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Courts Prepared to Scrutinise and Limit Norwich Pharmacal Orders

Norwich Pharmacal Order (“NPO“) forces a third party to disclose documents or information to an applicant. These Court orders are typically used to identify a proper defendant to a claim or to get information to enable someone to set out their case in Court documents. The respondent to an NPO application is generally not the defendant to the potential proceedings but they must be somehow mixed up in the wrongdoing (innocently or otherwise).

An NPO may seem like a good way to gain a tactical advantage over an opponent in proceedings but one does need to think carefully about before the likely success of the application before incurring what can sometimes be substantial costs. The recent High Court case of FCFM Group Ltd v Hargreaves Lansdown Asset Management Ltd, Interactive Investor Services Limited and EE Limited [2018] EWHC 3075 (QB)shows that the Court is quite ready and willing to limit and scrutinise applications for NPOs to protect against the unnecessary disclosure of private documents.

Background

FCFM Group Limited (“FCFM“) owned shares in a company listed on AIM (“RRE“) (the “Shares“).

Two individuals, Mr and Mrs Y, agreed to purchase the Shares. The following day there was a public announcement of a reverse takeover of RRE and its share price rose significantly. FCFM subsequently denied that the parties had created a valid contract to purchase the Shares.

Mr and Mrs Y issued proceedings for specific performance against FCFM, seeking an order to compel FCFM to sell the Shares to them. FCFM served a counterclaim on the basis that it believed Mr and Mrs Y had insider knowledge regarding the reverse takeover. It also passed its suspicions on to the CPS and launched its own private prosecution against Mr and Mrs Y.

The Application

FCFM made an Court application, without notice to Mr and Mrs Y, for a NPO to compel three companies to disclose certain documents.

Hargreaves London Asset Management Ltd (“HLAM”) and Interactive Investor Services Limited (“IIS”)

As HLAM facilitated the purchase of the Shares, FCFM asked the Court to compel them to disclose the full trading history of both Mr and Mrs Y. IIS held information about the ISAs that Mr and Mrs Y intended to use to pay for the Shares. FCFM therefore also asked the Court for an order compelling IIS to disclose statements in respect of any accounts held by Mr and Mrs Y. In both cases, the requests related to information generated over a period of five years.

FCFM also asked for all copies of communications with Mr and Mrs Y for a period of one month.

EE Limited (“EE“)

As Mr and Mrs Y’s mobile phone provider, FCFM asked for an order compelling EE to disclose ‘all communication records’ for a period of one year, starting shortly before Mr and Mrs Y offered to purchase the Shares.

Private Prosecutions and NPO’s

The Court decided that the party best placed to investigate Mr and Mrs Y and make a decision as to whether to pursue a criminal prosecution against them was the CPS.

The Court should not encourage parties involved in civil litigation to use the possibility of criminal prosecution to initiate ‘satellite litigation’ and/or gain a tactical advantage over the other party in the civil dispute.

Civil claims and NPO’s

The Court said that it was important for it to limit and supervise the disclosure of private documents, and to scrutinise the purpose for which they were disclosed.

The Court noted that the documents sought by FCFM would fall under the remit of standard disclosure in civil proceedings. The difference between a NPO and standard disclosure is that a NPO generally concerns the full disclosure of all of the documents requested, regardless of relevance, whereas standard disclosure allows parties to withhold irrelevant information.

With this in mind, the Court was concerned that the scope of the disclosure requested by FCFM was too wide, particularly as it included potentially sensitive information for Mr and Mrs Y. This was because:

  1. Mr and Mrs Y had not been given notice of the hearing and therefore were not present to make submissions on their own behalf;
  2. the respondents would not be as motivated to redact irrelevant or privileged information; and
  3. such disclosure potentially infringed Mr and Mrs Y’s rights to a private life under the Human Rights Act 1998.

In particular, the Court said that FCFM could make an application for specific disclosure in the civil proceedings. This would allow it to access information they had requested whilst addressing the concerns outlined above.

The Court therefore dismissed the application.

© Copyright 2018 Squire Patton Boggs (US) LLP

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About this Author

Garon Anthony, Squire Patton Boggs, litigation attorney
Partner

Garon Anthony is a partner in the Litigation Practice Group. He has specialised in dispute resolution work since he qualified as a solicitor and has considerable experience in general corporate and commercial litigation work, acting for both private and public sector clients.

Garon regularly resolves disputes for clients in the financial services/insurance sector. That encompasses professional negligence, fraud issues/recovery processes, dealing with claims and complaints by customers of the mis-selling of retail products, handling insurance policy coverage disputes for corporate...

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