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Without Notice Applications and the Duty of Full and Frank Disclosure

In the recent decision of the English High Court in Andrey Rogachev v Mikhail Goryainov, Justice Morris refused the continuation of a freezing injunction granted without notice because the Claimant failed to comply with its duty of full and frank disclosure.

The Claimant and the Respondent were business partners in a joint venture investing in real estate. The business relationship subsequently deteriorated. The Claimant alleged that the Respondent attempted to transfer one of the properties in the joint venture without its consent.

The Claimant made a without notice application to the Court to restrain the Respondent’s removal of assets within the jurisdiction up to £9 million (being the sale proceeds of the relevant property) or disposing, dealing with or diminishing the value of his assets worldwide up to £9 million. The Freezing Injunction was granted by Justice Stewart and served on the Respondent.

The Claimant subsequently made an application for the Freezing Injunction to be continued upon its expiration. In response, the Respondent made an application to revoke and discharge the Freezing Order on the basis that (among other things) the Claimant did not make full and frank disclosure to Justice Stewart in the initial application.

The Court noted the duty of full and frank disclosure required in a without notice application and cited the principles in Alliance Bank v Zhunus, including the duty on the applicant to (among other things):

  • go beyond merely identifying points of defence which might be taken against him;
  • show utmost good faith;
  • investigate the nature of the claim and the facts asserted before applying; and
  • disclose all facts which reasonably could or would be taken into account by the Court.

It is insufficient for the relevant information to be included in the Court bundle. The duty extends to directing the Court to the specific relevant passages.

The Court found that the Claimant failed to fulfil his duty of full and frank disclosure. Amongst other things, the Claimant did not disclose the extent of the parties’ negotiations, the arbitration proceedings instigated to resolve the dispute, and the existing settlement offers.

This case is a reminder of the duty of full and frank disclosure in without notice applications, which are usually made on an urgent basis under significant time pressure.

Without Notice Applications and the Duty of Full and Frank Disclosure

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