Case a reminder of disclosure rules where applications are made without notice

Out-Law News | 04 Aug 2022 | 3:15 pm | 2 min. read

A High Court judge’s decision to set aside service of a claim over the claimant’s failure to provide “full and frank” disclosure is a timely reminder for clients and lawyers of their obligations around applications that are made ‘without notice’, according to one legal expert.

Applications are sought ‘without notice’ – without serving the application on the other party in advance of it being considered by the court – in circumstances where an order is needed urgently, or where giving the other party forewarning of it might allow them to dispose of assets or evidence.

Mehreen Siddiqui of Pinsent Masons said: “The nature of a claimant’s duty of disclosure – often referred to as ‘full and frank’ - on a without notice application has repeatedly been confirmed by the courts to be a serious and onerous obligation that will be applied strictly. It is no excuse for an applicant to later argue that he or she was not aware of the importance of omitted matters.”

Mehreen Siddiqui

Associate, Pinsent Masons

A court will look unfavourably on any application where full and frank disclosure has not been given, even where an application has been made on an urgent basis

Her comments came after the High Court granted an application to set aside an earlier order made in a case brought by W Nagel, a broker in the diamond industry that trades from England, against Pluczenik Diamond Company (PDC), a Belgian manufacturer and distributor of diamonds. In 2015, Nagel sought damages in the English court for breach of contract, while PDC issued a claim in the Belgian courts alleging brokerage failures by Nagel.

In an interim judgment, before Nagel’s application was heard in the English High Court without notice, the Belgian court concluded that it had jurisdiction to determine the dispute. Nagel argued that it paid sums to Belgian lawyers from a bank account in England and consequently suffered losses there. The English judge found that permission to serve the proceedings outside of Belgium on a without notice application should be granted on the basis that the alleged "damage was sustained, or will be sustained, within [England]".

But at a later hearing in the High Court, Mrs Justice Cockerill agreed to set aside the earlier order, finding that Nagel had performed “a serious and deliberate breach of the duty of full and frank disclosure” by not informing the court of either the existence or content of the Belgian court’s interim judgment. She said: “The expectation would be that there would be at least a mention of it, with the date and a full summary of its conclusions; more usual would be for that to be supplemented by a translation of the judgment.”

Siddiqui said: “Although Justice Cockerill determined that England was not the appropriate place in which to hear the dispute, she commented that even if the English court did have jurisdiction, she would have concluded that the non-disclosures were material and sufficiently so that the correct answer would be to set aside service on the respondent.”

She added: “As a result, the consequences of non-disclosure cannot be overstated. The court has a wide discretion to set aside or continue any order obtained in breach of an applicant's duty of full and frank disclosure. An adverse costs order is likely to accompany any setting aside, and has previously been ordered by the court on an indemnity basis. Furthermore, the court has found that lawyers have a responsibility to ensure that their client understands and complies with the duty. This means that full and frank disclosure should be at the forefront of clients’ and lawyers’ minds alike when considering making any without notice application.”

“To satisfy the disclosure duty, the applicant should make the court aware of any relevant matters of fact or law or the existence of relevant foreign judgments, including those that are potentially adverse to the applicant. As a result, applicants should be mindful of the potential costs of putting together and presenting the necessary information and analysis to discharge this duty. A court will look unfavourably on any application where full and frank disclosure has not been given, even where an application has been made on an urgent basis,” Siddiqui said.