PROPERTY SERVICES LDN LTD v SUE ELISE NASH

A party affected by a without-notice injunction may participate at the return date even without being joined, where the order affects its legal rights. An applicant seeking without-notice equitable relief must make full and frank disclosure of all material matters. A deliberate and fundamental failure to disclose may deprive the applicant of any advantage obtained and justify discharge of the injunction. The court may determine the disclosure issue summarily without live evidence where the facts are sufficiently plain. The balance of convenience may independently favour discharge where the injunction creates a real risk of injustice to receivers and secured lenders.

The claimant obtained a without-notice injunction restraining the defendant from marketing or selling several mortgaged properties at auction. Fixed charge receivers had been appointed after mortgage default and were affected by the order, although they had not been joined as parties. They attended the return hearing and challenged the injunction.

The claimant’s evidence did not disclose the mortgages, receivership or proposed auction. The court considered whether the receivers could participate, whether the claimant had complied with its duty of full and frank disclosure, and whether the injunction should be varied, discharged or continued.

1. Participation by affected receivers. The receivers were entitled to make submissions at the return date. They were affected third parties because the injunction prevented them, as agents of the defendant, from marketing or auctioning the properties. Joinder was unnecessary where the injunction affected their rights and the claim made no allegations against them.
2. Full and frank disclosure. An applicant for without-notice equitable relief must disclose all matters material to the court’s jurisdiction and discretion. The claimant’s failure to disclose the mortgage charges, appointment of receivers and intended auction was material. The court considered that the omission was deliberate rather than innocent, and that the purported transaction appeared to be a sham designed to prevent the auction.
3. Consequence of breach. A fundamental breach of the disclosure duty deprived the claimant of any advantage obtained through the breach. The issue could be decided without live evidence because the relevant facts were sufficiently plain and capable of summary determination. The injunction was discharged.
4. Alternative consideration. The balance of convenience also favoured discharge. There was substantial suspicion about the transaction, no good evidence of deposit payments, and a real risk of injustice to the receivers and lenders, whose enforceable contractual rights were secured by legal charges over the properties.