[COURT OF APPEAL]

BRINK'S MAT LTD. v. ELCOMBE AND OTHERS

[1986 B. No. 7698]

Injunction - Mareva injunction - Non-disclosure - Ex parte application - Breach of duty to disclose all relevant matters - Whether discretion to continue injunction - Whether order to be set aside

The plaintiffs, who had been robbed of gold bullion worth £25m., commenced an action against a number of defendants claiming, inter alia, damages for wrongful interference with stolen gold, damages for conspiracy to inJure the plaintiffs and declarations that certain assets were the proceeds of sale, or profits made from the use of, stolen gold and were held on trust for the plaintiffs. Before issuing the writ they had obtained, on an ex parte application, an interlocutory injunction from Roch J. restraining nine of the defendants from disposing of specified assets. The ninth and tenth defendants applied unsuccessfully to Judge White, sitting as a High Court judge, to discharge the injunction. But, on a further application, Alliott J. discharged the injunction as against the ninth and tenth defendants on the ground that there had been innocent but material non-disclosure of facts in the information the plaintiffs had put before Roch J. and that new material had falsified the basis on which the plaintiffs had sought to show a ground of claim against the ninth and tenth defendants.

On appeal by the plaintiffs and cross-appeal by the ninth and tenth defendants from the decision of Judge White:-

Held, allowing the appeal and dismissing the cross-appeal, that, on any ex parte application it was imperative that the applicant should make full and frank disclosure of all facts known to him or which should have been known to him had he made all such inquiries as were reasonable and proper in the circumstances; but that, notwithstanding proof of material non- disclosure which justified or required the immediate discharge of an ex parte order, the court had a discretion to continue the order or to make a new order; that, although the plaintiffs had failed to disclose material facts to Roch J., on the evidence before Judge White, it would have been right for him to continue the injunction; that the additional information before Alliott J. did not establish any further material non-disclosure; and that, as a matter of discretion, it was a proper case for maintaining the injunction (post, pp. 1356F-H, 1357E, G-H, 1358B-C, D-E, G-H, 1359E-F).

Dicta of Lord Denning M.R. in Bank Mellat v. Nikpour [1985] F.S.R. 87, 90, C.A. and Glidewell L.J. in Lloyds Bowmaker Ltd. v. Britannia Arrow Holdings Plc., C.A., ante, p. 1337, applied.

Per Slade L.J. Particularly in heavy commercial cases the borderline between material 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, the application of the principle should not be carried to extreme lengths (post, p. 1359C).

Decision of Judge White, sitting as a judge of the Queen's Bench Division, affirmed.

Decision of Alliott J. reversed.

The following cases are referred to in the judgments:

Bank Mellat v. Nikpour [1985] F.S.R. 87, C.A.

Columbia Picture Industries Inc. v. Robinson [1987] Ch. 38; [1986] 3 W.L.R. 542; [1986] 3 All E.R. 338

Dalglish v. Jarvie (1850) 2 Mac. & G. 231

Lloyds Bowmaker Ltd. v. Britannia Arrow Holdings Plc. [1988] 1 W.L.R. 1337, C.A.

Practice Direction (Judge in Chambers: Procedure) [1983] 1 W.L.R. 433; [1983] 1 All E.R. 1119

Reg. v. Inland Revenue Commissioners, Ex parte Rossminster Ltd. [1980] A.C. 952; [1980] 2 W.L.R. 1; [1980] 1 All E.R. 80, H.L.(E.)

Rex v. Kensington Income Tax Commissioners, Ex parte Princess Edmond de Polignac [1917] 1 K.B. 486, C.A.

Thermax Ltd. v. Schott Industrial Glass Ltd. [1981] F.S.R. 289

WEA Records Ltd. v. Visions Channel 4 Ltd. [1983] 1 W.L.R. 721; [1983] 2 All E.R. 589, C.A.

No additional cases were cited in argument.

INTERLOCUTORY APPEALS fron Judge White, sitting as a judge of the Queen's Bench Division, and Alliott J.

On 9 December 1986 the plaintiffs, Brink's Mat Ltd., on an ex parte application to Roch J., obtained an injunction restraining, inter alios, the ninth and tenth defendants, Boinco Corporation and Stephen Kay, until trial or further order from disposing of assets listed against their names in a schedule to the order. The plaintiffs gave an undertaking to abide by such order as to damages as the court might make in relation to any damage suffered by the defendants by reason of the order and

further undertook forthwith to issue a writ and to swear and file an affidavit by Mr. McCunn, their solicitor, setting out the substance of what counsel had informed the court.

On 10 December 1986 the plaintiffs issued a writ against 11 defendants claiming, against the first to ninth defendants, (1) damages for wrongful interference with gold, to which the plaintiffs were entitled to possession and/or were the owners, stolen from the plaintiffs' warehouse on 26 November 1983; (2) damages for conspiracy to inJure the plaintiffs and/or procuring the breach by Anthony Black of his contract of employment and/or fiduciary duty; and, against all defendants, (3) an order requiring the defendants to disclose to the plaintiffs all information and documents in their possession or power which might assist in showing who had received the gold and/or the proceeds of sale thereof; (4) a declaration that, inter alia, proceeds of sale of Cyclops Wharf under an agreement dated 29 July 1986 were proceeds of the sale of and/or profits made from the use of the gold and were held on trust for the plaintiffs; (5) an account; and (6) an injunction in the terms of that already granted by Roch J.

On 30 December 1986 Judge White, sitting as a judge of the Queen's Bench Division, dismissed an application by the ninth and tenth defendants to discharge the injunction made against them by Roch J. On 15 April 1987, on a further application by the ninth and tenth defendants to discharge Roch J.'s order, Alliott J. made an order by which, on certain undertakings being given by the ninth and tenth defendants, the order of Roch J. was discharged as against them.

By notice of appeal dated 24 April 1987 the plaintiffs appealed on the grounds, inter alia, that (1) the judge was wrong to find that the inference drawn by Judge White, as to the source of the deposit for Cyclops Wharf, had been falsified and that Roch J. would not have granted the injunction had there been full disclosure; (2) the judge erred in finding that on the material before him the arguable case which he did find the plaintiffs had was not sufficiently good or that there might be a good arguable defence; and (3) in deciding not to grant a new injunction the judge wrongly failed to consider the balance of convenience.

By respondents' notice and notice of cross-appeal dated 29 April 1987 the defendants contended that the decision of Alliott J. should be affirmed on additional or alternative grounds and sought leave to appeal from the order of Judge White on the ground that he erred in holding that the non-disclosures he found were not material non-disclosures justifying the discharge of Roch J.'s order.

The facts are stated in the judgment of Ralph Gibson L.J.

Michael Tugendhat Q.C. and David Parsons for the plaintiffs.

Peter Leaver Q.C. and Jeffrey Onions for the ninth and tenth defendants.

12 June 1987. The following judgments were handed down.

RALPH GIBSON L.J. This is an appeal by the plaintiffs, Brink's Mat Ltd., from the order of Alliott J. of 15 April 1987 whereby an interlocutory injunction made by Roch J. on 9 December 1986 was

discharged as against the ninth defendant, Boinco Corporation, and the tenth defendant, Mr. Stephen Philip Kay. Roch J. had on 9 December 1986 on an ex parte application by the plaintiffs ordered that nine out of the eleven defendants in the action be restrained until trial or further order from disposing of the assets listed against their names in a schedule to the order. So far as concerns Boinco and Mr. Kay the assets so listed are described as the proceeds of sale of Cyclops Wharf, a dockland property in West Ferry Road, London E.14. The order was made, of course, on the usual undertakings, including undertakings as to damages, given by the plaintiffs. The plaintiffs seek an order continuing the injunction until trial.

The action in which this interlocutory appeal is brought is but one of a number of separate actions in which the plaintiffs claim various forms of relief against a number of men and women and corporations. All robbery at Heathrow Airport in November 1983 when valuables, including gold bullion worth then some £25m., were stolen. The main grounds of claim made against the first nine defendants in this case are three: first, damages for wrongful interference with the stolen gold; secondly, damages for conspiracy to inJure the plaintiffs and for procuring the breach of duty of a servant of the plaintiffs who was involved in the robbery; and, thirdly, for declarations that certain assets are the proceeds of sale of, or profits made from the use of, the stolen gold and are held on trust for the plaintiffs. The parties to this appeal are Boinco and Mr. Kay. The plaintiffs' claim against Boinco is advanced on all three grounds but as against Mr. Kay it is made only on the third ground of constructive trust. Mr. Kay appears to have been caught up in this litigation because he is and has long been the close personal friend of Mr. Relton, a solicitor. Mr. Relton acted for Mr. Parry, the seventh defendant, who on the evidence before the court got hold of some £2.7m. in cash in sterling and paid it into an account, code-named "Burton," in a bank in Zurich. That fund was the source of finance for a large number of property deals in this country, and for one in Spain, by which large profits were made by companies formed, or acquired, and operated, for Mr. Parry by Mr. Relton. Mr. Relton has admitted that the money in the Burton account was the proceeds of the stolen gold and that he knew that fact from about December 1985.

In January 1986 the eighth defendant, Selective Estates Ltd. ( "Selective"), a Jersey company, owned and controlled by Mr. Parry, or by Mr. Parry and Mr. Relton, contracted to buy Cyclops Wharf from Durable Warehousing Co. Ltd. for £2.7m. Only £135,000 was paid as deposit by Selective. The rest of the purchase price was payable as to £135,000 on 31 July 1986 and the balance on 1 May 1987. On 29 July 1986 Selective contracted to sell Cyclops Wharf to Chrysalis Plc. for £4.25m., to be paid by instalments with completion on 1 May 1987 and to yield a gross profit of £1.55m. Thus Selective did not have to find any further funds from its own resources. Under the resale contract to Chrysalis, Selective received £600,000 on 29 July 1986; £400,000 was to be paid on 15 December 1986; £300,000 on 2 March 1987; and the balance of £2.95m. on completion on 1 May 1987.

As against Selective the claim of the plaintiffs to be entitled in equity to the proceeds of sale of Cyclops Wharf appears on the stated facts to be good. According to Mr. Kay and Mr. Relton, however, Selective is no longer entitled to the proceeds of sale of Cyclops Wharf. It is said

that by an oral agreement in March 1986 Mr. Kay became entitled to one half of the Cyclops Wharf transaction and therefore to one half of the profit. On or before 4 September 1986 Mr. Relton became joint owner with Mr. Kay of Boinco, a Panamanian corporation, previously wholly owned by Mr. Kay, and on 17 September 1986 it is said that Selective by a written agreement validly passed and assigned the burden and benefits of the purchase and resale contracts for Cyclops Wharf to Boinco. Further, it is said that, while some companies owned and operated by Mr. Parry and Mr. Relton did carry out many property transactions with money derived from the stolen gold, the Cyclops Wharf transaction was different in that no tainted money was used to acquire the property and therefore the plaintiffs have no equitable claim against the proceeds of sale. If they have such a claim it is contended nevertheless that Mr. Kay and Boinco are bona fide purchasers of the rights under the contracts without notice of the equitable rights of the plaintiffs.

The assignment contract of 17 September 1986, if that is what it was, is an important matter in this case. According to the copy provided to the plaintiffs' loss adjusters, Selective by that contract assigned to Boinco all the interest of Selective in the purchase contract for Cyclops Wharf and in the resale contract, together with the right to receive from Chrysalis the outstanding stage payments. The receipt by Selective of £600,000 from Chrysalis, being the first payment under the resale contract, was recited. The consideration for the assignment to Boinco was said to be £800,000 paid by Boinco to Selective and, by the terms of the contract, Selective acknowledged receipt of that sum. In fact, as has become apparent in the course of the proceedings, nothing was paid by Boinco to Selective. The evidence as to the circumstances in which the assignment contract was made and such explanation as there is for the difference between the form of the contract and the facts as they are alleged to have been will be described later in this judgment.

Alliott J. on 15 April 1987 ordered that the injunction be discharged as against Boinco and Mr. Kay and refused in his discretion to make any new order. He directed, however, that the injunction continue pending the hearing of this appeal. The grounds on which Alliott J. so proceeded were in substance that there had been innocent but material non-disclosure of facts in the information put by the plaintiffs before Roch J., and that new material put before Alliott J. had falsified the basis on which the plaintiffs had sought to show a ground of claim against Boinco and Mr. Kay. He declined in his discretion to make any new order on the ground that on the evidence the plaintiffs had not made out a sufficiently strong case.

There had been an earlier application by Boinco and Mr. Kay to set aside the order of Roch J. That application was heard by Judge White, sitting as a High Court judge, and on 30 December 1986 was dismissed by him. During the hearing in this court Mr. Leaver applied on behalf of Boinco and Mr. Kay for leave to appeal against that decision of Judge White out of time on the ground that on the evidence before him he was wrong not to set aside the order of Roch J. by reason of material non-disclosure by the plaintiffs. This court gave leave to appeal. [His Lordship referred to the robbery, and stated that the ex parte application on 9 December 1986 was made by Mr. Tugendhat on behalf of the plaintiffs before the issue of the writ and unsupported by affidavit; that Roch J. made the order on the plaintiffs' undertaking that their solicitor,

Mr. McCunn, would swear and file an affidavit setting out the substance of what counsel had told the court; and that the affidavit accurately described the information given to the court with the important exception that it did not refer to the fact that Mr. Tugendhat had informed the court that the basis of the information put before the court was information made available by the police and that there was more information not known to Mr. Tugendhat. His Lordship referred to the defects in the affidavit, considered the first application by Boinco and Mr. Kay to Judge White to discharge the injunction made and continued:] Finally, Judge White said that, if he were wrong in his assessments of the various matters of non-disclosure, he would hold that this was a case in which the plaintiffs should have a locus poenitentiae, that is to say the injunction should not be set aside because none of the matters was so centrally material as to require the court to penalise the plaintiffs by revoking the injunctions.

Before examinination of Mr. Leaver's submissions in support of the defendants' appeal against Judge White's order I will explain the relationship between that appeal and the plaintiffs' appeal against Alliott J.'s order and, also, the reasons for giving leave to the defendants to appeal out of time. There was before Alliott J. a great deal more material than there had been before Judge White. Alliott J. was dealing with a renewed application to discharge the injunction made on the ex parte application and not with an appeal from Judge White. Alliott J. directed himself that it was only where additional evidence was before him that he would be in a position to look anew at any matter. He said that it would be wrong for him to hold as material non-disclosure the several matters rehearsed by Judge White and held by him not to be material non-disclosure; and that he would concern himself only with fresh material disclosed since the hearing before Judge White. He added that, if he were wrong in that approach, he reached the same conclusion as Judge White for the reasons he gave.

By their respondents' notice to the plaintiffs' appeal the defendants contend that Alliott J. was wrong in refusing to have any regard to the items of non-disclosure which Judge White found to have been established on the evidence but which Judge White held did not justify revocation of the order. In determining the cumulative effect of the non-disclosures by the plaintiffs, i.e. those established on the evidence before Judge White and those established on the evidence before Alliott J., it is said that regard should be had to all. By the cross-appeal the defendants contend that the non-disclosure found by Judge White to have occurred should have been held by him to be both material and such as to justify discharge of the ex parte order.

The defendants had made a decision not to appeal and had allowed the time for appealing to expire. That occurred in this case after express notice given by the defendants to the plaintiffs that the defendants challenged the correctness of the decision and were only not appealing so as to get on as fast as possible with the action and with a view to a further application to discharge the ex parte order after pleadings and discovery. On that further application the defendants succeeded and the plaintiffs have now appealed in order to reinstate the ex parte order. The plaintiffs have not changed their position in any way as a result of the failure by the defendants to appeal in time, and the proceedings as a whole would not be delayed by the grant of leave. If leave were granted it would be open to this court to consider the validity of the defendants'

contentions at both stages of these proceedings and, if the question of continuing the order of Roch J. in the exercise of the discretion of this court, or of making a new order, should arise, that could proceed on the basis of this court's view of the merits of the defendants' contentions on all the issues of non-disclosure. That appeared to be the better course in justice to both sides and accordingly leave was given.

For my part, I consider that Alliott J. was wrong in saying that he would concern himself only with the fresh material on the issue of non-disclosure. I agree that it was not open to Alliott J. to review Judge White's conclusions on the evidence before Judge White as to what the plaintiffs had or had not failed to disclose, or as to whether anything not disclosed was material; but, in so far as Judge White found that in regard to some fact there had been a material non-disclosure but that it did not justify discharging the order, Alliott J. was, in my judgment, bound to take that undisclosed material fact into consideration in deciding whether, cumulatively with any undisclosed material facts found by him, those facts justified discharging the order. In the event that point was not decisive before Alliott J., who discharged the order on the new ground which he found, and it is not, in my view, decisive in this court for reasons which will be clear.

The answer to the question whether the defendants have made out any effective ground of appeal against the decision of Judge White only affects the continuation of the injunction until trial if the plaintiffs' appeal against the order of Alliott J. would otherwise be allowed but the defendants' appeal must be considered in any event because it raises issues with reference to the costs of the hearing before Judge White. I will deal first with the defendants' appeal and before referring to the additional evidence which was before Alliott J.

In my judgment, the conclusion of Judge White, namely, that the ex parte injunction against Boinco and Mr. Kay should not be discharged, was right but I would reach that conclusion by a different route. His findings that the plaintiffs had demonstrated a good cause of action and a good arguable case on the evidence are not attacked on this appeal and, in my respectful opinion, were clearly right.

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 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 [1917] 1 K.B. 486, 514, 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 (1850) 2 Mac. & G. 231, 238, and Browne-Wilkinson J. in Thermax Ltd. v. Schott Industrial Glass Ltd. [1981] F.S.R. 289, 295.

(3) The applicant must make proper inquiries before making the application: see Bank Mellat v. Nikpour [1985] 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 [1987] 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 [1985] 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 perDonaldson L.J. in Bank Mellat v. Nikpour, at p. 91, citing Warrington L.J. in the Kensington Income Tax Commissioners' case [1917] 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 [1985] 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.

[His Lordship reviewed the case before Judge White and concluded:] For my part, therefore, on the evidence before Judge White I would have held that the defendants had demonstrated material non-disclosure so that the plaintiffs were, within the principles to which I have referred, in mercy before the court, that is to say liable to have the order set aside on that ground. Nevertheless, I have no doubt whatever that on the facts of this case, if the additional information had been before Roch J., the order would still have been made by him at once and on the same terms. [His Lordship referred to counsel's submissions and explained why, having regard to all the evidence before Alliott J., the injunction granted by Roch J. should be continued notwithstanding the non-disclosure before Roch J., and concluded:] For these reasons, therefore, I would allow the plaintiffs' appeal against the order of Alliott J., and I would dismiss the defendants' appeal against the order of Judge White.

BALCOMBE L.J. I have had the advantage of reading the draft judgment of Ralph Gibson L.J. I agree with him, and for the reasons which he gives, that the plaintiffs' appeal against the order of Alliott J. should be allowed and that the defendants' appeal against the order of Judge White should be dismissed. However, as we are differing from the conclusions of Alliott J., I propose to add a few words of my own.

The courts today are frequently asked to grant ex parte injunctions, either because the matter is too urgent to await a hearing on notice, or because the very fact of giving notice may precipitate the action which the application is designed to prevent. On any ex parte application, the fact that the court is asked to grant relief without the person against whom the relief is sought having the opportunity to be heard makes it imperative that the applicant should make full and frank disclosure of all facts known to him or which should have been known to him had he made all such inquiries as were reasonable and proper in the circumstances.

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 [1917] 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 [1985] 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. Those being the principles involved, it remains only to apply them to the facts of the present case. [His Lordship considered the facts and concluded that (1) Judge White should have found that, though the plaintiffs did not intentionally withhold information they thought to be material, there was on their part material non-disclosure when they made the ex parte application; (2) the additional information before Alliott J. did not establish any further non-disclosure; and (3):] The arguments in favour of maintaining the injunction are all one way, save only for "punishing" the plaintiffs for their original innocent and, as it now transpires, immaterial, non-disclosure. On the application of the discretion to which I have already referred, I am satisfied that this is a proper case for maintaining the injunction.

SLADE L.J. These appeals raise a number of different questions arising out of the application of what is sometimes known as the

principle of Rex v. Kensington Income Tax Commissioners, Ex parte Princess Edmond de Polignac [1917] 1 K.B. 486. I have had the advantage of reading in draft the judgments of Ralph Gibson and Balcombe L.JJ. I respectfully agree with them, both in their analyses of the principle and in its application to the facts of the present case. 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 due 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 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 [1917] 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.

As Ralph Gibson L.J. has explained in his judgment, the three principle issues on the two appeals now before the court have, in effect, been (A) whether the plaintiffs failed in their obligation to make full and frank disclosure to Roch J. in such a manner as to require revocation of the order made by him ex parte on 9 December 1986; (B) whether the plaintiffs have shown a good arguable claim to be beneficially entitled to the proceeds of the sale of Cyclops Wharf; and (C) if the plaintiffs fail on (A) but succeed on (B), whether the court can and should in its discretion continue Roch J.'s injunction or grant a new injunction. It has, I think, been common ground, and is to my mind clear, that, if the plaintiffs have shown a good arguable case as in (B), the balance of convenience would support the grant or continuation of an interlocutory injunction. [His Lordship reviewed the evidence and concluded, as to issue (B):] I agree that the plaintiffs have established a good arguable case both to be beneficially entitled to the proceeds of sale of Cyclops Wharf and to have a title to such proceeds superior to any which may be possessed by Boinco and Mr. Kay; and, indeed, that they have done so at all stages of these interlocutory proceedings.

As to issues (A) and (C), for the reasons given in the judgment of Ralph Gibson L.J. and the further reasons given by Balcombe L.J. so far as they too relate to these points, I too have reached the following conclusions.

(1) On the information put before him orally by counsel, Roch J. was right to make the order which he made ex parte on 9 December 1986.

(2) Quite apart from any other questions of material non-disclosure (as to which see (7) below) the affidavit subsequently sworn by Mr. McCunn on 10 December 1986 pursuant to the undertaking given to Roch J. was formally defective because (i) it should have included an account of what counsel had said to the judge about the information available to the plaintiffs; (ii) it did not sufficiently state the sources of the deponent's information or of his belief that payments from the proceeds of the robbery were probably the source of the funds used by Selective to make the initial deposit of £135,000 which enabled it to buy Cyclops Wharf; (iii) it did not comply with Practice Direction (Judge in Chambers: Procedure) [1983] 1 W.L.R. 433 with reference to stating the facts relied on as justifying the application being made ex parte; and (iv) the course followed by the plaintiffs in relation to the evidence could not be justified by reference to public interest immunity.

(3) Judge White, on the evidence before him, was right to hold that the plaintiffs had established a good cause of action and a good arguable case against Boinco and Mr. Kay.

(4) On such evidence, Judge White was also right to hold that the ex parte injunction against Boinco and Mr. Kay should not be discharged, but for the reasons summarised in (9) below, rather than the reasons given by him.

(5) In so far as Judge White found that in regard to some facts there had been a material non-disclosure but that it did not justify discharging the order, Alliott J. (contrary to his own view) was bound to take those undisclosed material facts into consideration in deciding whether, in conjunction with any undisclosed material facts found by him, those facts justified the discharge of the order.

(6) The defendants' appeal against Judge White's decision would only affect the continuation of the injunction until trial, if the plaintiffs' appeal against Alliott J.'s order would otherwise be allowed. However, it has to be considered in any event, because it could be relevant in relation to the costs of the hearing before Judge White.

(7) The plaintiffs, in their evidence in support of the ex parte application, should have informed the court of the various instances of frankness which Mr. Kay had apparently shown in his contacts with loss adjusters about his relationship with Mr. Relton, because this information was material to the question whether Mr. Kay's conduct was consistent with his not having been aware of the alleged tainted nature of the funds used by Selective to acquire its rights to Cyclops Wharf, and, further, was a relevant consideration for the court in deciding whether or not this was an appropriate case in which to grant ex parte relief.

(8) The failure to disclose these matters, though innocent in the sense that the plaintiffs did not intentionally omit information which they thought to be material, amounted to material non-disclosure within the principles of Rex v. Kensington Income Tax Commissioners, Ex parte Princess Edmond de Polignac [1917] 1 K.B. 486 and Judge White should have so held.

(9) Nevertheless, even if this additional information had been put before him, it would not (and should not) have caused Roch J. to decline to grant ex parte relief, in the terms in which he granted it, at once.

(10) In all the circumstances of this case, notwithstanding this non-disclosure and notwithstanding the defects in the presentation of the information placed before Roch J. and recorded in Mr. McCunn's first affidavit, it would have been right for Judge White, on the evidence before him, in the exercise of his discretion to continue the injunction granted by Roch J.

(11) As to the new evidence before Alliott J., the plaintiffs are not yet shown to have had knowledge of the contents of the police witness statements at the time when they made their ex parte application to Roch J. Nor are they to be treated as having constructive knowledge of those contents. The additional information placed before Alliott J. thus did not establish any further material non-disclosure.

(12) Even if the relevant statements had been before Roch J., they would not have presented any obstacle to the finding that there was a good arguable case that the initial deposit paid by Selective represented proceeds of the stolen gold, but would have provided support for that inference, becase Mr. Relton was reporting that Selective had obtained the money by borrowing and said nothing to contradict the inference that the borrowing by Selective was based on the assets of Selective which represented the proceeds of the stolen gold or assets derived from deals financed by those proceeds.

(13) Alliott J. was wrong to accept the submission that the only evidence before him was that the first £135,000 of the deposit was not tainted money.

(14) Alliott J. erred in holding that the basis on which Judge White had declined to discharge the injunctions had been falsified by the new evidence and in allowing the defendants' application to discharge them on the new grounds of non-disclosure relating to the contents of the police statements.

(15) Having regard to all the evidence which was before Alliott J., the injunction granted by Roch J. on 9 December 1986 against Boinco and Mr. Kay should continue until judgment in the action or further order in the meantime.

(16) The plaintiffs' appeal against the order of Alliott J. should be allowed. The defendants' appeal against the order of Judge White should be dismissed.

Solicitors: Shaw & Croft; Roscoe-Phillips.

C. N.