High Court considers application to set aside consent order due to non-disclosure article banner image

In the recent case of Todaysure Matthews Ltd v Marketing Ways Services Ltd, the High Court has refused the defendant’s application to set aside a consent order, so that it may be released from undertakings it contained, as a result of the claimants’ failure to give full and frank disclosure when obtaining an earlier freezing injunction.

The defendant alleged that on applying for an earlier freezing injunction, the claimants had failed to disclose their intention to seek a related injunction in the US courts. The claimants obtained the US injunction a day later, but failed to inform the English court under its continuing duty of disclosure. The defendant alleged, that had it known about the US injunction, it would not have entered into the agreement with the claimants which lead to the consent order.

The judge decided that because consent orders (as opposed to orders made as a result of the court’s exercise of discretion) are the result of negotiation and agreement between the parties, good cause must be established before a party may be released from an undertaking. The seriousness of the claimants’ breach of its disclosure obligations to the court and the effect of the US injunction suggested that it would be unjust to hold the defendant to its undertakings. However, the judge concluded that had the defendant known about the US injunction, it would still have agreed to the consent order, providing the US injunction was withdrawn. As the claimants were willing to withdraw the US injunction, the judge decided not to set aside the consent order, but to vary its terms to require the claimants to do this.

This case provides a good example of the court balancing the importance of enforcing the duty of full and frank disclosure when seeking a without notice order, against the importance of upholding the agreement of the parties.

Chris Harper is a partner and head of the dispute resolution team in Exeter. He specialises in commercial litigation and is named as a leader in his field by independent guides to the legal profession Legal 500 and Chambers. To contact Chris please call 01392 210700 or email drx@stephens-scown.co.uk.