The High Court in McDonagh -v- Ulster Bank Ireland Limited [2014] IEHC 476, High Court, Keane J, 22 October 2014, has once again made clear that any lack of candour or material non-disclosure of facts in an ex parte application will result in any order made being set aside and the substantive application being refused.

There were two applications before the Court; the plaintiff’s application for an interlocutory injunction pending trial and an application by the defendant for an order setting aside the interim injunction that had been granted to the plaintiff on an ex parte basis. 

The Plaintiff and his two brothers acting in partnership had purchased lands for €22 million and subsequently entered into a loan agreement with the defendant Bank to borrow the sum of almost €22 million to fund the purchase.

Legal issues arose in connection with the development of the lands which had implications for the Plaintiff’s repayment of the loan and he accordingly entered into a compromise agreement with the Bank. 

The Plaintiff issued proceedings against the Bank seeking specific performance of the compromise agreement or, in the alternative, an order awarding damages for breach of that agreement. The Plaintiff, in his application, asserted that he had complied with the terms of the compromise agreement but that the Bank had not.

The Plaintiff, in person, applied ex parte for, and was granted, an interim injunction restraining the bank from taking any steps, either to enforce the compromise agreement or to enforce or recover the loans or liabilities of the plaintiff pursuant to the agreement, pending the Plaintiff's application for an interlocutory injunction in similar terms.

The Bank brought an application to have the interim injunction set aside on grounds of material non-disclosure.

In considering whether there had been material non-disclosure Keane K quoted what he referred to as 'the golden rule' from the English case of Tate Access Floors Inc. v. Boswell [1991] Ch. 512 :

"No rule is better established, and few more important, than the rule (the golden rule) that a plaintiff applying for ex parte relief must disclose to the court all matters relevant to the exercise of the court's discretion whether or not to grant relief before giving the defendant an opportunity to be heard. If that duty is not observed by the plaintiff, the court will discharge the ex parte order and may, to mark its displeasure, refuse the plaintiff further inter partes relief even though the circumstances would otherwise justify the grant of such relief."

In the present case Keane J was satisfied that there was a significant and material failure to disclose matters which should have been disclosed in the context of the ex parte application for interim relief.  He found the facts that were not disclosed were directly relevant and, therefore, reasonably material, to the specific allegations made by the Plaintiff of breach of the compromise agreement by the Bank.  While he did not go so far as to find that the non-disclosure was deliberate, he was satisfied that it involved a culpable failure on the part of the Plaintiff.  Accordingly, he exercised his discretion to discharge the interim injunction and to refuse the application for an interlocutory injunction.

Comment

This is one of a series of recent cases where orders obtained ex parte have been set aside by the court for an alleged non-disclosure of material facts. 

The courts have repeatedly emphasised the absolute necessity for the utmost good faith and candour in all ex parte applications and the duty to ensure that all material and relevant facts are put before the court at ex parte stage.