Disclosure from third parties

There are a variety of tools available (both statutory and common law based) to enable disclosure to be obtained from third parties involved in fraud.

 Norwich Pharmacal relief

Norwich Pharmacal relief is a valuable remedy which has been adapted and developed through jurisprudence over the years. As Lord Woolf pointed out in the English case of Ashworth Hosp. Auth v MGN Ltd [2002] 4 All ER, "the limits which applied to its use in its infancy should not be allowed to stultify its use now that it has become a flexible and mature remedy".

A banker, trust officer or company administrator may often possess confidential information about his customer or client which would be of great assistance to someone wishing to pursue a claim against that individual or entity. On occasions, without being given the information, the plaintiff would not be able to pursue a claim at all. The principle established in the House of Lords’ decision in Norwich Pharmacal Co. v Customs and Excise Commissioners [1974] AC 133, which has been adopted by the Royal Court, may provide relief to the plaintiff seeking documents and information from an independent third party to enable him to bring his claim. The determinative question in any application for Norwich Pharmacal relief is whether justice requires the requested disclosure to be ordered.

The House of Lords in Norwich Pharmacal reaffirmed what is termed the "mere witness" rule which means that you cannot bring proceedings against an innocent third party purely for the purpose of obtaining information which you wish to use in proceedings against another. Procedures exist which enable you to subpoena that innocent third party as a witness.

The rule is based on the assumption that the plaintiff is able to bring a claim and that there will be a trial in due course but often information is needed from a third party without which no action can be brought. The House of Lords considered that where the information was needed to enable proceedings to be brought and where the person against whom discovery of this information was sought had himself, albeit innocently, been involved in the wrongful acts of another so as to facilitate the wrongdoing, then in such circumstances it would be appropriate to make an order requiring the third party to divulge the information. That principle has been referred to in the Jersey court as "Lord Reid's statement of principle".

The House of Lords further commented that it did not matter that a third party considered some of the information to be confidential, holding that the public interest in confidentiality was outweighed by the interests of justice in disclosure for the purpose of the plaintiff's intended proceedings.

Norwich Pharmacal relief has been adopted as part of the procedural law of Jersey and has been granted in a number of cases locally. In developing the Norwich Pharmacal principle, the Royal Court has not been constrained by the limits placed on its application before the English courts. Indeed, Jersey has been willing to extend the Norwich Pharmacal jurisdiction perhaps even further than the English courts. In IBL v. Planet (1990) JLR 294, the Royal Court made a disclosure order against a company which carried on the business of company and trust administration, and against its Chairman. The court held in that case that it was prepared to extend the Norwich Pharmacal principle to cover the collection of information which could give rise to amended proceedings or new proceedings in England for fraud which went beyond the identification of further wrongdoers. This case suggests that as long as the court can see the shape of the likely claim, the court may order the disclosure of a class of documents in evidence which may be crucial to a successful claim.

In a more recent decision (Macdoel Investments Limited and Others v The Federal Republic of Brazil [2007] JCA 069) the Jersey Court of Appeal raised the question as to what standard of proof the court must be satisfied that a third party such as a bank or trust company has become mixed up in alleged wrongdoing, so that it owes the plaintiff a duty of disclosure. Having noted that disclosure will only be ordered where the party that has been wronged has no other source of information, the Court of Appeal ruled that the threshold for innocent involvement should be set lower, so that a "reasonable suspicion" will suffice.

The required disclosure under a Norwich Pharmacal order may take any form. Usually, it takes the form of the production of documents, but it may also include providing affidavits, answering interrogatories or attending court to give oral evidence.

It is possible to obtain Norwich Pharmacal relief on a without notice basis and subject to gagging orders. Gagging orders, restraining the third party from disclosing the existence of the order to the ultimate defendant, may be vital, especially in cases of alleged fraud, where for example unless there is total secrecy, there is the risk that the defendant will have time to dissipate his assets and place them beyond the reach of the plaintiff. Local authority requires that there be convincing evidence to justify any such order. The affidavit in support must refer specifically to the order, explain why it is required and why it is justified.

Bankers Trust

Another similar approach to Norwich Pharmacal relief is to seek a Bankers Trust order (derived from the English case, Bankers Trust Co. v Shapira [1980] 1 WLR 1274). The Bankers Trust order is a variation of the Norwich Pharmacal order and may be used to assist in tracing assets. It is an order which requires parties who are not defendants to the substantive action to make full disclosure of facts which would enable funds described as the property of the plaintiff to be located and protected from dissipation before the action. Again, it is possible to make such orders on a without notice basis and subject to gagging orders.

A Bankers Trust order should not be confused with Norwich Pharmacal relief. Whilst there is some overlap between the two, the two remain distinct from one another. Norwich Pharmacal relief is geared towards discovery to identify wrongdoers or evidence of wrongdoing whereas a Bankers Trust order might be said to be aimed more specifically at protecting a party's proprietary interest in a claim.

Pre-action disclosure

In general, discovery is only obtainable against persons properly joined as parties to an action so that the circumstances in which a party may obtain pre-action discovery are limited. This is one of the reasons why Norwich Pharmacal relief is such a valuable remedy. The Royal Court Rules do allow for pre-action disclosure in personal injury cases.

Service of Process and Taking of Evidence (Jersey) Law 1960

Whilst a valuable and flexible remedy, Norwich Pharmacal relief is subject to the usual limitations on jurisdiction. If the Royal Court is unable to grant the relief sought because it lacks jurisdiction for example, it may be appropriate to seek the assistance of a foreign court. Applications are frequently made to the Royal Court seeking evidence at the request of a foreign court. Such evidence can be obtained under the Service of Process and Taking of Evidence (Jersey) Law 1960 (the "Law"). The Law was amended in 1985 to enable Jersey to fulfil its international obligations under the Hague Convention. The Law provides for the taking of evidence in Jersey for proceedings pending or in contemplation before courts outside the Island. The proceedings in question have to relate to civil or commercial matters arising in a court having jurisdiction in the relevant country.

The letter of request issued by the foreign court by which the assistance of the Jersey court may be sought to obtain evidence is forwarded, via official channels, to the Jersey Attorney General. The matter may be furthered either "in house" within the Law Officers' Department or a private firm may be instructed. The request should, amongst other things, specify the evidence which is required and the means of obtaining it.

Typically, requests are directed at obtaining documents and answers to interrogatories. When acting on a letter of request, the Jersey court delegates the hearing to a court officer who fulfils a quasi-judicial role. The hearing itself is not subject to the usual exclusive rights of audience reserved to Jersey advocates and counsel may appear from outside the Island to question witnesses. The proceedings may be transcribed and video recorded.

An order made under the Law may not require a person to state what relevant documents are, or have been, in his possession, custody or power. He may only be required to produce particular documents specified in the order as documents appearing to the Jersey court to be in his possession. As is commonly the position, the process is not to be abused as a means of conducting "fishing expeditions". The proceedings take place at a private hearing. However, if this is felt not to offer sufficient safeguard, a gagging order can be applied for to prevent witnesses from disclosing to anyone that they have been subjected to examination in Jersey. Any such requirements need to be covered in the original letter of request.

Bankers Book Evidence (Jersey) Law 1986

Finally, another tool which may allow a party to inspect and copy entries in bankers' books is the Bankers Book Evidence (Jersey) Law 1986. When considering any application pursued in reliance on this law, the Royal Court will weigh the interests of maintaining confidentiality in banking matters against the public interest in achieving justice.

Summary

In summary, plaintiffs now have, at their disposal, a panoply of remedies which have been adapted and developed over the years. That panoply will doubtless continue to grow and develop as the legal, social and economic climate in which Jersey operates continues to evolve.