Without notice applications carry with them a duty on the applicant to provide full and frank disclosure: that is, disclosure to the court of all objectively material facts, including those which it is anticipated would be raised by the other side if it were present (Konamaneni v Rolls Royce Industrial Power (India) Ltd). If the applicant is found substantially or deliberately to have breached their duty of full and frank disclosure, there is a rebuttable presumption that the order made without notice will be immediately discharged (National Bank Trust v Yurov and others). Given the potential negative consequences for the party, not to mention the criticism and potential sanction of their legal advisers for a breach of their personal duties to the court, giving full and frank disclosure is to be taken seriously. Indeed, much time and cost is incurred in the preparation of without notice applications by first raising, and then dispensing with, the potential arguments that the other side might raise.
Two recent judgments (The Public Institution for Social Security v Mr Kamran Amouzegar and Unión Fenosa Gas, S.A. v Arab Republic of Egypt, incidentally, both before Jacobs J in the Commercial Court) make clear, however, that it is not only applications made without notice that must be taken seriously: so too must an application to discharge such orders on the basis of material non-disclosure. This is because such an application is, essentially, an allegation of professional impropriety.
Applications for the discharge of an order made without notice on the basis of material non-disclosure must:
- Give sufficient particulars of the objection.
- Be of substance.
In Amouzegar, the claimant had applied ex parte to extend the time for service of a claim form, which order was granted on the papers by the court. Mr Amouzegar applied for the order to be set aside on the basis that the application notice had made “no reference to the possibility of the Defendants raising a limitation defence to the claims made against them”. The discharge application did not indicate under what law it was considered that a limitation defence arose, the nature or merits of the defence, or how the defence may be affected by an extension of time for service of the claim form (paragraph 146). At the hearing, the case on non-disclosure was materially different to that put forward in witness evidence and even in the skeleton argument exchanged shortly before the hearing (paragraph 148). Jacobs J held that “where non-disclosure is alleged it is incumbent on the party making the allegation to give proper particulars of the case being advanced, so that it can be fairly responded to by the other party. There was here, as Mr. Ritchie submitted, a moving target” (paragraph 149). The original case as to material non-disclosure was found to be unsustainable, and the re-formulated argument had not been provided in sufficient time to enable the claimant to meet that case. Accordingly, the application on the basis of non-disclosure failed.
In Unión Fenosa Gas, UFG successfully registered a US $2 billion International Centre for Settlement of Investment Disputes (ICSID) award against Egypt as if it were an English judgment. UFG sought to serve Egypt with the recognition order via the Foreign Process Service in accordance with the State Immunity Act 1978, but the confirmation from the British embassy in Cairo as to whether service had been successful was lost between different court departments. Accordingly, UFG applied ex parte for two orders:
- That service of the registration order be dispensed with.
- That the order dispensing with service could be served on Egypt’s English solicitors, with whom UFG’s solicitors had been corresponding for a number of months, by way of alternative service.
Both orders were granted on paper. Egypt subsequently sought to set aside the latter two orders (but not the registration order) alleging (among other things) that UFG had breached its duty of full and frank disclosure because of the allegations that:
- It had not referred the court to some obiter dicta in relevant case law.
- The order for alternative service had not included reference to Egypt’s right to apply to set the order aside.
- UFG had been too absolute in its description of the registration process for ICSID awards.
Jacobs J found that each argument had no substance; indeed, the first two were not points of material non-disclosure at all, and the latter was entirely academic.
As a result, in UFG, Jacobs J concluded at paragraph 5 of the hearing on consequential arguments:
“It is a regrettable feature of commercial court litigation nowadays that people fire off allegations of non-disclosure when they lack points of substance, and this then creates the need for costs and time to be spent looking into those points. I consider that parties and their advisers should realise that if allegations of non-disclosure are to be made, those are in substance, as has been said in other cases, allegations of professional impropriety fail and if allegations of professional impropriety fail, then an order for indemnity costs may well be appropriate.”
Accordingly, UFG was awarded its costs on the indemnity basis.
