A recent decision of the English High Court has highlighted the perilous consequences for a litigant who does not provide full and frank disclosure to the Court in an ex parte application, a decision which will be of keen interest to offshore practitioners.
In the matter of Punjab National Bank (International) Ltd v Srinivasan and Ors, the Bank sought permission to appeal against a previous order of the Court which had set aside an order granting the Bank permission to serve proceedings out of the jurisdiction. That order had been obtained ex parte but it was subsequently held that the Bank had been guilty of material non-disclosure in that it had failed to inform the court about two sets of proceedings it had brought in the USA and India.
In his analysis of this issue, Chancellor Vos of the High Court echoed the reasoning used recently by Bryan J in Libyan Investment Authority v J P Morgan including the following key points:
- If the court finds that there has been a breach of the duty of full and fair disclosure on the ex parte application, the general rule is that it should discharge the order obtained and refuse to renew the order until trial;
- Notwithstanding the general rule, the court has discretion to continue or to re-grant the order;
- That jurisdiction should be exercised sparingly, and should take account of the need to protect the administration of justice and the public interest in requiring full and fair disclosure;
- The court should assess the degree and extent of the culpability with regard to the non-disclosure. It is relevant that the breach was innocent, but there is no general rule that an innocent breach will not attract the sanction of discharge of the order. Equally, there is no general rule that a deliberate breach will attract that sanction;
- The jurisdiction is penal in nature and the courts should have regard to the proportionality between the punishment and the offence;
- There are no hard and fast rules as to whether the discretion to continue or re-grant the order should be exercised, and the courts should take into account all relevant circumstances.
Chancellor Vos also agreed with the comment of Bryan J that the importance of the duty of full and frank disclosure in applications for permission to serve out, just as in the case of freezing order applications, cannot be overstated. The decision serves as a stark warning to both litigants and practitioners making ex parte applications that the duty to disclose all relevant facts, whether favourable to their case or not, is paramount.