Disclosure: a guide to seeking Norwich Pharmacal orders

NPOs are often used where a victim of wrongdoing does not know the identity of the wrongdoer but can point to a third party who has this information. They can also be used to trace assets and obtain other information needed by the victim to put together its case against the wrongdoer. 

An overview

NPOs are frequently used in fraud cases, where the third party from whom information is sought is often a bank whose accounts or services have been used to receive or dissipate the proceeds of the fraud, and the information sought is about the identity of the fraudster and/or to where funds have been diverted. An order requiring a bank to give disclosure of a third party's account information to assist a victim in tracing assets is also referred to as a 'Bankers Trust' order. The test for obtaining a 'Bankers Trust' order is slightly different from that for an NPO, but in practice applications are often made on both bases. This note focuses on the general principles applicable to NPOs.

An NPO may also be made against the Land Registry, to check the property ownership register as part of investigations into a wrongdoer's assets or whether stolen funds have ultimately been used in the purchase of properties.

NPOs can also be used in other types of case, for example:

• to trace the proceeds of intellectual property infringements such as counterfeiting;
• to obtain IP address information from an internet service provider or website operator, helping to identify an individual who has anonymously posted defamatory content or engaged in illegal file-sharing;
• to require a party who has received the applicant's confidential information to reveal their sources; or
• to obtain information on sub-letting to investigate potential tenancy fraud.

One of the benefits of NPOs is their flexibility. Used effectively, they offer real potential to unlock crucial information that a victim needs to pursue a claim, and which they would struggle to obtain through other investigative methods. Organisations such as banks, internet service providers and mobile phone operators have a wealth of information about their users and NPOs provide a means of accessing that otherwise confidential information. However, as NPOs are an invasive order, their legal requirements need to be navigated with care.

Criteria for obtaining an NPO

To obtain an NPO a victim must satisfy a number of criteria.

Show that there is a good arguable case that there has been wrongdoing

It must be more than just arguable that there has been wrongdoing, although there is no need to show that the victim would have more than a 50% chance of winning at a trial against the wrongdoer. The wrongdoing can take a wide range of forms: for example it might involve a fraud, breach of intellectual property rights, or dissipating assets to evade a judgment.

Show that the victim needs the order to take action against the wrongdoer

It must be a just, proportionate response for the respondent to provide the information, rather than requiring the applicant to obtain the information though other means, such as an application for pre-action disclosure from the wrongdoer under the Civil Procedure Rules or via an internal investigation. That said, an NPO is not a 'last resort' available only when all other options have been exhausted: courts take a pragmatic approach.

Show that the respondent has been 'mixed up' or involved in the wrongdoing

This involvement may be, and often is, entirely innocent. However, an NPO cannot be obtained against someone who is a 'mere witness' to the wrongdoing, or just happens to have some relevant documents. As noted above, frequent targets of NPOs include banks, internet service providers and website operators.

Show that the respondent is likely to have relevant documents or information

Show that granting the order is necessary and proportionate

The court has a discretion and will weigh up various factors, including:

• the strength of the victim's potential claim;
• the public interest in allowing the victim to vindicate his legal rights;
• whether making the order will deter future wrongdoing;
• whether the information could be obtained from another source;
• whether the respondent knew or should have known that he was facilitating wrongdoing;
• whether complying with the order might reveal the names of innocent people;
• the degree of confidentiality of the information sought;
• the privacy and data protection rights of any individuals whose identity is to be disclosed;
• the public interest, for example in maintaining the confidentiality of journalistic sources; and
• how onerous complying with the order will be.

However, this does not mean that competing rights such as individuals' privacy rights will necessarily prevent an NPO from being made. NPOs are a flexible and discretionary remedy that will be granted if necessary and proportionate in all the circumstances.

Procedure for applying

An NPO may be obtained either in the course of existing proceedings or, often, as a precursor to further action. Where there are existing proceedings, the respondent should be joined as a party for the purposes of making the application. Where the order is sought before proceedings have started, which court the application is made in – usually a branch of the High Court – will depend on considerations including which court any subsequent proceedings would be brought in. 

It is necessary for the applicant to prepare an application, a witness statement setting out the background and how the criteria for an NPO are satisfied, and a draft of the order the court is asked to make.

Does notice need to be given?

In many cases, the respondent to the application will be given notice of the application. Where the respondent is an organisation like a bank or internet service provider which has been innocently 'mixed up' in the wrongdoing, it is usual to make the application 'on notice' in this way. 

Indeed, we often write to such respondents asking them to provide the information voluntarily. However, while respondents of this type may not actively oppose the making of an NPO, they often require the application to go before the court to make an order due to concerns about breaching obligations of confidentiality or privacy to third parties.

In some circumstances the application may be made on a 'without notice' basis, so that the respondent is unaware of it until after the order has been made. This may be the case if, for example, there is a danger that they will inform the wrongdoer, although in those circumstances another option is to first seek a 'gagging order' preventing them from doing so – see below. In some cases, such as fraud cases where there is a concern about stolen assets being dissipated, there may be such urgency that there is no time to give the respondent formal notice of the application, although they should still generally be told about it, known as giving 'short' or 'informal' notice.

Even if notice is given to the respondent, consideration should be given to whether there is a need to prevent the wrongdoer finding out about the proceedings and any order made. There are a number of ways of achieving this, including applications:

• for anonymity, so that parties are referred to in court records only by initials, e.g. X and Y;
• that hearings be held in private;
• that public access to the court file be restricted; and/or
• for gagging orders preventing the respondent, for a certain period of time, from telling anyone other than their lawyers about the proceedings or the fact that an order has been made.

The hearing

Once the application for an NPO has been made and the appropriate court fee paid, a hearing will usually take place – remotely if necessary – at which the judge will decide whether or not to make the order sought. The timescales for such a hearing taking place will depend on the circumstances. Where the application can be made by issuing an application notice, the court rules generally require three clear days between an application being issued and the hearing taking place. So, for example, if the application is issued on a Monday, the earliest date of the hearing will be the same Friday. The timescales may be longer if the applicant is required to issue a claim form.

In either event, however, where there is urgency the courts are generally accommodating in arranging for applications for NPOs to be heard quickly, depending on capacity. 

Depending on the complexity of the application, for example, the number of respondents, whether any of them object to the making of the order, and the amount of information sought, the hearing itself is generally short – often as little as half an hour but in any event rarely longer than half a day. An advocate will make representations to the court, including by a written 'skeleton argument' that is generally served before the hearing.

Where there is no urgency, for example where there is no concern about the dissipation of assets, it may even be possible to ask the court to deal with a simple NPO application on paper, saving the cost of a hearing.

Obligations on a party applying for an NPO

A party seeking an NPO must give 'full and frank disclosure'. This means that they must clearly put before the court not only the arguments and evidence which support their application, but also anything which might go against the making of an order. This is an onerous duty and complying is crucial as failure to do so may lead to any NPO later being set aside.

The applicant is generally also required to give a 'cross-undertaking in damages'. This means that if it is later determined that the NPO should not have been made, the applicant will compensate the respondent and any innocent third parties who suffer loss, such as an individual whose confidential information becomes public. The applicant will generally have to provide evidence that it has the means to comply with this undertaking. In many cases, this is not an onerous obligation: for example, the respondent will be complying with a court order in handing over information directed by the NPO, so is unlikely to be exposed to liability to third parties as a result. However, the risks need to be considered on a case by case basis.

A party applying for an NPO is usually also required to give the respondent an indemnity in respect of the costs of the application and of complying with the order. In many cases, costs will be relatively low as the information required is easy to provide. Many banks, for example, have in-house teams accustomed to dealing with NPOs. The applicant will also generally bear its own costs even if successful in the application, in contrast to the usual position in civil litigation that the 'loser' pays the 'winner's' costs. In theory at least, these costs can later be recovered against the wrongdoer in any subsequent proceedings. 

After an order is made

If an NPO is made, it must then be served on the respondent. The court has shown itself to be flexible as to the method used for serving the order, for example permitting electronic methods of service in appropriate cases. Where the NPO has been made 'without notice', a full note of what was said at the hearing must also be served. 

The respondent must then provide the information required by the order within the timescales directed by the court – usually within 28 days or less.

Using the information

A party who obtains information using an NPO may generally only use that information in connection with the proceedings in question. It is a very serious matter to breach this undertaking to the court.

However, if the information is subsequently needed for other purposes, an application to the court may be made for permission. For instance, it may be possible to obtain permission to use information obtained via the NPO process for related criminal proceedings, including a private prosecution.