Speedier Logistics & Others –v- Aardvark Digital & Another [2012] EWHC 2776 (Comm)

Summary

The Commercial Court granted an application to discharge a prohibitory injunction on the basis that the party with the benefit of the injunction had failed to disclose a substantial change in the circumstances under which the injunction had been originally granted.

Background

In 2007, Aardvark Digital (“Aardvark”) agreed to buy a consignment of exercise equipment from a Chinese supplier, Ningbo Trends Fitness Equipment Company Limited (“Ningbo”). Speedier Logistics and its agents (“Speedier”) were engaged by Ningbo to transport the goods to the UK. Upon arrival in the UK, the goods were mistakenly released by Speedier to Aardvark, before Aardvark had paid Ningbo for them.

In February 2008, Speedier successfully applied to Court for an injunction preventing Aardvark from moving, dealing with, or diminishing the value of the goods. In its application, Speedier had asserted that the balance of convenience lay in the granting of the injunction as a result of its potential liability to Ningbo for the loss of the cargo.

The proceedings were later stayed in order to allow time for negotiations between Aardvark and Ningbo. During the period of the stay, Ningbo issued a claim in China against Speedier, in relation to the release of the cargo to Aardvark. Ningbo’s claim failed both at first instance in 2008, and on appeal in September 2009.

Aardvark only became aware of the existence of the Chinese proceedings, and their outcome, in July 2012 when Speedier made reference to them in correspondence.

Issues

Aardvark applied for discharge of the injunction on the basis that firstly, there was no continuing requirement for the injunction, and alternatively, Speedier had withheld knowledge of the new position from both Aardvark and the Court and thereby breached its continuing duty of disclosure.

The first issue the court considered was what the duty of a claimant is in circumstances where events occur after the date of the injunction which render information previously given to the court no longer correct. The court also considered whether that duty was complied with in this case, and what the consequences of a failure to comply with that duty would be.

Decision

The court granted Aardvark’s application and discharged the injunction.

There had been no reason in principle, once the Chinese proceedings were concluded, for Speedier not to inform Aardvark or the court within a reasonable time in relation to the substantial change in the information on which it had previously relied. The court emphasised that the main reason for this is that the exercise of the court’s discretion in granting the injunction was originally made on a particular basis, and therefore when that basis changed, the court should have been informed of that change.

In failing to inform Aardvark or the court of the Chinese proceedings, Speedier had breached its duty to disclose the information within a reasonable time, and it was therefore just that the injunction be discharged.

The judge in the case also noted in his obiter comments that in relation to both freezing injunctions and injunctions generally, in circumstances where a party has gained the benefit of the exercise of the court’s discretion on a certain basis, when that basis no longer exists it is imperative that that party obtains either the consent of the other party to the continuation of the injunction or reverts back to the court so that the court itself can decide whether or not to continue the injunction.

Comment

This case is a valuable reminder to parties applying for injunctive relief of their ongoing duty of disclosure and the potential consequences of failure to comply with that duty. Compliance with the duty will not always be easy in fast-moving litigation and where there are more than one set of proceedings which are relevant to the circumstances in which the injunction was granted.