Norwich Pharmacal Orders Explained Part 2

Prerequisites of a Norwich Pharmacal Order

Before granting a Norwich Pharmacal Order NPO, the Court will need to be satisfied of the following:-

Evidence that the Respondent is involved in the wrongdoing.

1. There is much case law in this area as to what is meant by wrongdoing but as Lord Reid stated in the Norwich Pharmacal case itself, the Respondent cannot simply be an “innocent bystander”. There has to be some evidence that the Respondent (whether innocently or not) was mixed up in the wrongdoing.
2. An example of this is an application made against a telecommunications company for disclosure of the wrongdoers’ contact details in circumstances where it had not been possible to locate that particular individual.
3. It is even possible to apply for Norwich Pharmacal Orders against lawyers subject to issues of privilege. However, applications against entirely innocent lawyers are unlikely to be granted. Lawyers who, for example, who draft documentation which then enables the wrongdoer to facilitate a fraud could be held subject to an Norwich Pharmacal Order.

The Defendant will not later be called as a witness – the “mere witness” rule

As a general rule, Norwich Pharmacal Orders are not available against individuals who may at a later stage may be called as a witness in the proceedings. This is known as the “mere witness” rule. There are exceptions for example where an Applicant cannot identify the wrongdoer without the information being provided by the party subject to the Norwich Pharmacal Order application. 

• The interests of justice in making the Order

The Court will also consider the interests of justice when granting a Norwich Pharmacal Order. In so doing, it will balance the following factors when deciding whether to make an Order:-

1. The likely consequence if the Order were refused.
2. Whether there are any alternative remedies available.
3. The potential advantages to the Applicant versus the potential harm to the Respondent.
4. The nature of the compliance and whether it is likely to be onerous.

Developing area of the law

Norwich Pharmacal Orders are a developing area of the law and there is recent authority (as or writing) for the fact that a Norwich Pharmacal Order could not be challenged on the basis that the information sought might be available from other sources.

This recent case also made it clear that each application before the Court is to be determined on the circumstances of that particular case, taking into account  the size and resources of the Applicant, the urgency of its needs to obtain the information and any public interests in having the Applicant’s needs satisfied. 

Applying for a Norwich Pharmacal Orders

Much depends on whether the application is urgent or not.

If it is not urgent, then the first port of call is to write to the potential Respondent seeking voluntary disclosure of the information and setting out the reasons why it is sought.

If the Respondent is unable or unwilling to comply then an application to Court might be the only way forward. However seeking the cooperation of a Respondent even in circumstances where it cannot provide the information (for example due to privacy) can still be a useful approach as that information can be put before the Court when asking for an Norwich Pharmacal Order.

Often, for privilege, data protection or other reasons, the Respondent will invite the Applicant to apply for a Norwich Pharmacal Order so that the Respondent can be relieved of its obligations to withhold such information.  In such circumstances, as described above, the application should be relatively straightforward and the Applicant will have to provide for the Respondent’s costs in attending the proceedings and complying with the Norwich Pharmacal Order.

In terms of the procedure (both for urgent and non-urgent applications), an application must be supported by a detailed witness statement setting out the following:

1. The factual background arising to the application;
2. The nature of the claim sought by the Applicant;
3. The most likely cause of action against the wrongdoer;
4. Evidence that the mere witness rule will not be breached;
5. Evidence that the Respondent has been involved or mixed up in the wrongdoing (although not always necessary);
6. Specifying which documents or information is being sought and giving reasons for this;
7. Stating why the Respondent is believed to be in possession of the documents or information;
8. Stressing the Applicant’s intention to pursue the wrongdoer and not the Respondent.
9. If dishonesty is being alleged attention should be drawn to this.
10. That the application is in the interests of justice.
11. Any apparent basis on which the Respondent may seek to claim privilege against self-incrimination.
12. Any other relevant factors the Court may consider when exercising its discretion such as criminal activity etc.
13. Evidence in support of the undertaking in damages.

If the application is made without notice, then the need for urgency needs to be explained.

Norwich Pharmacal Orders Explained Part 1

Obtaining information from third parties 

In this series of posts, the person or company seeking a Norwich Pharmacal Order is referred to as the Applicant and the person or company subject to the application is referred to as the Respondent. The person or company against whom the ultimate Freezing Order may be sought is referred to as the Defendant.

Introduction

It is sometimes the case that an Applicant cannot clearly identify the proper Defendant to any potential proceedings due to the lack of information available to it.

In such circumstances, it is possible for an Applicant to seek disclosure of information or documents against a non-party to the proceedings (“the Respondent”) if it can be shown that

1. The Respondent must have been involved in or mixed up in the wrongdoing, whether innocently or not: and
2. The Respondent is unlikely to be a party to the potential proceedings.

Such Court Orders are known as Norwich Pharmacal Orders. These Orders can be obtained before proceedings are issued, during the course of proceedings or even after judgment has been obtained against a Defendant.

How Norwich Pharmacal Orders differ from normal disclosure applications

Norwich Pharmacal Orders differ from standard applications for pre action disclosure against third parties. The key difference is that under the Civil Procedure Rules the application is made where it is likely that the Respondent is going to be a party to the proceedings. Another key difference is that under the Civil Procedure Rules such an application can only relate to disclosure of documentation whereas under a Norwich Pharmacal Order, the application can also relate to the disclosure of information.

Why are Norwich Pharmacal Orders used?

Norwich Pharmacal Orders are commonly used in order to:

• Identify wrongdoers.

 For example where a third party has become mixed up in the wrongful acts of others, they are then under a duty to assist the injured party to provide information which will help disclose the true identity of the wrongdoer. Examples of instances where these types of Orders can be very useful include applications against internet service providers and also applications against website hosting companies where content may contain defamatory material or infringe an Applicant’s copyright.

• To help identify the full nature of the wrongdoing.

 Often it is the case that the Applicant already knows the nature of the wrongdoing when considering seeking injunctive relief by way of a Freezing Order, but in certain circumstances Norwich Pharmacal Orders can be used to help clarify the exact nature of that wrongdoing prior to any applications being made to Court for injunctive relief.

• To assist tracing assets and proprietary claims.

 This is a common ground for the use of a Norwich Pharmacal Order as it is often the Applicant’s position that it urgently needs to obtain further information to help it trace stolen assets.

The leading case of Bankers Trust Company v. Shapira [1980] 1WLR1247 related to an application against a bank for disclosure of relevant financial information including accounts, correspondence, banking records and cheques. The Court held that

“in circumstances where there was strong evidence that the applicant had been subject to fraud and deprived of monies as a result, then the rules of equity were that such an application should be granted”.

The Court of Appeal further held that the Courts would not hesitate in making strong Orders in circumstances where they helped prevent the disposal of assets by a Defendant which had been wrongfully or fraudulently obtained from the Applicant.

• For disclosure of the source of information contained in a publication

 Whilst not particularly relevant for fraud cases, these types of applications can be made often against newspapers who have received documents in breach of confidence.

• To enable an Applicant to plead its case.

 If it is clear that the documents and/or information sought would allow an Applicant to properly assess the prospects of success of its claim and enable it to then fully plead the claim, then Courts are willing to grant a Norwich Pharmacal Order.

• To enable the victim of a wrongdoing to answer allegations made against him.

 This deals with circumstances where a Defendant may benefit from the lack of information available to the Applicant.  Such non-disclosure may prevent proceedings being brought or continued and may ultimately frustrate the grant or continuation of a Freezing Order.  A third party Respondent is therefore required upon the grant of a Norwich Pharmacal Order to provide such information so as to prevent any facilitation of the Defendant’s case, where a wrongdoing exists.

• To enable a Defendant to obtain information

 In exceptional circumstances, a Norwich Pharmacal Order can even be used by a Defendant in proceedings to obtain information which would enable him to answer the allegations against him. This is a very rare use of a Norwich Pharmacal Order.

• To aid execution of a judgment.

 Again, whilst Courts have taken a restrictive approach in this particular area, the Court may consider an application by a judgment creditor for a Norwich Pharmacal Order to aid the execution of a judgment. This is only done where it can be shown that the judgment debtor is wilfully seeking to evade execution of the judgment.

Dealing With The Substantive Claim Part 2

Disclosure of documents 

 An Applicant will then need to produce what is called a Disclosure List.  This is a list setting out all relevant documents it has (or had) in its possession which are relevant to the current legal proceedings.  This exercise in complex fraud proceedings can be very onerous indeed.  

It is not uncommon now for large volumes of documents to be stored electronically (especially in large scale frauds) and parties often need to agree the parameters of any electronic search for documents (what is called “e-disclosure”). If necessary, the parties will need to appoint an independent IT expert to undertake searches of relevant databases by way of agreed key word search criteria.  

It should be borne in mind that this process is in addition to the more traditional review and cataloguing of all hard copy documents which in large scale cases can also be a very lengthy and time consuming exercise.  

However, disclosure is of paramount importance in claims of this nature. Failure to properly undertake the disclosure process can result in a Respondent making applications against an Applicant for specific disclosure of relevant documents and in very exceptional circumstances can even lead to a party making an application against the other party to have its claim struck out for failure to properly complete the disclosure exercise.

There are also costs consequences for failing to properly cooperate with any Order of Court.  Even if your primary case is stronger and likely to succeed, a failure to comply with any Order of Court can lead to interim cost orders against you before trial.

Once disclosure lists have been completed, they are exchanged with the Respondent who will in turn send their own list. Each party can then request copies of some or all of the documents on the opponents list or alternatively go to inspect the originals (such requests must be made within a specified time limit). In large cases the inspection and copy process can take considerable time. Even when complete, the Applicant and its legal advisors will then need to sift through all the documents to understand their important or otherwise in the claim thus extending the time taken up by the disclosure process.

Witness statements

 The next stage of the directions process is commonly the preparation of witness statements (or affidavits in certain types of proceedings), detailing for each individual who has direct knowledge of the issues relevant to the claim, their evidence in relation to the substantive case.  In complex fraud cases these statements can be very lengthy indeed but are crucial to get right.  The statements set out the factual basis of an Applicant’s claim and commonly witness statements are required from various different individuals and even third parties to the litigation.  They will also exhibit all the key documentation to support an Applicant’s claim.

It is critical that these statements are properly produced as, ultimately, the Applicant will only be able to rely upon the details contained in these statements at trial. These documents can often take a number of months to prepare and complete.

Once complete, the witness statements will be sent to the Respondent and they will likewise send theirs to the Applicant. It is then necessary to review the Respondent’s statements in detail and begin to gauge the quality of their evidence and whether it will ultimately “stand up at trial”.

Expert evidence

 If the claim involves, for example, complex financial matters or allegations of forgery etc, it is likely that the parties will need to agree to the appointment of an independent expert (eg a forensic accountant) to provide an expert’s report dealing with certain aspects of the alleged fraud. That person will also be required to give evidence at court. More often than not the court will insist on a single expert being instructed by both parties, but on occasion it might be that each party will seek to rely upon its own expert on a particular issue.

Experts need to be fully briefed and instructed pursuant to the Civil Procedure Rules 1998 and there are strict guidelines as to how this is to be done to ensure the independence of the expert in the proceedings is maintained.

Interim Applications

 Throughout the entire litigation process, either party to the proceedings may make an Interim Application. Essentially this is the ability to apply to court for various types of orders, such as:

1. A Respondent seeking to vary the terms of an Order;
2. A Respondent seeking to discharge an  Order;
3. Applications to strike-out some or part of a party’s pleaded case;  
4. Applications for specific disclosure;
5. Requests for Further Information in circumstances where a party’s pleaded case is unclear;
6. An application for security for costs;
7. An application for committal of a Respondent to prison for not complying with the terms of a Freezing Order.

Often, these types of applications cannot be foreseen at the outset of the proceedings but their possibility must be factored into proceedings of this nature as it is unusual to run a case without making (or facing) at least some interim applications.

Preparation for trial

 The parties will then need to make time and / or resource to prepare for trial.  In large cases, this is an extensive exercise as it is the Applicant’s responsibility to prepare all of the relevant paperwork in to paginated bundles ready for the court. Often many duplicate sets need to be produced so that all relevant parties have a single set of files from which to work from.

As part of the preparation for trial, it is very common to have meetings with the Barrister acting for the Applicant and these need to be factored into any proceedings.  Dependant on when the Barrister was instructed, a brief will also have to be delivered detailing all of the background to the case, enclosing all of the pleaded documents and any ancillary evidence and providing detailed instructions as to what is sought.  This Brief can take some time to prepare, as it effectively is an extension of the evidence in support of the claim.  The barrister (unless previously involved) will come in cold and have to read such documents to come up to speed and understand the claim.

Equally, there is often considerable correspondence between the parties to the claim, together with correspondence with the Court, third parties, such as the experts, forensic accountants and investigators.

Trial

 Ultimately, if the matter is not capable of settlement and / or the parties not willing to enter in to amicable settlement, the case will end up at trial.   Trials in complex cases involving fraud can be lengthy indeed due to the very detailed nature of the allegations and the number of witnesses often required to attend Court (including expert witnesses).  

Complex cases are likely to last a minimum of 10 days and representatives of the Applicant needs to be aware that attendance at Court throughout this period is required.

If the Applicant is a person, or has a nominated individual (where a company brings a claim), to provide evidence then that individual will usually be required to attend the trial and be cross-examined by the Defendant’s barrister on the evidence in support of the claim (and any other evidence filed in the proceedings).

Dealing With The Substantive Claim Part 1

The litigation process explained 

In this series of posts, the person or company seeking the Freezing Order is referred to as the Applicant and the person or company subject to the Order is referred to as the Respondent.

The grant of a Freezing Order is only the start, not the end of the claim. A Freezing order is simply a remedy to prevent a Respondent putting his / her assets out of the reach of the Applicant. Whilst the Applicant may have the protection of a Freezing Order in place, it is still under an obligation to pursue its substantive claim against the Respondent – commonly a monetary claim in respect of the losses it has suffered. A Freezing Order cannot be obtained in isolation without the existence of a substantive claim against the Respondent (although it may not yet have been issued).

This can be a lengthy process and ultimately end up in trial at Court. Set out below are the 9 main steps which will have to be undertaken in the substantive claim.

Drafting detailed Particulars of Claim

Particulars of Claim is the term given to a document which formally sets out the detail of the claim an Applicant has against a Respondent.

These documents commonly need to be prepared by a Barrister / Counsel as it is they who specialise in drafting these detailed documents. In a complex case involving various allegations of wrongdoing and high levels of loss, the Particulars of Claim can run in to many pages and will take numerous revisions to get right. However, it is vital that it is correct as it will form the pleaded basis of the Applicant’s claim throughout the entire case and the document which the Respondent will have to answer by way of defence.

If the Freezing Order has been obtained in circumstances of great urgency, the court will not require the detailed Particulars of Claim to have already been prepared. If, (as is often the case in fraud claims) the Freezing Order is obtained after a lengthy period of investigation and preparation, the Particulars of Claim,setting out the Applicant’s substantive case, will need to be prepared and put before the court on the application for the Freezing Order.

Defence and Counterclaim

If the Respondent intends to fight the claim, it will prepare and serve a defence to all of the allegations set out in the Particulars of Claim. Again, this can be a detailed and lengthy document and the Respondent may even seek to Counterclaim against the Applicant for any monies it may believe are due and owing to it. If that happens, the Applicant then has to prepare a defence to the counterclaim to avoid judgement being entered for that amount.

Case Management Conference

The parties will then have the matter listed for what is known as a Case Management Conference at which stage the court will review the claim to date and put in place steps to take the matter forward to trial (commonly known as “directions”). Directions are akin to a timetable put in place by the court that the parties have to adhere to, setting out a chronological sequence of steps / actions for all parties to carry out up to and including trial.

In advance of that hearing, the Applicant will need to provide detailed information with regard to the likely costs of the litigation together with detailed information relating to the nature and extent of any disclosure of documents within the proceedings.

The Case Management Conference will take place at court (normally listed for 1-2 hours) and a Judge will review the Court file before putting in place directions to take the matter to trial.