This Week's Caselaw

Ramilos Trading v Buyanovsky: Test for Norwich Pharmacal order and whether it can be ordered if foreign proceedings are likely

The claimant applied for a wide-ranging Norwich Pharmacal order ("NPO") against the defendant (a British citizen and one of the managing partners of a company which the claimant accuses of wrongdoing). The order was refused by Flaux J who held as follows:

(1) One of the conditions for obtaining a NPO is that a wrong has either been carried out or has arguably been carried out. In Utd Company Rusal v HSBC (see Weekly Update 9/11), it was held that that means that the claimant must show that it has "much the better of the argument". Flaux J disagreed, finding that the test was looser and the same as that for applications for a freezing order, ie "more than barely capable of serious argument, and yet not necessarily one which the Judge believes to have a better than 50% chance of success".

(2) Once the conditions have been satisfied, the court still has a discretion whether or not to make the order. The claimant argued that caselaw has developed beyond ordering disclosure of the identity of, and information about, the wrongdoers, to disclosure of more detailed information in appropriate cases, in order to enable the claimant to bring (and not just perfect) its claim. Flaux J rejected that argument, holding that it is "quite clear that the jurisdiction cannot be used for wide-ranging discovery or the gathering of evidence, but is strictly confined to necessary information" and that "the true position is that the jurisdiction remains in a narrow scope". He added that "The court will not permit the jurisdiction to be used for wide-ranging disclosure or gathering of evidence, as opposed to focused disclosure of necessary information". The application here fell foul of that restriction , and amounted to a fishing expedition.

(3) The judge accepted that, even if the claimant had a good arguable case, it was unlikely that it could be pursued in England, and instead foreign proceedings were likely. Following the Court of Appeal's decision in R (Omar) v Secretary of State for Foreign & Commonwealth Affairs (see Weekly Update 24/12), Flaux J noted that a NPO application cannot be made if the Evidence (Proceedings in Other Jurisdictions) Act 1975 applies (the 1975 Act sets out a procedure for obtaining evidence to use in civil proceedings taking place abroad).

Flaux J also held that the 1975 Act applies to a wide range of evidence, including the production of documents, and covers not just foreign proceedings which are "up and running", but also proceedings which are being contemplated.

Reference was made to the earlier decision of Shlaimoun v Mining Technologies (see Weekly Update 46/11), in which Coulson J held that "I take the view that, depending on the facts, there is no reason why a Bankers Trust/Norwich Pharmacal application should not be made in circumstances where there is the possibility that the ultimate proceedings would be commenced in a foreign jurisdiction". He found that the situation would only be different if foreign proceedings had already been up and running by the time of any possible crossover with the powers of the English court.

Flaux J held that Shlaimoun could be distinguished here on the basis that the claimant in that case genuinely did not know where any proceedings might be commenced (whether in England or abroad) and whether such proceedings would be viable: "It seems to me that is the true ratio of the decision and… it is not a case about proceedings being contemplated in a foreign jurisdiction at all". Accordingly, "it is not permissible to bypass the statutory regime simply by asserting that the case is at some earlier stage before the institution of proceedings abroad is contemplated".

Here, unlike in Shlaimoun, the claimant had already identified the jurisdictions in which any claim could be brought (or, alternatively, it couldn't show a sufficiently arguable case that there had been any wrongdoing at all). Accordingly, the 1975 Act was engaged and the court had no jurisdiction to entertain the claimant's NPO to obtain evidence in support of foreign proceedings.

Flaux J added that "If, as I have held, the 1975 Act is engaged in respect of any attempt to obtain information or evidence, but the claimant is unable to obtain an order of the foreign court or a letter of request, that unavailability of relief from the foreign court is no answer to the argument that the statutory regime is engaged and precludes any common law remedies under the Norwich Pharmacal jurisdiction".

Furthermore, although it did not matter on the facts of this case, Flaux J held that it was no longer correct to draw a distinction between information (so that proceedings can be brought abroad) and evidence (earlier cases having held that the former was obtainable under a NPO, whereas the latter was not).

COMMENT: There are therefore now two conflicting High Court decisions as to whether a NPO can be obtained before foreign proceedings are commenced. Shlaimoun appeared to draw a line between proceedings which are "up and running" and those which are contemplated, whereas here Flaux J held that no NPO can be ordered where proceedings abroad are contemplated. Flaux J sought to distinguish Shlaimoun on the basis that it had not been clear in that case whether foreign proceedings might be brought, but the judge in Shlaimoun (although agreeing that was not a case where the applicant had always known that the documents would not be used in English proceedings) made it clear that his decision would have been the same even if foreign proceedings had been contemplated. (The issue did not arise in Omar, because foreign proceedings were already up and running there).

Aviva Insurance v Randive: Court gives permission for insurer to bring contempt proceedings relating to an exaggerated road traffic accident claim

The respondent was involved in road traffic accident and the other driver's insurer admitted negligence but denied causation of the personal injury and consequential loss alleged by the respondent. At trial, the respondent discontinued his claim and the insurer was awarded its costs on the basis that the district judge found the claim to be fundamentally dishonest. The insurer then applied for permission to bring proceedings against the respondent for contempt of court by making false statements in documents verified by statements of truth, without an honest belief in the truth of those statements.

(No permission was required for the insurer to also pursue contempt proceedings in respect of a false statement made by the respondent in an affidavit in answer to the insurer's application).

The respondent sought to argue that committal for contempt of court should be reserved for the most serious lies, for example, contrived accidents in road traffic claims. It was argued that the courts are routinely faced with unreliable witnesses and inconsistent evidence, but that does not normally lead to contempt proceedings, Furthermore, the respondent had already been ordered to pay £8,000 in costs to the insurer and serious damage might be caused to his career.

Slade J rejected those arguments. Had the respondent's lie only related to a claim for £200 of travel expenses, she would not have considered that pursuing committal proceedings would have warranted the attendant use of court time and resources. But the respondent had also claimed £4,500 in lost wages and exaggerated the severity of the accident. The judge held that "bringing a false claim in the courts is extremely serious. Apart from the dishonesty of bringing such a claim, false claims lead to waste of court time and resources. Although the claim brought by the Respondent was small in financial terms and contempt proceedings will be costly, in the interests of justice and the overriding objective I consider it proportionate for contempt proceedings to be pursued".

Barclays Bank v Ente Nationale: Stay of proceedings where related cause of action only introduced later on

Proceedings were commenced in Italy and the defendant in those proceedings then commenced these (unrelated) proceedings in England. The Italian proceedings were then amended to introduce a cause of action which was said to relate to the same cause of action in the English proceedings. A stay of the English proceedings was sought. Article 27 of the Judgments Regulation provides that where two or more Member State proceedings involve the same cause of action and the same parties, any court other than the one first seised must stay its proceedings. The issue was whether the actions have to be related when the Italian court was first seised in order to obtain a stay.

A similar issue was considered by the Court of Appeal in Stribog v FKI (see Weekly Update 19/11), although that case concerned the operation of Article 28 of the Judgments Regulation (which provides that where related actions are pending before the courts of different Member States, any court other than the one first seised may stay its proceedings). In that case, the Court of Appeal held that all that was required was that the proceedings be related at the time the application for the stay was made (ie it made no difference that they had not been related when the first court was seised).

However, in this case, the Court of Appeal held that the position was different for Article 27, because it deals with related causes of action and not proceedings. Thus the proceedings did not involve the same cause of action until the amendment was filed in the Italian court. Accordingly, the Italian court had not been first seised of this cause of action and no stay was required.