Stop abusing ‘without notice applications’ - Judge issues warning as he gives Rusal Alpart Jamaica key legal victory over Kaiser
There seems to have developed a practice, over the years, where applicants approach the Supreme Court to obtain varying types of injunctions without notice to the respondents (without notice applications) and without full disclosure of all relevant facts.
Examples of without notice applications
For lay readers of this column, two prominent examples of without notice injunctions obtained this year would have been the provisional charging orders obtained by Jamaica Transport charging certain shares owned by Gordon 'Butch' Stewart in Gorstew Limited with the payment of certain costs, etc, and the injunction obtained by the Prime Minister Andrew Holness against TVJ and others which, among other things, prohibited the rebroadcasting of the 18 degrees North programme aired on Monday, May 30.
All of the before-mentioned orders being made ex parte were interim (that is, temporary, not permanent), pending inter partes hearings.
Word of caution
In a recent ruling, Justice David Batts issued a warning to the Bar and Bench (relying on the words of Lord Denning in Third Chandris Shipping Corporation and others v Unimarine SA), to the Bar, to make the applications with due regard to their responsibilities, and to the Bench, to exercise a wise discretion to see that the process is not abused.
Batts' words of caution were just as elegant as Lord Denning's and are worth noting:
"... It is only right that I underscore the reluctance with which applications without notice to the other side are to be embarked upon. Deprivation of a right, or the infringement of a liberty, is not to be effected without an opportunity to be heard, save in the most exceptional circumstances."
On March 21, 2016, Port Kaiser Oil Terminal SA (the claimant) obtained an ex parte freezing order from the Supreme Court against Rusal Alpart Jamaica (A Partnership).
The freezing order, in summary, restrained Alpart from:
1) Taking any steps to dispose of any of its property or assets up to a maximum of US$398,594,827.
2) Taking any steps to dispose of the sale proceeds of certain land situated in St Elizabeth, south of Bull Savannah.
The injunction was set for 14 days, after which there was to be an inter partes hearing (that is, hearing on notice to both parties) to determine whether the injunction should be discharged or renewed.
Ruling of Justice Batts
At the April inter partes hearing, Batts was very critical of the quality of significant aspects of the evidence Kaiser had placed before his sister judge on March 21, and, having canvassed the evidence in his usual methodical style, discharged the ex parte freezing order and refused to grant the new freezing order requested.
Leave was also granted to Kaiser to appeal the judge's orders. In today's column, we will drill down a bit into some of the reasons advanced by Batts for discharging the ex parte freezing order.
In obtaining the without notice freezing order in March, Kaiser had contended, among other things, that the application had been made without notice as:
a) the defendant was currently finalising the sale of the Alpart plant to a top Chinese Company, Jiuquan Iron and Steel (Group) Company (JISCO); and,
b) had Alpart known that the application was being made, that knowledge may have led to a speedy consummation of the sale agreement with JISCO.
However, Queen's Counsel and former solicitor general, Michael Hylton, at the hearing before Batts submitted that the freezing order should be discharged as Kaiser had not satisfied the legal requirements to obtain the freezing orders as it had not proven that:
a) it had not been possible to serve notice on Alpart; or
b) that giving notice would have defeated the purpose of the application.
In his judgment, Batts agreed with Hylton's submission in this regard.
"It is of cardinal importance," he stated, "that the claimant demonstrates that either service of notice is not possible or that such service would defeat the purpose of the application."
Having considered all the evidence, Batts was not satisfied that Kaiser had established that either service was not possible or that service would have defeated the purpose of the application. In Batts' own words:
"It is manifest that the evidence produced by the claimant suggests that the defendant owns a substantial asset in Jamaica that cannot be removed. It is an asset which is being sold but the sale for which will take months to complete. Service of notice of the application on the defendant's attorneys could not therefore 'defeat' the purpose of the freezing order within the meaning of the rules."
Batts was also heavily persuaded to discharge the ex parte freezing order because Kaiser had not sufficiently discharged its duty to provide full and frank disclosure.
He described the disclosure given to the court by Kaiser as falling "woefully short" of the duty.
The two main areas which Batts considered Kaiser to have fallen down on its duty to disclose were:
1) through its failure to indicate to the court that the documentation placed before it did not support the allegation of imminent completion of sale or of what was being sold;
2) because Kaiser had not brought to the attention of the court a particular clause of the lease agreement, at the heart of the case.
For the lawyers reading this column, an interesting third area of non-disclosure identified by Batts was the fact that the Particulars of Claim of Kaiser had been amended; however, the amended paragraph - which introduced a new claim for loss of profits - had not been underlined so as to bring the change to the attention of the court and the other side, as would customarily be done.
This failure to underline, Batts concluded, in the absence of full disclosure, could have caused his sister judge to draw certain inferences from the documents which had been laid before her in March, and especially with her not having had the benefit of Alpart's presence at the hearing to speak for itself.
With echoes of Portia's quality of mercy speech in Act IV Scene 1 of the Merchant of Venice, Batts stated: "The duty to disclose, is not discharged by placing documentation before the court. It is incumbent on the applicant to point out to the court anything in such documentation which may point in the absent Defendant's favour ... . It is time for all practitioners to recognise the importance and extent of the duty of full disclosure on ex parte applications."
- Shena Stubbs is an attorney-at-law. Send feedback to email: email@example.com. Twitter:@shenastubbs.