UK: High Court Refuses Norwich Pharmacal Disclosure Order In Aid Of Foreign Proceedings

In a significant recent decision, the High Court refused to grant a 'Norwich Pharmacal' disclosure order (NPO) on the grounds that the information was sought for the purpose of foreign proceedings, which is an impermissible use of such orders: Green v CT Group Holdings Limited [2023] EWHC 3168 (Comm).

The NPO procedure enables a victim of wrongdoing to seek disclosure from a third party who was 'mixed up' in the events (often innocently), for the purpose of obtaining information the victim needs in order to pursue legal redress.

On the basis of earlier authority, the High Court held that the NPO procedure cannot be used to obtain evidence (i) for the purpose of foreign civil proceedings (existing or contemplated) or (ii) in connection with foreign criminal investigations or proceedings. That is because the English courts' power to assist in obtaining such material is governed exclusively by the statutory regimes (civil and criminal) for international cooperation in this regard, under which foreign courts and prosecuting authorities can issue formal "letters of request" for such assistance.

The High Court observed that this jurisdictional constraint on the NPO procedure has not been widely recognised in practice, and suggested that some earlier NPO authorities must be reconsidered in light of it. It also proposed that the established test for granting an NPO be amended to take into account this restriction, by adding an express requirement that the order be sought for a proper purpose.

In any particular NPO application, the question of whether the information is being sought for the purpose of foreign proceedings (including whether a possible future foreign action can be said to be "contemplated" at that stage) will be fact-sensitive, and a judge's view may be difficult to predict. The present judgment suggests that, although in a wholly domestic context courts may sometimes be prepared to adopt a "wait and see" approach to the potential uses of the information once it is received, that approach will not be appropriate in cases where there is an international element and jurisdiction is an issue.

Related developments re cross-border third party disclosure

This decision follows several other recent cases considering when the English courts will make disclosure orders against third parties where there is a cross-border element. In the converse of the scenario in the present case, the following cases considered applications for disclosure by foreign third parties for the purpose of English proceedings:

• In Gorbachev v Guriev [2022] EWCA Civ 1270 (discussed here) the Court of Appeal granted a third party disclosure order under CPR 31.17 (rather than an NPO) against an entity located abroad where the documents sought were located in England. It left open the question of whether such an order could be made where the documents were held abroad (as would be more typical). It commented however that, even if such jurisdiction exists, it would rarely be appropriate to exercise it due to the risk of trespassing on the statutory "letter of request" regime.
• In Scenna v Persons Unknown [2023] EWHC 799 (Ch) (discussed here) the High Court reiterated that the English courts should only make 'Bankers Trust' disclosure orders against foreign banks in exceptional circumstances, because of the risk of putting the bank in breach of local laws. The case law suggests that exceptional circumstances might include urgency, or any other reasons why approaching the courts of the foreign jurisdiction for similar orders would not be a viable alternative.

Background

The claimant was involved in court proceedings in the Channel Islands regarding a contentious restructuring of family trusts. A counterparty in those proceedings was seeking to rely on certain bank statements and transactional records as evidence that she was misrepresenting her financial position. It had obtained the documents via an English-based private investigation company, CT Group.

The claimant maintained that the documents were forgeries and that she had no knowledge of any of the bank accounts or shareholdings referenced in them. That was supported by letters she obtained from the relevant financial institutions.

The Channel Islands courts granted her permission to use documents from those proceedings to apply to the English court for orders requiring CT Group to provide information regarding the provenance of the documents, including the identity of its sources (which CT Group had refused to disclose).

In the NPO application, CT Group's position was that the documents recorded genuine transactions but that it was possible that a fraud was being perpetrated on the claimant (noting that its enquiries had suggested that the claimant's ex-husband had links to the relevant financial transactions). However, it resisted the NPO application on various grounds.

Decision

The High Court (Charles Hollander KC) refused the NPO application.

The judgment set out the established test for granting an NPO, as summarised in Collier v Bennett [2020] EWHC 1884 (and recently approved by the Privy Council in Stanford Asset Holdings Ltd v Afrasia Bank Ltd [2023] UKPC 35 – discussed here). Broadly, that test requires that:

(i) there is a good arguable case that some legally recognised wrong has been committed against the claimant;

(ii) the respondent was mixed up in (so as to have facilitated) the wrongdoing;

(iii) the respondent is likely to be able to provide the information necessary to enable the ultimate wrongdoer to be pursued; and

(iv) requiring disclosure is an appropriate and proportionate response in all the circumstances.

The CT Group disputed all but (ii) in this case.

Legal wrong

As to (i), the court readily accepted that the claimant's contentions regarding forgery, supported by the relevant financial institutions, provided a good arguable case that some form of civil or criminal wrong had been committed against her, the precise nature of which would depend on the relevant proper law in the jurisdiction where any action was being pursued. The CT Group's complaint that she had not clearly identified the legal wrong was not realistic.

Notably, the court dismissed an argument that a criminal offence cannot be relied on as a wrongdoing for the purpose of the NPO jurisdiction – a point on which there are conflicting views in the case law. It noted that the issue would only need to be determined in a rare case where the wrongdoing relied on was solely a crime and not also some form of civil wrong. Here, the court held there was a good arguable case that a civil wrong had been committed. However, if it had been necessary, the court would have preferred the view that criminal offences can provide the basis for an NPO (commenting that it would be a brave judge who would decline to follow the unanimous – albeit obiter – view of the House of Lords to that effect in Ashworth Hospital Authority v MGN [2002] 1 WLR 2033).

Ability to provide information

CT Group argued that the requirement in (iii), that a respondent be able to provide information to enable the ultimate wrongdoers to be pursued, was not satisfied because it only knew the identity of Person A, a former intelligence operative currently residing in the Russian Federation from whom it had obtained the information, and not Persons X and Y who had provided the information to Person A. The court rejected this argument. Referring to analogous situations in the authorities, it confirmed that, where an NPO is likely to assist in identification of the culprit, this condition is satisfied.

Proper purpose – foreign proceedings

However, the court went on to address an issue that it regarded as central to the present case, arising from the existence of the statutory regimes under which the English courts may assist with obtaining evidence for foreign legal proceedings in response to formal "letters of request" from foreign courts and prosecuting authorities:

• Criminal proceedings: In R (Omar) v Secretary of State for Foreign Affairs [2013] EWCA Civ 118 (discussed in this earlier blog post) the Court of Appeal examined the Crime (International Co-operation) Act 2003. It observed that that regime differed from the NPO process in a number of key respects, including in the importance the legislation accords to considerations of national security, Ministerial discretion, and comity between sovereign nations and their courts. The Court of Appeal concluded that, in enacting the legislation, Parliament was to be taken to have created an exclusive procedure, not a parallel one to the common law NPO process. Therefore, where the 2003 Act was in play, the NPO remedy was not available.
• Civil proceedings: The court in the present case considered that the Omar judgment made it clear that the same principle applied in civil cases, where the relevant statute is the Evidence (Proceedings in Other Jurisdictions) Act 1975. In any event, that had been confirmed by the High Court in Ramilos Trading Ltd v Buyanovsky [2016] 2 CLC 896.

The court concluded that there is therefore no jurisdiction to grant an NPO for a purpose that is covered by the statutory regimes, which (applying the legislative wording) it described as being where the evidence is sought:

(a) for the purposes of civil proceedings which either have been instituted before the requesting court or whose institution before that court is contemplated; or

(b) in connection with criminal proceedings or a criminal investigation being carried out outside the United Kingdom.

In the court's view, this jurisdictional constraint is not adequately reflected in the Collier v Bennett formulation of the NPO test. It proposed that, in addition to the four preconditions listed in Collier, there should be a further condition:

"Is the application made for a legitimate purpose? (the 'Proper Purpose' test)"

Applying that test to the present case, the court was not satisfied that the claimant had demonstrated any purpose in seeking the NPO beyond the impermissible purposes of obtaining evidence for use in civil proceedings abroad (either the Channel Island proceedings or some separate future civil action) or a possible criminal investigation/prosecution (which the court considered would include the claimant making a criminal complaint).

In particular:

• The court rejected the claimant's submission that it was impossible to know exactly the purpose for which the information could be used until it was obtained.It acknowledged earlier NPO authority which accepted that, in many cases, the whole point of such an application is to obtain sufficient information to be able to assess what action(s) could be pursued and where. However, that authority was decided pre-Omar and wrongly assumed that use of the information for foreign proceedings would be permissible. While such a "wait and see" attitude to the purpose of an application might be reasonable where an NPO was being sought in a wholly domestic context, it was not appropriate "in any case with a jurisdictional element".
• The court was also not persuaded by the claimant's suggestion that the information obtained might potentially lead to civil or criminal proceedings within this jurisdiction, either against CT Group itself or against the ultimate wrongdoer. Apart from the CT Group having its residence in England, there were no known elements of the case related to this jurisdiction, including no evidence that the ultimate wrongdoers (whether Persons A, X or Y) had any connection with it.

As to a possible claim against CT Group, that would not be a legitimate use of the NPO procedure (rather than an application for pre-action disclosure under CPR 31.16) and, in any event, the court would not have been satisfied there was a good arguable case of wrongdoing by CT Group.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.