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Mistaken payments: Should Norwich Pharmacal disclosure be ordered?

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02/11/2015

Norwich Pharmacal disclosure

The Civil Procedure Rules (CPR) provide a process by which a disclosure order can be sought, pre-action, against a person who is likely to be party to subsequent court proceedings. A Norwich Pharmacal disclosure order [1], however, can be granted against a person who will not be party to subsequent proceedings, so as to identify another person (a wrong-doer), or so as to identify the nature of a wrongdoing, who or which will be the subject of subsequent proceedings. A Norwich Pharmacal order can also require the disclosure of information, as opposed to the disclosure of documents as per CPR disclosure provisions.  Norwich Pharmacal orders involve an invasion of privacy and place a burden on the receiver, who may have become involved entirely inadvertently and innocently. They are therefore generally issued only exceptionally.

The Norwich Pharmacal principles require:

  • that the person against whom the disclosure request is sought be involved, albeit possibly innocently, in the wrongdoing;
  • the order must be necessary in the overall interests of justice (as part of which the court must undertake an analysis of proportionality and it must balance the interests of the people involved);
  • that no other CPR provisions can achieve the necessary end;
  • that the respondent is likely to have the information sought; and
  • that there is already a good arguable case that a wrongdoing has occurred.

Santander v RBS and others

In this case [2], the applicant bank had made payments into various incorrect bank accounts in error. The respondents were the banks at which those accounts were held. The applicant had previously sought Norwich Pharmacal orders for disclosure of the names, addresses and other customer details for the recipient accounts. The earlier application had been refused by a Master because be considered that when the payments were made, there had actually been no ‘wrongdoing’. Wrongdoing would only occur subsequently if the recipient account-holders refused to repay. In another hearing, however, arising out of broadly the same facts but involving different recipient banks, the applicant sought Norwich Pharmacal orders before a High Court judge. He found that the mistaken unjust enrichment of the incorrect account-holders in itself was a sufficient wrong to justify a Norwich Pharmacal order. When the current application fell to be re-heard, the Master was bound to follow the High Court judge, although he did not agree.

Restating that the Norwich Pharmacal jurisdiction should be reserved for exceptional cases, the Master noted that he did not consider a mere unjust enrichment debt claim to be sufficient.  In addition, the Master explained his view that, at the time of the respondent banks’ involvement (that is, the time at which monies mistakenly came in), there was no wrong. Not having induced the payments, and not knowing they were coming, it was not in any legal or moral sense wrong of the third party account holders at that point merely to receive them. The Norwich Pharmacal requirement of the respondent being involved in wrongdoing was therefore not met.

Mistaken payment cases – the law as it stands

Nevertheless, “unless and until a different view is reached at High Court judge level or above” [3] banks and building societies should note that, in mistaken payment cases, Norwich Pharmacal disclosure can be ordered, although it should be limited to the disclosure of names and addresses only (as these are the details needed for a claimant to commence proceedings), and it should involve the applicant undertaking not to use any documents or information obtained other than for the purpose of enforcing its legal rights in connection with the mistaken payment.

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[1] An order made under jurisdiction established in Norwich Pharmacal v Commissioners of Customs & Excise [1974] UKHL 6
[2] Santander UK Plc v Royal Bank of Scotland Plc (1) HSBC Bank Plc (2) and Nationwide Building Society (3) [2015] EWHC 2560 (Ch)
[3] Ibid para 17

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