Disclosure orders often play an important part in proceedings involving fraudulent activity. Particularly, the Norwich Pharmacal order is a key tool where disclosure by an innocent third party is required. The specialist commercial lawyers at Bahamas law firm ParrisWhittaker are highly experienced in advising on disclosure issues in commercial disputes.
A ruling1 from the UK’s High Court, which has persuasive authority on the courts in The Bahamas, focused on the circumstances in which it may be appropriate for a party can use disclosed documents for collateral purposes.
Under the UK’s Civil Procedures Rules (CPR), disclosed documents can only be used for the purpose of the proceedings in which [they were] disclosed” – unless the court allows otherwise.
The court will allow such permission if there are ‘special circumstances’ constituting a cogent reason for permitting collateral use; and there is a public interest warranting the dispensing of the collateral rule (‘the Tchenguiz test’).
What happened in this case?
The applicant company fell victim to an authorised push payment fraud costing it $250,000. It had obtained ‘Norwich Pharmacal’ disclosure from Barclays (the fraudster’s bank). However, it became apparent its prospects of securing recovery from the fraudsters themselves were low but, having received the documents following the disclosure order, there was a case against Barclays.
It asked the court for permission to use the bank’s disclosure to bring a claim against the bank. Barclays resisted on the basis of public interest. It also argued that should the application be granted, it potentially set a precedent that if a Norwich Pharmacal application is not successful in the pursuit of a fraudster – then the documents obtained can be used against the bank; and that would result in fraud victims bringing expensive speculative cases against banks.
The court allowed the application on the basis that the Tchenguiz test was satisfied. It also pointed out that the best way to discourage speculative cases would be to ask for strike out or apply for summary judgment.
What does this mean?
The ruling illustrates both how useful Norwich Pharmacal orders are, and the potential extent to which the documents disclosed could be used in certain circumstances. It is worth noting that in this case, the fraud victim had undertaken not to use the disclosure provided to pursue a claim against the bank without the court’s permission.
Crucially, the ruling gives an extra layer of reassurance to business, who fall victim to fraud, that there are a number of options to secure remedies in the perhaps more complex cases
How can we help?
We advise and represent businesses across all types of disputes including where fraud and disclosure issues arise. Where a court application for disclosure seems inevitable, we can talk through the issues with you strategically to ensure any steps taken to apply to court are meritorious.
1F.T. S.A.L. Offshore v Barclays Bank PLC [2020] EWHC 3125 (Offshore)
