A Tear in the Cloth for Apparel: RFB Successful in Setting Aside Freezing Injunction

By Rudi Ramdarshan, Nii-Amaa Ollennu, and Harry Medway.  

Introduction: A Flaw in Apparel’s Legal Fabric 

On 09 February 2024 Apparel FZCO (“Apparel”), a renowned fashion retailer, sought a without notice freezing injunction against Sheeraz Iqbal (“Iqbal”).  

It is a crucial part of without notice applications, particularly those involving freezing injunctions, for there to be full and frank disclosure. A freezing injunction which will invariably take place initially with only one party present, relies on counsel and their professional obligations to bring to the attention of the Court material facts which could undermine the application. These include legal submissions and factual matters.  

In practice, faced with a busy list, there will be a section in the applicants witness statement dealing with issues falling under the heading of full and frank disclosure. This will also be supported by a skeleton argument with a similar section, with the final safeguard being counsel at a hearing making oral submissions going to full and frank disclosure.  

In the case of Apparel FZCO v Sheeraz Iqbal, this did not happen. When pressed by the Judge for material relevant to full and frank disclosure Apparel’s counsel replied:  

“We cannot find anything that we ought to draw to your attention to say there is a gaping hole in the story, or even a bit of a tear in the cloth” 

There was more than a tear in the cloth for Apparel. Iqbal was a victim of fraud and Apparel’s case did not reach the threshold of a good and arguable case.  

Background 

Apparel had initially secured a freezing injunction against Iqbal the background of which involved a convoluted fraudulent scheme involving individuals impersonating TK Maxx employees. These impersonators successfully deceived Apparel into selling them goods claimed to be in excess of £1 million in value, which were then sold to a third party. Apparel contended that Iqbal was the orchestrator of this elaborate fraud, but Iqbal vehemently denied these allegations, asserting that he, too, had fallen victim to the impersonators’ deceit.  

The Fabric of Justice: Full and Frank Disclosure 

The crux of the case revolved around the legal principle of full and frank disclosure, a cornerstone of the judicial process when applying for a freezing injunction without prior notice to the opposing party. This principle mandates that the applicant must divulge all material facts to the Court, encompassing any information that could potentially undermine their case or lend credence to the defendant’s position. 

In this particular instance, the Court determined that Apparel had fallen short of fulfilling this crucial obligation. They had neglected to disclose specific emails and evidence that could have substantiated Iqbal’s defence, suggesting that he might have been an unwitting participant in the fraudulent scheme rather than the mastermind behind it. The Court noted that Apparel’s counsel, when asked by the Judge to highlight any issues of full and frank disclosure, responded,

“We cannot find anything that we ought to draw to your attention to say there is a gaping hole in the story or even a bit of a tear in the cloth…that means it could unravel.”

This statement was ultimately deemed misleading, as the available evidence could have significantly impacted the Court’s initial decision to grant the injunction. 

Stitching the Legal Principles Together  

The Court’s ruling was firmly rooted in established case law, underscoring the stringent nature of the duty of full and frank disclosure. The Court cited several landmark cases, including Lloyds Bowmaker Ltd v Britannia Arrow PLC [1998] 1 WLR 1337, where the court emphasised that

“a party who seeks relief ex parte is under a duty to the court to make the fullest disclosure of all material facts. He must disclose any defence as reasons to anticipate may be advanced. If he does not comply, he will be deprived of the fruits of his order without consideration of the merits…”

They also referenced Bank Mellat v Nikpour, where the Court stressed the necessity of “the fullest and frankest disclosure” in such applications. 

Furthermore, the Court drew upon the modern formulation of the duty of disclosure as articulated in Brink’s Mat Ltd v Elcombe “a full and fair disclosure of all the material facts”. This case established seven key principles, including the applicant’s responsibility to conduct thorough inquiries before applying for an injunction and the Court’s authority to discharge an order obtained without full disclosure. 

A Tapestry Unravelled: The Consequences of Non-Disclosure 

The Judge concluded that:  

“54. Standing back and looking at matters in the round, the affidavit, the skeleton and the oral presentation of the case at the hearing, in my judgment, all fell significantly short of what is required in terms of overall fair and objective presentation of the evidence and the strength of the Claimant’s case in material respects. I am satisfied that the Order should be set aside as a result, essentially for the reasons submitted by Mr. Power.” 

The Court’s decision to set aside the freezing injunction against Iqbal serves as a potent reminder of the potential repercussions of failing to comply with the duty of full and frank disclosure. It underscores the critical importance of meticulous preparation and comprehensive disclosure when seeking such legal remedies. 

For clients contemplating instructing a law firm in similar matters, this case demonstrates the value which the team at RFB brought to the case ensuring that not only was the Court appraised of all the relevant facts to discharge the injunction but to sufficient facts which show that Iqbal was a victim of fraud. To read the judgment, please click here.

The team at RFB, comprising Senior Litigation Partner Rudi Ramdarshan, and Associate Solicitors Nii-Amaa Ollennu and Harry Medway, successfully represented Iqbal in this case. They can be contacted on r.ramdarshan@rfblegal.co.uk, n.ollennu@rfblegal.co.uk, h.medway@rfblegal.co.uk