Freezing Order Discharged Due to Lack of Full and Frank Disclosure

The High Court has discharged a worldwide freezing order and an access and imaging order applied for without notice against a holding company and one of its directors, finding that the application had been made without full and frank disclosure. The decision emphasises the need for those making such applications to consider what points or arguments the defendants would raise if they were present.

The applications were made against in the context of allegations of trade mark infringement and passing off. A judge granted the orders in broadly the terms sought by the claimants, at a hearing held in private and without notice to the defendants. The defendants later applied to discharge the orders on the ground of a failure of fair presentation.

The Court noted that the claimants were suing the holding company and its director as accessories to infringement by a subsidiary of the holding company. The Court observed that, in an application without notice for a freezing order or an access and imaging order, the case for excluding the respondent has to be justified by evidence, be persuasive, and be explained to the judge at the hearing. There must also be a conscientious attempt to compensate for the one-sided nature of the hearing.

The Court found that the claimants had not attempted to divert the judge from jumping to a conclusion about the necessity for a without notice hearing, and to ensure that facts which could point in a different direction were fairly presented. However, the failure openly to address the question of whether the hearing should proceed without notice was outweighed by other failures of fair presentation. The claimants had failed to distinguish between claims relating to 2019-2021 and those relating to 2021 onwards, and the question of whether there was a good arguable case in respect of the latter claims had not been addressed. The figures relied upon in applying for the freezing order were the estimated gross profits of the subsidiary, which was not a defendant, rather than the profits received by the holding company or the director. No good arguable case had been proved that the holding company and the director were liable as principals rather than accessories to the subsidiary's wrongdoing.

The orders were discharged. Refusing to re-grant the freezing order, the Court considered that, but for the failings in the claimants' presentation of their case, it was unlikely that a freezing order would have been granted, except possibly against the director for a much smaller sum.

The Court remarked that anyone applying without notice for a freezing injunction or an access and imaging order, and especially both together, must understand that there is a very high duty on them to ensure that such relief is not granted without the defendant's case, so far as it can be anticipated, being put squarely before the court, and any weaknesses in the applicant's case being identified. However much a judge may indicate that they see things the applicant's way, the absent respondent's likely case still needs to be articulated and understood.

However, the Court ordered the director to provide an undertaking to preserve documents. The parties had agreed that the documents already imaged should be held by the defendants' solicitors.