Patrick Hughes v Martin Bellamy & Ors

At an interim injunction hearing, the court should not order disclosure merely because a party has referred to documents in submissions or an application notice. Where the claim has not yet been clearly formulated, the court may decline to order disclosure until the issues and pleaded case are clearer. A condition attached to an adjournment under CPR 3.1(3) should not be used as an indirect substitute for a proper disclosure order. A party that relies on valuations, insolvency advice or transaction documents but does not produce them may face adverse inferences. Counsel’s factual representations made on instructions should ordinarily be confirmed or corrected in evidence. An applicant seeking interim relief must provide a clear route map identifying the proposed claims, relief and the basis for relief against non-parties.

Patrick Hughes sought continuation of an injunction against Martin Bellamy, Pathfinder 1 Ltd and AI Pathfinder Inc Ltd. The application concerned, among other matters, disclosure of documents relied on by the third defendant concerning an asset valuation, insolvency advice and a sale transaction. The claimant also had to explain proposed proceedings in the Isle of Man, possible receivership and unwinding of the sale, restrictions on expenditure, and a proposed cap on legal fees. The principal issues were whether disclosure should be ordered at this stage and what further information and directions were required before the return date.

1. Disclosure. The court declined to order immediate disclosure of the documents identified by the claimant. CPR 31.14 did not appear to apply because the relevant statements had been made orally and in an application notice, rather than in a statement of case, witness statement, witness summary or affidavit.
2. Adjournment condition. Although CPR 3.1(3) permits conditions to be imposed when adjourning a hearing, it was not principled to require production of the documents as a condition of giving the third defendant more time unless disclosure was independently appropriate.
3. The nature of the claim against the third defendant remained unclear. In those circumstances, the court could not determine whether the documents would fall to be disclosed once the claim had been properly formulated. The claimant remained free to make a proper disclosure application before or at the return date.
4. If the third defendant relied on the matters previously advanced but did not produce the supporting evidence, the court might draw adverse inferences. Counsel’s representations made on instructions at the short-notice hearing should ordinarily be confirmed in evidence or corrected if inaccurate.
5. The claimant was required to provide a summary explanation of the proposed Isle of Man counterclaim, the relief sought, the claims or relief affecting the second and third defendants, and the basis for injunctive relief against defendants who were not parties to those proceedings. The explanation concerning a receiver and any unwinding of the sale also had to identify the legal and procedural route to the relief sought.
6. Because the third defendant was understood not to be trading and to be discharging historic debts, notice of expenditure in the ordinary course of business could be increased to three days. The proposed cap on legal fees was adjourned to the return date pending evidence and explanation of the legal authority relied upon.