Royal Courts of Justice
Rolls Building, 7 Rolls Buildings
Fetter Lane, London EC4A 1NL
Before :
MR. JUSTICE TEARE
Between :
(1) TODAYSURE MATTHEWS LIMITED (2) MATTHEWS INTERNATIONAL CORPORATION | Respondents |
- and - | |
MARKETING WAYS SERVICES LIMITED | Applicant |
Richard Millett QC and Peter Webster (instructed by King & Wood Mallesons LLP) for the Applicant
David Quest QC (instructed by Reed Smith LLP) for the Respondent
Hearing dates: 13 and 14 January 2015
Judgment
Mr. Justice Teare:
This is an application by the Defendant to set aside an order to which it consented so that the Defendant may be released from the undertakings it gave in the consent order. The basis of the application is in essence that when the Claimants obtained an ex parte order they failed to disclose a material matter and continued to fail to disclose that matter up to the time when the parties negotiated and agreed the terms of the consent order.
The relationship between the parties
The Defendant, Marketing Ways Services Limited (“MWS”), is a Saudi Arabian company which contracted with the Government of Saudi Arabia to provide a slaughterhouse waste treatment facility. MWS entered into a sub-contract with the First Claimant, Todaysure Matthews Limited (“TSM”), an English company, for the manufacture and supply of two incinerators for installation in the waste treatment facility. The incinerators, it is said, have been delivered and TSM claims to have received only part of the agreed price. Some £2.3m is said to be owing.
TSM’s obligations were backed by a performance guarantee provided to MWS by the National Commercial bank of Riyadh (“NCB”). NCB had the benefit of a counter-guarantee from TSM’s bank in the UK, RBS, which in turn had the benefit of a standby letter of credit issued by RBS Citizens Bank NA (“RBS Citizens”) to the Second Claimant, Matthews International Corporation (“MIC”), a US affiliate of TSM. TSM or MIC were obliged to indemnify RBS Citizens.
On 16 September 2014 (or, according to MWS, 11 September 2014) MWS made a demand on the performance guarantee issued by NCB for the maximum sum, some £8.57m. It is the case of TSM that the demand was made in bad faith in that MWS had no claim against TSM capable of supporting the demand for £8.57m.
The ex parte order
TSM and MIC sought an injunction from this court ordering MWS to withdraw the demand and to refrain from making any further demand until the return date and, also, a world wide freezing order to protect TSM against the risk that if the demand were honoured by NCB TSM would dissipate the proceeds of the demand. On 22 September 2014 Walker J granted the orders which had been sought (“the English injunction”). He accepted that there was strong evidence that the conduct of MWS in making the demand was fraudulent. He also accepted that there was a risk that payment may already have been made and therefore granted the freezing order.
The consent order
The return date was 6 October 2014. MWS wished to challenge the English injunction but its challenge could not be heard that day and so the court adjourned the matter until 23 October 2014 having accepted appropriate undertakings from MWS. Before 23 October 2014 the parties negotiated and agreed the terms of a consent order dated 21 October 2014. In essence it was agreed that MWS could make a further demand on NCB but that any sums paid by NCB were to be paid into court. The most material terms of MWS’ undertakings were these:
1. The Defendant shall not make or pursue any demand under the perforamnce guarantee …….issued by …..(NCB), unless it first requests NCB to pay the amount demanded directly to the Defendant’s solicitors King & Wood Mallesons (KWM) ………….
3. KWM undertakes to pay into Court forthwith any moneys it receives pursuant to paragraph 1 …..above
4. Such moneys shall be held in and to the order of the Court to stand as security for any judgment or order any party may obtain in these proceedings against any other party.
Events subsequent to the Consent Order
On 26 October 2014 MWS made a further demand of NCB. However, NCB did not pay. Mr. Mattar of MWS has given evidence that NCB said that it refused to pay because RBS would not comply with its obligations under the counter-guarantee. MWS has accordingly issued proceedings against NCB in Saudi Arabia.
On 1 December 2014 MWS learnt from RBS that on 23 September 2014 (the day after Walker J. granted the English injunction) TSM and MIC (to whom I shall refer collectively as TSM) had obtained a temporary restraining order (“the American injunction”) from a court in the USA restraining RBS Citizens from making any payment to RBS. The precise terms of the American injunction were that RBS Citizens was restrained from “honouring any demand on the letter of credit”.
Mr. Millett QC, on behalf of MWS, submitted that TSM must have had an intention to seek the American injunction when it made the application for the English injunction before Walker J., that that intention was material and that it should have been disclosed to Walker J. In any event, having obtained the English injunction TSM should, pursuant to its continuing duty of disclosure, have returned to Walker J. and informed him that the American injunction had been obtained. MWS did not do so. Had TSM done so MWS would not have entered into the agreement which led to the consent order and as a result the court should discharge the consent order and thereby release MWS from the undertakings contained in the consent order. The result would be that if NCB honoured the demand the proceeds would be paid to MWS in Saudi Arabia and would not be kept in court to abide the result of the dispute between TSM and MWS.
Mr. Quest QC, on behalf of TSM, submitted that neither the intention to seek the American injunction nor the obtaining of the American injunction was material to the application for the English injunction and therefore did not have to be disclosed. In any event, even if such matters ought to have been disclosed, the failure to disclose them should not lead to the consent order being discharged. At most, the consent order should be varied so as to include an undertaking by TSM to seek the discharge of the American injunction.
TSM and the American injunction
It is not disputed that when TSM applied to Walker J. for the English injunction on 22 September 2014 TSM also intended to seek the American injunction, at any rate in the event that Walker J. granted the English injunction. It is also not disputed that Walker J. was not advised of that fact.
TSM informed MWS of the English injunction on 23 September 2014 at 1148 GMT. That was 1438 in Saudi Arabia where MWS was. In Pennsylvania the time was 0648.
Less than three hours later at 0929 in Pennsylvania (or 1729 in Saudi Arabia) TSM filed its application with the court in Pennsylvania seeking the American injunction. TSM did not expect opposition from RBS Citizens because on 18 September 2014 RBS Citizens had effectively invited TSM to obtain a court order enjoining RBS Citizens from paying RBS. The order was granted.
The evidence of Mr. Rahill, a director of TSM, is that the application for the American injunction on 23 September 2014 was made because MWS did not withdraw its demand on NCB as required by the English injunction. It may be that the plan was to issue the application for the American injunction only in the event that Walker J. granted the English injunction. But the plan to make such an application must have been formed at the same time as the plan to make the application for the English injunction. The evidence relied upon in support of both applications was the same, namely, the affidavit of Mr. Rahill dated 22 September 2014.
Mr. Rahill has said that because MWS did not withdraw its demand there remained a risk that RBS Citizens might pay under the letter of credit (with TSM liable to reimburse it) and so TSM issued proceedings in Pennsylvania for the American injunction. The English injunction was said to be “the basis” for the American injunction. This evidence was described by Mr. Millett as a canard or a lie. I am not prepared on an interlocutory application to say that Mr. Rahill has said something which he knows to be untrue. But his account of the reasons underlying the American injunction is incomplete. Reference to the court documents, that is, the complaint and the motion, reveals that reliance was placed on the allegation that the demand made by MWS was fraudulent; see paragraphs 14-21 of the complaint and paragraphs 12-18 and 31-32 of the motion. It is clear that, whilst it is possible that TSM would not have applied for the American injunction had the application for the English injunction failed, the basis in law of the application for the American injunction was the allegation of fraud. That was the same basis in law as the application for the English injunction. Although the grant of the English injunction was mentioned in both the complaint and the motion it was not expressed to be the basis in law of the application. It seems to me plain that the basis of the English and American applications was the same, namely, the allegation of fraud. The American injunction was, it seems to me, intended to provide TSM with further protection in the event that MWS did not comply with the English injunction. TSM informed the American court that “to their knowledge, MWS had not withdrawn its demand” but it does not appear that the American court was told that MWS had only been advised of the injunction by email less than 3 hours before the complaint had been filed or, indeed, what steps, if any, TSM had taken (after advising MWS of the English injunction) to enquire of NCB whether MWS had withdrawn its demand. If the English injunction, and MWS’ failure to comply with it, had truly been the “basis” of the application one would have expected these matters to have been dealt with in detail. They were not.
The duty of full and frank disclosure
The first question the court must determine is whether TSM was obliged, pursuant to its duty of full and frank disclosure, to inform Walker J. on 22 September 2014 that it intended to apply for the American injunction. That depends upon whether that intention was material.
Mr. Millett submitted that it was material for two reasons. First, it went to the question of the risk of loss to TSM and therefore to that part of the English injunction which required MWS to withdraw its demand. The American injunction would mean that TSM would not, during the currency of the injunction, have to pay out £8.57m. Second, the American injunction would result in none of the banks honouring their obligations and so there was no risk of the sum of £8.57m being dissipated. This went to the need for the freezing order in the English injunction.
Mr. Quest submitted that TSM’s intention to apply for the American injunction was not material and therefore there was no duty to disclose it. The intention did not remove the basis of the English injunction that MWS withdraw its demand. That basis was fraud and the intention to obtain additional protection from the American court did not remove that basis. Mr. Quest relied upon the decision of Eder J. in Speedier Logistics v Aardvark Digital[2012] EWHC 2776 (Comm). At paragraph 32 Eder J said that where “the claimant has in effect gained the benefit of the exercise of the court’s discretion on a certain basis when that basis no longer exists, it is imperative that the claimant obtains either the consent of the defendant to the continuation of the injunction or reverts back to the court so that the court itself can decide whether or not to continue the injunction”.
Mr. Quest further submitted that the American injunction was intended to provide some limited and temporary protection for TSM for so long as MWS failed to comply with the English injunction. The American injunction was ancillary to and supportive of the English injunction; it was not an alternative to it.
If one adopts a narrow view of the question of materiality, in the sense of asking whether the intention to seek the American injunction removed the basis of the claim for the English injunction, it can be said that that intention was not material. On 22 September 2014 TSM had a cogent case that the demand by MWS was fraudulent, that MWS should therefore be ordered to withdraw its demand and that if it did not do so TSM was at risk of suffering loss because, if the demand was honoured, TSM would ultimately be obliged to indemnify RBS Citizens. That was the basis of the claim on 22 September 2014 and it remained so notwithstanding that TSM intended to apply to the American court for additional protection in the form of an order restraining RBS Citizens from paying RBS. However, I consider that that would be to adopt too narrow a test of the question of materiality. Whilst it is undoubtedly the case that if a fact or matter removes the basis on which an injunction is granted it must be disclosed (as stated by Eder J. in Speedier Logistsics) that is not the extent of the duty of full and frank disclosure. That duty extends to disclosure of all facts “which reasonably could or would be taken into account by the Judge in deciding whether to grant the application”; see Siporex Trade SA v Comdel Commodites [1986] 2 Lloyd’s Rep. 428 at p.437 per Bingham J. Where a person who applies ex parte for an injunction intends to use the grant of the injunction to support an application for an injunction from another court in a foreign jurisdiction such intention is a matter which “reasonably could or would be taken into account by the Judge in deciding whether to grant the application”. That is because the intention affects or may affect the consequences of granting the injunction. Any judge of this court when asked to grant an injunction ex parte wishes to know the likely consequences of acceding to the application and making the requested order. If the judge is not informed of the applicant’s intention to use the order in support of another application abroad the judge will have an inadequate or incomplete appreciation of the likely consequences of making the requested order. In my judgment the fact that the judge may still make the requested order having been told of the applicant’s intention does not make the intention immaterial. The judge would expect to be told what the applicant intends to do with the injunction so that he or she can consider whether it remains appropriate to grant the injunction.
For that reason alone I consider that TSM ought to have disclosed to Walker J. that it intended to use the injunction in support of an application for another injunction in Pennsylvania.
Further, the terms of the American injunction (that RBS Citizens be “enjoined from honouring any demand on the letter of credit”) were such that it might be said that TSM would not or might not sustain the loss which it was feared it might sustain in the event that RBS Citizens honoured a demand on the letter of credit. The fact that Walker J. might well have concluded, on being told that the American injunction was only intended, as Mr. Quest said in his skeleton argument, “to provide some limited and temporary protection for the Claimants for as long as MWS failed to comply with the English injunction” does not make the fact of the American injunction immaterial.
Mr. Millett also submitted, as I have indicated, that the fact of the American injunction was material to the freezing order part of the English injunction. I agree that it probably was because it could be said that the other banks in the chain would not or might not honour their obligations if RBS Citizens was not going to pay and therefore there was or might be no prospect of MWS dissipating the sums of £8.57m which would or might otherwise have been paid to it. However, it is unnecessary to decide this point.
The effect of breach on the consent order
TSM did not disclose its intention to obtain the American injunction or the fact that it had obtained the American injunction before the parties agreed the terms of the Consent Order on 21 October 2014. Pursuant to that order the injunction was not renewed and in its place was an arrangement voluntarily agreed by TSM and MWS. TSM agreed that MWS might make a demand on NCB and MWS agreed that if the demand were honoured the proceeds would, ultimately, be paid into court.
Mr. Millett submitted that the principles which govern the question whether an ex parte order should be set aside following a failure to give full and frank disclosure (see The Arena Corporation Limited v Peter Schroeder [2003] EWHC 1089 (Ch) at paragraph 213, Millhouse Capital and others v Sibir Energy and others[2008] EWHC 2614 (Ch) at paragraphs 102-105, Dar Al Arkan Real Estate and others v Al Refai and others[2012] EWHC 3539 (Comm) at paragraphs 148-149 and U&M Mining Zambia v Konkola Copper Mines[2014] EWHC 3250 (Comm) at paragraph 68) apply also to the question whether a consent order made following an ex parte order obtained without giving full and frank disclosure should be set aside. Pursuant to those principles the general rule is that an order obtained in breach of the duty to give full and frank disclosure will be set aside but the court has jurisdiction to continue or to re-grant the order. Although the jurisdiction should be exercised sparingly (so as to uphold the public interest in requiring full and frank disclosure) the general rule should not be allowed to become an instrument of injustice and the court should have regard to the proportionality between the punishment and the offence. The overriding question for the court is what is in the interests of justice having regard to all the circumstances of the case. (Footnote: 1)
Mr. Quest submitted that where the question is whether undertakings given voluntarily in a consent order should be discharged the relevant principle is that set out in Chanel Ltd. v Woolworth and Co. [1981] 1 WLR 485 and Emailgen Systems Corp. v Exclaimer Ltd.[2013] 1 WLR 2132 at paragraphs 32-33. That principle requires good cause to be shown for a person to be released from an undertaking. What is good cause will depend upon all the circumstances of the case though typically a change of circumstances or the discovery of some new fact will be required. A person will only be released from an undertaking if it would otherwise be unjust to hold him to his undertaking.
Although an order resulting from the court’s exercise of a discretion and a consent order resulting from the parties’ agreement are both orders of the court, a consent order has a feature which is lacking in an order which results from the court’s exercise of a discretion, namely, it is the product of careful negotiation and agreement between the parties themselves. That additional factor is, it seems to me, relevant when considering whether it is just to set aside the order. It is a factor in favour of holding the parties to their agreement; for it is in the public interest that parties should seek to resolve their differences themselves and if they do so the court should seek to uphold their agreement. That is why, it seems to me, that before a party may be released from an undertaking good cause must be established.
In the present case the relief granted without notice, that is, the English injunction and the undertakings that replaced it, had expired or been released by agreement. In their place was an undertaking from MWS that it would not make or pursue any demand on NCB unless it first requested NCB to pay the amount demanded directly to MWS’ solicitors and an undertaking from the solicitors to pay such sums into court. The sums in court were to stand as security for any judgment any party may obtain in the proceedings against another party. Thus the dispute between the parties was to proceed to trial. In effect the dispute between the parties as to whether TSM was entitled to the English injunction was settled. MWS was now free to pursue its demand on NCB provided that it requested that the amount demanded be paid to its solicitors who would then pay it into court to await the outcome of the trial.
In those circumstances I consider that the appropriate principle to be followed is that set out in Emailgen Systems Corpn. v Exclaimer Ltd. and the cases there cited. The court is not concerned with an application to set aside an ex parte order which the court granted in the exercise of its discretion. Rather, the court is concerned with an application to set aside a consent order to which the applicant had agreed.
Mr. Millett submitted, in accordance with the principles set out in Emailgen Systems Corpn. v Exclaimer Ltd., that there is good cause to release MWS from the undertakings in the consent order, namely, the discovery of a new fact, that is, the existence of the American injunction, a fact which ought to have been disclosed at the very latest when the consent order was being negotiated. That was a significant change of circumstances because the consent order had been entered into, submitted Mr. Millett, “on the basis that it would be possible to obtain payment into Court of the sums due under the performance guarantee”. The “key cause” of that not happening was TSM’s failure to vacate the American injunction.
I accept that the American injunction was a new fact and a change of circumstances. MWS did not know of it when it agreed to the consent order. The question is whether the discovery of that fact makes the continuation of MWS’ undertaking unjust.
A number of submissions were made in this context on both sides. I propose to consider them under three headings: first, the seriousness of TSM’s breach of the duty it owed to the court to give full and frank disclosure, second, the effect of the American injunction and third, what is likely to have happened had there been no such breach of duty.
The seriousness of the breach of duty to the court
Mr. Rahill has said that when TSM applied for the English injunction he did not consider TSM’s intention to seek the American injunction was material. I infer that he was aware of TSM’s intention and chose not to disclose it to the court. In my judgment his opinion that MWS’ intention to seek the American injunction was not material was mistaken. TSM’s failure to disclose its intention was a serious breach of its duty to the court. The breach of duty continued until the parties agreed the consent order. The breach of duty is a factor which suggests that it would be unjust to hold MWS to the undertakings it gave when it effectively settled the dispute between the parties as to whether TSM was entitled to injunctive relief. That is because it is in the interests of the administration of justice that those who apply for ex parte relief comply with their duty of full and frank disclosure to the court.
The effect of the American injunction.
Mr. Millett submitted that the American injunction had the result that the proceeds of the demand were not paid by NBC and so were not paid into court as contemplated by the consent order.
In considering this question it is necessary to bear in mind that the consent order did not mean that payment by NCB would be made. NCB was not party to the consent order and whether it complied with the demand of MWS was a matter for it to decide. MWS had sought from TSM an undertaking that it would not communicate anything to NCB which might have an adverse effect on MWS’ ability to draw down on the Performance Guarantee and to pay the amount drawn down into court. However, TSM was not willing to give that undertaking and so it was not included in the consent order. Thus, whilst MWS was able to pursue its demand on NCB, there was no certainty that NCB would pay. MWS took the risk that NCB might not honour the demand and could not prevent TSM advising NCB of its reasons for considering that the demand was fraudulent.
Mr. Millett submitted that whilst MWS ran that risk they did not run the risk that NCB might not honour the demand because of the American injunction. MWS did not agree to run that risk because it did not know of the American injunction. Mr. Millett submitted that the risk was in fact a certainty such that there was no purpose in the consent order at all.
However, the existence of the American injunction did not mean that NCB would not honour MWS’s demand, for the American injunction was against RBS Citizens and not against NCB. Nevertheless, knowledge of the American injunction might make NCB unwilling to honour its obligations to MWS because it would know that there might be problems in obtaining payment up the banking chain of RBS and RBS Citizens.
NBC did not honour the demand but there is no evidence from it as to why it did not honour the demand. Mr. Mattar of MWS has given evidence that NCB said that it refused to pay because RBS would not comply with its obligations under the counter-guarantee. TSM has not disclosed correspondence between it and NCB.
However, Mr. Quest submitted that examination of the correspondence involving RBS from 23 October 2014 until 10 November 2014 showed that RBS was not relying upon the American injunction as a reason for not paying. RBS was concerned, not about that injunction, but with the question whether MWS had made a demand in accordance with its undertaking. Also, when TSM attempted to persuade RBS not to honour the demand it relied upon its case that the demand was fraudulent, rather than upon the American injunction.
The correspondence to which Mr. Quest referred suggests that even if there had been no American injunction RBS would not have been willing from 23 October until 10 November 2014 to pay NCB and therefore, if (as stated by Mr. Mattar) NCB would only honour its obligations to MWS provided RBS honoured its obligations to NCB, there would have been no payment by NCB.
However, when RBS made its proposal on 1 December 2014 to pay the sum demanded directly into court it did so on terms which included a requirement that TSM ask the Pennsylvanian court to lift the American injunction thereby allowing RBS Citizens to honour RBS’ demand under the letter of credit. This suggests that the American injunction might well have had an inhibiting effect not only upon RBS Citizens to whom it was directed but also upon RBS.
The American injunction was never lifted and so it seems likely that the American injunction had the direct effect of preventing RBS Citizens from paying RBS and, at least from 10 November 2014, the indirect effect of preventing RBS from paying NCB and (on Mr. Mattar’s evidence) the further indirect effect of preventing NCB from paying MWS’ solicitors in accordance with the consent order.
That the American injunction might have had this effect must have been apparent to TSM when it negotiated the terms of the consent order with MWS and is a further factor which suggests that it would be unjust to hold MWS to the undertakings it gave in the consent order.
What is likely to have happened had there been no breach of duty by TSM
Mr. Mattar of MWS has given evidence that had MWS known of the American injunction it would not have entered into the consent order. He did not however refer to what MWS said in correspondence after being informed of the American injunction.
Although MWS informed TSM on 2 December 2014 that had it known of the American injunction it would not have entered into the consent order, on 3 December 2014 MWS informed RBS that RBS’ proposal of making payment directly into court was “a sensible interim solution” but before it could be accepted RBS needed to know whether TSM was prepared to seek the discharge of the American injunction. On 4 December 2014 TSM informed RBS that it was agreeable in principle to RBS’ proposal (which included the requirement that the American injunction be lifted). On 23 December 2014 MWS required confirmation from TSM that it was still willing to accept RBS’ proposal, including the lifting of the injunction. On 29 December 2014 TSM replied saying that its agreement in principle had never been rescinded.
RBS’ proposal was not in fact implemented because it later appeared that MWS was not willing to agree, as requested by RBS, that payment into court would release NCB from its obligations under the performance guarantee.
It seems to me probable, notwithstanding what MWS stated on 2 December 2014 and what Mr. Mattar has said in his statement, that if MWS had been informed of the American injunction before agreeing to the consent order MWS would have agreed to the consent order provided that TSM agreed to withdraw the American injunction. In reaching that conclusion I have in mind:
MWS was content to give up its right to receive payment from NBC and to permit NBC to pay the sum demanded to its solicitors who would then pay the sum into court. MWS no doubt wished NBC to pay in accordance with the terms of the consent order.
Once MWS learnt of the American injunction they were agreeable to RBS paying the sum demanded directly into court so long as the American injunction was withdrawn.
Withdrawal of the American injunction would remove the risk that the existence of the American injunction would (indirectly) prevent NBC from paying the sum demanded.
These considerations suggest to me that the “new fact” or “change of circumstances”, namely, the discovery of the American injunction, does not make continuation of MWS’ undertakings in the consent order unjust. So long as the American injunction is withdrawn the arrangement which MWS and TSM negotiated will be effective.
TSM did not in fact take steps to withdraw the American injunction. It remains in place. It is unclear to me why TSM did not take steps to secure its release. Its failure to take such steps suggests, arguably, that it had no real intention to secure its withdrawal and would not in fact have secured its withdrawal even if MWS had requested its withdrawal. This possibility in turn suggests that continuation of MWS’ undertakings would be unjust. However, Mr. Quest made it plain in his written and oral submissions that TSM is willing to release the American injunction so that the sum demanded of NCB (assuming NCB is willing to pay it) can be paid to MWS’ solicitors and then into court.
Conclusion
My review of the circumstances of this case shows two factors which would suggest that it would be unjust to hold MWS to its undertakings (the seriousness of TSM’s breach of duty to the court and the likely effect of the American injunction) and one factor which suggests that it would not be unjust to hold MWS to its undertakings (that had MWS known of the American injunction it would still have agreed to the consent order so long as the American injunction was withdrawn and TSM is willing to withdraw it). Having considered, weighed and reflected upon the circumstances of this case I have reached the conclusion that it would not be unjust to hold MWS to its undertakings in the consent order upon terms that TSM seeks the withdrawal of the American injunction. I have reached that conclusion for these reasons:
The court is not considering whether to maintain an order which it made ex parte in the exercise of its discretion but whether undertakings agreed in a consent order should be maintained. Whilst it is in the interests of the administration of justice that the court insists upon and enforces the duty of an applicant who seeks an ex parte order to make full and frank disclosure to the court, it is also in the interests of the administration of justice, where parties have negotiated and agreed upon a settlement of a dispute as to whether the relief granted ex parte should be continued, that the agreement of the parties should be upheld.
In the present case the terms of the consent order provided benefits for both parties. MWS was free to pursue its demand for payment by NCB under the performance guarantee and TSM was assured that if NCB honoured the demand under the performance guarantee the proceeds would be kept in court pending determination of the dispute between the parties as to whether TSM was liable in damages or not. It is in the interests of the administration of justice that the parties’ agreement be upheld.
Whilst TSM had failed to comply with its duty of full and frank disclosure to the court and whilst the American injunction may have led, indirectly, to NCB not honouring MWS’ demand, it is more probable than not, had TSM disclosed the American injunction, that MWS would still have wished to agree to the terms of the consent order so long as TSM undertook to withdraw the American injunction. In the particular circumstances of this case I am persuaded that, notwithstanding TSM’s breach of duty to the court, there is no injustice to MWS in holding it to the agreement it made.
Mr. Millett submitted that the court was entitled either to uphold the consent order or to discharge it but was not entitled to refashion the consent order. In simple terms that is probably correct. But by upholding the consent order on terms that TSM withdraws the American injunction the court is not altering the nature of the scheme agreed by the parties. Rather, the court is ensuring that the operation of that scheme, beneficial to both parties and agreed by them, will not be impeded.
For these reasons I have decided not to set aside the consent order.