Introduction

The first article of this series examined the background of relief for disclosure against a non-party, the power of the English court, the practice of disclosure and inspection under the English Civil Procedure Rules, in particular, Norwich Pharmacal relief. This second article of the series considers how to apply for Norwich Pharmacal relief, the respondent’s obligations and costs related issues.

How to apply

In the English Civil Procedure Rules, the procedure for seeking a Norwich Pharmacal relief is not expressly prescribed. Depending on the circumstances, a Norwich Pharmacal order may be sought prior to the issue of the claim, during the proceedings, and post judgment.

Bearing in mind the applicant’s limited right to use the information (which is produced by the respondent) for limited purpose, the requirements for making an application to obtain a Norwich Pharmacal relief are:

a) a wrong[1] must or arguably have been carried out (“good arguable case”[2]) by an ultimate wrongdoer;

b) necessity for interests of justice to enable action to be brought, where there are no other relevant CPR provisions which would provide the appropriate relief;[3]

c) evidence that the respondent was mixed up in and so as to have facilitated the wrongdoing;

d) availability of other sources of information, i.e. the respondent is likely to have the information sought and that the applicant cannot obtain the information elsewhere;[4]

e) the “mere witness” rule, i.e. discovery cannot be made against a mere witness (who could be called as a witness in the proceedings); and

f) the applicant’s cross undertaking in damages.

Application

An application may be brought in the High Court, given the balancing exercise[5] which the application may raise, including merit of the claim, potential invasion of privacy and data protection rights, public interest, other available sources of the information, respondent’s knowledge of the wrongdoing, etc. In some cases, it may be appropriate to bring the application in county court, depending on the factual and legal complexity of the matter, the basis of the claim and the quantum (especially where the sums are within the limit of the small claims track).   

Where disclosure is sought before action, a two-stage process[6] is required. First, where this is a “real prospect in principle” of disposing fairly of the anticipated proceedings, assisting resolution without proceedings, or saving costs[7]. Then, if there is such a real prospect (a low threshold), the court should go on to decide on discretion based on all the facts and in detail.    

To make an application for Norwich Pharmacal relief, first is to consider whether the matter is urgent or should be kept secret. If there is no need for urgency or secrecy, prior to the issue of the application, consider whether contacting the respondent may help facilitate the process:

a) the type of information which the respondent may have;

b) estimation of costs for producing the information;

c) the speed and easiness of producing the information; and

d) details of parties who likely hold the information.

Also, consider potential costs at a stage as early as possible and whether the respondent may agree to voluntary disclosure. Parties (e.g. banks) which hold the information may have a duty of confidentiality or privacy and may not agree to give voluntary disclosure. Secondly, consider that, where a respondent does not oppose the application, it may agree to have the application considered by a judge on paper, as opposed to at a hearing. These steps will reduce costs.

In circumstances such like where the applicant may need to identify assets and seek a freezing order, the application will be made without notice.

CPR 23.2(4) provides that such an application can be made before a claim has been started and must be made to the court “where it is likely that the claim to which the application relates will be started unless there is good reason to make the application to a different court.” 

Where proceedings have not been commenced, i.e. Part 7 Claim Form has not been issued against the wrongdoer, a Part 8 claim against the respondent who holds the information may be appropriate.

In the Chancery Guide 2017, at paragraph 7.4, it states that an application for a Norwich Pharmacal relief under Part 23 is likely to be rejected and that the better practice is to make an application by Part 8 Claim Form.[8] The case may be more so where an application is contemplated prior to the commencement of the substantive proceedings, or where the applicant is making a number of applications with the same respondent on a substantial scale.

Birss J. in Santander UK plc v National Westminster Bank plc and others [2014] EWHC 2626 (Ch) recommended to bring applications under CPR Parts 7 or 8 so as to assist the court in its administration and management of matters, and that “if the application is or is thought likely to be uncontested the court may entertain an application under Part 23 by evidence[9].

Where there is an existing claim, as in Towergate Underwriting Group Ltd v Albaco Insurance Brokers Ltd [2015] EWHC 2874 (Ch), the court may consider that a Part 23 application (within the proceedings) would be appropriate.

Evidence

An application for Norwich Pharmacal relief must be supported by evidence (witness statements, affidavits or oral evidence). Evidence usually presents the background of the application, the urgency/secrecy of the without-notice application, evidence of non-infringement of the “mere witness” rule, the respondent’s involvement or being mixed up in the wrongdoing, the specific information sought, the respondent’s possession of the information, purpose of the order sought,[10] applicant’s intention to issue claim against the wrongdoer, necessity for interests of justice and likely consequence if the application is refused, privilege issues of the respondent (e.g. against self-discrimination), evidence for the undertaking, matters which might need to be brought to the court’s attention, and any other factors which may assist the court in exercising its discretion.

Applicant’s duty of full and frank disclosure

The applicant ought to be mindful of making a full and frank disclosure of all material facts, irrespective whether the application is made with or without notice[11] to the respondent. In Orb ARL and others v Fiddler [2016] EWHC 361 (Comm), the court discharged a Norwich Pharmacal Order at the return date in that the applicant had failed to comply with its duty of full and frank disclosure on a without notice application, and was found to have committed a number of material non-disclosure, which would have affected the judge’s decision and misled the court to grant the Norwich Pharmacal relief.

CPR 31.16 and 31.17 provide respectively for disclosure before commencement of proceedings, and disclosure against a non-party. The applicant is strongly advised to proceed under these provisions where they are applicable. 

Order

The draft order should set out clearly the information sought from the respondent, the timescale within which the respondent must supply the information, how the information will be used by the applicant, whether the information will be used for any purpose other than the contemplated proceedings against the wrongdoer, prevention for a reasonable period against the respondent from informing the wrongdoer of the information sought by the applicant, the applicant’s suitable undertaking in damages, etc. The information sought must be proportionate[12] and limited to its necessity[13] for the applicant to obtain.

The order may also be endorsed by a penal notice[14] particularly if it is to be enforced by committal proceedings[15]. If it contains a penal notice, the order must be served on the person (the respondent) required to do or not do the act in question, unless the court dispenses with service under CPR 81.8.

The penal notice is a warning given to the respondent, and must be conspicuously displayed on the front page of the order that non-compliance would be a contempt of court punishable by a fine, imprisonment or confiscation of assets. Practice Direction 81.1 provides the form of the penal notice, “If you the within-named [ ] do not comply with this order you may be held to be in contempt of court and imprisoned or fined, or your assets may be seized” or in the form to the same effect.

Respondent’s obligations

A respondent of Norwich Pharmacal order will likely to be obliged to investigate, and must make full disclosure even though the applicant has no intention of pursuing the respondent in the substantive proceedings.[16] The respondent may be required to set out his knowledge of the information sought and produce documents as he is able to compile within the timescale; he is under a duty to give full and frank disclosure of all material facts pursuant to the order, and to cooperate and assist the applicant in providing the information to the best of his ability.

Further, the respondent may also be prevented for a reasonable period from informing the wrongdoer whom the information sought from was to be used to enable the applicant’s claim against.

Where the respondent is outside the jurisdiction of England and Wales, the law is unclear.[17]  

Costs

The common ground for costs of Norwich Pharmacal relief is that the applicant pays reasonable costs incurred by the innocent third party respondent in complying with the order[18]; Lord Cross, however, in JSC BTA Bank appears making it more obligatory that “the full costs of the respondent of the application and any expense incurred in providing the information would have to be borne by the applicant.[19] What is clear is from their Lordships is that, depending on the circumstances, the applicant will usually bear the respondent’s costs and (probably) reasonable expenses.  

Further, the Court of Appeal in Totalise plc v The Motley Fool Ltd and another [2001] EWCA Civ 1897 confirmed that in general costs incurred should be recovered from the wrongdoer and that the innocent respondent should be paid his costs of complying with the order. Further, the court should consider all the circumstances when considering its order as to costs.

Depending on the circumstances, a respondent may be ordered to pay the applicant’s costs. In Totalise and Morton-Norwich Products Inc and others v Intercen Ltd (No 2) [1981] FSR 337 (HC), the costs of the Norwich Pharmacal relief proceedings were recovered as damage in the subsequent substantive action against the wrongdoer, on the basis that the wrongdoer could or ought to have foreseen that the claimant would take all necessary steps of investigation and disclosure to find out the full facts which was likely to result from their torts.      

In JSC BTA Bank v Ablyazov and ors [2014] EWHC 2019 (Comm), the respondent Mr T was a Ukrainian businessman, against whom JSC BTA Bank sought disclosure. Flaux J. held that Mr T was in breach of a worldwide freezing injunction and receivership order against the defendant to assist the defendant in concealing assets, that his disclosure to the claimant was not engaged in good faith, that his evidence was “evasive”. As a result, Mr T was allowed to recover only 25% of the costs of preparing his affidavits; he was not allowed to recover costs for the two-day cross-examination, but was ordered to pay the claimant’s costs of the cross-examination exercise. It is worth noting that, although Mr T had not been required to make all reasonable enquiries, he was still under an obligation to set out all relevant information to his best ability and to produce the documents he was reasonably able to compile in the available time, which he had failed to do without any legitimate explanation.

Conclusion

It can be seen that Norwich Pharmacal relief is a flexible and equitable remedy and adapts to new circumstances. It may usually be understood that seeking Norwich Pharmacal relief is by making an application. Having now considered the relevant procedures and case law authorities, a claim form of either Part 8 or Part 7 may be more appropriate. Both parties must make full disclosure.

The common ground for costs of seeking Norwich Pharmacal relief is that the application/claimant will usually pay the innocent third-party respondent’s reasonable costs in complying with the order; depending on the circumstances, the applicant may also bear the respondent’s reasonable expenses. However, on the other hand, if the third-party respondent has probably facilitated the wrongdoing and not been innocent, he may not be able to recover his costs, the proportion of which will be subject to the discretion of the court.            

The next final article of this series will consider how to challenge and vary a Norwich Pharmacal order, the foreign elements of Norwich Pharmacal relief, and aspects of the Bankers Trust order.