[2025] EWHC 2648 (Comm)

The law as to the requirements on an applicant for without notice relief, including for injunctive relief such as was sought and granted here, is well known. As Males LJ said in Derma Med Ltd v. Ally [2024] EWCA Civ 175 at [29]:

“The importance of full and frank disclosure by a claimant when applying for an order without notice to the defendant has been emphasised many times. The leading statements of principle remain those set out in the well-known case of Brink’s Mat Ltd v Elcombe [1988] 1 WLR 1350, although there are many other more recent summaries of the applicable principles to be found in the cases. One very full such summary was by Mrs Justice Carr in Tugushev v Orlov [2019] EWHC 2031 (Comm) at [7]:

‘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;

viii)

In general terms it is inappropriate to seek to set aside a freezing order for non-disclosure where proof of non-disclosure depends on proof of facts which are themselves in issue in the action, unless the facts are truly so plain that they can be readily and summarily established, otherwise the application to set aside the freezing order is liable to become a form of preliminary trial in which the judge is asked to make findings (albeit provisionally) on issues which should be more properly reserved for the trial itself;

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.’

Males LJ continued at paragraphs [30]-[31]:

“30.

Although this was said in the context of an application for a freezing order, the principles are of general application. I would draw particular attention, as relevant in the present case, to the fact that the overriding consideration when deciding whether to continue an injunction or grant a fresh injunction despite a failure of disclosure is the interests of justice; and to the need to maintain a due sense of proportion in complex cases. This latter point was made by Mr Justice Toulson in Crown Resources AG v Vinogradsky (15 June 2001) and was adopted by the Court of Appeal in Kazakhstan Kagazy Plc v Arip [2014] EWCA Civ 381, [2014] 1 CLC 451 at [36]:

‘… where facts are material in the broad sense in which that expression is used, there are degrees of relevance and it is important to preserve a due sense of proportion. The overriding objectives apply here as in any matter in which the Court is required to exercise its discretion. …

I would add that the more complex the case, the more fertile is the ground for raising arguments about non-disclosure and the more important it is, in my view, that the judge should not lose sight of the wood for the trees. …

In applying the broad test of materiality, sensible limits have to be drawn. Otherwise there would be no limit to the points of prejudice which could be advanced under the guise of discretion.’

31.

A further point which merits emphasis is that even when there has been a failure of full and frank disclosure, the interests of justice may sometimes require that a without notice order be continued and that a failure of disclosure be marked in some other way, for example by a suitable costs order. A court needs to consider the range of options available to it in such an event.

The point made by Carr J (as she then was) in paragraph [7(vii)] of her decision in Tugushev v Orlov reflected what Males J (as he then was) had said in National Bank Trust v. Yurov [2016] EWHC 1913 (Comm) at [14] as to the need to set out in the application notice, or failing that in the witness statement, clearly and prominently a succinct statement of the grounds relied upon as being a failure of full and frank disclosure.

The application notice in this case did not set out the grounds relied on. The witness statement of Michael Coyle in support of the Discharge Application does not set out clearly and prominently a succinct statement on the grounds relied on. Nor did Mr Jones’ skeleton argument. This is obviously not a satisfactory approach to have been adopted by the Defendants. Rather it was left to Wenda in its evidence in answer to identify the matters which it understood the Defendants were saying should have been drawn to the attention of the Court by Wenda under its obligation of full and frank disclosure but were not namely (1) the issue as to who was the contracting party; (2) the issue of Effs’ entitlement to charge interest and (3) Wenda’s duplicate record keeping system.

In his oral submissions, Mr Jones for the Defendants did not seek to go beyond these as the areas where he said there was a lack of full and frank disclosure. His initial submission was that the fact that Wenda had advanced the case on the basis that it was the seller, not Syner or Effs, and had failed to set out that Effs had an entitlement to charge interest (although he, in my judgment rightly, did not seriously press this failure as a full and frank disclosure issue) as well as the duplicate record keeping, but had later come to disclose these matters in Mr Xiong’s 6^th witness statement in November 2023 demonstrated that there was no proper investigation of the case before the application for the Injunction was made. These were matters that he says should have been ascertained if not before then at least in the three year period between the end of the initial investigation and the application for the Injunction.

It became clear in the course of Mr Jones’ oral submissions that his main complaint was as to the duplicate invoicing and what that showed. These are partly the matters dealt with at paragraphs 12 to 13 of Mr Xiong’s 6^th witness statement as to the correct identity of the seller (see paragraph 43 above) and partly the matters set out at paragraphs 21 to 24 of that statement, which I have set out at paragraph 47 above. Mr Xiong said that these latter paragraphs were not corrections to his earlier evidence but were offered by way of clarification.

What is material for the judge to know in dealing with an application is to be decided by the court and not by the assessment of the applicant or the applicant’s legal advisers (Brinks-Mat Ltd. v. Elcombe [1988] 1 WLR 1350 at 1356G-H). In my judgment, the two sets of invoices and the double financing were matters which should have been disclosed on the without notice hearing, notwithstanding Mr Xiong’s explanations in his 10^th witness statement which I address below. Although Mr Milnes tried to suggest that these were not material matters, he eventually said in his oral submissions that it would have been “far wiser” to have disclosed the double financing at the time of the hearing before Jacobs J. Had that been disclosed, it would have disclosed the existence of the two sets of invoices and would have caused Wenda to have put its case in a different way to that which it was advanced before Jacobs J.

In my judgment, it would have been material for Jacobs J to have known that there was what must have been a dishonest scheme operated by Wenda with Mr Xiong’s knowledge of double financing the same sales, once under the agreement between Syner and HIF and once under the arrangements with Chinese banks (who, contrary to Mr Xiong’s suggestion in my judgment would have been highly unlikely to have been secured by a trade credit protection policy as that policy would hardly have paid out in respect of false invoices). This was a scheme which was clearly dishonest and one that Mr Xiong would not try to justify (indeed it is difficult to see how this would not end in disaster for Wenda as it would have borrowed monies twice on one sale, but would only recoup monies from the buyer in respect of one invoice). Had this been disclosed to Jacobs J, it would have caused him to consider where the real dishonesty lay, that is to say whether it was solely to be laid at the door of Ms Wang as it was portrayed, or whether at the very least Wenda was party to the dishonesty. It may not have made a difference to the ultimate outcome as he may well have concluded that Wenda’s dishonesty did not bear on the claim against the Defendants, but that is not the relevant question as to whether it should have been disclosed. In my judgment it was information which should have been put before the Judge, especially given that equitable relief was being sought.

Mr Jones made the point that in Mr Xiong’s 6^th witness statement he sought to distance himself from the emails of January 2014 by saying that he was merely copied in on these and did not read them in any detail, which Mr Jones said was untrue. I have been shown emails going back to December 2011 between Geissler Silva of Wenda’s Brazilian subsidiary, Mr Xiong and Ms Wang asking about the production of duplicate contracts in the name of Wenda and in the name of Syner. Then there were further emails in October 2013 between Mr Silva, Mr Xiong and Ms Wang addressing the Syner processes, including email correspondence from Mr Xiong in which he referred to discussions he and Mr Silva had had in Brazil on this topic (it is not clear if Ms Wang was involved in these discussions). The Syner processes were proposed by Mr Silva and not Ms Wang as Mr Xiong had said in his 6^th witness statement in respect of the January 2014 emails. Those emails were part of the chain which commenced in October 2013, to which Mr Xiong was a party. Accordingly, Mr Jones submitted, Mr Xiong was much more intimately involved in the production of the 2 sets of invoices, one in the name of Syner to be used in the invoice discounting arrangements with HIF and one in the name of Wenda to be used for raising finance in China, than he was prepared to admit even at this stage.

Mr Jones submitted that in light of these emails, what Mr Xiong was doing in his affidavit in support of the Injunction application before Jacobs J was putting forward a false case and/or that there had been a lack of proper rigour in the investigation. These are two very different submissions. He expanded on the first submission by saying that Mr Xiong’s knowledge as presented to Jacobs J was not true because he knew that Syner was the seller and also knew about the double financing. Therefore, to Mr Xiong’s knowledge this presentation was not true. This was deliberate. As to the second, he said that what Mr Xiong said as to who the seller was and therefore what the arrangements between Syner and Wenda were, must not have been checked by anyone else against relevant available documentation, the documentation Mr Xiong referred to in his 6^th witness statement having always been available to Wenda. He says that the Court should have been told that notwithstanding that Wenda was seeking equitable relief, Wenda was the beneficiary of an acknowledged fraudulent invoice financing scheme, being the Chinese one. Had the Court been told this, he submitted, the Court would not have granted equitable relief and therefore it should be taken away as a punishment. It seemed at times that Mr Jones might have only been seeking discharge of the proprietary injunction, and although I do not proceed on the basis he was limiting the relief sought to this, it is right to note that it would be entirely possible to discharge the proprietary injunction but leave in place the freezing injunction.

Mr Milnes complained that the allegation of deliberately putting forward a false case was not one which had been made before, let alone in a clear and succinct statement as required by the Yurov decision and therefore it could not be pursued. If contrary to that submission, I were to allow it to be pursued, he sought permission to put in further evidence from Mr Xiong (who was in China) as to why this was not explained in the affidavit put before Jacobs J and in particular to answer the submission that it was a deliberately false case that Wenda through Mr Xiong had advanced. This, he submitted, was particularly important in the context of the issue of any continuation or regrant of the Injunction were the Court to conclude (as I now have) that there had been a failure of full and frank disclosure.

In Mr Xiong’s 9^th witness statement dated 1 July 2025, which is his reply witness statement for the purposes of the trial, he had said at paragraph 25.3.3:

“At paragraphs 20-24 of my 6th WS I said that Wang Jinhong had mentioned to me the opportunity for double financing before the arrangements with Syner were finalised. This was my recollection when I prepared my 6th WS, I had no memory of discussions with Wang Jinhong about double financing prior to this and it is only through the process of preparing this witness statement that I was reminded that this was something that was being discussed as early as November 2011.’

I therefore wondered what more he might say in respect of the allegation that he had deliberately put forward a false case to Jacobs J. I did not decide at that point whether it should be open to Mr Jones to pursue that allegation, however, given the gravity of it and its centrality to Mr Jones' submissions, I gave permission for a further witness statement to be put in and for the parties to put in short written additional submissions on that statement. If it were to turn out that Mr Xiong admitted he had deliberately presented a false picture on the without notice hearing, that would obviously be material.

Mr Xiong put in a 10^th witness statement dated 23 July 2025. As to the 2 sets of invoices, he confirmed that what he had said in his 6^th witness statement was true, namely that he did not appreciate “that there were also sales contracts naming Syner as the seller when preparing for and attending the Injunction Hearing” before Jacobs J. Had he known that there were sale contracts naming Syner as the seller, he would have ensured that this was stated accurately both in the Particulars of Claim and when it came to explaining the position at the hearing itself. He acknowledged that this would have required him to explain to the Court why there were two sets of sales contracts and that it was connected to the double financing. This cannot be read literally as the emails referred to above from 2011, 2013 and 2014 show that he did know at that time that there were two sets of invoices. I take it to mean that he did not recollect in 2021 that there had been two sets of invoices.

As to the reasons for failure to disclose the double financing, he says that although he was aware that this had happened, “it was simply not an issue I gave any thought to at the time Wenda was preparing for the Injunction hearing. I had given careful consideration to the need for Wenda to comply with its duty of full and frank disclosure” before setting out how he understood the duty at the time, which was “to ensure the Court had all the information it needed to show this information was true and accurate and that Wenda had not overstated or exaggerated its claim. To me this meant showing not just the value of sales through Syner and Effs, but also what Wenda should give Syner and Effs credit for.” He did not understand that the duty extended to disclosing other operational practices such as the double financing. He went on to explain that he relied on Wenda’s then financial manager as well as Wenda’s Vice President and that he personally reviewed only a limited number of the underlying documents. He said that had he considered the double financing was something which Wenda was under a duty to disclose, he would have had no hesitation in taking steps to ensure the Judge was told about it. His failure to do so was not deliberate or done knowingly or intentionally and he apologised unreservedly for not ensuring the Court had the full picture at the time of the Injunction hearing. No evidence was submitted from Wenda’s solicitors as to what they had told him about the duty of full and frank disclosure and whether it was in terms which were reflected in this 10^th witness statement.

In his further written submissions on this witness statement, Mr Jones said that it was not credible that Mr Xiong had forgotten about there being invoices with Syner as the seller. And further that Wenda’s lawyers would have apprised Mr Xiong of the seriousness and scope of the duty of full and frank disclosure and therefore it is inconceivable that Mr Xiong would have been left in any doubt but that any apparently dishonest conduct on the part of Wenda (like running a duplicate financing operation) would need to have been disclosed.

In their further written submissions, Mr Milnes and Mr Gardner maintained the position that the Defendants raising this allegation for the first time in oral submissions was “extraordinary and unsatisfactory”. They complained that permitting a further witness statement and further written submissions was not a satisfactory solution to this either. Nonetheless they went on to say that Mr Xiong’s evidence showed that, at the time of the without notice application, he did not know about the two sets of invoices, that is to say he had forgotten about them 8 years later. And that he did not appreciate that the double financing practice, though irrelevant to Wenda’s claim, would fall within the full and frank duty because a judge would consider it relevant to an overall assessment of whether injunctive relief should be granted without notice or generally. They submit that this evidence is plausible and it cannot fairly be summarised as demonstrably unsupportable as it would have to be for me to be able to make findings against him on a summary basis, relying on Okpabi v Royal Dutch Shell Plc [2021] 1 WLR 1294 at [22], [107], [110].

In my judgment, Mr Milnes and Mr Gardner are correct on this. First, it is very unsatisfactory for this issue to have been raised in oral submissions for the first time. If an allegation of deliberate failure was going to be made, it should have been made in the application notice or the supporting witness statement. Even if it had been only an allegation which became clear after the issue of the application, which is not alleged, it would have been incumbent on the Defendants to have spelled out in correspondence in advance of the hearing that this point was going to be taken. It was not done. It did not even feature (or at least not in any clear way) in Mr Jones’ skeleton argument. On that basis, it is not something which is open to the Defendants to seek to rely on in support of the Discharge Application.

Secondly, in my judgment on the basis of the decision in Okpabi (and other authorities) it is not open to me to disbelieve what Mr Xiong says in his 10^th witness statement, at least without the benefit of cross-examination, which was not sought, unless it is demonstrably unsupportable. That is not to say that I do not have doubts as to Mr Xiong’s claim of having forgotten about the two sets of invoices which would have led to him having to explain these away. I find it surprising that he should have done so given that the practice must have continued until 2016 when Wenda terminated the arrangements with Syner and Effs, but I cannot conclude it is wholly implausible. Likewise, I have some doubts as to his explanation as to his understanding of the full and frank duty given the experience of his solicitors in matters such as this, but again it is not wholly implausible.

Accordingly, in my judgment, it is not a finding that is open to me to make that Mr Xiong deliberately put forward a false case, nor that he deliberately and knowingly withheld the existence of the two sets of invoices and the double financing from the Court on the without notice hearing.

That does not mean that if the matters were material, as I have held they were, there has not been a failure of full and frank disclosure. Mr Jones’ second complaint namely that there had been a lack of proper rigour in the investigation is one which in my judgment is correct. This is not a case where there was great urgency so that it was necessary for evidence to be in a less tidy or complete form than is desirable. The investigation had apparently concluded in 2018, but it took another 3 years for the application to be brought to Court. There was plenty of time for a much deeper investigation to have been carried out which would have disclosed the matters which Mr Xiong set out in his 6^th witness statement at the time of the hearing before Jacobs J. I accept that as a party gets closer to trial, further details are likely to emerge, but these were all matters which were clear from documents which had always been in Wenda’s control. Before seeking draconian relief by way of freezing and proprietary injunctions, it is incumbent on the applicant to undertake a rigorous search for relevant documents. It is clear that in this case, Wenda did not do so.

Mr Milnes submitted that the documents showed that Ms Wang was fully aware of the double invoicing and the obtaining of finance on the two sets of invoices for the same goods with different sellers named. He said she was consciously and knowingly involved in it, but she had not addressed this at all. That may be the case, but it is not an issue for me. If there was a failure to give full and frank disclosure, which I have held there was, it does not matter that Ms Wang knew about those matters or even was consciously and knowingly involved in them. The Court did not know about these matters and, by proceeding without notice, the Court was deprived of hearing from Ms Wang.

Having determined that there was a failure of the duty to give full and frank disclosure, but that it was not deliberate, the question arises as to what the appropriate order is that the Court should make.

Mr Jones submits that, in accordance with the principle set out in paragraph 7(ix) of the Tugushev judgment the Court should be astute to deprive Wenda of any advantage it derived from the non-disclosure, that is to say that the Injunction should be discharged. I am also conscious of paragraph 7(xi) of that judgment in which it was said that the court will discharge the order even if it would still have been made had the relevant matters been brought to its attention at the without notice hearing, that this is a penal approach and intentionally so, by way of deterrent to ensure that applicants in future abide by their duties. However, that follows paragraph 7(x) where Carr J stressed that whether or not the non-disclosure was innocent is an important consideration before going on to deal with deliberate non-disclosure. In my judgment what Carr J said in paragraph 7(xi) was in the context of a deliberate non-disclosure case, that is that if there was a deliberate non-disclosure, even if the order made would have been the same, the order will still be set aside.

Mr Milnes submitted that there is actually no link between the non-disclosure and the relief granted, that is to say that the non-disclosure did not lead to the advantage obtained by Wenda of getting the Injunction. In my judgment this is to take too narrow a view of the materiality of the non-disclosure in this case.

He also presses the comments of Males LJ in the Derma Med Ltd. v. Ally case at paragraphs [30]-[31] set out above. He submits that the overriding consideration when deciding whether to continue the injunction or grant a fresh injunction despite a failure of disclosure is the interest of justice. He says that even if these matters had been disclosed, the Court would still have granted proprietary and freezing injunctions, albeit it would have been on the basis of the case now advanced. That remains a case in dishonesty against the Defendants, who have embezzled monies owing to Wenda. While they deny it, there is (he says) ample evidence of dishonesty on the part of Ms Wang. He points in particular to the apparent forging of HIF documents and the forging of rental invoices. While I am not in a position to come to any firm conclusions on these issues which will be addressed at the trial, Wenda appears to have a strong case in this respect. He also made submissions as to Ms Wang’s conduct in the course of the proceedings, those matters being set out in paragraph 22 of Mr Marmor’s 14^th witness statement, although these were countered, in my judgment effectively, by Mr Jones pointing to the highly confrontational nature of this litigation. I note that no contempt applications have been brought against Ms Wang on account of alleged breaches of the Court’s orders. I do not draw any conclusions from these matters as to Ms Wang’s honesty or otherwise.

As set out above, Mr Jones did not seek to attack the conclusions of Jacobs J on the risk of dissipation. Given that the trial in this case is only a matter of months away, it is difficult to see what Ms Wang, in particular, would obtain from the Injunction being discharged other than the ability to seek to make herself judgment proof before the trial. She has not pointed to any specific hardship which is being caused to her by the Injunction, over and above the inevitable hardship that being subject to an order of this nature will cause. Nor have Syner or Effs. It is noticeable that in the draft Order accompanying their application, the Defendants do not seek an enquiry as to damages on the cross undertaking given by Wenda, but rather payment of a sum “as a result of the hardship suffered” by them. This appears to be a claim for general damages as opposed to any specific damages.

In my judgment, given all of the matters set out above, while not understating the seriousness of the non-deliberate failure of Wenda to comply with its obligation to give full and frank disclosure, this is a case where the interests of justice do require the Injunction to be maintained until trial or further order. To discharge the Injunction at this stage would lead to the very real risk that Ms Wang would indeed take steps to make herself judgment proof. That risk of dissipation identified by Jacobs J when initially granting the injunction remains and, if anything, will have increased as the litigation nears its conclusion.

It follows that in my judgment it is just and convenient that the Injunction should continue.

However, there must be a sanction imposed on Wenda. In my judgment and in the exercise of my discretion, the appropriate way of marking the failure to give full and frank disclosure is to make a costs order. This will satisfy the interests of justice in this particular case on these facts. The order should be that Wenda should pay the costs of the Discharge Application and of its Continuation Application to the Defendants and that those costs should be payable on the indemnity basis.

This will extend to all of the costs of these applications, including the costs of the additional witness statement and further submissions notwithstanding that the Defendants did not take the point of deliberate non-disclosure in the correct manner and I have ultimately ruled against the Defendants on that issue.

If they are not agreed, it is appropriate either to assess those costs on a summary basis or, if it is not possible to do so, to make a payment on account of those costs to be paid within 14 days after the hearing at which I will consider the quantum of those costs.

I invite Counsel to submit an order reflecting this judgment agreed as far as it can be. In the event that the parties are unable to agree the order in full, including the quantum of costs, this matter should be listed as soon as possible before me for a two hour hearing.