Frenkel v Lyampert & Anor (No. 2)

On a without-notice application for a freezing injunction, the applicant must make full, fair and accurate disclosure of all material facts, including facts which proper inquiries would have revealed. The duty applies to applications concerning specific assets as well as broad freezing orders, and departures from standard wording must be drawn expressly to the judge’s attention.

A substantial breach ordinarily requires discharge of the order. The court may continue or replace it only sparingly, after weighing the applicant’s culpability, the significance of the non-disclosure, the merits, and the nature and impact of the order.

The claimant sought to enforce a Californian judgment against the first defendant and had previously pursued a claim concerning shares and dividends in the second defendant company. A without-notice freezing injunction was granted on 17 July 2017. The claimant’s substantive Chancery claim was later dismissed in [2017] EWHC 2223 (Ch).

The first defendant applied to discharge the injunction for material non-disclosure and other grounds. The claimant applied to continue or replace it. The central issues were whether the without-notice presentation breached the duty of full and frank disclosure, the consequences of that breach, and whether any further injunction was just and convenient.

1. The freezing injunction was discharged and the application to continue or replace it was dismissed.
2. The ordinary criteria for a freezing order were accepted: a good arguable case, an objectively established real risk that judgment may go unsatisfied by dissipation, and justice and convenience under Senior Courts Act 1981, section 37. The claimant had a good arguable case concerning the Californian judgment, but the evidence did not establish a fresh real risk of dissipation after the Californian application had been served.
3. An applicant seeking relief without notice must investigate the facts and disclose fully, fairly and accurately all material matters, including adverse factual, legal and procedural matters. Materiality is determined by the court. The extent of the necessary inquiries depends on the case advanced, the order sought, its likely effect, and the degree of urgency.
4. The claimant failed to disclose, among other matters, that the Californian injunction application had been served on the defendant, that its expedited hearing had been refused because there was no imminent or irreparable harm, the uncertainty surrounding the protective order, the company’s continuing intention to issue shares, and material departures from the standard freezing-order form. These were substantial breaches. The duty applied equally to an order concerning specific assets.
5. The general consequence of a substantial breach is discharge and non-renewal. The court may exceptionally continue or replace the order after considering the applicant’s culpability, the importance of the non-disclosed matters, the merits, and the nature and consequences of the order. Here, those considerations strongly favoured discharge. The Californian injunction also covered the first defendant’s relevant property, and restraining the company risked interfering with its ability to structure its shareholding and causing commercial cost and delay.

First-instance applications concerning the discharge and continuation of a freezing injunction. The underlying Chancery claim had been dismissed in [2017] EWHC 2223 (Ch), with no appeal.