Background

In the recent BVI High Court judgment of UVW v XYZ (27 October 2016), obligations are imposed on a registered agent to provide third-party disclosure to assist a foreign judgment creditor in its tracing assets and available for enforcement. A third party often is not a party to legal proceedings (a non-party). It is crucial that the judgment creditor can obtain non-party disclosure in support of his tracing assets and enforcing the judgment which is made in his favour. To a wider perspective, a non-party disclosure will ensure an action to begin and the proceedings to progress justly. In such circumstance, such relief for disclosure ultimately targets those wrongdoers who act with deliberate concealment. The decision of BVI High Court clearly demonstrates the significance of this powerful weapon, not only within the English jurisdiction but internationally. In legal terminology, this is often known as Norwich Pharmacal relief, which was established by the English House of Lords in their decision in Norwich Pharmacal Co v Customs and Excise Commissioners [1974] AC 133.

The English civil procedure rule (CPR) 31.17[1] provides for relief for disclosure against a person who is not a party to the proceedings, with other powers[2] of the court not to be limited to order disclosure[3]. In addition, CPR 34.2 provides that a witness may be ordered to produce documents to the court. In this first article of a series of three on this topic, the author explains the general requirements for disclosure, the requirements for Norwich Pharmacal relief and the function and purpose of this relief, which are not covered by the CPR rules.[4]

Disclosure and inspection

To better understand the mechanism of Norwich Pharmacal relief, it is important to first understand the general requirements for disclosure as being part of the powers of case management of the English court, i.e. “to enable the court to deal with cases justly” and the parties to place “all the cards on the table”. The duty to disclose will arise “if and when and to the extent that the court orders disclosure”, usually at the first case management hearing or upon a party’s application. Lawyers have a positive duty to the court to inform his client of the obligation to ensure that all relevant documents are preserved as soon as litigation becomes a possibility. The duty of disclosure continues until the proceedings are concluded either by judgment or settlement.[5] Disclosure means formally stating that documents (or classes of documents) exist or have existed. The parties must carry out reasonable search for documents[6], and disclose documents which are or have been in the party’s control[7]. A “document” means “anything in which information of any description is recorded”, including electronic documents, such as email, text messages, voicemail, word-processed documents, databases, documents stored on memory sticks and mobile phones, back-up system, deleted data and Metadata. Disclosure is effectuated by exchanging the list[8] of documents must contain a disclosure statement.

The opponent has the right to inspect the original documents or, more commonly to obtain copies of the documents disclosed by the disclosing party.[9] Inspection may be withheld on various grounds, for example, privilege. Parts of a disclosable document can be redacted or limited to certain viewers for inspection. The original document must remain intact (i.e. un-redacted).

If any non-party may likely hold documents which either help your case or damage another party’s case, it is worth considering seeking to obtain such documents from a non-party. 

Norwich Pharmacal relief

Norwich Pharmacal orders provides relief for matters which is not provided under the CPR rules, in that the claimant could establish that a wrong had been committed to them, the extent of the wrong, but did not know who had done it. The relief is made under the equitable jurisdiction of the court and is typically used to obtain disclosure of information where:

“(i) a wrong must have been carried out, or arguably carried out, by an ultimate wrongdoer; (ii) there must be the need for an order to enable action to be brought against the ultimate wrongdoer; and (iii) the person against whom the order is sought must: (a) be mixed up in so as to have facilitated the wrongdoing; and (b) be able or likely to be able to provide the information necessary to enable the ultimate wrong-doer to be sued.[10]

The applicant must present a good arguable case that there has been wrongdoing; it does not need to have a definite intention to commence proceedings against the wrongdoer; and it must be able to provide cross-undertaking in damages[11]. The respondent must have facilitated (or is likely to have facilitated) the wrongdoing[12], and must be able to (or is likely to be able to) provide the relevant information. The order sought is necessary[13] in the interest of justice, not for an improper purpose.

If an applicant knows the identity of the wrongdoer and has sufficient information, a Norwich Pharmacal order may be unnecessary and so an application will be refused by the court.[14] There has also been attempt to seek to obtain a Norwich Pharmacal order by using CPR 23 application, as opposed to issuing a claim form. In Towergate Underwriting Group Ltd c Albaco Insurance Brokers Ltd [2015] EWHC 2874 (Ch), Master Matthews in the Chancery Division considered that “policy is implemented by higher fees on the issue of claim forms” and that the court should not permit litigants to use an application under CPR 23 to “bypass the need for originating process when they in fact start fresh proceedings.” The nature of an application for Norwich Pharmacal order is to obtain information so as to enable a claim which otherwise would not be made, irrespective whether or not the application might be contested.    

Further difficulty may arise where applications were made under CPR 23 by the same applicant before the issue of a claim – the court managing these applications effectively (whereas applications are not assigned to any identifying number) and ensuring not to entertain an application twice. It would be appropriate, even if the applications are unlikely to be contested, to bring applications under CPR 7 or 8 so that each application can easily be identified by given claim numbers and common issued raised in the applications would be best considered at a hearing before a judge, as Mr Justice Birss stated in Santander UK plc v National Westminster Bank plc and ors [2014] EWHC 2626 (Ch), where Santander made a number of applications for Norwich Parmacal relief to recover proceeds which it had paid out in error.

The Purpose of Norwich Pharmacal relief

Identify the wrongdoer

A typical purpose of Norwich Pharmacal relief is that, where the respondent was involved in or facilitated wrongful acts of others, the respondent has a duty to provide the victim with full information so as to identify the wrongdoer, even if the applicant has no cause of action against the respondent. The applicant must have a legitimate reason for the required disclosure of information.

Hughes v Carratu International plc [2006] EWHC 1791 (QB) concerns a party who had unlawfully obtained the applicant’s information. The court considered that the respondent was likely to be a party to the subsequent proceedings under CPR 31.16 (3) (a), as well as the conditions in CPR 31.16 (3) (b) (c) (d) have also been fulfilled. The court further considered that, since the respondent admitted to have received unlawfully obtained information, it may not have given a full account of the matter. The applicant passed the threshold of establishing an arguable cause of action. Judge Tugendhat in this case iterated the point made by Rix LJ in Black v Sumitomo Corp [2002] EWCA Civ 1819 at para. 95: “In appropriate circumstances, where the jurisdictional thresholds have been crossed, the court might be entitled to take the view that transparency would be what the interests of justice and proportionality most required.”         

In Arab Satellite Communications Organisation v AI Faqih and another [2008] EWHC 2568 (QB), the court considered that where there is “a small pool of potential wrongdoers”, the applicant could show with reasonable certainty that once he had the names in question he would be able to identify the wrongdoer(s) from others. The court would be “very fully satisfied” that there is no injustice to the persons identified and would grant the relief. There are distinctions from where the culpit was to be found in the pool but granting the relief would not lead to the entire pool being sorted, in which circumstance the court would not grant a Norwich Pharmacal order due to “the uncertainty as to whether the information sought will in fact lead to the identification of the wrongdoer”. 

Identify the full nature of the wrongdoing

In Ashworth Security Hospital v MGN Ltd [2002] UKHL 29, Lord Woolf viewed that the court has wide powers including granting Norwich Pharmacal relief in order to discover the full nature of the wrongdoing. Discovery of the full nature of the wrongdoing is different from the aim of the applicant at solely ascertaining whether it had a good cause of action and obtaining evidence in support, over the latter of which the court has no jurisdiction to grant the relief. In AXA Equity & Law Life Assurance Society plc v National Westminster Bank plc [1998] EWCA 782, the identity of the intended defendant is known, but the issue in this case was lack of evidence by which AXA hoped to prove (i.e. the defendant’s liability). The court refused to grant the relief, having regard to all the evidence, and reminded that “a party is required to plead the material facts on which he relies”.

In order to allow the relevant party to plead its case, P v T Ltd [1997] 1 WLR 1309 considered allegations made by a third party against the applicant who was dismissed from his employment, whereas his employer refused to reveal the information. The claimant sought disclosure of details of the allegations and the identity of the maker for use in bringing proceedings against a non-party who could not be ascertained but had committed torts (malicious falsehood or defamation) against the claimant. The court held that the claimant was entitled to know both the name of the individual making the allegations and the nature of the allegations, so as to protect the claimant’s interest.[15] Further, in Mitsui v Nexen Petroleum UK Ltd [2005] EWHC 625 (Ch), Judge Lightman viewed on the authority of P v T on granting the relief where “a crucial piece of information” ought to be disclosed to enable to claimant “to bring its claim or where the claimant requires a missing piece of jigsaw.” To enable justice to be done, the defendant may seek information for disclosure in order to enable him to plead his defence. Carlton Film Distributers v VCI plc [2003] EWHC 616 (Ch) considered enabling a victim of a wrongdoing (including contractual dispute) to answer potential allegations made against itself, where Calton Film Distributers could otherwise face allegations of over-production which could lead to a copyright infringement claim or claim for damage, and could affect the after-market which may likely cause damage to what the contract between the parties had intended to prevent.

Discover the source of information

Where the applicant seeks discovery of the source of information and sensitive information is involved, s. 10 of the Contempt of Court Act 1981 may restrict the use of Norwich Pharmacal relief: “no court may require a person to disclose, nor is any person guilty of contempt of court for refusing to disclose, the source of information contained in a publication for which he is responsible, unless it be established to the satisfaction of the court that disclosure is necessary in the interest of justice or national security or for the prevention of disorder or crime.” In Ashworth, the House of Lords held that there was no pressing social need which would justify the disclosure of the identity of the wrongdoers.

In addition, Article 10 of European Convention on Human Rights (ECHR) provides that everyone has the right to freedom of expression, including “to receive and impart information and ideas without interference by public authority” subject to the member state’s restrictions and law. In Goodwin v United Kingdom (1996) 22 E.H.R.R. 123, the European Court of Human Rights found that there had been a breach of Article 10 of the ECHR but the request for disclosure did not satisfy the test of being “necessary in a democratic society”. It should be noted that the question whether a publisher is to be required to disclose the source of information which would necessarily identify that source is to be determined in accordance with English law as set out in s.10 and to be interpreted by the English courts[16].  

As a result, the court scrutinises diligently any request for the purpose of bringing an action. Both the UK statutory and the EC legislative provisions serve to protect freedom of expression. The court has to be sure that a sufficiently strong positive case has been presented in favour of disclosure before such will be ordered. In reality, there is general difficulty to obtain a Norwich Pharmacal order if the journalist would be required to disclose the identity of his source. A single leak of counsel’s draft advice was not sufficient to warrant an order for disclosure of the information under s.10 of the 1981 Act.[17] 

Trace and recover assets

As we have seen in UVW v XYZ, the BVI High Court granted Norwich Pharmacal relief to enable the judgment creditor to obtain information of identification of assets available for enforcement. In this matter, an interlocutory application for freezing order and other proceedings took place in another common law jurisdiction.       

In Santander UK plc v National Westminster Bank plc and ors [2014] EWHC 2626 (Ch), Santander sought Norwich Pharmacal relief to recover funds which had been mistakenly paid to recipients.

In Arab Monetary Fund v Hashim and ors (No 8) [1989] 1 WLR 565, the court found that evidence demonstrated a strong case against the first defendant a clear propensity to move assets around the world so as to avoid judgment which the claimant may obtain, that disclosure gave real prospect that the assets will be located and preserved in proprietary claim to recover these, and that disclosure of information of the location of the missing assets could be ordered against a non-party.     

In aid of execution of judgment

Whether Norwich Pharmacal jurisdiction should be available post judgment to assist execution is a wider question. In NML Capital Ltd v Chapman Freeborn Holdings Ltd et al [2013] EWCA Civ 589, the Court of Appeal held that Norwich Pharmacal relief would be “available only in respect of involvement in conduct which necessarily amounts to wilful evasion of execution.” A deliberate effort to obstruct or frustrate enforcement is required for granting the relief. On the other side, where the non-party is not mixed up or involved in wrongdoing, as the Court of Appeal held, the respondent’s conduct is in no real sense connected with the relevant wrongdoing.

The court further stated that “anything short of that has the potential to involve the English court in the paralysis or at the very least serious inhibition of international trader” against bona fide commercial traders and held that such intrusive relief should be refused.       

Conclusion

As we see above, Norwich Pharmacal relief is a powerful weapon in many ways to enable proceedings to progress justly within the powers of the English court when there is necessity for disclosure of information by a non-party. The court will not entertain applications which will cause difficulty in managing the applications or where an application is used to avoid higher court fees for issuing a claim.

The English court will also be cautious to grant the relief in aid of execution of judgment in a foreign jurisdiction without being satisfied that there is deliberate effort to obstruct or frustrate enforcement in that foreign jurisdiction.        

In the next article, the author will consider how to apply for Norwich Pharmacal relief, the respondent’s obligation, how to challenge or vary such an order, and costs related issues.