Applicant beware: Guidance on consequences for breaching duty of full and frank disclosure
In Ovaskainen v Ovaskainen, the Cayman Islands Grand Court provided some helpful guidance on the consequences of breaching the duty to make full and frank disclosure at an ex parte hearing.
In that case, the wife (plaintiff) obtained an ex parte order freezing the assets of the husband (defendant) in the Cayman Islands. The order was sought in aid of enforcement of a prospective judgment recognising a debt due pursuant to a Swiss judgment in proceedings ancillary to the parties’ divorce. The husband sought to set aside the order for serious non-disclosure at the ex parte hearing.
The Chief Justice considered the authorities on the applicable principles (including Tugushev v Orlov and Re Juan Enrique Rassmuss Raier). In summary:
- The primary question is whether in all the circumstances the effect of non-disclosure was such as to mislead the Court in any material respect
- In case of any substantial or deliberate breach, immediate discharge (without renewal) is the likely starting point
- Nevertheless, the Court has a discretion to continue or renew the order in case of breach although such discretion should be exercised sparingly with the interests of justice being the overriding consideration
- The interests of justice may sometimes require that the order be continued even when there was non-disclosure, and the breach can be addressed in some other ways such as an appropriate cost order
In dismissing the application, the Chief Justice considered that there was no material non-disclosure and there remained cogent evidence of a real risk that the assets in the Cayman Islands would be dissipated without the order.
This decision is of particular interest to legal professionals advising on any ex parte application when considering their obligations to the Court and opposing party.