You have obtained a judgment in another jurisdiction for a considerable sum, where the court has made an order in favour of you on grounds which include a finding of fraud. You are having trouble locating the defendant’s assets and they are being “surprisingly” unhelpful.
You do have one lead though …you believe that funds belonging to the defendant may be in or may have gone through a UK bank. This article sets out what you and your solicitors can do in order to locate these funds.
The first thing you need to do is to seek pre-action disclosure from the bank of the bank statements you believe belong to the defendant. At this stage, the bank would be a non-party and any disclosure provided would be on a voluntary basis.
There is a high likelihood that the bank will not be particularly forthcoming, in which case you can make an application to the court for what is known as a Norwich Pharmacal Order (NPO). In the landmark case Norwich Pharmacal v Customs and Excise Commissioners (1974) AC 133, the House of Lords recognised the equitable jurisdiction or fairness of the authorisation which enables the court to require a non-party respondent “mixed up” in wrongdoing to provide full information. The NPO may provide for disclosure to identify the wrongdoer, or to trace or preserve assets.
However, there are a number of matters which you should give consideration to before taking this next step.
As the applicant, you will need to show that;
1. There has arguably been wrongdoing and the NPO is available before and after judgment is obtained and may be in aid of foreign proceedings. The wrongdoing may consist of a judgment debtor attempting to put his assets out of reach. It is not necessary that the applicant intends to bring proceedings in respect of the wrongdoing, as any form of redress, such as disciplinary action, will be sufficient;
2. There is a real prospect that the respondent bank is “mixed up”, or has facilitated or is involved in the wrongdoing. The mixing up may be innocent or the bank may not even be aware of the wrongdoing. Involvement is important and there has been some discussion regarding “facilitation”, in R(Omar and others) v The Secretary of State for Foreign and Commonwealth Affairs (2013) EWCA Civ 118, and “furtherance” of the transaction, in NML Capital Ltd v Chapman Freeman Holdings Ltd (2013)EWCA Civ 589.
3. The respondent bank has relevant information which can be the subject of an NPO and the information may include email routing and address data. The court has a general discretion, but the scope of an NPO is not as wide as in standard disclosure and the court will usually seek to limit the scope of the NPO to specific documents or classes of documents.
4. The order is a “necessary and proportionate” response in all the circumstances. The factors that may be considered in the exercise of the discretion have been explored in Ashworth Hospital Authority v MGN Limited (2002)UKHL 29 and more recently in Rugby Football Union v Consolidated Information Services Ltd (2012)UKSC 55.
It is also important to note that if you wish to use the disclosed documents or information in support of proceedings in another jurisdiction, you must seek the court’s permission to do so. If the above criteria cannot be met, or if for some other reason an NPO would not be appropriate, there are other avenues available for seeking disclosure;
1. A Bankers Trust Order. The relief offered under an NPO was extended in Bankers Trust v Shapira (1980)1 WLR 1274 to allow applicants to pursue disclosure against banks and other financial institutions to aid tracing claims and to assist applicants in finding or recovering assets (Arab Monetary Fund v Hashim No 5 (1992) 2 All E.R. 911). This is the most appropriate approach where there is a fairly clear-cut case of fraud and where you are seeking disclosure of confidential documents from the defendant’s bank to support a claim to trace assets. One benefit of this approach is that a Bankers Trust Order may be obtained without reference to Norwich Pharmacal. There still needs to be a real prospect that the information might lead to the location or preservation of assets, however the court recognised that delay risks dissipation and so the application is often made and granted without notice. A draw back is that because the application has been granted without notice, the claimant must pay the bank’s expenses of the disclosure and give an undertaking in damages. It is possible to use a Bankers Trust Order if there is sufficient information for one group of assets and an NPO to seek more information for another group.
2. Under the Bankers’ Books Evidence Act 1879. Where legal proceedings have already been commenced, then attested copies from the bank’s books may be ordered as disclosure.
3. Under Civil Procedure Rule (CPR) 31.16, which provides for an order for disclosure before proceedings are issued, where the respondent is likely to be a party to the proceedings. This avenue would not be available in a case where the proceedings being brought in the UK are unlikely and/or if the bank is unlikely to be a party to the proceedings.
You have obtained a judgment in another jurisdiction for a considerable sum, where the court has made an order in favour of you on grounds which include a finding of fraud. You are having trouble locating the defendant’s assets and they are being “surprisingly” unhelpful.
You do have one lead though …you believe that funds belonging to the defendant may be in or may have gone through a UK bank. This article sets out what you and your solicitors can do in order to locate these funds.
The first thing you need to do is to seek pre-action disclosure from the bank of the bank statements you believe belong to the defendant. At this stage, the bank would be a non-party and any disclosure provided would be on a voluntary basis.
There is a high likelihood that the bank will not be particularly forthcoming, in which case you can make an application to the court for what is known as a Norwich Pharmacal Order (NPO). In the landmark case Norwich Pharmacal v Customs and Excise Commissioners (1974) AC 133, the House of Lords recognised the equitable jurisdiction or fairness of the authorisation which enables the court to require a non-party respondent “mixed up” in wrongdoing to provide full information. The NPO may provide for disclosure to identify the wrongdoer, or to trace or preserve assets.
However, there are a number of matters which you should give consideration to before taking this next step.
As the applicant, you will need to show that;
1. There has arguably been wrongdoing and the NPO is available before and after judgment is obtained and may be in aid of foreign proceedings. The wrongdoing may consist of a judgment debtor attempting to put his assets out of reach. It is not necessary that the applicant intends to bring proceedings in respect of the wrongdoing, as any form of redress, such as disciplinary action, will be sufficient;
2. There is a real prospect that the respondent bank is “mixed up”, or has facilitated or is involved in the wrongdoing. The mixing up may be innocent or the bank may not even be aware of the wrongdoing. Involvement is important and there has been some discussion regarding “facilitation”, in R(Omar and others) v The Secretary of State for Foreign and Commonwealth Affairs (2013) EWCA Civ 118, and “furtherance” of the transaction, in NML Capital Ltd v Chapman Freeman Holdings Ltd (2013)EWCA Civ 589.
3. The respondent bank has relevant information which can be the subject of an NPO and the information may include email routing and address data. The court has a general discretion, but the scope of an NPO is not as wide as in standard disclosure and the court will usually seek to limit the scope of the NPO to specific documents or classes of documents.
4. The order is a “necessary and proportionate” response in all the circumstances. The factors that may be considered in the exercise of the discretion have been explored in Ashworth Hospital Authority v MGN Limited (2002)UKHL 29 and more recently in Rugby Football Union v Consolidated Information Services Ltd (2012)UKSC 55.
It is also important to note that if you wish to use the disclosed documents or information in support of proceedings in another jurisdiction, you must seek the court’s permission to do so. If the above criteria cannot be met, or if for some other reason an NPO would not be appropriate, there are other avenues available for seeking disclosure;
1. A Bankers Trust Order. The relief offered under an NPO was extended in Bankers Trust v Shapira (1980)1 WLR 1274 to allow applicants to pursue disclosure against banks and other financial institutions to aid tracing claims and to assist applicants in finding or recovering assets (Arab Monetary Fund v Hashim No 5 (1992) 2 All E.R. 911). This is the most appropriate approach where there is a fairly clear-cut case of fraud and where you are seeking disclosure of confidential documents from the defendant’s bank to support a claim to trace assets. One benefit of this approach is that a Bankers Trust Order may be obtained without reference to Norwich Pharmacal. There still needs to be a real prospect that the information might lead to the location or preservation of assets, however the court recognised that delay risks dissipation and so the application is often made and granted without notice. A draw back is that because the application has been granted without notice, the claimant must pay the bank’s expenses of the disclosure and give an undertaking in damages. It is possible to use a Bankers Trust Order if there is sufficient information for one group of assets and an NPO to seek more information for another group.
2. Under the Bankers’ Books Evidence Act 1879. Where legal proceedings have already been commenced, then attested copies from the bank’s books may be ordered as disclosure.
3. Under Civil Procedure Rule (CPR) 31.16, which provides for an order for disclosure before proceedings are issued, where the respondent is likely to be a party to the proceedings. This avenue would not be available in a case where the proceedings being brought in the UK are unlikely and/or if the bank is unlikely to be a party to the proceedings.
