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• Norwich Pharmacal Co v Customs and Excise Commissioners [1974] AC 133 – Where an innocent third party possesses information relating to the wrongdoing, a court can
compel that third party to provide disclosure of documents and/or information to assist the person suffering harm.
• Usually brought to identify the wrongdoer, but can also be made in respect of documents or other information
• Third party is the target because they have usually facilitated the wrongdoing – “…if through no fault of his own a person gets mixed up in the tortious acts of others as to
facilitate their wrongdoing he may incur no personal liability but he comes under a duty to assist the person who has been wronged by giving him full information and disclosing the identity of the wrongdoers” – Lord Reid
• Ashworth Hospital v MGN [2002] 1 WLR 2033 – “…What is required is involvement or participation in the wrongdoing and that, if there is the
necessary involvement, it does not matter that the person from whom discovery was sought was innocent and in ignorance of the wrongdoing by the person whose identity it is hoped to establish”
• An order for disclosure could be made even where the information was not
required for the purposes of a bringing an action.
• Important weapon in a fraud litigator’s armoury given that secrecy is a
badge of fraud.
• Has been developed by the courts to the extent that it is now often
considered an important remedy.
– CPR 3.18 specifically recognises and preserves the Norwich Pharmacal
jurisdiction
• Equitable remedy, so the court has an overriding discretion as to whether it
should be granted.
• Number of judgments have indicated that the increased availability of pre-action disclosure and non-party disclosure under CPR r. 31.16 and 31.17 operates to limit the residual scope for Norwich Pharmacal Orders
– Mitsui & Co Ltd v Nexen Petroleum UK Ltd [2005] EWHC 625 (Ch)
– Nikitin v Richards Butler LLP [2007] EWHC 173 (QB)
• Scope of relief differs from that of pre-action disclosure pursuant to CPR r. 31.16, which allows the Court to order disclosure of documents against respondents who are likely to become parties to the expected proceedings.
• Under CPR r. 31.17, the Court has power to order disclosure of documents, likely to adversely affect the Defendant or support the Claimant, against a person who is not a party to the proceedings – once proceedings have commenced.
• NPO Jurisdiction is enshrined in CPR r. 31.18 and confirms that CPR r. 31.16 and 31.17 does not limit the Court’s power in relation to NPO’s.
• R (on the application of Mohamed) v Secretary of State for Foreign and
Commonwealth Affairs [2008] EWHC 2048 (Admin)
– Relief continues to be a flexible remedy at all stages of litigation
– Can assist anyone who lacks information and/or documents essential to his case
– Will be tailored to the needs and circumstances of the case
– Helpful in fraud cases and other cases involving criminal conduct and dishonesty
– Cannot be used as a “fishing expedition”, however at the same time the test must not
be set too high to confine the jurisdiction within artificial barriers
– Ultimately the granting of a Norwich Pharmacal Order will turn on what is in the
interest of justice
– Jurisdictional barriers are surmountable
• R (on the application of Mohamed) v Secretary of State for Foreign and Commonwealth Affairs [2008] EWHC 2048 (Admin)
– Court criticised the decision in Mitsui and Nikitin as having built “artificial barriers” around the relief, by unduly narrowing the ambit of the Court’s discretion and cluttering the content of “necessity”.
– It regarded Mitsui as wrongly characterising NPO as a remedy of last resort, available only if the innocent third parties were the only practicable source of information.
– Nikitin unduly increased the test of what was necessary to enable action by referring to information or documents “vital” to a decision to sue or ability to plead, which could not be obtained from other sources. The preferred the approach in Campaign against Arms Trade v BAE Systems plc [2007] EWHC 30 (QB), which emphasised that the Court should, and was entitled to, have regard to all the prevailing circumstances in the matter in hand.
(1) The wrong has been carried out, or at least arguably carried out, by a
wrongdoer.
(2) The Claimant intends to assert his legal rights against the wrongdoer.
(3) There is the need for an order to enable action to be brought against
the wrongdoer, usually to require the third party respondent to the
application to identify the wrongdoer.
(4) Respondent is not a “mere witness”, but sufficiently involved in the
wrongdoing so as to have facilitated it, even innocently and therefore
must be in a position to provide the information sought.
• The exercise of jurisdiction does require that there should be some evidence of wrongdoing by the wrongdoer and not the Respondent.
• Not necessary for the Claimant to establish there has been a wrong, although there must be at least some reasonable basis for contending a wrong may have been committed.
• Courts have made NPO’s to enable Claimants to discover whether or not a wrong has been committed and to enable them to pursue other legitimate purposes connected with the action, even though the disclosure sought would not identify any wrongdoers or result in proceedings.
• Must be shown that the discovery sought is necessary to
enable the Claimant to take action, or at least that it is just
and convenient in the interest of justice to make the order. It
raises the following elements:
– Whether the information sought can be shown to be
necessary;
– The extent of information which may be ordered to be
disclosed;
– Whether there is an alternative and more appropriate
method to obtain the information sought.
• The “mere witness” rule prevents a party from obtaining
discovery against a person who will in due course be
compellable to give that information as a witness or through
the production of documents.
• The “mere witness” rule does not apply:
– Where the identity of the wrongdoer is not known;
– Where there is a claim to trust property which may be
dissipated, most commonly in fraud and tracing claims;
– In respect of a post-judgment freezing injunction;
– Where the third party respondent is himself a wrongdoer
• Court will not require disclosure under a NPO if that disclosure would itself complete a cause of action.
• The Privilege against Self-Incrimination rule applies.
• Contempt of Court Act 1981, S.10 – a person responsible for a publication does not have to reveal his source.
• To order disclosure would in effect amount to infringement of the Sovereignty of another Country.
• Courts will likely refuse to make a Norwich Pharmacal Order where:
– There is an alternative method of obtaining the
information.
– If the Claimant has failed to make basic enquiries which may lead to the identity of the wrongdoer.
– Where the information will become available from a likely party to the substantive proceedings.
• Bankers Trust Co v Shapira [1980] 1 W.L.R. 1274, CA
• Made against bankers or other entities through whom stolen or misappropriated funds or their proceeds have passed.
• The Claimant must show a prima facie that his funds have been subjected to fraud and that the funds have been paid into/though the bank.
• Usually without notice.
• Bank’s reasonable costs and expenditure will usually need to be met by the Claimant.
• NPO may be the sole relief or often in fraud cases, it is ancillary to other relief such as injunctions, delivery-up, etc.
• Can be granted on an interim application on notice or without notice (exceptional).
• Generally follows CPR Part 23. Should set out: – The wrongdoing the Applicant complains of
– The Information being sought
– The Purpose for which the information is being sought
• Once the innocent third party has complied with the disclosure order, he should be released from the proceedings unless there is any reason for him to remain.
• The obligation may extend to giving full information and the order will expressly so provide.
– Full information does not mean general or standard disclosure as under CPR Part 31.
– NP jurisdiction does not provide a general right of discovery but is confined to necessary information.
• Generally requires the Respondent to identify the wrongdoer by name in an affidavit.
• There are no standard orders as these will vary to fit the circumstances of each case
• The Court in Mitsui held:
– “the required disclosure may take any appropriate form. Usually it takes the form
of production of documents, but it may also include providing affidavits,
answering interrogatories or attending court to give evidence.”
• Such application endorsed in JSC BTA Bank v Solodchenko [2011] EWHC 843
(Ch), where the Respondent was cross-examined in relation to the tracing of
assets.
• There is a debate as to whether any implied undertaking as to collateral use is owed
by an applicant who succeeds in getting disclosure from the Respondent to the
application.
• Passport Surrender
• Cross examination on compliance with order
• Without notice Search Order (after purported
disclosure)
• No filtered disclosure
• Electronic tagging and curfew
• Computer imaging
• Contempt
Application Notice in BTA Bank
Order in BTA Bank
Application Notice in BTA Bank
• Generally the Applicant will be obliged to pay the Respondent’s costs, including the compliance costs
• In appropriate cases the court may make an order conditional on costs being paid first – The Coca Cola Company Ltd v British Telecommunications Ltd [1999]
F.S.R. 518
• The position may differ where the Respondent supports or is implicated in a crime or tort or other wrongdoing and seeks to obstruct justice being done – Totalise Plc v The Motley Fool Ltd [2002] 1 W.L.R. 1233, CA
• If the Applicant is obliged to pay the costs of the Respondent, he may be able to recover those costs if he succeeds in the second action.
• S.25 Civil Jurisdiction & Judgments Act 1982.
• UK – the current jurisdiction of choice for shielding corporate assets
• Why ? – “E-Govt”; Electronic filing at Companies House – a “compliance car-crash”.
• Limited ID on directors – no check on multiple nominees
• Use of electronic authentication code
Section 25 CJIA provides as follow:
“(1) The High Court in England and Wales or Northern Ireland shall have power to grant interim relief where-
(a) proceedings have been or are to be commenced in a Contracting State other than the United Kingdom or in part of the United Kingdom other than that in which the High Court in question exercises jurisdiction; and
(b) they are or will be proceedings whose subject-matter is within the scope of the 1968 Convention as determined by Article 1 (whether or not the Convention has effect in relation to the proceedings).
(2) On an application for any interim relief under subsection (1) the court may refuse to grant that relief if, in the opinion of the court, the fact that the court has no jurisdiction apart from this section in relation to the subject-matter of the proceedings in question makes it inexpedient for the court to grant it.” [emphasis added]
• Court of Appeal in Motorola v Uzan had two concerns in mind:
– Comity; the impact that the making of the order will have on the proceedings in the primary court (including the potential for overlap, inconsistency and confusion); and
– Enforceability.
The Royal Bank of Scotland plc v FAL Oil Company Limited & Ors [2012] EWHC 3628 (Comm), Gloster J recently emphasised the following:
– It is a strong thing to restrain a defendant who is not resident within this jurisdiction or who does not hold the relevant assets here, or does not have close ties here, from disposing of his assets; but where the defendant is domiciled within the jurisdiction or has assets here, such an order cannot be regarded as exorbitant or as going beyond what is internationally acceptable;
– Where there is every reason to suppose that an order made against a foreign defendant, with tenuous links to the jurisdiction, will be disobeyed and that, if that should occur, no real sanction would exist to enforce compliance, then it is likely to be inexpedient to make far-reaching worldwide freezing and disclosure orders against such a defendant under s.25 CJJA; and
– The fact that the court hearing the substantive proceedings has no jurisdiction or procedural power to make a worldwide freezing order or disclosure orders does not render it inexpedient for the English court, acting in its ancillary capacity, to do so.
• Usually ancillary to a freezing injunction but the jurisdiction covers “interim orders” thus all of CPR Part 25
• CPR Part 25.1 (1) (g) – stand alone order for disclosure – including against third parties
• CPR Part 25.1 (1)(h) – search orders
• CPR Part 25.1 (1)(c)(i) – evidence preservation orders
• Applications against Internet Service Providers (ISPs)
• Applications against Corporate Service Providers (CSPs)
• Communications pursuant to fraud are frequently easier to obtain in this jurisdiction as ISPs and CSPs are either domiciled here or are more compliant here.
• “Concierge” service providers; an unregulated London boom industry;
• Twitter – facebook – “Viber” & Skype
• You may get disclosure of material that destroys privilege or a defendant may deliberately or inadvertently waive their privilege by attempting to explain otherwise incriminating disclosed material…..but that is a story for another day.
• The Claimant must satisfy the Court so
that it is sure.
• The issue is therefore determined
according to the criminal standard of proof.
– JSC BTA Bank v Mukhtar Ablyazov [2012]
EWHC 237
• Christopher Clarke J in Masri v Consolidated Contractors
International Company SAL & Others [2011] EWHC 1024
(Comm) said that in order to establish that someone is in
contempt it is necessary to show that:
(i) He knew the terms of the order
(ii) He acted (or failed to act) in a manner which involved a
breach of the order; and
(iii) That he knew of the facts which made his conduct a
breach.
• In reaching its conclusions it is open to the
court to draw inferences from primary facts
which it finds established by evidence. A
court may not, however, infer the
existence of some fact which constitutes
an essential element of the case unless
the inference is compelling i.e. such that
no reasonable man would fail to draw it:
Kwan Ping Bong v R [1979] AC 609
• Where the evidence relied on is entirely circumstantial the court must be satisfied that the facts are inconsistent with any conclusion other than that the contempt in question has been committed and that there are “no other co-existing circumstances which would weaken or destroy the inference” of guilt: Teper v The Queen [1952] AC 480. 489.
• It is not, however, necessary for the court to be sure on every item of evidence which it takes into account in concluding that a contempt has been established. It must, however, be sure of any intermediate fact which is either an essential element of, or a necessary step on the way towards, such a conclusion: Shepherd v The Queen 170 CLR 573 (High Court of Australia).
Application for Contempt of Court
• JSC BTA Bank v Mukhtar Ablyazov [2012] EWHC 237
– Not necessary to show that the defendant to a contempt
application appreciated what he was doing was a breach of the court order and intended to breach the court order
– “In my judgment the power of the court to ensure obedience to its orders for the benefit of those in whose favour they are made would be inappropriately curtailed if, in addition to having to show that a defendant had breached the order, it was also necessary to establish, and to the criminal standard, that he had done so in the belief that what he did was a breach of the order “ – Christopher Clarke J in Masri
• Templeton Insurance Limited v Thomas
and Panesar [2013] EWCA Civ 35
– Involved controlling minds of the Respondent
companies
– Power to join a party for the purpose of
contempt
– Officers or “responsible officers” of
Respondent Companies
• JSC BTA Bank v Ablyazov [2012] EWCA Civ 1411 – Rix LJ – guidance in cases for
breaching freezing orders following JSC BTA Bank v Solodchenko [2011] EWCA Civ
1241
– From this review of authority I derive the following propositions concerning sentence for civil
contempt, when such contempt consists of non-compliance with the disclosure provisions of
a freezing order:
(i) Freezing orders are made for good reason and in order to prevent the dissipation or
spiriting away of assets. Any substantial breach of such an order is a serious matter,
which merits condign punishment.
(ii) Condign punishment for such contempt normally means a prison sentence.
However, there may be circumstances in which a substantial fine is sufficient: for
example, if the contempt has been purged and the relevant assets recovered.
(iii) Where there is a continuing failure to disclose relevant information, the court should
consider imposing a long sentence, possibly even the maximum of two years, in
order to encourage future co-operation by the contemnor.”
• JSC BTA Bank v Solodchenko [2011] EWCA Civ 1241 - Rix LJ
– “I shall not attempt to catalogue all those first instance decisions. What they
show collectively is that any deliberate and substantial breach of the restraint
provisions or the disclosure provisions of a freezing order is a serious matter.
Such a breach normally attracts an immediate custodial sentence which is
measured in months rather than weeks and may well exceed a year.”
– “Sometimes in the case of continuing breaches, judges impose the maximum
two-year sentence but draw attention to the court's power to vary or discharge
the sentence if the defendant makes disclosure. See, for example, JSC BTA
Bank v Stepanov [2010] EWHC 794 (Ch) at [23].”
– In the case of continuing breach, out of fairness to the contemnor, the court may
see fit to indicate (a) what portion of the sentence should be served in any event
as punishment for past breaches and (b) what portion of the sentence the court
might consider remitting in the event of prompt and full compliance thereafter.
Any such indication would be persuasive, but not binding upon a future court.”
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