Background

The first article of this series examined the background of relief for disclosure against a non-party under English law, the power of the English court, the practice of disclosure and inspections under the English Civil Procedure Rules, in particular, Norwich Pharmacal relief. This second article of the series discussed the procedures and case law authorities, and considered how to apply for Norwich Pharmacal relief, evidence, the respondent’s obligations and costs related issues. This final article discusses how to challenge and vary a Norwich Pharmacal order, the situation when foreign elements are involved, and very briefly the Bankers Trust order.

Challenge a Norwich Pharmacal order

The court has discretion as to whether to grant Norwich Pharmacal relief. Equitable maxims apply. For example, the court will require the applicant to act fairly towards the respondent in relation to the relief which the applicant seeks; the court may not grant the relief if the applicant is not prepared to carry out what he is required to do. Another example is that the applicant must come into equity with “clean hands”.

The respondent may resort to equitable principles and seek to challenge or oppose the application. In JSC BTA Bank v Ablyazov and ors [2014] EWHC 2019 (Comm), the documents had been prepared for advancing a fraudulent plot, the principle of inequity applied. In addition, Norwich Pharmacal relief will not be permitted to be used as a fishing expedition to establish whether or not the claimant had a good arguable case, as indicated in Ramilos Trading Ltd v Buyanovsky [2016] EWHC 3175 (Comm).

In AB Bank Ltd v Abu Dhabi Commercial Bank PJSC [2016] EWHC 2082 (Comm), the Commercial Court set aside a Norwich Pharmacal order on the ground that there was no jurisdictional gateway under CPR Practice Direction 6B available for Norwich Pharmacal relief and refused to extend the court’s jurisdiction to grant the relief to parties outside the jurisdiction. In this circumstance, it may be more appropriate to seek local relief.

Material non-disclosure

The applicant has a duty to make full and frank disclosure of all material facts and comply with all the requirements imposed by the order, irrespective whether the application is made with or without notice. Where there has been material non-disclosure by the applicant, a Norwich Pharmacal order may be discharged by the court (as was considered in the second article of this series).    

Privilege

As we know that the legal profession privilege is a fundamental right at common law, the English Civil Procedure divides this into two classes of documents which are protected on this ground:

  1. legal advice privilege, i.e. documents that are privileged whether or not litigation was contemplated or pending [1], which protects all communications to lawyers; and
  2. litigation privilege, i.e. documents that are only privileged if litigation was either contemplated or pending when they were made[2]. This is originated from the decision of the House of Lords in Waugh v British Railway Board [1980] AC 521.

Where legal professional privilege exists, it is absolute and cannot be overridden by the balancing exercise of competing public interests against each other; it prevails over public interest. Documents fall into either of the two classes will not be disclosed unless privilege has been waived or abrogated. As a result, a respondent will challenge the Norwich Pharmacal order and may be entitled to withhold the information due to privilege.

In West London Pipeline and Storage Ltd v Total UK Ltd [2008] EWHC 1729 (Comm), Beatson J. gave a number of guidance as to how to deal with a claim for privilege when challenged. The burden of proof is on the party claiming privilege. Affidavits claiming privilege must be specific to show the analysis or the documents or the purpose for which they were created without disclosing the very matters that the claim for privilege was designed to protect; such affidavits are usually conclusive at the interlocutory stage. An assertion of privilege was not determinative and may be required to be independently proved. Where the court is not satisfied on the evidence that a claim for privilege has been made out, it might:

  1. conclude that the evidence did not establish the privilege, and order inspection;
  2. order a further affidavit to deal with matters that the previous affidavit did not cover;
  3. inspect the documents (pursuant to CPR 31.19 (6)) as a last resort; and
  4. order cross-examination of the deponent. Note that the English authorities for over a century is against cross-examination of an affidavit of documents at an interlocutory stage.      

Self-incrimination

The privilege against self-incrimination is derived from common law and is one of the basic liberties of the subject. Section 14 (1) of the Civil Evidence Act 1968 of the United Kingdom provides that a person in any legal proceedings other than criminal ones has the right “to refuse to answer any questions or produce any document or thing if to do so would tend to expose that person” to proceedings for a criminal offence or recovery of a penalty under the UK law. This privilege exempts a person in any legal proceedings other than criminal proceedings from being compelled to produce information or documents which might incriminate him in any potential or current criminal proceedings or expose him to a penalty in the UK. It applies to both oral statements and written materials, and safeguards against false confessions given under testament.

The right to claim privilege against self-incrimination is not absolute. In O’Halloran and another v United Kingdom (2008) 46 EHRR 397, the court considered that it was necessary to focus “on the nature and degree of compulsion used to obtain the evidence, the existence of any relevant safeguards in the procedure, and the use to which any material so obtained was put.”  The privilege can only be claimed personally or on behalf of a spouse[3] or civil partner. It cannot be claimed for protecting a third party. Where the respondent is a corporate body, it has no privilege to withhold information even if it may incriminate its officers such as directors. The risk (of incriminating or exposing to proceedings for recovery of a penalty under the UK law) must be “real and appreciable”[4] (as opposed to a “mere possibility”), irrespective of the phraseology used such as “will” and “may”, etc.    

A number of statutes have abrogated this privilege, which means that the relevant respondent might become incriminated, depending on whether the information/documents disclosed will be used as evidence in future proceedings. The most frequently encountered ones are:

  1. Fraud Act 2006: s.13 abrogates such privilege in any proceedings relating to property[5], and provides retrospective effect in that it applies to events before the force of this Act in future proceedings; 
  2. Insolvency Act 1986: s.236 abrogates such privilege where the official receiver (whether he is a liquidator or not) examines the company’s dealings. Where the official receiver requests for information and documents from a bankrupt, the bankrupt cannot invoke this privilege to withhold information and documents;
  3. Senior Courts Act 1981: s.72 withdrew such privilege so that a person cannot be excused from answering any question in proceedings pertaining to infringement of intellectual property or passing off;
  4. Theft Act 1968: s.31 stipulates that, for theft offences, a person “shall not be excused, by reason that to do so may incriminate that person or the spouse or civil partner of that person, ... from answering any question put to that person in proceedings for the recovery or administration of any property, for the execution of any trust or for an account or any property or dealings with the property…”.

In Rank Film Distributors v Video Information Centre [1982] AC 380, the House of Lords held that the privilege against self-incrimination in relation to illicit copies of films is capable of being invoked in the circumstance, but the privilege did not apply because the illicit copies belonged to the claimants who would assert a proprietary claim.

Where documents are “independent” or “pre-existing”, the privilege against self-incrimination does not apply in civil proceedings to the offending documents which are material and existed independently of the relevant order, as in C Plc v P & Anor [2007] EWCA Civ 493 where the defendant was not ordered to produce the incriminating materials. In R (on the application of River East Supplies Limited) v The Crown Court at Nottingham [2017] EWHC 1942 (Admin), the High Court confirmed that the privilege against self-incrimination does not extend to materials which are “independent”. Such “independent” materials were obtained not by use of compulsion (e.g. acquisition pursuant to a warrant of arrest or production order) and had an existence independent of the will of the accused; the claim of privilege against self-incrimination could not apply to such materials.

In addition to the difficulties that the respondent ought to establish that the materials are privileged on the basis of self-incrimination, a respondent who attempts to rely on this privilege should carefully identify potentially incriminating materials before handing the materials over.  

Confidentiality

Where the disclosing party has a duty of confidentiality, the court will consider the applicant’s need for disclosure against the need to maintain confidence in the information or documents. In Glidepath BV and others v Thompson and others [2005] EWHC 818 (Comm), the parties had an arbitration agreement and there was an application to stay the proceedings under s.9 of the Arbitration Act 1996. The applicant, a non-party, applied to the court to inspect the court file for his claim against the first defendant. The court confirmed that, when dealing with confidential documents, it would not grant permission unless:

  1. all the parties to the arbitration consented; or
  2. the applicant demonstrates that disclosure is reasonably necessary to protect the rights and in the interests of justice.

In this case, the application was refused.

Human rights issues

Arguments based on European Convention on Human Rights (ECHR) may challenge a Norwich Pharmacal order. The court will exercise its balancing power in deciding whether or not to order disclose.

Section 10 of the Contempt of Court Act 1981 stipulates that, “no court may require a person to disclose, nor is anyone guilty of contempt of court for refusing to disclose, the source of information contained in a publication for which he is responsible, unless it is established to the satisfaction of the court that disclosure is necessary in the interests of justice or national security or for the prevention of crime.” Article 10 of the ECHR provides that everyone has the right to freedom of expression without interference by public authority. This right is not absolute, because public authorities may interfere through regulations and prescriptions of licences, formalities, conditions, restrictions and penalties if such interferences are necessary in a domestic society. Article 8 provides for the protection of the rights and freedoms of others, the “right to respect for private and family life, his home and his correspondence” in accordance with the law and with the exception of necessity in a democratic society. Article 6 provides for the right to a fair trial; in particular, where a public body is involved it must act in a manner compatible with ECHR requirements.

Proportionality

In Golden Eye (International) Ltd and others v Telefonica UK Ltd [2012] EWHC 723 (Ch), Arnold J. considered that an “ultimate balancing test” must be applied to each case, where justifications for interfering with each right must be taken into account, i.e. the potential value to the applicant for disclosure against the interests of the disclosing party as a result of the order. The Supreme Court in Rugby Football Union v Consolidated Information Services Limited [2012] UKSC 55 has subsequently approved this approach as a correct statement of the approach to proportionality.

Vary a Norwich Pharmacal order

The Respondent may seek to vary the order on grounds such as limiting the scope of the information sought, reasonableness, proportionality and costs.

Extension of time is usually also sought by the respondent for production of the documents. Where the time for provision is extended, the time of restricting the respondent from informing the wrongdoer also need to be extended.

Foreign elements

An applicant of Norwich Pharmacal relief may face potential problems where the respondent resides or where information sought is outside the jurisdiction. The English court has discretion to grant permission to serve an application outside the jurisdiction. In McKinnon v Donaldson Lufkin and Jenrette Securities Corp [1986] Ch. 482, the court held that it should not (save in very exceptional circumstances) require a foreigner who was not a party to an action to produce outside the jurisdiction documents concerning business conducted overseas, and that there were no exceptional circumstances in the present case. The respondent bank in this case was headquartered in New York where the documents were located. The court considered that the bank owed a duty of confidence to its customers under the law of New York where its customer’s account was kept, and discharged the subpoena duces tecum and an order made under the Bankers’ Books Evidence Act 1879 which had been sought by the claimant.

Credit Suisse Trust v Intesa San Paulo SPA, Banca Monte Dei Pasche Di Siena [2014] EWHC 1447 (Ch) is a case of steps taken to assist enforcement of a judgment against an dishonest agent who breached his fiduciary duty and misappropriated substantial sums in the trust (of which the claimant was a permanent trustee) for his own benefit. The court confirmed that, if a party was located outside but have a branch within the jurisdiction, nothing would prevent the court from making an order for Norwich Pharmacal relief where information is sought from that party. The application was made against the two defendant banks which were both located in Italy and had branches in London; the banks indicated that they did not intend to contest the proceedings but raised that the defendant’s unlawful activities took place in Italy. The court considered two points:

  1. whether it was appropriate to grant this relief given that the activities of the defendant banks’ concerned were abroad; and
  2. whether there was a point in granting the relief in the English jurisdiction.

The judge in this case noted that there was no authority which prevents the court from granting the relief simply because the information sought is held in a branch of a bank that is abroad, which was particularly the case when dealing with fraud. The judge also found that there was at least a realistic prospect that if the relief was granted, some steps would be taken to comply with the order by the London branches which would be willing to provide some information. He noted that if the relief did not obtain the information required, the claimant had indicated that it would not sue the defendants for contempt but instead would seek to have the original judgment and the Norwich Pharmacal order recognised by the Italian court pursuant to Article 26 of the Brussels Convention 1968. The English court considered that if there were any public interest arguments to be raised against such recognition, these could be dealt with by the Italian court at that time. 

In AB Bank, Teare J. set aside a Norwich Pharmacal order which had been granted against a UAE bank based on that none of the jurisdictional gateways in PD 6B was applicable and that the respondent was not the alleged wrongdoer. It is worth noting that Norwich Pharmacal relief was not interim, but final in the sense that it pursues the person who was mixed up in a wrongdoing in order to assist the victim by providing information which would enable the victim to initiate proceedings against the ultimate wrongdoer.  

A Norwich Pharmacal order may also be used to seek information to be deployed subsequently both at the trial of the action and for allied purposes in foreign civil proceedings, as was in the case of Omar v Omar [1995] 1 WLR 1428. The particular allied purposes in this case were adding a personal claim against the existing defendants, using the information and documents at trial for the purposes of both the tracing claim and the personal claim, and using the information and documents to pursue parallel remedies in other jurisdictions.   

Bankers Trust orders

A Bankers Trust order is also a type of third-party disclosure order, which requires a bank to provide information which would ordinarily be protected by the bank’s duty of confidentiality. In Bankers Trust Co v Shapira [1980] 1 WLR 1274 CA, the order sought was for disclosure of all relevant information relating to the accounts of two fraudsters. The order (derived from the case and known as the Bankers Trust order) was granted on the basis that it effectuated the right to trace the funds, without which it would have been impossible for the claimant to make a proprietary claim for these assets, regardless that the bank had not incurred any liability for the fraud.

To apply for a Bankers Trust order, there must be compelling (very strong) evidence of fraud that the claimant has been deprived of the funds held by or transferred through a bank and there is risk of dissipation of assets which demands urgent action. The disclosure sought must be focused in time and relate to specific bank accounts of individuals and companies, which will also help in limiting costs to be incurred by the bank’s retrieving and providing the information. When contemplating to seek a Bankers Trust order, at the same time it is worth considering obtaining various measures including Norwich Pharmacal order (to obtain more information on the whereabouts of the assets) and freezing order (to prevent the fraudster from dissipating the assets). It is also crucial to follow up with the bank for it to respond and comply with the order in a timely manner.

Conclusion

It is clear that Norwich Pharmacal relief is an evolving area of law and narrow in scope. Equitable principles apply. It can be used as a powerful weapon to enable proceedings to progress justly and to enforce judgment when there is no other applicable means, although there may be difficulties when seeking the relief. Where foreign elements are involved, the English court also heeds caution of whether to grant the relief.  Looking at the decision of the BVI High Court in UVW v XYZ, Norwich Pharmacal relief has clearly become reciprocated in other common law jurisdictions to facilitate international trade and deliver justice.