Indicii Salus Ltd v Chandrasekaran & Ors

An applicant for a search and seizure order must give full and frank disclosure of all material matters, including matters bearing on the cross-undertaking in damages. The obligation does not require disclosure of every historical transaction or internal concern that does not materially bear on asset value or enforceability. A respondent who considers the undertaking inadequately secured can apply promptly for fortification, which may have retrospective effect. On appeal, a party cannot ordinarily introduce a new non-disclosure complaint that was not particularised, explored in evidence, or decided below. Where the order was justified and disclosure adequate, alleged deficiencies did not warrant reopening the order or an inquiry into damages.

ISL obtained an ex parte search and seizure order against the respondents in intellectual property proceedings concerning computer software. The respondents applied to discharge the order on five grounds. Warren J rejected them, finding that the respondents intended to use the software, would have disposed of or destroyed relevant evidence if notified, and would cause severe damage. He also rejected complaints concerning non-disclosure and the cross-undertaking in damages.

Permission to appeal was granted only on the adequacy of the undertakings and four alleged failures to disclose information concerning the software’s value. Several of those matters had not been raised or determined below. The central issues were whether disclosure to Etherton J was adequate and whether the undertakings justified the order.

Unanimous outcome. Longmore LJ dismissed the appeal. Sir William Aldous and Sir Anthony Clarke MR agreed. The findings concerning intended use of the software, likely destruction of evidence, and serious damage were not open to challenge because permission had been refused on those grounds.

1. Full and frank disclosure. An applicant for a search and seizure order must disclose all relevant matters to the judge, including matters bearing on the substance of the relief and on the cross-undertaking in damages.
2. Cross-undertaking. The respondents’ concerns included the absence of a charge over the software, possible realisation outside the jurisdiction, conversion into less readily realisable assets, and the software’s possible wasting nature. Those concerns did not justify the appeal. A respondent could apply promptly for fortification, and successful fortification could have retrospective effect. In the circumstances, the order had been justified by the findings below and the undertaking would not be enforceable unless the non-disclosure challenge succeeded.
3. New points on appeal. The complaints concerning the 3i transaction, the later Kroll document, and the Burridge history were not properly raised before Warren J. They were not particularised, cross-examined, submitted upon, or determined below. They could not be introduced for the first time on appeal; any application to extend the grounds should have been made to Warren J.
4. Materiality. Warren J had properly treated the Kroll memorandum as expressing concern about whether fees would be paid, rather than concern that they could not be paid or evidence of the software’s value. The disclosure that the software was of substantial but uncertain value was adequate. The fact that other attempted transactions were ineffective did not make that disclosure false or inadequate.
5. The court rejected the attempt to use Taylor and Lawrence to reopen the refusal of permission where the point had not been taken or decided below. It also observed, obiter, that the consequences of any material non-disclosure would depend on the circumstances. On the facts found, an inquiry into damages would not have been ordered even if non-disclosure and an inadequate undertaking had been established, having regard to Memory v Sidhu [2000] FLR 921.

Order: appeal dismissed.

• Court of Appeal (Civil Division), [2008] EWCA Civ 67: dismissed the appeal.
• High Court, Chancery Division (Warren J): rejected five grounds seeking discharge of the search and seizure order, including alleged non-disclosure and inadequacy of the cross-undertaking in damages.