Amedeo Hotels Ltd & v Zaman & Ors

On a without-notice application, the duty of disclosure extends to material facts relevant to the court’s assessment and weighing of the application. It does not require a general confession of every potentially relevant wrongdoing. Materiality is for the court to decide, and the applicant must make proper inquiries.

Material non-disclosure will usually justify setting aside the order. The court nevertheless retains a discretion to continue or replace the order, even where the non-disclosure was not innocent. That discretion requires a balance between the public interest in full disclosure, the applicant’s culpability, the significance of the omission, the merits, and the risk that discharge would cause injustice.

The applicants sought relief under section 25 of the Civil Jurisdiction and Judgments Act 1982 in support of fraud and related proceedings pending in the United States District Court for the Southern District of New York. Mrs Justice Gloster had granted a worldwide freezing order without notice.

The first and second respondents applied to discharge the order, alleging material non-disclosure, misrepresentation, absence of a real risk of dissipation, and that continuation was inexpedient because of the New York proceedings. The court also considered whether the order should be re-imposed if discharge was required.

1. Material non-disclosure. The court applied the guidance in Brinks Mat v Elcombe [1998] 1 WLR 1350. Disclosure was confined to facts material to the court’s assessment of the application and the factors to be weighed. It did not extend to every breach of the Brunei or English orders. Proper inquiries were required, but materiality remained a matter for the court.
2. The applicants had materially failed to disclose the true position concerning Argent, had given an incorrect account of the directorship of Cedar Swamp, and had failed to disclose earlier attempts to realise the Tomiyasu proceeds. The Argent non-disclosure was serious and intentional. Other omissions were material but less culpable. The alleged disclosure concerning the respondents’ personal use of credit cards was not material to the claims as advanced.
3. Effect of non-disclosure. The usual consequence of serious material non-disclosure was discharge of the order. However, following the principles discussed in Bank Mellat v Nikpour [1985] F.S.R. 87, Marc Rich and Others v Krasner and Others (Transcript, 15 January 1999), and related authorities, the court retained a discretion to continue or replace the order. That was a discretionary balance, not a rule confined to innocent non-disclosure.
4. The order should be discharged and replaced. The underlying claims might benefit BIA, which was blameless and might otherwise lose assets. The applicants’ case remained relatively strong, and the evidence established a real, probably substantial, risk of dissipation through company incorporations, transfers of money, planned relocation, and involvement in breaches of court orders.
5. Continuation was not inexpedient under section 25. Applying the factors identified in Motorola Credit Corp v Uzan (No 2) [2004] 1 WLR 113 (CA), the order did not interfere with the New York proceedings, create jurisdictional conflict or disharmony, or present an enforcement problem. The absence of equivalent worldwide relief in New York supported, rather than prevented, relief in England.
6. The existing injunction was discharged and replaced by a new order on terms to be agreed or decided. Costs were reserved. Any replacement order was conditional on satisfactory steps being taken to regularise the parties’ United Kingdom tax and social security position.