The defendant applied for the discharge of a freezing order granted against it on the basis that there had been a failure by the claimant to provide full and frank disclosure when it applied for the order.
Males J noted that, although an applicant must make the court aware of potential difficulties with its case, it "need not extend to a detailed analysis of every possible point which may arise; and the defendant must identify with clarity (and, if necessary, restraint) the failures of which it complains, rather than adopting a scatter gun approach". (The defendant was criticised here for failing to set out its grounds in the application notice and instead served 130 pages of written evidence in which it included its allegations of non-disclosure. Males J said that that that was "not an acceptable to way to proceed").
The judge found that there had been 3 material non-disclosures by the claimant. He therefore considered whether the freezing order should be discharged or continued. Various factors were taken into account:
- The importance of the fact not disclosed to the judge's decision to grant the freezing order. Here, it was held that the order would and should have still been granted even in the absence of the non-disclosed facts.
- The need to ensure compliance with the duty of full and frank disclosure and whether or not the failure to disclose was "culpable": "If the failure was "innocent" … the question of punishment will not arise, while even in a case involving various and numerous failures, the requirement of deterrence can sometimes be met by an appropriate order as to costs". A failure will be "innocent" if the fact in question was not known to the applicant or its relevance was not perceived. The judge decided that the three failures here were innocent.
- The injustice to the claimant if the order is discharged should also be taken into account. That was a powerful factor here because a risk of dissipation had been proven here. (The defendant had made use of offshore companies, which can provide support for an argument that there is a risk of dissipation. Nor did it matter that the defendant no longer had access to that network: "The significance of this network is that it demonstrates that the defendant is ready and able to use such structures dishonestly in order to conceal the true beneficial ownership of assets").
Accordingly, the application to discharge was dismissed and the freezing order continued: "any other course would involve a major loss of perspective".
COMMENT: Males J's approach in this case might be contrasted with the comments of the judge in Otuo v Brierley (see Weekly Update 35/13) that it is no excuse for an applicant to say he was not aware of the importance of the matters which were not disclosed, or that he had forgotten those matters, and the freezing injunction may be discharged even if it would have been granted had full disclosure been made. However, in Otuo, criticism was also made of an application to discharge which is made on slender grounds or in relation to "trifling errors".
Courts therefore approach applications to discharge a freezing order as a balancing exercise, and it is hard to lay down hard and fast rules as to when an order may, or may not, be discharged.