Valbonne Estates Ltd v Cityvalue Estates Ltd and another

Injunction – Discharge – Non-disclosure – Appellant company appealing against court order discharging pre-action proprietary injunction restraining respondents from dealing with development property – Whether judge properly exercising discretion not to re-impose injunction – Appeal dismissed  The appellant and the first respondent were both companies owned by members of the ultra-orthodox Jewish community in north London. A dispute arose concerning the purchase of the leasehold interest in a property known as Beckton Arms, Beckton Road, London E16. One of the conditions for completion was that consent to the assignment should be obtained from the local authority freeholder. Due to difficulties in obtaining that consent, the purchase was not completed, and a dispute arose as to whether the contract had been rescinded. The appellant registered a unilateral notice on the title of the property, which provided notice that there was a contract for sale between the appellant and the first respondent. The court granted the appellant a pre-action injunction on a without-notice basis, restraining the first respondent from selling, disposing of, encumbering or otherwise dealing with the property, restraining the second respondent company from acquiring any interest in the property and restraining both respondents from registering at the Land Registry any dealing with the property that had already taken place. The appellant’s application to continue the injunction was dismissed and the injunction discharged. The judge held that there had been a material breach of the appellant’s obligation to provide full and frank disclosure to the court in its application for a without-notice injunction in relation to four substantial matters which, if properly disclosed, might well have affected the outcome of the hearing in a material way: [2021] EWHC 544 (Ch). The appellant was granted permission to appeal in relation to the exercise of the judge’s discretion not to re-impose an injunction. Held: The appeal was dismissed. (1) The sole issue was whether the judge’s decision not to re-impose injunctive relief was wrong. That decision was made in the exercise of her discretion. The court on appeal had to be satisfied that no judge who was properly instructed as to the law with regard to the relevant facts could have reached the relevant conclusion. It was clear that the court might only interfere in the exercise of a discretion where the judge below had exceeded the generous ambit within which reasonable disagreement was possible. It was not for the appeal court to remake the decision, and the fact that different judges might give different weight to the various factors did not make the decision one which could be overturned: Clearance Drainage Systems v Miles Smith [2016] EWCA Civ 1258 considered. Accordingly, it was necessary for the appellant to be able to demonstrate that the judge was wrong in law, failed to take account of relevant matters or took account of irrelevant ones and that she exercised her discretion in a way which no reasonable judge could have done in the circumstances. (2) The court had at its disposal a range of options in the event of non-disclosure. If the court found that there had been breaches of the duty of full and fair disclosure on the ex parte application, the general rule was that it should discharge the order obtained in breach and refuse to renew the order until trial. Notwithstanding that general rule, the court had jurisdiction to continue or re-grant the order. That jurisdiction had to be exercised sparingly, and take account of the need to protect the administration of justice and uphold the public interest in requiring full and fair disclosure. The court should assess the degree and extent of the culpability with regard to non-disclosure. It was relevant that the breach was innocent, but there was no general rule that an innocent breach would not attract the sanction of discharge of the order. Equally, there was no general rule that a deliberate breach would attract that sanction. The court had to assess the importance and significance to the outcome of the application for an injunction of the matters which were not disclosed to the court. In making that assessment, the fact that the judge might have made the order anyway was of little if any importance.   The court could weigh the merits of the plaintiff’s claim, but should not conduct a simple balancing exercise in which the strength of the plaintiff’s case was allowed to undermine the policy objective of the principle. The application of the principle should not be carried to extreme lengths or be allowed to become the instrument of injustice. The jurisdiction was penal in nature and the court therefore had to have regard to the proportionality between the punishment and the offence.   There were no hard and fast rules as to whether the discretion to continue or re-grant the order should be exercised and the court had to take into account all relevant circumstances: In the Matter of OJSC ANK Yugraneft [2008] EWHC 2614 (Ch) and Tugashev v Orlov & Ors [2019] EWHC 2031 (Comm) followed. (3) Where there were breaches of the duty of full and fair disclosure on a without-notice application, the general rule was that the order should be discharged and the court should refuse to re-grant it.   In this case, there were four instances of non-disclosure and inaccurate representations, all of which were in relation to substantial matters which the judge found might well have affected the outcome of the without-notice hearing in a material way. Furthermore, she found that they were neither inadvertent nor accidental. In such circumstances, she was entitled to take as her starting point that the injunction should be discharged. That could not be characterised as looking back overly much.    The judge was well within the generous ambit of the proper exercise of her discretion and none of the appellant’s challenges came close to being sufficient to surmount the high hurdle necessary to set it aside. Therefore, there were no grounds which would justify interfering with the judge’s exercise of discretion. Her decision was unimpeachable. She took account of all relevant matters and was not misdirected in the law. Gary Blaker QC (instructed by Howard Kennedy LLP) appeared for the appellant; Harry Hodgkin (instructed by Direct Access) appeared for the first respondent; Edward Levey QC (instructed by Aliant Law) appeared for the second respondent. Eileen O’Grady, barrister Click here to read a transcript of Valbonne Estates Ltd v Cityvalue Estates Ltd and another