“Every man thinks there is far more profit in dishonesty than there is in honesty”
Plato, Republic Book II 360d
An ex parte application places a weighty burden upon the court hearing it. This is why the applicant has a duty to make full and frank disclosure of material which both assists and/or hinders their case. Courts are understandably more comfortable when all parties are represented and able to put their case forward robustly and fairly. That said, two recent judgments in Sheyko v Consolidated Minerals Limited demonstrate that it is not just ex parte applicants who have a duty to place all relevant material before the court – and that the consequences of failure can be severe.
In Sheyko v Consolidated Minerals Limited  JRC 236, the facts were as follows: on 17 July 2018 the Plaintiff obtained a freezing order preventing the Defendant from removing, disposing of, dealing with or diminishing the value of assets in Jersey up to a value of US$10 million (“the Frozen Sum”). The freezing order did not require the fortification of the Plaintiff’s undertaking in damages and contained no exception for ordinary business and legal expenses.
The Defendant applied to discharge the freezing order and that application was listed for 3 October 2018 (“the October hearing”). The Defendant subsequently made an urgent application to vary the injunction on the basis that it needed access to the Frozen Sum to meet its ordinary business expenses. This application was heard on 23 August 2018 (“the August hearing”).
At the August hearing the Defendant applied (i) to vary the order to include the exception for ordinary business and legal expenses, which it referred to as “the standard wording” and (ii) an order that the Plaintiff fortify his undertaking by paying US$2 million into court. On the day the Defendant made a spontaneous application to have the freezing order discharged. Both applications failed.
The Defendant claimed that, contrary to the affidavit evidence given by the Plaintiff at the ex parte hearing, it did not have sufficient sums to meet its business and legal expenses without access to the Frozen Sum, and that the Plaintiff had misled the Court with respect to its monthly income. The Royal Court however found that the Plaintiff’s description of the Defendant’s revenue had “to a very great extent [been] proved accurate” by further material exhibited by him, and that by contrast the Defendant’s evidence, which omitted reference to cash flow records and forecasts, did not persuade the Court that it would be unable to meet its payments.
The Court also held that the standard wording relating to the fortification of undertakings contained in Practice Direction 15/04 is expressly optional and that the part relating to dealing with assets in the ordinary course of business (set out in parentheses) might also be omitted.
Very shortly before the October hearing the Defendant abandoned its application to discharge the freezing order and agreed to pay the Frozen Sum into Court. That left the question of costs (of both hearings) to be heard on 3 October 2018. The judgment can be found at Sheyko v Consolidated Minerals Limited  JRC 008.
By the time the discharge application was abandoned the parties had already filed skeleton arguments and affidavit evidence. Crucially, exhibited to the affidavit filed on behalf of the Defendant was a letter of comfort from its ultimate parent company Ningxia Tianyuan Manganese Industry Co Ltd (“TMI”) dated 2 June 2018 which made it clear that TMI had agreed to provide the Defendant with financial support until 31 December 2019. The Court held that it was “unlikely” that the Defendant was unaware of the existence of the letter and yet no mention of it had been made in the affidavits it had filed for the August hearing (paragraph 23), and observed that “had reference been made to that letter it would have substantially undermined the strengths of any application to discharge or vary”.
The Plaintiff submitted that the costs of the August hearing should be paid on the indemnity basis because the Defendant had misled the Court by failing to disclose the letter of comfort. The court agreed, and held that the Defendant’s failure to disclose the very evidence which would have rendered its applications “destined for failure” was “wasteful of time and costs in a manner that should be reflected by an order for costs in favour of the Plaintiff”.
In respect of the second application to discharge, the Plaintiff argued that by abandoning its application late the Defendant had effectively conceded defeat, and that it should pay the Plaintiff’s costs, on the standard basis. The Defendant argued that the appropriate order was for costs in the case, relying on Picnic at Ascot v Kalus Derigs  FSR 2, confirmed in Berry Trade Limited and Vitol Energy Bermuda Limited v Moussavi and others  JRC 193.
The Court considered Picnic at Ascot in detail and confirmed that while the costs of an interim injunction would normally be reserved where there has been no application to raise it, and that that may be the appropriate order even where there had been an unsuccessful challenge to raise or vary an injunction, it was within the Court’s discretion to make a costs order against a party who wastes time and money by commencing an application and then concedes at the last minute.
The Defendant was thus ordered to pay the Plaintiff’s costs in respect of both the August hearing and the October hearing. The Court also ordered a payment on account of £60,000 to be paid within 14 days.
These judgments, best understood when read together, offer a salutary warning for parties considering an application to vary or discharge an interim injunction. While it is natural to feel affronted by an injunction obtained ex parte, resistance at all costs can end up meaning exactly that.
Baker & Partners acts for the Plaintiff in the above proceedings.
Baker & Partners
 RC 15/04
 Sheyko v Consolidated Minerals Limited  JRC 236 at 42
 Ibid at 43
 Ibid at 11
 Sheyko v Consolidated Minerals Limited  JRC 008 at 21
 Ibid at 23
 Ibid at 28