THE DUTY OF FULL AND FRANK DISCLOSURE ON WITHOUT NOTICE APPLICATIONS: ANOTHER CASE ILLUSTRATING THE DANGERS

The duty of full and frank disclosure owed when a without notice application is made has been looked at many times on this blog.  Another example can be seen in the judgment today by Sir Michael Tugendhat  in Ahuja -v- Polititika Novine I Magazini D.O.O. [2015] EWHC 3380 (QB).

“…where there has been deliberate non-disclosure or misrepresentation. In such circumstances, it will only be in exceptional cases that a court will not set aside an order, having regard to the public interest in applicants making full disclosure”

KEY POINTS

  • The claimant’s failure to disclose the fact he had Serbian nationality on a without notice application was a breach of the duty of the duty of full and frank disclosure.
  • That non-disclosure, in itself, would have led to the setting aside of the without notice order.

PRACTICE POINTS

  • This case illustrates the rigorous duty owed by a party making a without notice application.  There are now numerous cases where orders have been set aside because of a failure to comply with this duty.
  • The case also illustrates the dangers where legal advisers take decisions in relation to whether a matter is relevant. There can only be one mantra: if in doubt disclose.

THE CASE

The claimant was bringing an action for misuse of information and libel. He obtained a without notice order giving permission for service out of the jurisdiction in Serbia.  The publication was in a Serbian newspaper, in Serbian.

THE ALLEGED NON-DISCLOSURE

The Defendant alleged that there was non-disclosure in that the claimant failed to disclose to the court that he had Serbian nationality.

NON-DISCLOSURE
  1. The main failures which Mr Price relies on relate to the Claimant having Serbian nationality and a Serbian passport, and property and other connections with Serbia not referred to in the evidence before the Master, the overstatement of the numbers of publishees in England (12,000 hits per day, of which 1000 were on Politika, whereas a realistic figure for the Articles in Politika is of the order of 70 in all by 15 July, and the publications of Blic are not sued on), the omission to adduce the evidence of publications in, and his connections with, places other than England and Serbia (being information which I have held could reasonably have been obtained by the Claimant), the failure to identify which of the people whom he named as having approached him had read the words complained of in England, and the failure to disclose evidence of the cogent kind required if a court is to decide that there is a risk that the Claimant would not receive a fair trial in Serbia.
  2. In relation to all of these matters, save the first, Mr Price accepted that the failure was not the result of any intention to deceive, but rather of misjudgement. In relation to the Serbian nationality, passport and properties he alleged that it was deliberate.
  3. There is no dispute that the failure to disclose the Claimant’s nationality was a serious one. Mr Tomlinson accepted that and extended the Claimant’s apologies. The matter is the more serious because at the start of the hearing the Master asked ‘What nationality is the claimant?’ and counsel replied ‘He is an Indian national. He has been resident in this jurisdiction….’ The Claimant’s solicitor, who was present, did not intervene to ensure that the Master was told that the Claimant was also of Serbian nationality. The misleading information given to the court on 31 March was not corrected until after the Defendants had raised the issue. Ms Georgian made a witness statement on 22 July in which she reported that the Claimant is referred to as having joint Indian and Serbian nationality. This is in a brochure from the London Business School, which he once attended. The Defendants’ application to set aside service was issued on the same day. It identified the non-disclosure of the Claimant’s Serbian nationality, and his upbringing, interests and family connections with Serbia, as the first ground relied on. On 22 October 2015 the Claimant made his second witness statement. In that he accepted that he did have Serbian nationality and a passport, which he used for travel to Serbia, but said that he had begun the process of formally relinquishing Serbian citizenship. He explained his failure to mention those matters which he accepted to be true about his connections with Serbia on the basis that he did not believe them to be important, and that he considered the core of his life to be in London.
  4. The Defendant’s legal representatives interpreted this evidence as meaning that the Claimant had not disclosed these matters to his own solicitors. If he had disclosed them to his own solicitors, Mr Price submitted, then the court should infer that the solicitors would have informed the court. As a result of the submissions advanced by Mr Price, further evidence was filed in the form of a third witness statement by the Claimant’s solicitor dated 4 November 2015. He stated that the day before the application to the Master the Claimant had informed his solicitors that he had a Serbian passport. Mr Cowper-Coles, who received the call, said he discussed with a partner, and, he says, with counsel, whether this should be disclosed to the court, and that they all took the view that it was not material. Counsel has explained that she did not recall having been told of the Claimant’s Serbian passport the day before she gave the misleading answer to the Master, and that is why she gave the answer to the Master that she did.
  5. At the start of the hearing before me Mr Price applied for an adjournment to consider, and if possible investigate further, whether this non-disclosure was deliberate, and whether privilege had been waived. I refused the adjournment for reasons I gave at the time. Mr Cowper-Coles’ witness statement of 4 November 2015 makes clear that the decision not to disclose was deliberate in the sense that it was a considered decision, although he says it was not with intent to deceive. Further notes have been submitted to me on this topic in writing after the end of the hearing. It is accepted for the Defendants that counsel’s failure to disclose the Claimant’s Serbian nationality was not intentional. But the Defendants remain critical of the conduct of his solicitors. In this context, it is common ground that the court should draw no distinction between the Claimant and his legal representatives.
  6. I accept that it is a matter of concern that, in the context of this case, the materiality of the Claimant’s Serbian nationality was not recognised by the Claimant’s solicitors. The difference in recollection between solicitor and counsel is a further cause for concern, as is the omission by the solicitors to inform the court that the Master had been misled at the hearing in March. The Master’s question related to objective facts, not to the Claimant’s subjective view of his nationality. But these proceedings are not an appropriate occasion for investigating this matter further, assuming (which I doubt) that any further investigation in the course of these proceedings could be conducted consistently with the requirements of justice to all concerned and the overriding objective for the conduct of this case (which includes proportionality). Any investigation would be a matter for the regulatory authority. I make no adverse finding against any individual.
  7. Although Mr Tomlinson accepts that the Claimant’s Serbian nationality should have been disclosed, he submits that a claimant’s nationality is, at most, only of limited relevance to the question as to what is the most appropriate place for an action to be tried. He submits that in this case the evidence weighed heavily in favour of granting the application. The other matters disclosed in the evidence before the Master, and in the words complained of themselves, made clear that he has substantial links to Serbia. He submits that the court should not discharge the order made by the Master in any event.
  8. In my judgment the order must be set aside. This conclusion would follow in any event, in my view, from what I have found to be the requirements of s.9, and the absence of any quantitative evidence of publication in countries other than England and Serbia (the fact of global publication was disclosed in the letter of 23 February). The same conclusion would also follow independently, in my view, from the large difference between the figures for publication in England put before the Master and the figures as they have been put before me. But independently of these, in my judgment the non-disclosure of the Claimant’s Serbian nationality, and the fact that the court was misled as it was, taken by itself, would have required the order to be set aside.

THE LAW IN RELATION TO NON-DISCLOSURE

The judgment also contains a summary of the law of relating to non-disclosure.

LAW ON NON-DISCLOSURE
  1. Mr Tomlinson invites me to take the law to be as recently summarised by Warby J in Sloutsker v Romanova [2015] EWHC 545 (QB) para [51]:
‘i) An applicant for permission to serve proceedings outside the jurisdiction is under the duty of full and frank disclosure which applies on all applications without notice.
ii) The duty requires the applicant to make a full and fair disclosure of those facts which it is material for the court to know: Brinks Mat v Elcombe [1988] 1 WLR 1350, 1356 (1) and (2) (Ralph Gibson LJ). Put another way, disclosure should be made of “any matter, which, if the other party were represented, that party would wish the court to be aware of”: ABCI v Banque Franco-Tunisienne [1996] 1 Lloyd’s Rep 485, 489 (Waller J).
iii) Non-disclosure of material facts on an application made without notice may lead to the setting aside of the order obtained, without examination of the merits. It is important to uphold the requirement of full and frank disclosure.
iv) But the court has a discretion to set aside or to continue the order. 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 that were to be decided. The answer to the question whether the non-disclosure was innocent is an important, though not decisive, consideration. See Brinks Mat at pp1357 (6) and (7) and 1358 (Balcombe LJ).
v) In the context of permission for service outside the jurisdiction the court has a discretion to set aside the order for service and require a fresh application, or to treat the claim form as validly served and deal with the non-disclosure by a costs order: NML Capital Ltd v Republic of Argentina [2011] UKSC 31, [2011] 2 AC 495, [136] (Lord Collins).
  1. Mr Tomlinson further submitted that in deciding what is or is not material, the court was not concerned with the merits of the dispute, save to the extent that it had to be satisfied that there is a serious issue to be tried. It followed that the applicant was not required to disclose everything that might be relevant to the merits of the dispute: MRG (Japan) Ltd v Engelhard Metals Japan Ltd [2004] 1 Lloyd’s Law Reports 731 paras 26, 30 and 31.
  2. Mr Price directs me to the words of Jay J in Shaw & Anor v Logue [2014] EWHC 5 (Admin):
’35. …. the duty requires a party to ‘… disclose all facts which reasonably could or would be taken into account by the Judge in deciding whether to grant the injunction. It is no excuse to say that he was not aware of the importance of matters he has omitted to state’….. 37. Even more axiomatically, there is a separate duty arising at all times not to mislead the Court and, should the Court have been inadvertently misled, to correct that as soon as possible. These duties are prominent in the Solicitor’s Code of Conduct’. (emphasis original)
  1. Mr Price added submissions on cases where there has been deliberate non-disclosure or misrepresentation. In such circumstances, it will only be in exceptional cases that a court will not set aside an order, having regard to the public interest in applicants making full disclosure: Behbehani v Salem [1987] 1 WLR 723, 729 D-E, 734G-H; Congentra AG v Sixteen Thirteen Marine SA (‘The Nicholas M’) [2008] EWHC 1615 (Comm); [2008] 2 Lloyd’s Law Reports 602.

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