Bowmaker Ltd. V Britannia

[1988] 1 W.L.R.
1337 Page 1
[1988] 1 W.L.R. 1337 [1988] 3 All E.R. 178 (1989) 86(1) L.S.G. 40 (1988) 132 S.J. 1527 Times, March 19, 1987
Official Transcript [1988] 1 W.L.R. 1337 [1988] 3 All E.R. 178 (1989) 86(1) L.S.G. 40 (1988) 132 S.J. 1527 Times,
March 19, 1987 Official Transcript
(Cite as: [1988] 1 W.L.R. 1337)
© 2012 Thomson Reuters.

[1988] 1 W.L.R. 1337 Page 2
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Mareva injunction and the summons for

directions when neither the action nor the third party
*1337 Lloyds Bowmaker Ltd. v Britannia Arrow proceedings had been set down for trial the third
Holdings Plc. party applied for the Mareva injunction
to be discharged on the ground that it had been
1984 L. No. 2030 obtained as a result of material non-disclosure by the
defendants. The judge dismissed the third party's
application.
Court of Appeal
On appeal by the third party:—
L.JJ. Dillon, and Glidewell
Held, allowing the appeal, that a party
1987 March 18 applying for a Mareva injunction ex
parte should make full and frank disclosure of all
Injunction—Mareva injunction—Non-disclosure— material facts; that since the defendants had failed to
Defendants' Ex parte application by defendants for make proper disclosure of material facts on their
Mareva injunction against third party—Breach of application for a Mareva injunction
duty to disclose all relevant matters on ex parte against the third party, the injunction should be
application—Third party's delay in making discharged; that the third party's delay in applying for
application for discharge of injunction—Whether a discharge of the Mareva injunction
injunction to be discharged—Whether delay bar to had not prejudiced the defendants and was not a bar
discharge of injunction to its discharge; and that in the circumstances, the
court would not exercise its discretion in the
The plaintiffs brought an action against the defendants' favour by granting a stay on the discharge
defendants claiming arrears of rental due under of the injunction or by the grant of a fresh injunction
several leasing agreements for telecommunications (post, pp. 1341E–F , 1343H–
equipment. The defendants alleged in their defence 1344A , 1346C–E , 1347C–
that the rental charges were grossly excessive and D , 1348E–F , 1349A–B
issued a third party notice against an expert in , 1350A ).
telecommunications equipment alleging that they had
entered into the leasing agreements in reliance on the Bank Mellat v. Nikpour [1985] F.S.R. 87, C.A.
third party's advice and alleging that he had considered .
defrauded them. They applied ex parte for a
Mareva injunction against the third party but in Decision of Sir Neil Lawson, sitting as a judge of the
their affidavit in support did not disclose that the Queen's Bench Division, reversed.
contracts were made with the third party's company
and wrongly stated that the third party had given no
explanation for the amounts charged for hiring the The following cases are referred to in the
equipment. The judge granted the defendants' judgments:
application. Two years after the grant of the
• Bank Mellat v. Nikpour [1985] F.S.R. 87, C.A.
• Eastglen International Corporation v. Monpare S.A. (1987) 137 N.L.J.Rep. 56, C.A.
• Hytrac Conveyors Ltd. v. Conveyors International Ltd. [1983] 1 W.L.R. 44; [1982] 3 All E.R. 415, C.A.
• Rex v. Kensington Income Tax Commissioners, Ex parte Princess Edmond de Polignac [1917] 1 K.B. 486, C.A.
*1338
• Yardley & Co. Ltd. v. Higson [1984] F.S.R. 304, C.A.
INTERLOCUTORY APPEAL from Sir Neil
No additional cases were cited in argument. Lawson sitting as a judge of the Queen's Bench
Division.

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which were the subject matter of the plaintiffs' claim;

By writ dated 31 May 1984 the plaintiffs, (3) the judge erred and/or misdirected himself in law
Lloyds Bowmaker Ltd., claimed from the defendants, in holding that the defendants were not guilty of any
Britannia Arrow Holdings Plc., £63,138.09 as arrears non-disclosure when applying for the injunction in
of rental due under 27 agreements for the leasing of failing to disclose or draw to the attention of
telecommunications equipment. By third party notice Kennedy J. when applying for the injunction that
dated 6 August 1984 the defendants joined A. G. there was clear evidence that the assertion by Mr.
Lavens to the action. On 20 August 1984 on an ex Tyler in his affidavit sworn on 16 August 1984 which
parte application by the defendants, Kennedy J. was relied upon by the defendants in support of their
granted a Mareva injunction against the application that when he signed the rental agreements
third party. On 2 July 1986 the third party applied for he believed that they were delivery notes was false;
the discharge of the Mareva injunction on (4) the judge erred and/or misdirected himself in law
the ground that it had been obtained as a result of in holding that the non-disclosure by the defendants
material non-disclosure by the defendants. The judge when applying for the injunction of the third party's
dismissed the application. explanation for the rental prices charged under the
rental agreements which had been communicated to
By notice of appeal dated 28 July 1986 the third party them was immaterial; (5) the judge erred and/or
appealed on the grounds that (1) the judge erred misdirected himself in law in holding that the
and/or misdirected himself in law in holding that the cumulative effect of the defendants' non-disclosures
non-disclosure by the defendants when applying for of facts when applying for the injunction was not
the injunction of their knowledge of the existence and such as to be material; and (6) the judge erred and/or
involvement of Sprigchoice Ltd. in the dealings misdirected himself in law in holding that the
between the defendants and third party was defendants were not guilty of having failed to make
immaterial; (2) the judge erred and/or misdirected full and frank disclosure when applying for the
himself in law in holding that the defendants were not injunction.
guilty of any non-disclosure when applying for the
injunction in failing to disclose that it was not their The facts are stated in the judgment of Glidewell L.J.
intention to rely as against the third party on any
knowledge or belief on his part of any want of Representation
authority on the part of the defendants' office
manager, Mr. Tyler, to sign the rental agreements
• Jeffrey Burke Q.C. and Colin Stutt for the third party.
• Patrick Twigg Q.C. and Robert Moxon Browne for the defendants.
in the field of telephone equipment and was alleged
GLIDEWELL L.J. to have acted as the agent of Hamilton Leasing Ltd.
The defence claims rescission of the agreements and
By a specially indorsed writ issued in May counterclaims for negligence by the third party.
1984 the plaintiffs, Lloyds Bowmaker Ltd., as
assignees of Hamilton Leasing Ltd., claimed On 6 August 1984 the defendants issued a
£63,138.09 as arrears of rental under 27 agreements third party notice against Mr. Lavens making
for the leasing of telephone equipment made between allegations to which I shall refer later. On 20 August
Hamilton Leasing *1339 Ltd. and the 1984 Kennedy J., on the defendants' ex parte
defendants, Britannia Arrow Holdings Plc., between application, granted a Mareva injunction
September 1981 and July 1983. against the third party and against a company called
Sprigchoice Ltd. The injunction restrained the third
The defendants' defence in summary is that the rental party and the company from “disposing of or
charges under the agreements were grossly excessive removing from the jurisdiction or otherwise
and unfair and that the defendants had entered into disposing of or dealing with or parting with their
the agreements in reliance on the advice of Mr. assets within the jurisdiction” in excess of £681,686,
Lavens, the third party, who purported to be an expert and save for the sum of £1,000 a month. It also

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restrained the third party and the company from agreement was for a period of five years. It is alleged
disposing of or dealing with the sum of £500,000 or that on the first agreement the price charged to
other receipts in respect of the rental agreements. The Hamilton Leasing Ltd. was reasonable, and thus the
third party and the company were also required to *1340 rental charge was approximately what
disclose information which would, the defendants might reasonably be expected. However, starting
hoped, enable the moneys received by the third party with the second agreement, it is alleged that
by virtue of the transactions to be traced. These Commend Communications, to the third party's
injunctions were varied on 20 December 1984 and knowledge, charged to Hamilton Leasing Ltd. prices
again on 1 May 1985, so as to allow various which were excessive and which gradually became
payments for the third party's costs, but otherwise less and less reasonable. The effect was that the
remain in force. rental charge being made by Hamilton Leasing Ltd.
vastly exceeded what would have been reasonable.
On 2 July 1986 the third party and Sprigchoice Thus, in relation to the penultimate agreement
Ltd. applied on summons to Sir Neil Lawson for the entered into on 14 July 1983, it is alleged that the
discharge of the Mareva injunction on quarterly rental charged was £3,119.14, whereas a
the general ground that it was obtained as a result of fair and reasonable quarterly rental would have been
material non-disclosure by the defendants. The the sum of £53.65. In total it is alleged that the
application was dismissed. With the leave of Sir Neil defendants under the agreements were required to
Lawson, the third party now appeals against that pay total rentals over the five-year period of some
decision. £724,486, whereas a reasonable total rental would
have been the sum of £42,800.00.
The third party notice alleges that Mr. Lavens,
trading as Commend Communications, specialised The defendants' claim against the third party is put in
and had expertise in the supply and installation of a number of alternative ways: first, it is alleged as
telecommunications equipment for office purposes. It breach of an implied term in a contract between
is said that in February 1981 the defendants, by Mr. them; secondly, in negligence; thirdly, as the result of
White (their company secretary), sought the third misrepresentation (the representation alleged being
party's advice as to the supply of telecommunications implied, not expressed); and, finally, in deceit.
equipment for their offices, and that he agreed to give
such advice. It is alleged that the third party knew, or The material before Kennedy J., in addition to the
ought to have known, that neither Mr. White, nor Mr. pleadings to which I have referred, consisted of three
Tyler, the defendants' office manager, had any affidavits. The deponents were Mr. White, Mr. Tyler
expertise in matters relating to telecommunications and Mr. Simmonds, a telecommunications consultant
equipment, and that they would rely upon him to whose evidence was that the prices charged were
advise them, amongst other matters, as to whether the excessive and unreasonable. Mr. White's evidence
prices charged to the defendants for such equipment was to the effect that he sought the third party's
were fair. advice in relation to the first agreement, and that he
signed that agreement in the belief that the rental was
In February 1981, on the third party's advice, a fair, genuine and reasonable rental. Thereafter, Mr.
the defendants agreed to acquire an internal office White left it to Mr. Tyler to sign the agreements. Mr.
telephone system. The equipment was supplied by Tyler's evidence was that he merely signed the
Commend Communications to Hamilton Leasing agreements as an acknowledgment that the
Ltd., from whom the defendants agreed to lease the equipment had been installed. He said that he gave no
equipment. Thereafter the defendants entered into 26 attention to the rental figure because it was no part of
further similar agreements with Hamilton Leasing his responsibility to check it. He did not inform Mr.
Ltd., all relating to further equipment supplied by White of the amount being charged. Moreover, Mr.
Commend Communications. The rental charge made Tyler alleged that he only had authority to expend
by Hamilton Leasing Ltd. was of course related to the sums up to £200 without reference to higher authority
price charged by Commend Communications for the and he could not believe that the third party, thought
equipment and its installation. In each case the rental he had authority to incur obligations of the size
represented by the various agreements.

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concern. It is specifically denied that Mr. Tyler or

Mr. White's affidavit exhibits a number of Mr. White relied upon the third party's advice.
specimen rental agreements in which the supplier of Misrepresentation, negligence, breach of contract and
the equipment is described as Commend deception are all denied.
Communications. In paragraph 13 of his affidavit Mr.
White says: As I have said, it was almost two years after
the grant of the Mareva injunction that
“In all my dealings with Lavens I understood that the third party's application to discharge it came
Commend Communications was his business name. I before Sir Neil Lawson. The point made before the
did not realise that it belonged to a £100 company. judge, and made before us, was, in short, that a party
Lavens never disclosed the existence of Sprigchoice to proceedings who seeks an injunction ex parte,
Ltd. to me or that his organisation was a limited particularly a Mareva injunction, owes a
company.” duty to disclose to the court all facts which are
material to the proceedings. It is alleged that the
At the end of his affidavit Mr. Tyler says: information put before Kennedy J. did not disclose all
material facts, or draw them to the attention of that
judge, and that accordingly the Mareva
“I now know that Commend Communications is a injunction should be discharged.
business name of a £100 company called Sprigchoice
Ltd. Nowhere from Lavens' letter does this fact
appear and in all my dealings with Lavens he never Mr. Burke, for the third party, makes the following
disclosed this fact to me.” submissions as to the law. A party who seeks relief
ex parte is under a duty to the court to make the
fullest disclosure of all material facts. He must
In Mr. White's affidavit he exhibits a copy of a disclose any defence he has reason to anticipate may
telex from Hamilton Leasing Ltd. in which that be advanced. If he does not comply, he will be
company say that they sometimes paid by cheque deprived of the fruits of his order without
made out to Sprigchoice Ltd. Mr. White also exhibits consideration of the merits and irrespective of
a report upon Sprigchoice Ltd. which reveals it to be whether, had he made such disclosure, he would or
a £100 company of which *1341 the would not have obtained the order. It matters not
third party is the sole director and owner of 99 shares, whether the non-disclosure is deliberate or innocent.
his wife being the owner of the remaining share. Mr. The court may allow a limited latitude for a slip, but
White also produces the accounts of Sprigchoice Ltd. only where the party seeking relief has corrected the
for the years 1981–1983. error quickly.
Following the grant of the Mareva Mr. Twigg, for the defendants, accepts that an
injunction, third party directions were given on 30 applicant for a Mareva injunction has a
November 1984. Thereafter, the third party filed a responsibility to disclose all material facts, but
defence to the third party notice. This alleges that it submits that failure to comply does not automatically
was Sprigchoice Ltd. who traded as Commend lead to the discharge of the injunction. He submits
Communications, and that it was Sprigchoice Ltd. that a party should not be deprived of relief if he was
using that name which supplied all the equipment to innocent in not disclosing the facts, and if he himself
Hamilton Leasing Ltd. It denies that the third party had done nothing wrong. Alternatively, he submits
personally owed any duty to the defendants, either in that, even if an injunction initially granted is
contract or in tort. The defence neither admits nor discharged, the court should be ready to consider a
denies that the prices charged on some of the later further application for an injunction based upon the
agreements were excessive. It says in effect that the facts as they appear at the time of the application to
defendants are a substantial company perfectly discharge the first injunction.
capable of making their own business decisions, and,
if they chose to enter into a number of rental
agreements without checking the prices or obtaining The authorities to which Mr. Burke refers us
alternative quotations elsewhere, that was their start with Rex v. Kensington Income Tax

[1988] 1 W.L.R. 1337 Page 6
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Commissioners, Ex parte Princess Edmond de and frank disclosure of all material facts. He ought to
Polignac [1917] 1 K.B. 486 , a decision of this state the nature of the case and his cause of action.
court. That case involved an ex parte application for Equally, in fairness to the defendant, the plaintiff
an order of prohibition, not for an injunction. ought to disclose, so far as he is able, any defence
However, the judgments contain dicta which relate to which the defendant has indicated in correspondence
ex parte applications generally. Warrington L.J. said, or elsewhere. It is only if such information is put
at p. 509: *1342 fairly before the court that a Mareva
injunction can properly be granted.”
“It is perfectly well settled that a person who makes
an ex parte application to the court — that is to say, Donaldson L.J. said, at p. 90:
in the absence of the person who will be affected by
that which the court is asked to do — is under an “This principle that no injunction obtained ex parte
obligation to the court to make the fullest possible shall stand if it has been obtained in circumstances in
disclosure of all material facts within his knowledge, which there was a breach of the duty to make the
and if he does not make that fullest possible fullest and frankest disclosure is of great antiquity.
disclosure, then he cannot obtain any advantage from Indeed, it is so well enshrined in the law that it is
the proceedings, and he will be deprived of any difficult to find authority for the proposition; we all
advantage he may have already obtained by means of know it; it is trite law.”
the order which has thus wrongly been obtained by
him. That is perfectly plain and requires no authority He then quoted the passage from the judgment
to justify it. of Warrington L.J. in Ex parte Princess
Edmond de Polignac [1917] 1 K.B. 486 , 509
Scrutton L.J. said, at p. 514: which I have quoted above. Donaldson L.J. said, at
pp. 91–92:
“it has been for many years the rule of the court, and
one which it is of the greatest importance to maintain, “the court will be astute to ensure that a
that when an applicant comes to the court to obtain plaintiff who obtains an injunction without full
relief on an ex parte statement he should make a full disclosure — or any ex parte order without full
and fair disclosure of all the material facts … the disclosure — is deprived of any advantage he may
applicant must state fully and fairly the facts, and the have derived by that breach of duty …. The rule
penalty by which the court enforces that obligation is requiring full disclosure seems to me to be one of the
that if it finds out that the facts have not been fully most fundamental importance, particularly in the
and fairly stated to it, the court will set aside any context of the draconian remedy of the
action which it has taken on the faith of the imperfect Mareva injunction. It is *1343
statement.” in effect, together with the Anton Piller
order, one of the law's two ‘nuclear’ weapons. If
Bank Mellat v. Nikpour [1985] F.S.R. 87 was access to such a weapon is obtained without the
a decision of this court relating to a Mareva fullest and frankest disclosure, I have no doubt at all
injunction. On an inter partes application Robert Goff that it should be revoked.”
J. discharged the injunction on the ground that there
had not been a full and proper disclosure of the facts Slade L.J. agreed.
by the plaintiffs. On appeal the plaintiffs argued that,
if there had been a non-disclosure, it had been Yardley & Co. Ltd. v. Higson [1984] F.S.R. 304
innocent. The court dismissed the appeal, holding in , which was heard after the Bank Mellat case
effect that even innocent non-disclosure was fatal. [1985] F.S.R. 87 , was a passing off action in
Lord Denning M.R. said, at p. 89: which the plaintiffs obtained an ex parte injunction.
This was granted for three weeks in the first instance.
“When an ex parte application is made for At the end of that time, when the plaintiffs made an
a Mareva injunction, it is of the application to renew the injunction, they realised that
first importance that the plaintiff should make full they had failed to disclose some material fact, but

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brought it to the attention of Goulding J. on the Bank Mellat case about the importance of
second application. Lawton L.J. said, at p. 309: full and frank disclosure, and I would support any
policy of the courts which was designed to buttress
“even if there has to be a discharge of one injunction that by declining to give anybody any advantage
because there has not been proper disclosure, that from a failure to comply with that obligation. I would
does not prevent a further application for an go further and say that it is no answer that if full and
injunction being made.” frank disclosure had been made you might have
arrived at the same answer and obtained the same
Oliver and Slade L.JJ. agreed. The order of Goulding benefit. This is the most important duty of all in the
J. granting a modified injunction on the second context of ex parte applications.”
application was therefore upheld.
Nevertheless, in relation to the second injunction,
In Eastglen International Corporation v. because the default was wholly that of the first
Monpare S.A. (1987) 137 N.L.J.Rep. 56 , the solicitor, the court (Ralph Gibson and Nicholls L.JJ.
first solicitor for the plaintiffs on an application for a agreeing) allowed the appeal and continued the
Mareva injunction swore an affidavit which second injunction.
clearly omitted a most material fact. When the
defendants applied to discharge the injunction, the In my view these authorities support the
plaintiffs went to other solicitors who discontinued propositions of law advanced by Mr. Burke as set out
the first action and started a fresh action, coupled above. However, Mr. Twigg's last submission is also
with a fresh application, for a Mareva correct in my view, i.e., even though a first injunction
injunction backed by an affidavit which made clear is discharged because of material non-disclosure, the
the failure to disclose in the first action. On an court has a discretion whether to grant a second
application to discharge the second injunction Mareva injunction at a stage when
because of the non-disclosure in relation to the first *1344 the whole of the facts, including that of
injunction, it being accepted that the failure was the original non-disclosure, are before it, and may
wholly due to the solicitor, Gatehouse J. said that, if well grant such a second injunction if the original
an omission is innocent and the undisclosed fact is non-disclosure was innocent and if an injunction
not of central importance, the court may well decline could properly be granted even had the facts been
to discharge the injunction. However, this was obiter, disclosed.
because in the particular case he did discharge the
injunction. On appeal Sir John Donaldson M.R. said, Mr. Burke complains of four respects in which
at p. 56: material was not disclosed before Kennedy J. They
can be summarised as follows.
“I stand by everything that I said in the
• (1) That the picture presented by the plaintiffs was that at the time when the telephone equipment was
acquired and leased to the defendants, Mr. White and Mr. Tyler both believed that they were dealing with the
third party personally, trading as Commend Communications, and did not know of the existence of Sprigchoice
Ltd. or indeed that the third party owned a limited company. However, submits Mr. Burke, it is clear that Mr.
White did know of the existence of Sprigchoice Ltd. and of the part it played. He refers us to the following
documents which were placed before the court on the application to discharge. First, an invoice dated 30 April
1980 relating to an earlier transaction for the supply of equipment to Britannia Financial Services Ltd. by
Sprigchoice Ltd. Admittedly this did not relate to any of the transactions the subject of these proceedings.
Secondly, a letter from the third party to Mr. White dated 4 February 1981 relating to the first of the relevant
transactions, signed “yours faithfully Sprigchoice Ltd. AG Lavens,” together with another letter of the same
date to Mr. White from a Mr. Henderson which says “we would confirm that Sprigchoice Ltd., who trade under
the name Commend Communications …” Thirdly, a delivery note dated 23 April 1981 headed “Sprigchoice
Ltd. trading as Commend Communications” which related to some of the relevant material. This note is signed
by Mr. Tyler.
• In his judgment on this issue Sir Neil Lawson said:

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“I am prepared to accept for the purposes of this application that there were persons in important positions in
the employment of the defendants who did realise that Sprigchoice Ltd. was in some way involved in these
transactions or some of them but in my judgment that is irrelevant because of the causes of action in this case. It
is said that the judge's view on the injunction might have been affected, but basically this is a case of fraud and
there is no way that the third party could escape personal liability. Sprigchoice Ltd. is an alter ego of the third
party and the documents in relation to the use of Sprigchoice Ltd.'s name are most extraordinary. The fact that
the defendants did not tell the judge that they knew of the existence and involvement of Sprigchoice Ltd. was
wholly immaterial to the exercise of the judge's discretion.”
• Mr. Twigg argues that this is a correct analysis, but, with respect to the judge, I disagree. It is true that
the deceit and negligence were alleged as being those of the third party personally, and on those causes of action
the existence of Sprigchoice Ltd. was immaterial. (I note incidentally that the word “fraud” is first used in the
third party notice after it was further amended in March 1987.) However, as I have said, one of the alleged
causes of action is breach of contract, and it clearly was material to this cause of action whether the contract
was with the company or with the third party personally. Mr. Burke further argues with justification that, since
the alleged misrepresentation is based upon an implied as opposed to an expressed representation, the cause of
action in contract must be one of considerable importance to the *1345 defendants.
Accordingly, in my view the failure by Mr. White and Mr. Tyler to disclose in their first affidavits that they
knew or had documents which showed that at least in some of the transactions the contract was with
Sprigchoice Ltd. rather than with the third party personally was clearly a material non-disclosure.
• (2) The second matter of which Mr. Burke complains is Mr. Tyler's assertion in his first affidavit that
he had no authority to sign rental agreements relating to sums larger than £200, and that the third party must
have known this. Mr. Burke points to evidence which shows that Mr. Tyler's authority was not so limited and
that the third party would not have thought that it was.
• Mr. Twigg points out that the defendants in their third party notice do not mention, or rely upon Mr. Tyler's
alleged lack of authority. Thus, he submits the point was of no materiality in the action.
• Sir Neil Lawson held that non-disclosure in this connection was immaterial, and in this respect I agree with him.
• (3) The third complaint is based upon the assertion in Mr. Tyler's affidavit that he signed the rental
agreements thinking that they were merely notes. The answer to this is similar to that to the second complaint,
i.e., that the defendants do not rely in their pleading upon want of authority in Mr. Tyler to enter into the rental
agreements. For this reason the judge held that this point also was not material, and again I agree with him.
• (4) Mr. Burke's fourth complaint of non-disclosure is based upon a passage in Mr. White's first
affidavit to which I have not so far referred. At paragraph 11 he said:

“explanations were repeatedly sought from Lavens as to why the rental amounts were so high, why there was
such a range in the rental amounts for similar equipment and where the sums he had received from Hamilton
Leasing Ltd. had gone. He was unable to give any explanations and refused to disclose the whereabouts of the
money.”
Mr. White also said in the first sentence of First, a Britannia Arrow file note dated 7 September
paragraph 14: 1983 of a meeting between Mr. White and a
colleague, representatives of Hamilton Leasing Ltd.,
“Britannia have not received a satisfactory or any the third party and a gentleman from Messrs. Clifford
explanation for the rental amounts which they regard Turner. It is clear that during this meeting Mr. White
as grossly excessive.” asked the third party to explain his prices and that the
third party gave an explanation, which may or may
Mr. Burke showed us the following documents not have been satisfactory, but certainly purported to
exhibited to an affidavit sworn by the third party on 1 explain the size of the prices charged.
July 1986.

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Secondly, a letter from Hamilton Leasing Ltd. to the at a disadvantage by the delay, but I cannot see that
defendants dated 10 April 1984 in reply to a letter of they were. In this respect Sir Neil Lawson held that
12 January 1984 in which the defendants had said: the delay did not debar the application for setting
“neither Commend Communications nor Mr. Lavens aside the injunction, and I agree with him. In my
… has ever been able to explain how any of the rental view, therefore, the Mareva injunction
amounts were calculated.” In their letter Hamilton granted by Kennedy J. should be discharged.
Leasing Ltd. said: “Mr. Lavens assures us that
Britannia Arrow have not been overcharged on this Mr. Twigg urges that, even if the first
project. The high cost of the installation is put down injunction is discharged, we should at this stage
to,” and there then follow four alleged reasons for the exercise our discretion, either ourselves to grant a
high cost of the installation.*1346 further Mareva injunction, or to remit
the matter to the High Court to enable a further
Again, these may or may not be satisfactory, application for a Mareva injunction to
but they do purport to be explanations emanating be made and in some way preserve the status quo in
from the third party. In his judgment on this issue Sir the meantime. For some time during the course of the
Neil Lawson said: argument I was of the opinion that this was probably
the proper course to adopt. Certainly on the more
“When one comes to look at the third party's defence recent authorities it is my view that the High Court
there is no defence along the lines of this letter and would have a discretion to grant a second
there is no evidence along the lines of that letter. The Mareva injunction, and it may well be that this
inference is that these were not genuine explanations court would have a discretion to preserve the status
and that it is an attempt to cover up the swindle. quo in the meantime pending such an application, or
Therefore in my judgment the defendants were not a discretion itself to grant a second Mareva
guilty of material non-disclosure.” injunction. I note, as I have said that, while the third
party has never admitted that his prices were
Mr. Burke's point is that, since it is not admitted that excessive, on the other hand he has not denied it in
the prices were excessive or unreasonable, even his pleadings. It seems probable that the defendants
though the precise explanations are not relied upon in will be able to establish that the third party took
the third party's defence, nevertheless at the ex parte advantage of the fact that they left the conduct of
stage the possibility that these explanations might, in affairs to Mr. Tyler, who, whether through
part at least be relied upon should have been incompetence or for some other reason, signed the
envisaged, and it was wrong to say that no rental agreements without giving any proper
explanation of the prices had been given. With this consideration to the rental charges and prices set out
submission I also agree. in the agreements. Whether this will suffice to
establish a cause of action against the third party
personally remains to be seen. *1347
I am therefore of the view that in the evidence
placed before Kennedy J. on the application for the
Mareva injunction the failure to reveal that Mr. Mr. Burke argues, however, that it is at this
White and Mr. Tyler had knowledge that Sprigchoice stage that delay does become relevant. He points out
Ltd. was involved in at least some of the transactions that it is now over two and a half years since the third
was a material non-disclosure, and that the statement party proceedings were commenced, and, although
that the third party never gave an explanation for the the summons for directions was over two years ago,
prices was a material mis-statement. Accordingly, in neither the action nor the third party proceedings
accordance with the criteria laid down in the have been set down for trial. I agree with him that
authorities to which I have referred, but in particular this is a most relevant consideration. A
Bank Mellat v. Nikpour [1985] F.S.R. 87 , I Mareva injunction, as Donaldson L.J. in
take the view that the injunction granted should be Bank Mellat v. Nikpour [1985] F.S.R. 87 , 92,
discharged. The fact that the third party's advisers said, is a draconian remedy. It is intended as an
waited almost two years to make the application adjunct to the action itself, not as a substitute for
could have been material if the defendants were put relief to be obtained on trial. In other words, a
plaintiff who succeeds in obtaining a Mareva

[1988] 1 W.L.R. 1337 Page 10
(Cite as: [1988] 1 W.L.R. 1337)
injunction is in my view under an obligation to press discretion which, despite non-disclosure, might allow
on with his action as rapidly as he can so that if he an injunction to stand in an exceptional case, as in
should fail to establish liability in the defendant the effect was done in Eastglen International
disadvantage which the injunction imposes upon the Corporation v. Monpare S.A. (1987) 137 N.L.J. Rep.
defendant will be lessened so far as possible. There is 56 . That does not, however, arise in the
no sign that the defendants in the present case have present case.
been active in pressing ahead with these proceeding.
The case of the defendants against the third party,
It is not for this court to direct whether or not Mr. Lavens, was pleaded as a case of breach of the
the defendants should make another application for a duty of care of an expert adviser and breach of an
fresh Mareva injunction. Certainly, if implied representation, alternatively, a case of fraud,
they do so the factors to which I have just referred, although the actual word “fraud” is not used until the
amongst other matters, should no doubt be taken into recent re-amendment of the pleading. There is an
account by the judge who hears the application but alternative plea in contract — that there was a
for my part I am persuaded that we should not grant a contract between the defendants and the third party
fresh Mareva injunction ourselves, and embodying the duty relied on — but for present
that we should not, because of the delay, take any purposes I disregard that.*1348
other steps to preserve the status quo.
The defendants' trouble is that when they
Accordingly, I would allow the appeal and discharge applied to Kennedy J. ex parte for the Mareva
the existing injunction. injunction they over-gilded the lily. They had pleaded
in considerable detail their case of alleged breach of
DILLON L.J. duty of care and implied representation with a case of
deceit woven into it. When they came to prepare the
As I said in a judgment given in this court only evidence for the Mareva application,
last week, I would endorse as emphatically as I can they sought to put in maximum prejudice against the
the views expressed by Lord Denning M.R. and third party. Thus Mr. White, their company secretary,
Donaldson L.J. in Bank Mellat v. Nikpour included in his affidavit the passage at the end of
[1985] F.S.R. 87 , that the making of an paragraph 13 in relation to non-disclosure of the
application for a Mareva injunction existence of Sprigchoice Ltd. to which Glidewell L.J.
requires the fullest and frankest disclosure to the has referred and also the passages in paragraphs 11
court on the part of the applicant. If an injunction is and 14 in relation to the failure of the third party to
obtained and there has been material non-disclosure give any explanations of the prices charged and his
by the applicant, then prima facie the injunction alleged refusal to disclose the whereabouts of the
ought to be discharged. money. These are statements calculated, in a case
such as this, to prejudice the third party, and thus in
my judgment highly material to the application for
This is an instance — of particular importance the Mareva injunction against the third
because of the draconian nature of a Mareva party, even though the third party would be
injunction — of the general rule as to ex parte personally liable in damages for his fraud or breach
applications which is very clearly set out in the of professional duty, even if he was acting through a
judgments of this court in Rex v. Kensington company. The same goes for the statements of Mr.
Income Tax Commissioners, Ex parte Princess Tyler at the end of his affidavit. But in fact Mr. White
Edmond de Polignac [1987] 1 K.B. 486 to and Mr. Tyler knew perfectly well that the third party
which Glidewell L.J. has referred. That must, I was carrying on business through a company, and
apprehend, as a matter of jurisdiction be a rule of they also knew that Sprigchoice Ltd. was the name of
practice rather than a rule of law, and, in so far as the that company. They may not have known the amount
judgments in the Polignac case show of its paid up capital, but that was only because the
that the rule is derived from the practice of the old paid up capital was not a material factor.
Court of Chancery in relation to the grant of
injunctions, there must, I apprehend, be an element of

[1988] 1 W.L.R. 1337 Page 11
(Cite as: [1988] 1 W.L.R. 1337)
The judge seems to have thought that non-disclosure third party's delay in applying for the discharge of the
is only material as a basis for discharging the injunction precludes it being discharged now. There
injunction if it affects some point which it is is no evidence that the delay has prejudiced the
necessary for the applicant for the injunction to defendants. The judge held that the third party was
establish if he is to succeed in his claim. Therefore he not guilty of unreasonable delay. I agree. The third
said that the failure to disclose that the defendants party had to find the material to prove what the
knew about the company was not material, because it defendants had known at the time of their application
would have been no defence for the third party to say to Kennedy J. and, owing in part to the
in answer to the charge of fraud: “It was not I, it was Mareva injunction, he had difficulty in doing
my tame company who did it.” that.
With all respect, I do not agree with the judge that Should the court nevertheless exercise
the duty of disclosure is so limited. The applicant discretion in favour of the defendants by not
owes a duty of fullest and frankest disclosure: if he discharging the Mareva or by granting a
puts in matters of prejudice he must put them in as fresh injunction in similar terms, or by staying the
fully as is necessary to be fair. He cannot pile on the discharge for a period pending application by the
prejudice and then when it is pointed out that he has defendants at first instance for a fresh injunction?
told only half of the story and has left out matters
which give a quite different complexion, say “Oh, There is no doubt that there is jurisdiction to
well, it is not material. It is only prejudice, and so, on grant a fresh injunction, even though there has been
a strict analysis of the pleadings, does not have to be culpable non-disclosure when the original injunction
regarded.” was applied for. I find it a cumbrous procedure that
the court should be bound instead of itself granting a
Again, as to the absence of satisfactory explanation fresh injunction, to discharge the existing injunction
afterwards or, as it is put by Mr. White, any and stay the discharge until a fresh application is
explanation afterwards for the rental amounts, Mr. made, possibly in another court, and that the court
White fails to disclose the matters to which Glidewell which is asked to discharge the injunction, it should
L.J. has referred; that there was a meeting in not simply, as a matter of discretion in an appropriate
September 1983 between representatives of the case, refuse to discharge it if it feels that it would be
plaintiffs and of the defendants and of the third party; appropriate to grant a fresh injunction. That leads me
that at that meeting the third party agreed to provide a to think that there is a discretion in the court on an
breakdown of all contracts and charges; that at the application for discharge. It is difficult to see that
end of the meeting, after the third party had left, the there should be a different result in a case such as
recorded feelings of the others present was that the Yardley & Co. Ltd. v. Higson [1984] F.S.R. 304
third party did not seem sharp although vague on , which Glidewell L.J. has mentioned, where the
various points: that after the meeting the third party injunction was, in accordance with the normal
did supply several pages of notes to the defendants by practice of the Chancery Division, only granted for a
way of breakdown and explanation; and that in April limited period in the first place and the question of
1984 Mr. White himself had received a letter from non-disclosure arose on the application for a renewal
the plaintiffs giving the third party's heads of of the injunction at the end of that period, and cases
explanation of the high cost of installation of the in the Queen's Bench Division under a practice where
equipment. Whether the explanations are valid, I the ex parte injunction is granted without specific
know not. The point is that they were given.*1349 limit in the first place and the question of non-
disclosure arises on an application by the party
In my judgment, therefore, the defendants were enjoined to discharge the injunction.
guilty of serious and material non-disclosure on that
application to Kennedy J. for the Mareva But in the present case a further important
injunction. factor comes in at this stage. The Mareva
injunction was granted on 20 August 1984. It is a
It was submitted for the defendants that the very onerous injunction which has hung over the

[1988] 1 W.L.R. 1337 Page 12
(Cite as: [1988] 1 W.L.R. 1337)
third party for two and a half years, with the attendant
expense of applying from time to time for
relaxations, but the action is not yet set down. The
defendants say that that is in part due to delay or
prevarication on the part of the third party in
answering interrogatories in aid of discovery as to
what has happened to money he received from the
plaintiffs in respect of equipment which he, or his
company, supplied to the defendants. But the
directions for setting down were given before 1984
expired. They have been ignored; nothing has
happened. The defendants have been content to leave
the third party tied up indefinitely in the toils of the
Mareva injunction. For a plaintiff to do that
when an Anton Piller order had been obtained was
strongly disapproved in Hytrac Conveyors
Ltd. v. Conveyors International Ltd. [1983] 1 W.L.R.
44 , a decision of this court affirming a
decision of Whitford J. Precisely the same
considerations, in my judgment, apply in relation to a
Mareva injunction; where a party has obtained
a Mareva injunction, that party is bound
to get on with the *1350 trial of the
action — not to rest content with the injunction. The
injunction is merely ancillary to the trial of the action
to hold the position until the action comes on for trial.
In my judgment, therefore, these defendants

have been wrong in resting on the Mareva
and the discretion of the court should not be
exercised in their favour by granting some stay on the
discharge of the injunction or by this court granting a
fresh injunction. Accordingly, I would simply allow
this appeal and discharge the injunction. Appeal
allowed with costs in Court of Appeal and below.
Costs to be taxed and paid forthwith. Inquiry as to
damages. Leave to appeal refused.
END OF DOCUMENT

Bowmaker Ltd. V Britannia

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[1988] 1 W.L.R.

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Mareva injunction and the summons for

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which were the subject matter of the plaintiffs' claim;

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concern. It is specifically denied that Mr. Tyler or

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In my judgment, therefore, these defendants

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