High Court dismisses application to discharge injunctions due to lack of material non-disclosure regarding a board meeting recording.

Neutral Citation [2013] IEHC 266

THE HIGH COURT

[2012 No. 12487P and 2012 No. 12606P]

BETWEEN

ANCORDE LIMITED AND BARRY HARTE

PLAINTIFFS

AND

MIRANDA HORGAN, COLLETTE SWEETNAM AND ASHWOOD INVESTMENTS LIMITED

DEFENDANTS

AND (BY ORDER OF THE COURT) –

BARRY HARTE, DAMIEN RYAN AND ANCORDE LIMITED

DEFENDANTS TO THE COUNTERCLAIM

Judgment of Ms. Justice Laffoy delivered on 6th day of June, 2013.

The proceedings and the application

1. These proceedings are now consolidated proceedings, the original proceedings being –

(a) proceedings between Ancorde Limited and Barry Harte (the Harte Parties), as plaintiffs, and Miranda Horgan, Collette

Sweetnam (the Horgan Parties) and Ashwood Investments Limited (the Company), as defendants (Record No.

2012/12487P); and

(b) proceedings between the Company and the Horgan Parties, as plaintiffs, and the Harte Parties and Damien Ryan, as

defendants (Record No. 2012/12606P).

Before the proceedings were consolidated, the plaintiffs in each had sought interlocutory injunctive relief. The Court’s decision on

each of those applications was given on 31st May, 2013 and the approved judgment (the Injunctions Judgment) was delivered on 6th

June, 2013.

2. Before the Injunctions Judgment was delivered, by notice of motion dated 17th April, 2013, the defendants in the consolidated

proceedings, that is to say, the Horgan Parties and the Company had sought the following reliefs:

(a) an order dismissing the interlocutory application of the Harte Parties on the grounds that the Harte Parties had

“knowingly withheld” from the Court during the hearing of the application the existence of a secret recording of the board

meeting of the Company that took place on 6th November, 2012, asserting that the fact of the making of which and the

content of which was and remained “centrally relevant and material to the determination of the respective interlocutory

applications herein”; and

(b) an order discharging the defendants, that is to say, the Horgan Parties and the Company “from their interlocutory

undertakings to the Court” on the same grounds.

This judgment should be read in conjunction with the Injunctions Judgment.

3. In the affidavit grounding that application, which was sworn on 12th April, 2013, Ms. Horgan averred that a very serious matter

came to light for the first time on 10th April, 2012, being the surreptitious and secret recording by the Harte Parties of the meeting of

the board of directors of the Company which took place on 6th November, 2012. Arising from replies dated 27th March, 2013 by the

plaintiffs’ solicitors to a notice for particulars delivered by the defendants’ solicitors, on 10th April, 2012 the plaintiffs’ solicitors sent

by e-mail a document transcribed by Gwen Malone Stenography Services Limited, which was represented as being the “minutes” of

the meeting on 6th November, 2012. In fact, it was a transcript or, as the Horgan Parties contend, a partial transcript of a recording

made of the meeting on a mobile phone. Ms. Horgan’s position is that there was deliberate subterfuge and concealment, a lack of

candour, and a failure to make full and frank disclosure of all material matters to the Court in the course of the hearing of the

applications for interlocutory injunctive relief which resulted in a deliberate misleading of the Court and further that a major breach of

trust occurred as a result of the secret recording.

4. Mr. Harte’s response, in his replying affidavit sworn on 29th April, 2013, was that the recording was made by Mr. Hilary Haydon,

who was present at the meeting on 6th November, 2012 as “Financial Advisor” to the Company and that he, Mr. Harte, was unaware

that the recording was being made and had only recently been notified about it. Mr. Harte then, in what only can be viewed as an

unproductive “tit for tat” response, asserted his belief that Ms. Horgan had made a recording of the meeting on 3rd December, 2012,

which is referred to in some detail in the Injunctions Judgment, although professing that he was not raising any objection to that

having occurred. I am quite satisfied on the basis of Ms. Horgan’s further affidavit sworn on 8th May, 2013, which is corroborated by

an affidavit sworn by Ms. Sweetnam on 7th May, 2013, that Ms. Horgan did not make a recording of the meeting of 6th December,

2012.

5. In her grounding affidavit sworn on 12th April, 2013, Ms. Horgan outlined matters which the transcript which she had received of

the recording of the meeting on 6th November, 2012 at that stage revealed and which she considered to be of significance. The

general thrust of the matters she has averred to is that they corroborate her account of what happened at the meeting on 6th

November, 2012 and what was happening in relation to the affair of the Company at that time. To take one example, she has averred

that the “repeated claims” by Mr. Harte in his affidavits that Mr. Haydon was a mere “financial advisor” are “exploded” by the

transcript and that the transcript demonstrates that Mr. Harte did not speak for, or represent, Ancorde but that it was Mr. Haydon

who at all times spoke for and represented Ancorde. It is reasonable to anticipate that the existence of the transcript and of the

further evidence in relation to what transpired at the meeting of 6th November, 2012 averred to by Ms. Horgan in her second affidavit

sworn on 8th May, 2013 will be of significance in resolving evidential conflicts which will inevitably arise at the hearing of the

substantive consolidated proceedings, including a conflict which I flagged in the Injunctions Judgment, that is to say, as to who was

the driving force in Ancorde, which is likely to have a bearing on the broader issues in the consolidated proceedings. However, as

regards the specific issues with which the Court was concerned on the hearing of the applications for interlocutory injunctive relief,

which I referred to as the shareholder issue and the directorship issue and also the issue in relation to the amended Articles of

Association of the Company, having regard to the relevant legal principles applicable, that evidence would not be of relevance to the

issues if it had been adduced on the hearing of the applications for interlocutory injunctive relief.

Submissions on the legal principles applicable

6. The principal authority relied on by counsel for the Horgan Parties is the decision of High Court (Clarke J.) in Bambrick v. Cobley

[2006] 1 ILRM 81, which has been followed consistently since it was given, and, indeed, was followed in the other authorities of the

courts of this jurisdiction relied on by the Horgan Parties, which I do not consider it necessary to address. In that case, the plaintiff

had applied ex parte for, and had obtained, an interim Mareva injunction restraining the defendant from reducing her assets within the

jurisdiction below €100,000. At the hearing of the interlocutory application, the defendant claimed that the plaintiff had failed to

disclose, when applying for the interim order, the fact that the defendant’s solicitors had undertaken to hold €50,000 on trust.

Against that background, Clarke J. stated (at p. 89) that the Court has a discretion, in cases where failure to disclose has been

established, to refuse to grant the interlocutory injunction and to discharge the already granted interim injunction but is not

necessarily obliged to do so. He then went on to consider, in general terms, the criteria which the Court should apply in the exercise

of such discretion, stating (at p. 89):

“Clearly the court should have regard to all the circumstances of the case. However the following factors appear to me to

be the ones most likely to weigh heavily with the court in such circumstances:

1. The materiality of the facts not disclosed.

2. The extent to which it may be said that the plaintiff is culpable in respect of a failure to disclose. A deliberate

misleading of the court is likely to weigh more heavily in favour of the discretion being exercised against the continuance

of an injunction than an innocent omission. There are obviously intermediate cases where the court may not be satisfied

that there was a deliberate attempt to mislead but that the plaintiff was, nonetheless, significantly culpable in failing to

disclose.

3. The overall circumstances of the case which lead to the application in the first place.”

Earlier, having referred to some authorities of the courts of the United Kingdom, Clarke J. had stated (at p. 87):

“Taking those authorities it would seem that the test by reference to which materiality should be judged is one of

whether objectively speaking the facts could reasonably be regarded as material with materiality to be construed in a

reasonable and not excessive manner.”

Applying the criteria which he had outlined to the facts of the case before him, Clarke J. concluded that the non-disclosed facts in

that case were of significant materiality. 7. Counsel for the Harte Parties pointed to the fact that, as in the Bambrick v. Cobley case,

the authorities of the United Kingdom courts relied on by counsel for the Horgan Parties concerned applications to discharge orders

made ex parte on the ground of lack of disclosure: Brink’s Mat Limited v. Elcombe [1988] 1 WLR 1350; Behbehani v. Salem [1989] 1

WLR 723; and Sumitomo v. Oil & Natural Gas [1994] 1 Lloyds Law Reports 45. It was submitted that, by contrast, here the Court was

required to adjudicate on an inter partes application.

8. The response of counsel for the Horgan Parties was that when the Harte Parties’ application for interlocutory relief first came

before the Court on 13th December, 2012, the Horgan Parties gave an undertaking to the Court, which I have quoted in the

Injunctions Judgment, and that the undertaking was, in substance, similar to the Court making an ex parte order. I do not necessarily

think that that is a correct analogy in this case because, at the time the undertaking was given, the Horgan Parties had an

opportunity to consider the affidavit evidence put before the Court by the Harte Parties and, additionally, a replying affidavit had

been sworn by Ms. Horgan on 12th December, 2012. However, I do not think it would be proper to determine the issue now before the

Court on that ground alone.

9. Counsel for the Harte Parties acknowledged that a factor which the Court has to have regard to in determining whether or not to

exercise an equitable discretionary remedy is the conduct of the party invoking the jurisdiction of the Court, citing the commentary in

Delany on Equity and the Law of Trusts in Ireland, 5th Ed. (at p. 521). As is pointed out by Delany, in this regard, one of the

equitable maxims which comes into play is “he who comes to equity must come with clean hands”. However, the court will decline to

intervene on the basis of the “clean hands” principle unless there is a sufficient connection between the inequitable conduct and the

subject matter of the dispute and, in this connection, Delany quotes the following comment from Scrutton L.J. in Moody v. Cox [1917]

2 Ch. 71 (at p. 87 – 88):

“Equity will not apply the principle about clean hands unless the depravity, the dirt in question on the hand, has an

immediate and necessary relation to the equity sued for.”

Conclusion on application of legal principles

10. In the Injunctions Judgment, it was necessary to pare down the reliefs sought on the two applications for interlocutory relief

before the Court for the purposes of identifying the issues the Court had to address on those applications and, as I have stated,

there were three issues: the directorship issue; the shareholder issue; and the issue in relation to the amended Articles of Association

of the Company. Although there was evidence before the Court as to what happened at the meeting of the board of directors of the

Company on 6th November, 2012, I concluded that what happened at that meeting was not material to the Court’s function in

relation to the three issues which were raised on the interlocutory applications. It is for that reason that, in summarising the core

factual underlay which had given rise to those issues, I did not include in the chronology the meeting of 6th November, 2012.

11. On the application by the Harte Parties for interlocutory injunctive relief, the Court’s function was to establish whether a fair issue

had been raised as to the shareholder issue and the directorship issue, the exercise of which involved a low threshold. I was satisfied

that the threshold had been met by reference to what happened from between 15th November, 2012 and the initiation of the

proceedings by the Harte Parties. That conclusion would not have been affected, even if the evidence which has been adduced on

this application had been adduced on the hearing of the applications for interlocutory relief. In short, in my view, what happened at

the meeting on 6th November, 2012, applying the test of materiality indicated by Clarke J. in Bambrick v Cobley, could not reasonably

be regarded as material from an objective perspective in determining whether there was a fair issue to be tried in relation to the

shareholder issue or the directorship issue, both of which issues were triggered by the action of Ms. Sweetnam’s solicitor in serving

the notice of 15th November, 2012. It was that action, in which the persons who attended the meeting on 6th November, 2012 did

not participate, coupled with what happened subsequently, which had an immediate and necessary relation to the injunctive relief

which Mr. Harte sought.

12. Having heard the applications for interlocutory relief but not having delivered judgment on them before this application was made,

I considered that the proper course was to determine the applications for interlocutory relief on the evidence before the Court at the

hearing. If, on the evidence adduced on this application I had come to the conclusion that there was a material non-disclosure on the

part of the Harte Parties, which breached the equitable “clean hands” maxim, it would have been appropriate to consider discharging

the interlocutory orders. However, I am satisfied that there was no such non-disclosure which was material to and connected with

the decisions which I made. Of course, that is not to say, as I have made clear earlier, that the evidence which has emerged will not

be significant on the hearing of the substantive consolidated action.

13. Accordingly, the defendants’ application will be dismissed.