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Injunctions and the duty of disclosure more generally

The duty of disclosure in the context of injunctions has tended in recent years to come into focus in the context of applications made ex parte or ex parte on notice and the principle that any applicant for the same owes a duty to disclose any relevant fact or matter that might be said to go against the granting of such relief. Indeed Members of Littleton will be giving a seminar on this topic in Manchester on precisely this topic on 11th October. Registration details for that seminar can be found on this site under “Events”.

However the recent decision of Mr Justice Eder in Speedier Logistics Co Ltd v Aardvark Digital Ltd LTL 4/9/2012 is a valuable reminder that all applicants for injunctions owe a continuing duty of disclosure, whether or not they initially obtained the injunction without notice.

The general principle in respect of all injunctions is that where a party has derived a benefit from the exercise of the court’s discretion on a certain basis and that basis no longer exists, it is imperative that the party either obtains that consent for the continuation of the injunction from the other party or it returns the matter to the court for it to decide whether the injunction should continue and, if so, on what terms.

In Speedier the applicant company (D) applied successfully to discharge an injunction prohibiting it from diminishing the value of a consignment of goods released to it by the respondent companies (C).

In 2007 C had been engaged by a Chinese supplier (S) to transport D’s order of goods to England. The assignment had been mistakenly released to D on its arrival here before D had paid S for it. Once C realised that this had happened it had applied successfully for an injunction prohibiting D from disposing of the goods, diminishing their value, or moving them from specified premises. The application for that injunction had contended that the balance of convenience fell in support of the grant of the relief sought as S might issue proceedings against C for breach of contract and liability for the loss of the cargo.

Proceedings had then been stayed by agreement to allow D to continue negotiations with S and there was subsequently no further communication between C and D. S brought proceedings against C in China which concluded in September 2009. D was not made aware of the Chinese proceedings nor of their conclusion and only learned of them in February 2012 after it had written to C requesting the discharge of the injunction.

D applied to the Court for that discharge contending that C had been under a continuing duty of disclosure in respect of the Chinese proceedings and had acted in breach of that duty.

Mr Justice Eder agreed. He held that there had been no reason in principle for C not to inform D or revert to the court once the Chinese proceedings had concluded . That conclusion had resulted in a substantial change in the information upon which C had previously relied when applying for the injunction that had been granted. The judge emphasised that the main reason why C should have brought the matter back before the court was that the exercise of the court’s discretion in granting the injunction had been on a particular basis and it was therefore a matter of principle that the court should have been informed of the developments. C’s failure to comply with that obligation led the judge to discharge the injunction.

It could have been even worse for the respondents in that D also applied to strike out C’s claim for the return of the consignment due to the same default. Mr Justice Eder was not willing to go that far. He pointed out that it had always been open to D to bring the matter back to court to advise of the difficulties and to pursue an early determination of the proceedings and that in those circumstances C’s failure to disclose the outcome of the Chinese proceedings was not such as to justify striking out its claim.
Related link:  Profile of Chris Quinn
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