Warning shot fired over full and frank disclosure

The Court of Appeal judgment MEX Group Worldwide Ltd v Ford & Ors [2024] EWCA Civ 959 will be of interest both to those applying for ex parte orders (as a prime example of how not to do things) and those seeking to discharge them (in view of the court’s warnings around how these arguments should be presented). This article looks specifically at the court’s warning to those seeking to discharge ex parte orders on grounds of material non-disclosure.

Context

The claimant sought to overturn the discharge of a worldwide freezing order obtained on an ex parte basis in support of foreign proceedings pursuant to section 25 of the Civil Jurisdiction and Judgments Act 1982. In its judgment, the appeal court dismissed the appeal and found that (among other things) the first instance judge was right to discharge the freezing order and not renew it because of the claimant’s material failure to give full and frank disclosure at the ex parte hearing.

Importantly, the court’s judgment goes to some length to criticise the parties’ approach to the question of material non-disclosure. The decision goes as far as to suggest that, if the parties do not limit material non-disclosure attacks to clear-cut allegations, the court may decline to consider the matter at all.

Warning

Lord Justice Males cracked the judicial whip early on: ‘In this case we have been prepared to separate the wheat from the chaff, but I would suggest a different approach for the future. In future, if the court is presented with a long shopping list of alleged failures, with no attempt made to identify the relatively few points that really matter, it should simply decline to consider the issue at all.’

Lord Justice Coulson followed up with a barrage of criticism of the parties’ presentation of disclosure issues at first instance and on appeal, and put forward his own suggestions as to how it should be approached. In summary:

• He was strongly critical that dealing with full and frank disclosure may have taken up more time than other ‘substantive’ issues, complaining that his is neither ‘sensible’ nor ‘proportionate’.
• He stated that ‘quality not quantity should be the watchword’ and warned of a ‘real risk that the best points become buried in an avalanche of trivia’.
• He stuck with the mountaineering metaphor later on, complaining that the first instance judge faced a ‘blizzard’ of non-disclosure allegations while commending him for doing ‘his best’ to deal with them.
• He suggested it is almost always the case that arguments relating to material non-disclosure will ‘stand or fall on no more than a handful of alleged failures’.
• He advised that ‘those preparing this sort of attack in the future should ensure that they concentrate their efforts on alleged failures of disclosure which are clear-cut and obviously important’.

This is not the first time that the court (or even Lord Justice Males) has suggested that litigants ought to take a targeted approach to arguments about material non-disclosure. In National Bank Trust v Yurov and Others [2016] EWHC 1991 (Comm), Mr Justice Males (as he then was) required the defendants to identify from a longer list their six best points and (in his own words) deliberately sought to encourage ‘restraint and a sense of proportion’. On any view, things have now gone one step further with the suggestion that the court should simply decline to consider the issue at all if it finds it is dissatisfied with the manner in which the application is presented.

Analysis

One might take the view that the Court of Appeal’s threat is more a reflection of its general frustration at the specific facts of this case than a serious suggestion or guidance to the courts below. The case was complex (relating to matters already the subject of long-running litigation in the British Virgin Islands) and the two parties filed lengthy skeleton arguments for the appeal (together exceeding 250 pages). To compound matters, the appeal court was forced to deal with a last-minute application to adduce new evidence, and (as is often the case in contested fraud claims and when freezing orders are at stake) the parties were fighting tooth and nail. Lord Justice Coulson described the dynamic as ‘trench warfare of the most attritional kind’.

Legal practitioners might consider it harsh for the court to make these sorts of criticisms and demands, particularly when:

• There was disagreement between the lower court and the appeal court as to what constituted non-disclosure and what was sufficiently material to justify the discharge of the freezing order.
• There was a legitimate argument to make that, in high-stakes litigation where one party is allegedly in breach of full and frank duties, a high number of instances of non-disclosures may (of itself) be a relevant factor in determining materiality.
• Identifying ‘clear-cut and obviously important’ arguments is rarely straightforward in the midst of hard-fought litigation (particularly in view of the two points raised above) and far easier to assess in hindsight.

Whether or not the Court of Appeal’s threat will be acted upon and what it will take to get to that point remains to be seen. For now, all practitioners contemplating (or facing) arguments of material non-disclosure would do well to:

1. Exercise caution and be selective when identifying examples of alleged failures in the duties of full and frank disclosure for the court to determine.

2. If wishing to identify and rely upon numerous examples, find a way of presenting the information that ensures the court understands easily which ones are considered most fundamental.

3. Bear in mind that this judgment could present a useful line of attack for unworthy applicants facing allegations of material non-disclosure.

Edward Irwin is vice-president of the Junior London Solicitors Litigation Association and a senior associate at Peters & Peters. Jonathan Tickner is a partner at Peters & Peters