THE DANGERS OF WITHOUT NOTICE APPLICATIONS: THE WHOLE TRUTH IS THE ONLY OPTION
Since the advent of CPR 3.3 and CPR 23.8 and 9 there appears to have been a growth in the number of applications made without notice. Two recent cases highlight the very onerous duty on a party making such an application to disclose all relevant facts. Here we look at those cases; the strict nature of the duty owed and its practical implications for those seeking or challenging without notice orders. Litigators should be aware that the principles apply to, apparently, mundane applications such as those to extend time.
(This post was updated on 10th September 2015 to include more recent cases relating to non-disclosure)
THE CHANCERY GUIDE
The Chancery Guide (2013) clearly outlines the duty placed upon applicants at paragraph 5.22-24. (http://www.justice.gov.uk/courts/rcj-rolls-building/chancery-division)
“Applications without notice
5.22 On all applications made in the absence of the respondent the applicant and their legal representatives owe a duty to the court to disclose all matters relevant to the application. This includes matters of fact or law which are or may be adverse to the applicant. If made orally, the disclosure must be confirmed by witness statement or affidavit. The applicant or their legal representatives must specifically direct the court to passages in the evidence which disclose matters adverse to the application. This duty also applies to litigants in person. If there is a failure to comply with this duty and an order is made, the court may subsequently set aside the order on this ground alone.” (emphasis added).
RECENT CASE LAW
Some key quotes from recent cases give a flavour of the nature of the duty.
Anglo Financial SA -v- Goldberg  EWCH 3192 (Ch).
“Here, I regard the non-disclosure as both serious and significant, in a case where the grounds for granting a freezing order were never strong. The issue of non-disclosure, as Mr Freedman submitted, is here bound up with the risk of dissipation, since the assessment of that risk is very different once the material facts are correctly before the Court. Thus, the material non-disclosure is a reinforcing ground for refusing the Claimants’ application for a further injunction”
YXB -v- TNO  EWHC 862 (QB)
In my judgment the importance of the duty of full and frank disclosure, and the seriousness of the material non-disclosure in this case, lead to the conclusion that the injunction, anonymity order, and reporting restriction granted by Walker J and continued by me must be discharged. In my view, the third item of material non-disclosure would of itself be sufficient to justify that conclusion. Taken together with the others, the case for discharge is highly compelling”
PCV -v- The Y Regional Government of X  EWHC 68 (Comm)
The Claimants were therefore in breach of duty when they made their application for the November Order. Given what Freshfields knew and should have known and the fundamental importance of the disclosure to the application being made I regard that breach as being seriously culpable. As is accepted, the duty is a continuing one and the Claimants remained in breach of duty thereafter. They were in further breach of duty when they issued their application for the December Order on 12 December 2014 without reference to the potential applicability of the SIA.
Greenwich Inc Ltd (in Administration) -v- Dowling & others  EWHC 2451 (Ch).
“The failures to disclose in the context of an application on a busy interims court day leads inexorably to the conclusion that the undertakings must be discharged. There may be an Admiral Byng element in this, but I cannot emphasise too much the need for Counsel to be very careful in how the order is presented and how the matter is deployed before the judge. It is essential that Counsel satisfies himself or herself that this case has been fully understood by the judge.
Providing reading lists of large amounts of material to a judge on an ex parte application on the interims day is almost always likely to lead to the situation that the judge does not read the vast amount of material deployed before him. In this case there were three lever-arch files of exhibits which I was told I need not read.
COOKE -v- VENULUM PROPERTY INVESTMENTS LTD  EWHC 4288
Mr Justice Morgan found that the claimants had not addressed the defendant’s possible arguments
“20. Secondly, I am also critical of the fact that Judge Barker was not told that there was a possible argument as to jurisdiction. I am prepared to assume that the claimants just did not think about it and so they are not personally at fault. However, that does not remove the sting of the criticism because it seems to me that it was obvious that they should have thought about it”
Carr –v- Penman
In Carr –v- Penman  EWHC 2679 (QB) Mr Justice Dingemans considered an application to set aside an order giving permission to serve proceedings abroad. The Judge set aside the without notice order and declared that the court would not exercise its discretion to hear the action. Among the other factors considered was the failure to make full disclosure to the Master who made the order. The judge found that that there had been material non-disclosure.
It appears from what I have said above that: HH Daly As J’s acceptance that there was force in the proposition that Mr Carr was pursuing a vendetta against Mr Penman; Mr Carr’s email referring to costs to Mr Penman before proceedings began; and Mr Carr’s failure to pay libel damages in Australia and the unpaid interim orders; were all material matters to be disclosed to Master Yoxall. This is because they were all relevant to the purpose for which the proceedings were being pursued and the issue of whether there was a real and substantial tort in this jurisdiction.
In my judgment there was no obligation on Mr Carr to do more than he had about other potential defences to the claim. Mr Carr referred to his belief that the statements about him were not justifiable, and whether the statements are justifiable could not sensibly be determined at this stage.
The material matters identified in paragraph 44 above were not disclosed on the without notice application made by Mr Carr. The email was missing, even though the pre-action protocol letter had been placed before Master Yoxall. It is true that there was a reference to other proceedings and threats of bankruptcy in the articles, but this was not a full and frank disclosure to Master Yoxall of the defamation proceedings and the failure to make payments. Given the importance of this information to an assessment of whether there was a real and substantial tort within this jurisdiction, I also set aside the order for service out of the jurisdiction on this basis.”
OLDER (BUT STILL HIGHLY RELEVANT) CASE LAW
In Marc Rich & Co Holding GmbH v Krasner  C.L.Y 487 the Court of Appeal reiterated that an applicant who applies for relief ex parte is under a duty to investigate the facts fairly and present the evidence on which he relies. They cited the important judgment of Bingham J in Siporex Trade v Comdel Commodities  2 Lloyd’s rep 482
(1) An applicant on an ex parte application must show the utmost good faith and disclose his case fully and fairly.
(2) He must, for the protection and information of the defendant, summarise his case and the evidence in support of it by an affidavit or affidavits sworn before or immediately after the application.
(3) He must identify the crucial points for and against the application, and not rely on general statements and mere exhibiting of numerous documents.
(4) He must disclose all facts which reasonably could or would be taken into account by the judge in deciding whether to grant the application.
(5) It is no excuse for an applicant to say he was not aware of the importance of matters he has omitted to state. (There is a duty to investigate).
THE DUTY OF DISCLOSURE EXTENDS TO REPRESENTATIONS MADE BY THE APPLICANT’S LEGAL ADVISERS
In Sidhu –v- Memory Corporation  1 WLR 1443 the applicant for a freezing order and seize and search order had, inadvertently, used an unusual, and particularly onerous, draft injunction whilst (inadvertently) informing the court that the draft order was in the “usual form”. The Court of Appeal held that that duty of disclosure extended to representations of law made by the legal advisers.
“… if and so far as the judge intended to draw any fundamental distinction between the litigant’s duty of full disclosure of material facts, and the advocate’s duty to assist the court by reference to (or correct summary of) relevant authorities, statutory provisions and practice directions. In the context of what should be disclosed to the court on a without notice application, the distinction between fact and law is not clear-cut. Many of the authorities already cited refer almost interchangeably to non-disclosure of ‘material facts’ or ‘relevant matters’. Little weight can be attached to these slight variations in language. But some statements of the principle of full disclosure extend to what the court is told about matters of law. “
In Bank Mellat v Nikpour  FSR 87, 92 Slade LJ said,
“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.”
In Siporex Trade v Comdel Commodities  2 LLR 428, 437, Bingham J said that the claimant
“Must show the utmost good faith and disclose his case fully and fairly … 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.”
In Tate Access Floors v Boswell  Ch 512 (a decision of Sir Nicolas Browne-Wilkinson V-C not cited to this court, but referred to in some of the cases that were cited) the two matters considered by the Vice-Chancellor (at pp 534-5) as possible breaches of the duty of full disclosure (although not accepted by him) were not as to past facts, but as to the likely future course of litigation overseas, and as to the legal implications in terms of self incrimination of a search order. In Marc Rich & Co Holding v Krasner (18 December 1998) Carnwath J cited Tate Access and said,
“Full disclosure must be linked with fair presentation. The judge must be able
to have complete confidence in the thoroughness and objectivity of those
presenting the case for the applicant. Once that confidence is undermined he
“For these reasons I cannot fully accept the judge’s restriction of the duty of full disclosure to matters of fact. Nor can I fully accept his corresponding distinction between non-disclosure of facts for which the client must bear responsibility (even if the non disclosure was based on legal advice, as in Behbehani v Salem  1 WLR 723) and breaches of an advocate’s duty which are exclusively or primarily a matter of professional discipline. The well-known decision of this court in Hytec Information Systems v Coventry City Council  1 WLR 1666 illustrates that an advocate’s professional failure may lead to his client suffering the severe sanction of having his defence struck out. It also (in the judgment of Ward LJ at p.1675) contains a clear statement of the principle which applies:
“Ordinarily this court should not distinguish between the litigant himself and
his advisers. There are good reasons why the court should not: first, if anyone
is to suffer for the failure of the solicitor it is better that it be the client than
another party to the litigation; secondly, the disgruntled client may in
appropriate cases have his remedies in damages or in respect of the wasted
costs; thirdly, it seems to me that it would become a charter for the
incompetent (as Mr MacGregor eloquently put it) were this court to allow
almost impossible investigations in apportioning blame between solicitor and
counsel on the one hand, or between themselves and their client on the other.
The basis of the rule is that orders of the court must be observed and the
court is entitled to expect that its officers and counsel who appear before it are
more observant of that duty even than the litigant himself.”
That was said in the context of an unless order but the same principle applies to
without notice applications.”
This case law has developed largely in relation to major commercial injunctions and
applications to serve abroad. However, as the Baker case shows, the same
principles apply to more mundane applications of litigation. When making any kind
of ex parte application.
THE STATEMENT IN SUPPORT
(1) Make sure your own client is aware of the duty. As a matter of self-protection for the lawyers involved it would be prudent to include in the witness statement
“I have been informed that, since this is a without notice application to the court, I am under a duty to the court to inform it of all relevant matters. This includes matters that could be detrimental to my argument. To the best of my knowledge and belief I have complied with that duty.”
(2) It has to be said that such statements serve three purposes:
(i) In helping the court be reassured that the litigant knows of the duty and has done its best to comply.
(ii) In bringing home to the client the significance of the duty owed.
(iii) In providing protection to the lawyers if the litigant later argues that he or she was not informed of the duty.
BE AWARE THAT THE “SENSE OF SECURITY” GIVEN BY A WITHOUT NOTICE ORDER IS NOT AN ARGUMENT AGAINST IT BEING SET ASIDE
Be very aware that without notice applications can be set aside. The applicantcannot rely on the fact the order was made as giving rise to a “false sense of security”, see the judgment of the Court of Appeal in Hoddinnot –v- Persimmon Homes (Wessex) Ltd  EWCA Civ 1203L, in the judgment of Lord Justice Dyson.
“47 In our judgment, the time has come to put the “false sense of security” point firmly to rest. We do not understand Robert Walker LJ to have been saying that the fact that a claimant is lulled into a sense of security by an order made without notice granting an extension of time is a factor to be take into account in deciding whether or not to set aside the order. He was merely stating as a fact that the solicitors may have been lulled into a false sense of security and suggesting that a word of warning from the district judge who extended time for service would have led the solicitors to take a different course. This was no doubt a helpful suggestion, but it was no more than that. Further, Robert Walker LJ emphasised that the decision should not be regarded as a precedent. We would add that Lord Woolf said nothing about the false sense of security point.
It follows that, if (as appears to be the case) Tugendhat J considered that Jones was authority for the proposition that the false sense of security point is a relevant factor to be taken into account by a judge who is deciding whether or not to set aside an order obtained without notice extending the time for service, we respectfully think that he was wrong to do so.
In our judgment, District Judge Daniel was right to regard the false sense of security point as irrelevant. In Collier v Williams at para 38, this court warned against the dangers of dealing with without notice applications on paper. But the paragraph also contained this passage:
“…An application for an extension of time for service of the claim form is potentially of critical importance, especially where the application is made shortly before the end of the four months period for service and where the cause of action has become time-barred since the date on which the claim form was issued. If the application is allowed and an extension of time is given, the defendant can always apply under CPR r 23.10 for the order to be set aside, in which case the applicant may be worse off than if it had been refused in the first place.”
Thus if a claimant applies for and obtains an extension of time for service of the claim form without giving notice to the defendant, he does so at his peril. He should know that an order obtained in such circumstances may be set aside. He can take no comfort from the fact that the court has made the order. He cannot be heard subsequently to say that it was the court’s fault that the order was made. That is not to say that, when such an application is made, the court should not consider it carefully and decide whether, on an application of the guidance given by this court in Hashtroodi and the later cases, the claimant has made out a case for extending time. On the material placed before District Judge Rowe, no such case was made out and she should not have made the order.”
- Without notice applications for freezing orders: the dangers abound
- Freezing orders and the duties owed on ex parte applications: nuclear weapons that can blow up in your face
- The duty of full and frank disclosure: a case in point
- Football, sex, injunctions and material non-disclosure.
- Material non-disclosure on without notice applications: a salutary reminder.