and taking of instructions and the preparation of the requisite drafts in some haste. Particularly, in heavy commercial cases, the borderline between material facts and non-material facts may be a somewhat uncertain one. While in no way discounting the heavy duty of candour and care which falls on persons making ex parte applications, I do not think the application of the principle should be carried to extreme lengths. In one or two other recent cases coming before this court, I have suspected the signs of a growing tendency on the part of some litigants against whom ex parte injunctions have been granted, or of their legal advisers, to rush to the Rex v. Kensington Income Tax Commissioners  1 K.B. 486 principle as a tabula in naufragio, alleging material non-disclosure on sometimes rather slender grounds, as representing substantially the only hope of obtaining the discharge of injunctions in cases where there is little hope of doing so on the substantial merits of the case or on the balance of convenience.
Though in the present case I agree that there was some material, albeit innocent, non-disclosure on the application to Roch J., I am quite satisfied that the punishment would be out of all proportion to the offence, and indeed would cause a serious potential injustice if this court were, on account of such non-disclosure, to refuse to continue the injunction granted by Roch J. on 9 December 1986."
(1) The court has a discretion, notwithstanding proof of material non-disclosure which justifies or requires the immediate discharge of the without notice order, nevertheless to continue the order, or to make a new order on terms (Ralph Gibson L.J.'s proposition (7)).
(2) The rule that injunctions obtained in breach of the duty should be discharged should not be allowed to become an instrument of injustice (Balcombe L.J. at p. 1358; Slade L.J. at p. 1359).
(3) It is relevant to the exercise of this discretion that the original nondisclosure was innocent (Ralph Gibson L.J.'s proposition (7) and the Lloyds Bowmaker case).
(4) It is also relevant to the exercise of this discretion that an injunction could properly have been granted even had the relevant facts been disclosed (ditto).
(5) The purpose of discharging an injunction obtained in breach of the rule is to ensure compliance with the duty of full and fair disclosure (Balcombe L.J. at p. 1358).
(6) Whilst the discretion is one to be exercised sparingly, the courts decline to define or limit the circumstances in which it may be exercised (ibid).
(7) The principle should not be carried to extreme lengths, especially in cases where the claimant has had to act with haste, or in heavy commercial cases (Slade L.J. p. 1359).
(8) The jurisdiction is penal in nature, and the court should therefore have regard to the proportionality between the punishment and the offence (ibid).
"… I regard the Eastglen International case, 17 September 1986, as being very much an exceptional case, and one which should not be regarded as having application in respect of the different facts and in the different circumstances which exist here. Indeed I regard it as undesirable to apply hard and fast rules. It is preferable, in my view, for each case to be considered on its own merits taking into account the public interest which exists in protecting the administration of justice from the harm that will be caused if applicants for the draconian relief of Mareva and Anton Piller orders do not, on an ex parte application, make disclosure of all the material facts, whether or not the non-disclosure is innocent. I recognise the strain placed on legal advisers and the pressure under which they have to work, especially in large commercial actions, where prompt steps sometimes have to be taken in order to protect their clients' interests. However, if the court does not approach the question of the non-disclosure of material matters in the way that has been indicated in earlier decisions, there will be little hope of solicitors who are subjected to such pressures appreciating the importance of making full disclosure and, more important, bringing home to the clients the serious consequences of non-disclosure.
In deciding in a case where there has undoubtedly been non-disclosure whether or not there should be a discharge of an existing injunction and a re-grant of fresh injunctions, it is most important that the court assesses the degree and extent of the culpability with regard to the non-disclosure, and the importance and significance to the outcome of the application for an injunction of the matters which were not disclosed to the court.
In this connection Mr. Brodie at one stage of his argument submitted that the acid test was whether or not the original judge who granted the injunction ex parte would have been likely to have arrived at a different decision if the material matters had been before him. I do not regard that as being the acid test. Indeed, although I regard it as a relevant matter when considering the question of discharge and re-grant of injunctions, I do not regard it as a matter of great significance unless the facts which were not disclosed would have resulted in the refusal of an injunction."
(1) In the exercise of its discretion, the court should have regard to all the circumstances of the case and should not apply hard and fast rules.
(2) The court should take account of the need to protect the administration of justice and uphold the requirement of full and fair disclosure.
(3) The court should assess the degree and extent of the culpability with regard to the non-disclosure.
(4) The court should assess the importance and significance to the outcome of the application for an injunction of the matters which were not disclosed to the court.
(5) For the purposes of (4), the court does not have to reach the conclusion that the judge would have reached a different decision if the relevant facts had been disclosed. The court can properly reach the conclusion that the nondisclosure was important and significant even where the judge would still have granted the injunction.
"I agree that in order to get at the principles of discretion on which the court acts in a case of this kind we do not now look further than the decision of this court in Brink's Mat v. Elcombe  1 W.L.R 1350, where they are summarised in the passage in the judgment of Ralph Gibson L.J. which Woolf L.J. has read. In paragraph (7) of that summary, at p. 1357, we find that:
'The court has a discretion, notwithstanding proof of material non-disclosure which justified or requires the immediate discharge of the ex parte order, nevertheless to continue the order, or to make a new order on terms. "When the whole of the facts, including that of the original non-disclosure, are before [the court, it] may well grant ... a second injunction if the original nondisclosure was innocent and if an injunction could properly be granted even had the facts been disclosed": per Glidewell L.J. in Lloyds Bowmaker Ltd. v Britannia Arrow Holdings Plc.  1 W.L.R. 1337, 1343H-1344A".
Although it would not be correct to treat Glidewell L.J.'s statement of the circumstances in which the court may exercise its discretion as being exhaustive, it is, I think, likely to have relevance in many of these cases, and it is certainly a useful starting point in this I should add that in the Brink s Matt case all three members of this court defined an innocent non-disclosure as one where there was no intention to omit or withhold information which was thought to be material see ante, p 728E-F,  1 W.L.R. 1350, 1358G and 1360H).
Since it is accepted both that the non-disclosure justified or required the immediate discharge of the ex parte order and that the whole of the facts are now before the court, the questions to which we should start by addressing ourselves are, first, whether it was innocent, and, secondly, whether an injunction could properly have been granted if full disclosure had been made to Roch J."
"The fact that at the end of the day Roch J. might nevertheless have made the orders sought, which I am perfectly prepared to assume that he would, is, as Woolf L.J. has said, entirely beside the point. This is not a consideration which can relieve an ex parte applicant of the duty of dislosure."
"He concludes by approaching the matter as being one of balance, and he puts in the scales on one side the strength of the plaintiffs' claim, and on the other side he puts the matters which were not disclosed. It is in the performance of that balancing exercise where the judge has gone wrong to a critical extent, and come to a conclusion which I can only regard as being wholly wrong.
I sought to indicate earlier that in my view there is a considerable public interest in the court ensuring that full disclosure is made on ex parte applications of this sort. If it is to be sufficient to outweigh that public interest to point to the harm that could befall plaintiffs if an injunction is not re-granted, then the whole policy which has been adopted by the court in this field in my view would be undermined. Injunctions in the nature of Mareva and Anton Piller orders should not be granted unless the plaintiff can show a substantial case for saying that unless they are granted they will be under serious risk that assets which might otherwise be available to meet the judgment being dissipated or evidence which might otherwise be available disappearing. In my view it cannot be sufficient to carry out a balancing exercise in the way it was carried out by the judge. It would seem to me that if that approach were adopted, a judge would inevitably come to the conclusion that the injunction must be re-granted.
When one looks at this case, with regard to the Spanish proceedings there was a remarkable failure to make disclosure to this court in respect of the first plaintiff's proceedings. In my view there was also a serious failure, both in regard to the first defendant's proceedings and in relation to the settlement. If the right approach is one which requires the court to measure the materiality of the non-disclosure looked at cumulatively, then it cannot be right just to sweep that aside on the basis of the strength of the plaintiffs' case against the defendants. In my view it is important that this court should uphold the policy which I detect indicated by the cases to which I have made reference, and the cases in particular which were cited by this court in the Brink's Mat case  1 W.L.R 1350, and not approach the matter in the way which was indicated by the judge. It is for that reason that I would allow this appeal."
"While I take full account of all the points which Mr Brodie has made to us, including his submissions on the depth and scale of the defendants' iniquity, as it was seen by the judge, particularly perhaps in Canada and France, and also the requirement that the rule of policy should not become an instrument of injustice, I am in the end satisfied that Rougier J's decision cannot be sustained. I certainly do not say that a judge's view of the general merits of the plaintiff's case is a consideration which cannot be weighed in the balance, although my clear impression of the cases is that it has never played the same part on an application for discharge as it does on the initial ex parte application. Indeed, I do not see how it could play such a part if the rule of policy is to be maintained, as it is essential that it should be. Be that as it may, I am entirely satisfied that, on the facts of this case and on the material before him, the judge was in error in allowing that consideration to outweigh the rule of policy. Whether it is more correct to say that he erred in applying established principles of discretion on which the court acts or that he failed to take into account important matters which he ought to have taken into account or that his decision was plainly wrong may not matter very much."
(1) There is a considerable public interest in the court ensuring that full disclosure is made on ex parte applications, which the court should uphold.
(2) That policy should not be undermined by pointing to the harm which would be suffered by the plaintiffs if an injunction were not re-granted.
(3) Although the court can weigh the merits of the plaintiffs' claim in the balance, it should not carry out a simple balancing exercise in the way it was carried out by the judge.
"It is now accepted in this Court that, even if there has been material non-disclosure, the Court has a discretion whether or not to discharge an order obtained ex parte and a discretion whether or not to grant fresh injunctive relief Discharge of the order is not automatic on any non-disclosure being established of any fact known to the applicant which is found by the Court to have been material."
"In any event there was also non-disclosure to be considered before the injunction was continued. The authorities show plainly that non-disclosure will, in an appropriate case, not only be a ground for discharging an ex parte order, but also a ground for refusing to make a fresh order inter partes. At least in one respect there was here non-disclosure which was in my view both serious and culpable. The Galadaris had specified what they said was their defence to the claim, and there can scarcely be any more important topic of disclosure than that. As to culpability, it is said the Dubai Bank did not know the facts, and that those whom they consulted in the Government of Dubai had forgotten them. But the letters were still in the Government's possession.
Once serious and culpable non-disclosure was established, the Judge had a balancing task to perform. On the one hand if justice required that a fresh injunction should be granted (which in the Judge's view it did not, but the contrary was arguable), it might be thought unjust to refuse one on the grounds of non-disclosure. On the other hand the Courts must uphold and enforce the duty of disclosure, as a deterrent to others, if they are not to be deceived on ex parte applications. The conflict between those principles is well illustrated in a passage from the judgment of Lord Justice Woolf in the Behbehani case."
He then cites the passage already set out above.
"As I have already indicated, I reject the suggestion that a negative answer to either of the questions means that I must automatically discharge the order and decline to entertain the application for a continuance of injunctive relief against the defendants. In my view, I have a discretion in the matter. The Behbehani case shows, however, that it would be wrong to exercise that discretion by attempting to balance the gravity of the plaintiff's misrepresentation against the strength of the plaintiff's case against the defendants. I must bear in mind throughout that on the view which I have formed, the plaintiff was in breach of a fundamental duty and what I have to decide is what should be the consequences of that breach.
If the plaintiff had not provided the bond which it has in fact provided I have no real doubt that the right answer would have been to discharge the ex parte injunctions and probably also to decline to entertain the plaintiff's present motions. But the fact that a bond has been provided and that this was done in effect as soon as attention was drawn to the misrepresentation makes what is to my mind a fundamental difference ..."
In the circumstances of that case, he held that the advantage which the plaintiff had obtained by its misrepresentation was very slight and that it was right the injunctions should be continued.
"Where an ex parte order has been made a party aggrieved by that order may apply inter partes to have the order set aside. He can make that application simply on the material that was before the court on the ex parte application. The court on the inter partes hearing has to consider the matters afresh and may arrive at a different conclusion. Alternatively, application to set aside may be made with the support of additional evidence or material placed before the court on the inter partes hearing. Here again, if the court concludes, having considered all the material including the new material and all the arguments placed before it, that the order should not be made, the order will be discharged. Thus far, what happened on the inter partes hearing was the decision on the merit of the application for the relevant order. If the order is not one which should, on the merits, be made then it will be set aside.
If however the result of the inter partes hearing, and the consideration of the totality of the material before the court is that the order is the appropriate one on the merits the party aggrieved may be able to make an application that the order be set aside on the grounds of non-disclosure. This is an application of a different character which relates to the need to preserve the integrity of judicial procedure …
Where there, has been some material non-disclosure, which ex hypothesi is not sufficient to justify setting aside the original order on its merits, the judge has a discretion which he must exercise in accordance with the guidance given in the authorities whether or not to set aside the original order on the grounds of non-disclosure. It is a discretion and the established principles for the review of such a discretion on an appeal to this Court apply."
"Judge Diamond summarised the relevant legal principles and made appropriate quotations from the two leading decisions of the Court of Appeal which have also been cited before us, Brink's Mat v. Elcombe  1 W.L.R 1350, and Behbehani v Salem  1 W.L.R. 723. Each case stresses the importance of full and frank disclosure in the making of ex parte applications for Mareva injunctions and Anton Piller orders. This importance does not need to be re-stated or re-emphasised. The duty goes beyond that which is present on any ex parte application. The nature of the order that is being applied for may have irremediable consequences for those it affects. Those making the application must take care to make proper enquiries beforehand so that the relevant facts can be presented to the Court with appropriate completeness and accuracy. It is accepted in the present case as found by Judge Diamond, that the Plaintiffs and those representing them did not fully discharge their duty. It is not suggested that if the full facts had been accurately placed before Cresswell J. he would have made a materially different order. This is not a case where it can be said the Plaintiffs have benefited in any way by their breach of duty. Nor is it a case where it is said that they acted in any way in bad faith, although it is asserted and now accepted that they were culpable."
"The present case falls within these principles. Whilst it was more than regrettable that Mr. Croft should have sworn to the statements that the whereabouts of Mr Al Bader were unknown and that it had only recently been discovered that he had assets in London, these points were peripheral. Mr Brodie rightly pointed out that to say of someone that he had in effect disappeared was very prejudicial. But the weight of the Plaintiffs' case for a Mareva injunction against Mr Al Bader arose not from such nuances but from the strength of the Plaintiffs' case that he had been engaging in systematic fraud so as to remove very substantial funds into the hand of specially created offshore companies and anonymous bank accounts. Their case for a Mareva injunction in no way depended on the ability to track down Mr Al Bader to a confirmed place of residence although that would be material to the ability to serve proceedings. Similarly, the stage at which it was first learnt that Mr Al Bader had bank accounts in London was of marginal relevance. It was again peripheral. It did not relate directly to the commission of any of the alleged fraudulent acts. It was only relevant to the necessary deposition that he was believed to have assets within the jurisdiction, as was in fact the case.
Mis-statements were made in the affidavit. They should not have been made. Although Judge Diamond properly concluded that they were material, it would be disproportionate to treat them as a reason, or even a substantial part of the reason, of discharging the injunction."
"It was Donaldson L.J. in Bank Mellat v. Nikpour  F.S.R. 87 who described the Anton Piller and the Mareva orders as the 'nuclear weapons of the law'. Of the two nuclear weapons it is the Mareva which is thermo-nuclear. The atomic bomb of the Piller involves a severe intrusion of privacy but, once executed, it is by and large over. Its execution may even exonerate a defendant if, notwithstanding all the indications in the evidence, the Piller yields nothing. Formally a Mareva has the ongoing effect of judicial claims on a defendant's financial affairs and, with Mareva discovery, an invasion of privacy which can be ongoing, particularly where a defendant is required to account regularly for such expenditure as is allowed by the order.
But the devastation caused by the hydrogen bomb of a Mareva is far wider than the strict legal effect. A defendant's credit is likely to have been destroyed or severely damaged. An individual subject to such an order, if he is in work, may lose his job or if he is not in work will be unlikely to find any. A company will often be destroyed. In truth a Mareva is not only the beginning of the case; it is often the end, whether the order is justified or not.
In this rough world the two orders are a necessary part of the court's powers. There are cases where they are wholly justified and the consequences for a defendant well deserved. But these orders give plaintiffs an enormous initial advantage in litigation, putting the defendant under tremendous pressure. So plaintiffs are keen to get them wherever they can. Experience has shown that not all lawyers fully consider, on an objective basis, whether an application for one of these weapons is justified. Once an order has been obtained, it is not all lawyers who execute or conduct them fairly. There is a temptation, which not all lawyers can resist, to be over-zealous in pursuit of their client's case. So the courts must be vigilant in ensuring that they are only granted when necessary and are executed in a fair manner."
"A material consideration as to whether there should be discharge when there has been material non-disclosure, or breach of duty, or one of the other matters referred to by Ralph Gibson L.J., is whether or not there has been injustice to the defendant (see for example Hoffman J. in Lock International Plc v. Beswick  1 W.L.R.) or whether the plaintiff has gained any advantage by his failure of duty.
Finally in considering the general principles of law I think it is valuable to consider the recent judgment of the Court of Appeal in Kuwait Oil Tanker Company v Albania, an unreported case of 27 November 1995."
Jacob J. then quotes passages from the judgment of Hobhouse L.J. in that case which have already been set out above.
"The earlier cases to which I have referred indicated in varying terms that, prima facie, order obtained without proper disclosure should be discharged, that the jurisdiction to continue or re-grant them should be exercised sparingly and that the purpose of the prima facie rule, namely the protection of defendants and the court's own procedure generally, was a relevant consideration in deciding whether or not to exercise the court's discretion to grant or re-grant the order. See in particular Behbehani v Salem  1 W.L.R. 723 at pages 734-735. If the failure to disclose is deliberate, in the sense of the intentional omission of information thought to be material, then it is unlikely that the court will continue or re-grant the order but the failure may be culpable, that is to say blameworthy, even though not deliberate. The judge did not conclude that any of the instances of non-disclosure relied on before him was deliberate in the sense in which I have explained it."
"In my view, it is quite plain that the judge correctly considered the importance of the golden rule and the public interest in its enforcement. It is also clear that he appreciated that the prima facie result of this application would be to discharge and refuse to re-grant the orders obtained by its breach. But he correctly recognised that notwithstanding these considerations he was entitled to continue the relief obtained on the ex parte application. On the facts of the case he decided to do so. I can see nothing wrong with the test the judge applied and would reject this objection."
"Carnwath J said that the court faced an unenviable task in this case. I would prefer to say that the task of the judge was to reconcile the irreconcilable. Those who are guilty of non-disclosure must be deprived of the remedy they seek in order to encourage the others in future cases to display greater frankness and diligence. But in Cropper v Smith  26 Ch. 700 at 710 Bowen LJ said:
'Courts of law do not exist for the sake of discipline but for the sake of deciding matters in controversy.'
That principle is in general still the law today, although I am not sure whether it will remain wholly intact when the new rules come into force. It is already modified in the special case of ex parte proceedings. Carnwath J had to reconcile the need for disciplinary action where there is significant non-disclosure in proceedings which require the presence of one party only with the general duty to do justice. I am satisfied that the conclusion which he reached was well within the range of a reasonable answer to the problem."
"The correct view, it seems to me, is that the advocate's individual duty to the court, and the collective duty to the court, on a without notice application, of the plaintiff and his team of legal advisers are duties which often overlap. Where they do overlap it will usually be unnecessary, and unprofitable, to insist on one categorisation to the exclusion of the other. It will however always be necessary for the court, in deciding what should be the consequences of any breach of duty, to take account of all the relevant circumstances, including the gravity of the breach, the excuse or explanation offered, and the severity and duration of the prejudice occasioned to the defendant (which will include the question whether the consequences of the breach are remediable and have been remedied). Above all the court must bear in mind the overriding objective and the need for proportionality. As Balcombe L.J. said in Brink's Mat v. Elcombe  1 WLR 1350, 1358, this judge-made rule cannot itself be allowed to become an instrument of injustice. The relative degrees of culpability of the client and of his lawyers are not irrelevant but will seldom if ever be determinative."
(1) If the court finds that there have been breaches of the duty of full and fair disclosure on the ex parte application, the general rule is that it should discharge the order obtained in breach and refuse to renew the order until trial.
(2) Notwithstanding that general rule, the court has jurisdiction to continue or re-grant the order.
(3) That jurisdiction should be exercised sparingly, and should take account of the need to protect the administration of justice and uphold the public interest in requiring full and fair disclosure.
(4) The court should assess the degree and extent of the culpability with regard to non-disclosure. It is relevant that the breach was innocent, but there is no general rule that an innocent breach will not attract the sanction of discharge of the order. Equally, there is no general rule that a deliberate breach will attract that sanction.
(5) The court should assess the importance and significance to the outcome of the application for an injunction of the matters which were not disclosed to the court. In making this assessment, the fact that the judge might have made the order anyway is of little if any importance.
(6) The court can weigh the merits of the plaintiff's claim, but should not conduct a simple balancing exercise in which the strength of the plaintiff's case is allowed to undermine the policy objective of the principle.
(7) The application of the principle should not be carried to extreme lengths or be allowed to become the instrument of injustice.
(8) The jurisdiction is penal in nature and the court should therefore have regard to the proportionality between the punishment and the offence.
(9) There are no hard and fast rules as to whether the discretion to continue or re-grant the order should be exercised, and the court should take into account all relevant circumstances.
APPLICATION OF THE LEGAL PRINCIPLES TO THE FACTS OF THIS CASE
General approach to exercise of discretion