“16. Given that CubeFunder did not consent to continuing the Scottish Proceedings, and the real risk that Phlo would lose the benefit of the Interim Interdict at the Scottish Recall Hearing on the grounds of jurisdiction, it was necessary to seek an urgent interim injunction in England on the same terms as the Interim Interdict. At that point in time post 15:58 on24 March 2025 , I did not know whether it would be possible to obtain a hearing before this Court prior to the Scottish Recall Hearing. Papers for Phlo were with our senior counsel, Roddy Dunlop KC ("RD") for placing before this Court at 21:51 on24 March 2025 . Roddy Dunlop KC was first formally instructed in relation to the Scottish Proceedings in the late afternoon of21 March 2025 owing to Phlo's original senior counsel being unavailable to appear on behalf of Phlo at the Scottish Recall hearing. As Roddy Dunlop KC is qualified in both Scotland and England and Wales, he was also instructed to appear on Phlo's behalf in relation to the present proceedings. An out of hours hearing was ultimately accommodated by Mrs Justice Joanna Smith who heard the matter on the24 March 2025 at 23:55 ("Recall Hearing"). I understand from reading Roddy Dunlop KC's note of the Recall Hearing ("Note") that he first made a call to the Royal Courts of Justice at 21:52. Roddy Dunlop KC did not receive a call back from Ms Caroline Reid, Chancery Clerk, until 23:07, after which papers were emailed to Ms Reid at 23:21.Given the nature and timing of the Recall Hearing this proceeded solely between RD and Mrs Justice Joanna Smith. Neither I, nor any of my team or anyone from AG, were in attendance. Even if CubeFunder had known that the out of hours hearing was happening, they would not have been able to attend so it made no difference that they were not told that the hearing was happening.”
“The accounts for Phlo for the year ending31 March 2023 are at [AH1/429-442]. These show that Phlo had a net asset position of£2,764,141 . In light of the Misappropriations these accounts will not be fully accurate however, in high level Phlo was then and remains now in profit and able to meets its debts as and when they fall due.”
“It is no part of the court’s function at this stage of the litigation to try to resolve conflicts of evidence on affidavit as to facts on which the claims of either party may ultimately depend nor to decide difficult questions of law which call for detailed argument and mature consideration…”
“The principal dilemma about the grant of interlocutory injunctions, whether prohibitory or mandatory, is that there is by definition a risk that the court may make the ‘wrong’ decision, in the sense of granting an injunction to a party who fails to establish his right at the trial (or would fail if there was a trial) or alternatively, in failing to grant an injunction to a party who succeeds (or would succeed) at trial. A fundamental principle is therefore that the court should take whichever course appears to carry the lower risk of injustice if it should turn out to have been ‘wrong’ in the sense I have described...”
“66. The appointment of an administrator by a secure creditor is often a hostile act proposed by the company’s management. In my judgment it would be a serious impediment to the realisation of assets for the payment of secure creditors if they could be precluded from appointing an administrator merely because the debt was disputed, even if the dispute was in good faith. 67. Schedule B1 is part of a package of measures intended to encourage enterprise. That package includes the facilitation of the raising of credit. Part of the quid pro quo was to make it easier for creditors to appoint administrators, hence the current power to appoint administrators without having to apply to the court. I do not consider that Mr Lyon’s analogy with bankruptcy and winding up petitions is a sound one. 68. A debenture and the powers of a debenture holder derive from a contract between the lender and the borrower. The borrower consents to the grant to a lender of powers of enforcement, including the appointment of administrators, formerly administrative receivers. Therefore, I reject Mr Lyon’s submission that the appointment of the administrators was necessarily invalid merely because of the existence of a dispute in good faith on substantial grounds. 69. Mr Lyon’s fallback submission on this point is that if administrators are appointed in the face of a disputed debt, it is inevitable that an injunction would be applied for. If applied for, it is inevitable that it would be granted. I reject this submission too. If the administrators are appointed and an injunction is applied for, the grant or refusal of an injunction will, in my judgment, be decided on familiar American Cyanamid principles…”
“4.2 These applications are normally dealt with at a court hearing but cases of extreme urgency may be dealt with by telephone. 4.3… (3) except in cases where secrecy is essential, the applicant should take steps to notify the respondent informally of the application.”
“25.3.—(1) The court may grant an interim remedy on an application made without notice if it appears to the court that there are good reasons for not giving notice. (2) An application for an interim remedy must be supported by evidence, unless the court orders otherwise. (3) If the applicant makes an application without giving notice, the evidence in support of the application must state the reasons why notice has not been given.”
“13 First, there appears to have been no reason why the application for an injunction should have been made ex parte, or at any rate, without some notice to the bank. Although the matter is in the end one for the discretion of the judge, audi alterem partem is a salutary and important principle. Their Lordships therefore consider that a judge should not entertain an application of which no notice has been given unless either giving notice would enable the defendant to take steps to defeat the purpose of the injunction (as in the case of a Mareva or Anton Piller order) or there has been literally no time to give notice before the injunction is required to prevent the threatened wrongful act… Their Lordships would expect cases in the latter category to be rare, because even in cases in which there was no time to give the period of notice required by the rules, there will usually be no reason why the applicant should not have given shorter notice or even made a telephone call. Any notice is better than none.”
“Short notice 40. An extremely important provision, reflecting the final sentence of the quotation from Lord Hoffmann [in Olint] set out above, is paragraph 4.3(c) ofPractice Direction 20A - Interim Remedies supplementing FPR Pt 20, which requires that “except in cases where it is essential that the respondent must not be aware of the application, the applicant should take steps to notify the respondent informally of the application”
“I can readily understand how, in the heat of the moment, the decision was taken to proceed in this way, but I must nevertheless say that it was in my view a serious error of judgment.”
“… I have found, by a narrow margin, that the application to Morgan J met the substantive requirements of a good arguable case and a real risk of dissipation of assets. However, I have also found that the application was improperly made without notice, that it suffered from severe procedural flaws, and that the duty of full and frank disclosure was breached in two respects. Looking at the matter in the round, I am satisfied that the cumulative effect of these deficiencies justifies an award of costs on the indemnity basis…”
“(c) Discretion 102. I turn finally to the question whether I should exercise my discretion in favour of the grant of the proposed injunction. For the reasons I have already given, I feel no doubt that this is in principle a suitable case for the grant of a limited injunction in the terms sought… However, the question of substance remains whether it is appropriate for the Court to grant the injunction where it replaces, albeit on a much more limited basis, the freezing order made by Morgan J which I have found to be flawed in a number of significant respects. 103. The relevant principles were stated by Balcombe LJ in Brink’s Mat Ltd v Elcombe[1988] 1WLR 1350 at 1358C, as follows: “The rule that an ex parte injunction will be discharged if it was obtained without full disclosure has a two-fold purpose. It will deprive the wrongdoer of an advantage improperly obtained … But it also serves as a deterrent to ensure that persons who make ex parte applications realise that they have this duty of disclosure and of the consequences (which may include a liability in costs) if they fail in that duty. Nevertheless, this judge-made rule cannot be allowed itself to become an instrument of injustice. It is for this reason that there must be a discretion in the court to continue the injunction, or to grant a fresh injunction in its place, notwithstanding that there may have been non-disclosure when the original ex parte injunction was obtained … I make two comments on the exercise of this discretion. (1) Whilst, having regard to the purpose of the rule, the discretion is one to be exercised sparingly, I would not wish to define or limit the circumstances in which it may be exercised. (2) I agree with the views of Dillon LJ in [another case] that, if there is jurisdiction to grant a fresh injunction, then there must also be a discretion to refuse, in an appropriate case, to discharge the original injunction.” 104. In Behbehani v Salem, reported as a note at[1989] 1WLR 723 , the Court of Appeal reiterated that it was undesirable to apply hard and fast rules and that it was preferable for each case to be considered on its own merits. However, Woolf LJ went on to say at 729E: “In deciding in a case where there has undoubtedly been non-disclosure whether or not there should be a discharge of an existing injunction and a re-grant of fresh injunctions, it is most important that the Court assesses the degree and extent of the culpability with regard to the non-disclosure, and the importance and significance to the outcome of the application for an injunction of the matters which were not disclosed to the Court.” 105. In applying these principles, I begin by asking myself how serious and culpable the non-disclosure to Morgan J actually was. In my judgment it falls towards the lower end of the scale, both in extent and in culpability… However, I am satisfied that the failures to take these steps were no more than errors of judgment by Mr Mallin, and that there was no intention on his part, or that of anybody else, to omit or withhold information which was thought to be material (see Behbehani v Salem at 736E-F, where Nourse LJ said that this was the relevant test of innocent non-disclosure laid down by all three members of the Court in the Brink’s Mat case). The cumulative effect of these errors of judgment was serious, but it caused no substantive injustice to Mr Al Assad. Furthermore, none of the defaults were in my view of central importance to the order made by Morgan J. It is quite possible that he, or another Judge, might still have been persuaded to make the order, even if the application had been made on notice. The application was a weak and speculative one, but not in my judgment so weak and speculative that it was bound to fail. Disclosure of the funding arrangement might have persuaded the Judge to exact a more stringent cross-undertaking in damages, but it is equally likely that he would have regarded the limited undertaking as sufficient to hold the position until the first return date… 106. In these circumstances I take the view that this is a case where the public policy requiring full disclosure on without notice applications, and the need for a suitable deterrent, can be sufficiently met by an award of indemnity costs, and that the deficiencies in the original application are not so grave that the Court should refuse to grant the more limited injunction now sought…” [Henderson J then proceeded to make a more limited freezing order]. “The rule that an ex parte injunction will be discharged if it was obtained without full disclosure has a two-fold purpose. It will deprive the wrongdoer of an advantage improperly obtained … But it also serves as a deterrent to ensure that persons who make ex parte applications realise that they have this duty of disclosure and of the consequences (which may include a liability in costs) if they fail in that duty. Nevertheless, this judge-made rule cannot be allowed itself to become an instrument of injustice. It is for this reason that there must be a discretion in the court to continue the injunction, or to grant a fresh injunction in its place, notwithstanding that there may have been non-disclosure when the original ex parte injunction was obtained … I make two comments on the exercise of this discretion. (1) Whilst, having regard to the purpose of the rule, the discretion is one to be exercised sparingly, I would not wish to define or limit the circumstances in which it may be exercised. (2) I agree with the views of Dillon LJ in [another case] that, if there is jurisdiction to grant a fresh injunction, then there must also be a discretion to refuse, in an appropriate case, to discharge the original injunction.” “In deciding in a case where there has undoubtedly been non-disclosure whether or not there should be a discharge of an existing injunction and a re-grant of fresh injunctions, it is most important that the Court assesses the degree and extent of the culpability with regard to the non-disclosure, and the importance and significance to the outcome of the application for an injunction of the matters which were not disclosed to the Court.”
“7. The law is non-contentious. The following general principles can be distilled from the relevant authorities by way of summary as follows: i) The duty of an applicant for a without notice injunction is to make full and accurate disclosure of all material facts and to draw the court's attention to significant factual, legal and procedural aspects of the case; ii) It is a high duty and of the first importance to ensure the integrity of the court's process. It is the necessary corollary of the court being prepared to depart from the principle that it will hear both sides before reaching a decision, a basic principle of fairness. Derogation from that principle is an exceptional course adopted in cases of extreme urgency or the need for secrecy. The court must be able to rely on the party who appears alone to present the argument in a way which is not merely designed to promote its own interests but in a fair and even-handed manner, drawing attention to evidence and arguments which it can reasonably anticipate the absent party would wish to make; iii) Full disclosure must be linked with fair presentation. The judge must be able to have complete confidence in the thoroughness and objectivity of those presenting the case for the applicant. Thus, for example, it is not sufficient merely to exhibit numerous documents; iv) An applicant must make proper enquiries before making the application. He must investigate the cause of action asserted and the facts relied on before identifying and addressing any likely defences. The duty to disclose extends to matters of which the applicant would have been aware had reasonable enquiries been made. The urgency of a particular case may make it necessary for evidence to be in a less tidy or complete form than is desirable. But no amount of urgency or practical difficulty can justify a failure to identify the relevant cause of action and principal facts to be relied on; v) Material facts are those which it is material for the judge to know in dealing with the application as made. The duty requires an applicant to make the court aware of the issues likely to arise and the possible difficulties in the claim, but need not extend to a detailed analysis of every possible point which may arise. It extends to matters of intention and for example to disclosure of related proceedings in another jurisdiction; vi) Where facts are material in the broad sense, there will be degrees of relevance and a due sense of proportion must be kept. Sensible limits have to be drawn, particularly in more complex and heavy commercial cases where the opportunity to raise arguments about non-disclosure will be all the greater. The question is not whether the evidence in support could have been improved (or one to be approached with the benefit of hindsight). The primary question is whether in all the circumstances its effect was such as to mislead the court in any material respect; vii) A defendant must identify clearly the alleged failures, rather than adopt a scatter gun approach. A dispute about full and frank disclosure should not be allowed to turn into a mini-trial of the merits; … ix) If material non-disclosure is established, the court will be astute to ensure that a claimant who obtains injunctive relief without full disclosure is deprived of any advantage he may thereby have derived; x) Whether or not the non-disclosure was innocent is an important consideration, but not necessarily decisive. Immediate discharge (without renewal) is likely to be the court's starting point, at least when the failure is substantial or deliberate. It has been said on more than one occasion that it will only be in exceptional circumstances in cases of deliberate non-disclosure or misrepresentation that an order would not be discharged; xi) The court will discharge the order even if the order would still have been made had the relevant matter(s) been brought to its attention at the without notice hearing. This is a penal approach and intentionally so, by way of deterrent to ensure that applicants in future abide by their duties; xii) The court nevertheless has a discretion to continue the injunction (or impose a fresh injunction) despite a failure to disclose. Although the discretion should be exercised sparingly, the overriding consideration will always be the interests of justice. Such consideration will include examination of i) the importance of the facts not disclosed to the issues before the judge ii) the need to encourage proper compliance with the duty of full and frank disclosure and to deter non-compliance iii) whether or not and to what extent the failure was culpable iv) the injustice to a claimant which may occur if an order is discharged leaving a defendant free to dissipate assets, although a strong case on the merits will never be a good excuse for a failure to disclose material facts; xiii) The interests of justice may sometimes require that a freezing order be continued and that a failure of disclosure can be marked in some other way, for example by a suitable costs order. The court thus has at its disposal a range of options in the event of non-disclosure. (See in particular Memory Corporation plc and another v Sidhu and another (No 2)[2000] 1 WLR 1443 at 1454 and 1459; Behbehani v Salem[1989] 1 WLR 723 at 735 and 730; Congentra AG v Sixteen Thirteen Marine SA (The Nicholas M)[2008] EWHC 1615 (Comm) ; [2009] 1 All ER (Comm) 479 at [62]; Bank Mellat v Nikpour[1985] FSR 87 at 89 and 90; Kazakhstan Kagazy plc v Arip[2014] EWCA Civ 381 ; [2014] 1 CLC 451 at [36] and [42] to [46]; Todaysure Matthews Ltd v Marketing Ways Services Ltd[2015] EWHC 64 (Comm) at [20] and [25]; JSC BTA Bank v Khrapunov[2018] UKSC 19 ;[2018] 2 WLR 1125 at [71] and [73]; Banca Turco Romana SA v Cortuk[2018] EWHC 662 (Comm) at [45]; PJSC Commercial Bank PrivatBank v Kolomoisky and others[2018] EWHC 3308 (Ch) at [72] and [73] to [75]; National Bank Trust v Yurov[2016] EWHC 1913 (Comm) at [18] to [21]); Microsoft Mobile Oy v Sony Europe Ltd[2017] EWHC 374 (Ch) at [203].)”
“In practice, however, it is often hard to tell whether either damages or the cross-undertaking will be an adequate remedy and the court has to engage in trying to predict whether granting or withholding an injunction is more or less likely to cause irremediable prejudice (and to what extent) if it turns out that the injunction should not have been granted or withheld, as the case may be. The basic principle is that the court should take whichever course seems likely to cause the least irremediable prejudice to one party or the other.”