Memory Corporation and Another v Sidhu and Another
| Jurisdiction | England & Wales |
| Judgment Date | 21 January 2000 |
| Date | 21 January 2000 |
| Court | Court of Appeal (Civil Division) |
Injunction - Mareva injunction - Non-disclosure - Counsel misrepresenting that freezing order applied for in standard form - Failure to inform court of possibility that evidence in support of application obtained illegally - Whether order to be discharged
The plaintiffs intended to take action against the first defendant, the second plaintiff's acting managing director, who was suspected of abusing his position to benefit the second defendant and another company in both of which he had a secret interest. Before issuing a writ the plaintiffs applied without notice for orders freezing the assets of both defendants and for a search order in respect of premises belonging to the second defendant. The application was made by counsel at 5.15 p.m. on 26 January 1999 without either a skeleton argument or a draft order and the judge was not given advance sight of the affidavit on which the application was based. At the continuation of the hearing at 9 a.m. the following morning the judge was shown draft orders provided by the plaintiffs' solicitors. Counsel assured the judge that each of the two draft orders was in standard form. In fact the freezing order was in terms which the Court of Appeal, in a previous reported case, had disapproved on the basis that a provision requiring the defendant to hand allegedly self-incriminating material to a supervising solicitor did not provide effective protection for the defendant. The plaintiffs also placed evidence of bank accounts before the judge without disclosing that the evidence had probably been obtained illegally. It emerged subsequently that five of those bank accounts belonged to the first defendant's brother. On 1 February 1999 another judge continued the freezing order against both defendants in a modified and more conventional form, removing what he described as unusual and oppressive provisions in the original order as to disclosure and delivery of documents. On 21 May 1999 the original judge refused an application by the first defendant to discharge the freezing order, having found that the acts and omissions of the plaintiffs' counsel in the without notice application were not deliberate.
On appeal by the first defendant:—
Held, dismissing the appeal, (1) that where the advocate's individual duty to the court on a without notice application overlapped with the collective duty to the court of the applicant and his lawyers, the court need not insist on one categorisation of duty applying to the exclusion of another; that in deciding on the consequences of any breach of either duty the court should consider all relevant circumstances, including the gravity and remediability of the breach, any excuse or explanation offered by the applicant or his lawyers and any prejudice to the respondent, bearing in mind the overriding objective and the need for proportionality; that the judge-made rule that a without notice order would be discharged if it was obtained without full disclosure could not be permitted to become an instrument of injustice; and that the relative culpability of the applicant and of his lawyers, though relevant, would seldom if ever be determinative of the consequences of any breach (post, pp. 1455E–G, 1459B).
(2) That evidence obtained by questionable means could be admitted without condoning illegality, although the court would have to decide how much weight to give such evidence; that on the evidence the judge had been entitled to conclude that the plaintiffs and their lawyers were not aware that the information about the first defendant's bank accounts was incorrect and were not put on inquiry as to how the information was obtained, so that they did not act in breach of their duty of full disclosure in relation to that matter; that, moreover, although the judge erred in approaching counsel's failure to disclose that parts of the freezing order were in non-standard form on the basis that the court had no discretion to apply the sanction of depriving the plaintiffs of the freezing order, his exercise of discretion was not significantly flawed since on the evidence he would still have concluded that such a sanction was inappropriate; and that in the circumstances, since counsel's error was not deliberate, only affected the form of the order rather than the decision to grant relief and was rectified within three working days, since counsel had tried his best to explain the error and apologised for it, and since to discharge the freezing order might unduly prejudice the plaintiffs in making serious allegations of fraud, there were ample grounds for affirming the judge's conclusion (post, pp. 1458C–1459B).
Per curiam. It is always prudent where an advocate's conduct of a case is subject to, or likely to be subject to, controversy for the advocate to make a full written account of his recollection as close in time to the events in question as possible. This is particularly desirable where the impugned conduct occurred at a hearing at which the other side were not present and no transcript is available. Within the limits of legal professional privilege the advocate's statement should be made available to the other side (post, pp. 1449H, 1459B).
Per Mummery L.J. It is unsatisfactory for an advocate to hand to the court for the first time during the course of an urgent hearing a long and complex draft order which requires close reading and careful scrutiny by the court. If the advocate is unable to produce a draft order for the judge to read before the oral hearing starts then the application should not be made, save in the most exceptional circumstances, until the order has been drafted and lodged (post, p. 1460B–C).
The following cases are referred to in the judgment of Robert Walker L.J.:
Bank Mellat v. Nikpour [
Behbehani v. Salem (Note) [
Brink's Mat Ltd. v. Elcombe [
Castelli v. Cook (
Den Norske Bank A.S.A. v. Antonatos [
Dering v. Earl of Winchelsea (
Dubai Aluminium Co. Ltd. v. Al Alawi [
Hytec Information Systems Ltd. v. Coventry City Council [
Kuruma v. The Queen [
Lloyds Bowmaker Ltd. v. Britannia Arrow Holdings Plc. [
Marc Rich & Co. Holding v. Krasner (unreported), 18 December 1998, Carnwath J.; (unreported), 15 January 1999; Court of Appeal (Civil Division) Transcript No. 84 of 1999,
Practice Direction (Mareva Injunctions and Anton Piller Orders) [
Practice Direction (Mareva Injunctions and Anton Piller Orders: Forms) [
Rex v. Kensington Income Tax Commissioners, Ex parte de Polignac (Princess) [
Siporex Trade S.A. v. Comdel Commodities Ltd. [
Tate Access Floors Inc. v. Boswell [
Tinsley v. Milligan [
The following additional cases were cited in argument:
Sal Oppenheim v. Rotherwood (U.K.) Ltd. (unreported), 19 April 1996; Court of Appeal (Civil Division) Transcript No. 386 of 1996,
Worldwide Corporation Ltd. v. Marconi Communications Ltd., The Times, 7 July 1999; Court of Appeal (Civil Division) Transcript No. 1073 of 1999,
Appeal from Hart J.
On 27 January 1999 Hart J. granted an application made without notice by the plaintiffs, Memory Corporation Plc. and Datrontech Hong Kong Ltd., on 26 January 1999 for Mareva (freezing) and Anton Piller (search) orders against the first defendant, Sukhbir Singh Siddhu. Both orders were continued, in modified form, by Jacob J. on 1 February 1999. The first defendant's application by notice of motion dated 15 March 1999 seeking, inter alia, the discharge of both orders, was dismissed by Hart J. on 21 May 1999. By notice of appeal dated 18 June 1999 the first defendant appealed with permission of the judge against that decision on the grounds, inter alia, that the judge had erred in holding that a misrepresentation made by counsel for the plaintiffs was not a breach of the duty of full and frank disclosure; alternatively, that if the misrepresentation was a breach of the advocate's duty only, the judge was in error in holding that a breach of that duty in the context of a without notice application should have any lesser consequence than a breach of the duty of full and frank disclosure; further or alternatively, that the judge erred in making a positive finding that the breach of duty was inadvertent, since he had no material from which he could have drawn any such conclusion; and that the judge also erred in concluding that the plaintiffs were not in breach of the duty of disclosure in having not informed the court that evidence of bank accounts which was before the court might have been obtained illegally.
The facts are stated in the judgment of Robert Walker L.J.
Robert Howe for the first defendant.
Timothy Higginson for the plaintiffs.
The second defendant did not appear and was not represented.
21 January 2000. The following judgments were handed down.
Robert Walker L.J. This is an appeal with the permission of the judge from part of an order of Hart J. made in the Chancery Division on 21 May 1999. The relevant part of the order dismissed an application by the first defendant, Mr. Sukhbir Singh Sidhu, for the...
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