A Norwich Pharmacal order is a type of disclosure order requiring the provision of information. It may be used to help a potential claimant to identify a wrongdoer to sue, to obtain information to facilitate a decision whether or not to sue or to trace the movement of assets. Claimants often rely upon Norwich Pharmacal orders to help recover assets stolen as a result of fraud.
In this article, we outline the basis upon which a Hong Kong court would grant a Norwich Pharmacal order and provide examples of situations where courts typically grant such an order. This article is part of a series of articles on asset recovery and asset tracing. Other articles of interest may include our article on Cyber Fraud: Assessing Options for Asset Recovery.
If you’d like more information about Norwich Pharmacal orders or other types of disclosure orders, please contact one of our dispute resolution lawyers.
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Where money is stolen or hidden away, a claimant faces the difficult task of identifying who stole or hid the money or where the money has gone. A Norwich Pharmacal order can help. It can, for example, require a bank who has received the money to disclose details of the holder of the account into which the money was deposited as well as details of the movement of monies into and out of the account. This disclosure, which will typically include bank account opening documentation and bank statements, enables the owner of the money to identify to whom his money was transferred, to determine how much money remains in the account and to find out where the money went if it has been withdrawn from the account.
Basis for Norwich Pharmacal Order
A victim of wrongdoing may commence proceedings to claim against the wrongdoer and, as part of the discovery process in these proceedings, he may obtain information from the wrongdoer. However, as a general principle, the victim has no right to obtain information from any person other than the wrongdoer. As the court stated in the case giving rise to Norwich Pharmacal relief:
… as a broad and general rule it is true to say that a court will not order discovery against a mere witness… Someone who was not being sued and could not be sued would be regarded as a mere witness.
Equally, as a general principle, the victim has no right to obtain information from the wrongdoer before he commences proceedings against the wrongdoer.
As an exception to these general principles, a Norwich Pharmacal order requires a person who is thought to be innocent of the wrongdoing, who is involved in or has facilitated the wrongdoing and who has information which relates to the wrongdoing, to give information about the wrongdoing. Because a Norwich Pharmacal is an exception to the general principles, Hong Kong courts regard it as an extraordinary remedy which is not to be granted lightly.
In a typical case, the victim cannot seek relief against the wrongdoer at the time of the application for the Norwich Pharmacal order, possibly because the victim has not yet identified the wrongdoer or because the victim has yet to gather sufficient evidence to found an action against the wrongdoer.
There will usually be a relationship between the wrongdoer and the person from whom information is sought in the Norwich Pharmacal order. This relationship may impart duties of confidentiality owed by the person to the wrongdoer. Consequently, without a court order, the disclosure of information by the person to the victim may result in a breach of these duties to the wrongdoer for which the person may be liable. In light of the foregoing, Hong Kong courts must carefully balance the competing interests of the victim and the person from whom information is sought.
Conditions for Grant
An applicant for a Norwich Pharmacal order must satisfy a Hong Kong court of a number of matters before the court will grant the order.
- Cogent and Compelling Evidence of Serious Wrongdoing - There must be cogent and compelling evidence to demonstrate serious wrongful activities have taken place. The degree of proof to establish the likelihood of such wrongful activities is commensurate with the seriousness of the allegations of wrongdoing.
- Substantial Benefits of Disclosure - It must be clearly demonstrated that the order will or will very likely reap substantial and worthwhile benefits for the applicant. These benefits may, for example, be in the form of identifying the wrongdoer, determining the merits of proceedings against a wrongdoer or tracing assets.
- Disclosure Not Unduly Wide - The disclosure sought must be specific and must be restricted to documents or classes of documents that are necessary to enable the applicant to move forward with its claim against the wrongdoer. There is no general right to discovery of information.
Procedure for Grant
An application for a Norwich Pharmacal order should normally be made on an inter partes basis, meaning that the person from information is being sought is notified of the application and has the opportunity to contest it.
Gagging Order
Where there are concerns that the person from whom information is sought may disclose the Norwich Pharmacal application to the wrongdoer, the application for a Norwich Pharmacal order may be accompanied or preceded by an application for a gagging order. The gagging order prohibits the person from whom disclosure is sought from informing the wrongdoer of the fact that an application is being made for a Norwich Pharmacal order.
An application for the gagging order can made on an ex parte basis, meaning that it is made without notice to the person from whom information is sought.
Full and Frank Disclosure
The applicant for a Norwich Pharmacal order must make full and frank disclosure to the court hearing the application. This means that the applicant must draw to the court’s attention any matter which may be material to the court’s decision as to whether or not to grant the order.