CHAPTER ONE – COMMENCING PROCEEDINGS AGAINST ANONYMOUS FRAUDSTERS
Where a person has been the victim of a fraud, the most obvious target for any civil recovery action is the person who perpetrated that fraud in the first place.
However, one of the primary difficulties in any instance of cyber fraud is that the perpetrators may not be immediately, personally identifiable. Cyber fraudsters can remain largely anonymous, perpetrating the fraud and escaping with the proceeds before anyone is aware of the presence or identity of the fraudster. Taking the example above of a fraudster interfering with a legitimate transaction between a buyer and a seller, the buyer may unwittingly be corresponding with the fraudster (by email, for example) without being aware that the fraudster is not in fact the seller. When the buyer later discovers the fraud, the buyer may have great difficulty in discovering for itself the identity of the (now-escaped) fraudster.
This chapter considers how claims can be issued and pursued against anonymous fraudsters, explaining how those fraudsters may be identified or alternatively how recovery can be achieved even the fraudster remains stubbornly anonymous.
The options available
Broadly, there are two ways by which a prospective claimant can go about identifying and bringing proceedings against (not necessarily in that order) anonymous fraudsters:
The conventional way is for the claimant to follow a two-step process. First, the claimant will take steps to identify the anonymous fraudster. Assuming that this cannot be done by the prospective claimant’s own investigations, supported as necessary by professional assistance, the prospective claimant can seek assistance from the court. In particular, the claimant can seek disclosure orders against third parties for information which might identify the fraudster. Once the fraudster has been unveiled, the claimant can issue a claim against that named fraudster in the ordinary way.
The alternative approach is for the claimant to simply issue a claim against a class of persons unknown, defined to include the anonymous fraudster, and litigate accordingly. The claimant may proceed all the way to judgment against the persons unknown, but it is also open to the claimant to take steps to identify some or all of the persons unknown in the intervening period between issuing the claim and obtaining judgment.
Each of these approaches will be discussed below. Which is more appropriate in any given case will vary on the precise facts. If speed of action is of paramount importance, such as where the fraud has recently been perpetrated, the alternative approach is often better. This is because the claim can be issued immediately and protective relief (such as freezing injunctions) obtained very quickly.
However, the alternative process does involve committing to commencing a full claim and, as will be seen, often making an array of applications. The cost of this, coupled with the inevitable risk of dissipation in cyber fraud cases, may mean that this is not a commercially feasible option for some complainants. The game may not be worth the candle. Equally, where significant sums have been misappropriated, this represents a swift and effective way to take significant steps towards making up lost ground on the fraudsters.
By contrast, the conventional approach first looks at how easy (or not) it is to identify the fraudster and any misappropriated assets. It is more targeted and thus likely to be less costly. The results of the investigation will allow a complainant to make an informed decision about whether it is worth expending further costs in pursuing the fraudster or whether the complainant is better served by considering action against persons other than those responsible for perpetrating the fraud itself. This is particularly appropriate where time is less critical, such as where a significant period of time has elapsed between the fraud itself and its discovery (or, as regrettably can happen, the complainant consulting its legal advisers as to the available options).
A further variation is where the complainant has no real interest in identifying the fraudster. If, for example, the misappropriated sums were paid into a bank account and the bank servicing that account confirms that it has already been frozen, the claimant may have no interest in uncovering the identity of the account holder. The claimant may instead prefer to simply pursue judgment against persons unknown and a proprietary order that the sums paid into the frozen account are the claimant’s property and thus to be repaid.
The conventional approach to piercing anonymity
As stated above, the conventional way to bring proceedings against an anonymous fraudster is first to pierce the cloak of anonymity, before then issuing a claim against the fraudster thus-identified. The various claims which may be available against the fraudster are discussed later in this guide. This chapter focuses on the means by which the fraudster can be identified.
Disclosure pursuant to the Norwich Pharmacal jurisdiction
The equitable jurisdiction of the court to make disclosure orders against third parties who get mixed up in wrongdoing was established in Norwich Pharmacal Co v Customs and Excise Commissioners [1974] AC 133. In that case, HMRC were found to have a duty to disclose the names of patent infringers, whose goods had (innocently) passed through HMRC’s hands. Lord Reid (at 175) explained the principle as follows:
that if through no fault of his own a person gets mixed up in the tortious acts of others so as to facilitate their wrongdoing he may incur no personal liability but he comes under a duty to assist the person who has been wronged by giving him full information and disclosing the identity of the wrongdoers. I do not think that it matters whether he became so mixed up by voluntary action on his part or because it was his duty to do what he did. It may be that if this causes him expense the person seeking the information ought to reimburse him. But justice requires that he should co-operate in righting the wrong if he unwittingly facilitated its perpetration.
As summarised by Lightman J in Mitsui & Co Ltd v Nexen Petroleum UK Ltd [2005] 3 All ER 511 at [21]:
The three conditions to be satisfied for the court to exercise the power to order Norwich Pharmacal relief are:
i) a wrong must have been carried out, or arguably carried out, by an ultimate wrongdoer;
ii) there must be the need for an order to enable action to be brought against the ultimate wrongdoer; and
iii) the person against whom the order is sought must: (a) be mixed up in so as to have facilitated the wrongdoing; and (b) be able or likely to be able to provide the information necessary to enable the ultimate wrongdoer to be sued.
The first condition is relatively straightforward.
As to second condition, given that there must be a ‘need’ for the order before the jurisdiction is engaged, it follows that the jurisdiction should only extend to requiring the disclosure of information which is ‘necessary’ in order to enable action to be brought. Indeed, this is generally accepted in the analogous Bankers Trust jurisdiction (discussed below). This ‘need’/’necessity’ condition is often treated as requiring that the information sought be relevant to the intended claim. However, it arguably goes further than this and provides that the information sought shall not be required unless the intended claim could not be brought without it. Thus, highly relevant but not strictly necessary information may fall outside of the jurisdiction. This is a very strict reading of the principle, which is intended to be an exceptional remedy. However, there is a degree of flexibility in its operation and proportionality rather than strict necessity may be a better guiding rule. Suggestions that the principle is the remedy of last resort have been rejected: Aamer v Secretary of State for Foreign & Commonwealth Affairs [2009] EWHC 3316 (Admin) at [49]-[50] (Sullivan LJ).
As to the third condition, phrased negatively it prevents orders being obtained against ‘mere witnesses’ to the wrongdoing. The person from whom disclosure is sought must have done something to facilitate the wrongdoing. In the case of banks, the most common target of such orders in cyber fraud cases, the facilitation is by providing banking facilities and (ordinarily) receiving the proceeds of fraud and permitting those proceeds to be dissipated. A recent demonstration of the boundary between mere witness and innocent facilitator can be seen in EUI Ltd v UK Vodaphone Ltd [2021] EWCA Civ 1771.
A claim under the Norwich Pharmacal jurisdiction is a claim for equitable relief. The court therefore retains discretion as to whether or not to it. In Rugby Football Union v Consolidated Information Services Ltd [2012] 1 WLR 3333 at [17], Lord Kerr (non-exhaustively) summarised various factors which weigh in the discretion as follows (references omitted):
The essential purpose of the remedy is to do justice. This involves the exercise of discretion by a careful and fair weighing of all relevant factors. Various factors have been identified in the authorities as relevant. These include: (i) the strength of the possible cause of action contemplated by the applicant for the order…; (ii) the strong public interest in allowing an applicant to vindicate his legal rights…; (iii) whether the making of the order will deter similar wrongdoing in the future…; (iv) whether the information could be obtained from another source…; (v) whether the respondent to the application knew or ought to have known that he was facilitating arguable wrongdoing…; (vi) whether the order might reveal the names of innocent persons as well as wrongdoers, and if so whether such innocent persons will suffer any harm as a result…; (vii) the degree of confidentiality of the information sought…; (viii) the privacy rights under article 8 of the European Convention for the Protection of Human Rights and Fundamental Freedoms of the individuals whose identity is to be disclosed…; (ix) the rights and freedoms under the EU data protection regime of the individuals whose identity is to be disclosed…; (x) the public interest in maintaining the confidentiality of journalistic sources…
On its face, therefore, the Norwich Pharmacal jurisdiction is a broad one. It is often used in cases of cyber fraud to seek disclosure from banks where those banks have become mixed up in the fraud by receipt of its proceeds and are likely to have information about the subsequent whereabouts of those proceeds and the identity of the person controlling the account. However, the jurisdiction is not limited to disclosure of such information. It may also be used to seek further about the wrongdoing and its extent so as to identify the claimant’s causes of action. For example, in P v T Ltd [1997] I WLR 1309, the court made an order for disclosure of certain information which was required for the claimant to ascertain whether it had a cause of action against a third party, and if so what.
That said, there are important limitations on the jurisdiction:
First, the claim is subject to limitations where the defendant is outside of the jurisdiction. AB Bank v Abu Dhabi Commercial Bank [2016] EWHC 2082 (Comm) held that none of the jurisdictional gateways then provided for in CPR PD6B para 3.1 were available, so no permission to serve the claim out of the jurisdiction could be granted. As a result, where the intended defendant is outside of the jurisdiction, there are 3 avenues by which the claimant can proceed:
(1) The claim will need to satisfy new jurisdictional gateway (25), very recently introduced. This option is discussed in a later chapter on procedural guidance.
(2) The claim will need to be served on the foreign defendant by means which do not require the court to give permission for service out of the jurisdiction. This option is discussed in a later chapter on procedural guidance.
(3) The intended relief should be sought under the independent Bankers Trust jurisdiction, which is discussed in the following section. Recourse may also be had to CPR 25.1(1)(g), though as discussed in the section on ‘Further interim steps’ below, it is unlikely that this is an instance where one of the routes above are not already available.
Second, conversely, it is not permitted to claim Norwich Pharmacal relief to obtain evidence for the purpose of foreign proceedings. In Ramilos Trading v Buyanovsky [2016] EWHC 3175 (Comm), Flaux J ruled that the existence of the Evidence (Proceedings in Other Jurisdictions) Act 1975 excludes the availability of Norwich Pharmacal relief in such cases. Flaux J followed the approach set out by the Court of Appeal in R (Omar) v Secretary of State for Foreign Affairs [2013] EWCA Civ 118, regarding the Crime (International Co-operation) Act 2003.
The reasoning in Ramilos refers exclusively to Norwich Pharmacal relief. However, the claim in that case was advanced under both the Norwich Pharmacal and Bankers Trust jurisdictions (the latter discussed in the following section). Ramilos is generally understood to cover both jurisdictions and the rationale for the decision applies equally to both jurisdictions.
Other jurisdictions have declined to follow the Ramilos approach. In the BVI case of K&S v Z&Z BVIHCM(COM) 2020/0016, the court held that Norwich Pharmacal relief was available notwithstanding that the BVI Evidence (Proceedings in Foreign Jurisdictions) 1988 as materially the same as the UK’s 1975 Act. The Cayman Islands has adopted what may be an intermediate position between Ramilos and K&S. In Arcelormittal USA LLC v Essar Global Funds Ltd CICA (Civil) Appeal No.15 of 2019, the Cayman Islands Court of Appeal suggested that the statutory regime (there, the Evidence (Proceedings in Other Jurisdictions) (Cayman Islands) Order 1978) did not oust the Norwich Pharamcal jurisdiction where that latter jurisdiction was confined within its proper scope. There are good policy reasons why Norwich Pharmacal should remain available in these cases – e.g. to enable swift action to be taken without notice to those who are suspected of wrongdoing.
Working within the confines of Ramilos, Flaux J confirmed that where there is genuine uncertainty as to venue or viability of proceedings then there is no bar on seeking relief: Shlaimoun v Mining Technologies [2012] 1 WLR 1276. However, where the claimant is reasonably certain as to where the proceedings might take place then the Ramilos considerations are engaged.
As a possible exception, it might be argued that where the identity of the intended defendant (i.e. the fraudster) is unknown, it is not possible for a would-be claimant to have reached a settled view on where proceedings will be commenced. The claimant may have a firm provisional view, but if the information obtained as a result of the Norwich Pharmacal order points strongly towards another jurisdiction – even this jurisdiction – being the best venue, then the claimant can be expected to change their mind.
On this basis, the Ramilos restriction can be avoided where no proceedings have been commenced. In those circumstances, a disclosure order can be made in aid of proceedings which may take place abroad. However, the order in those circumstances should be tightly limited to that which is strictly necessary in order to identify the defendant – and so confirm whether they will be sued in this jurisdiction or elsewhere.
This argument is more difficult where proceedings have already been commenced abroad and disclosure orders are then sought in this jurisdiction to identify a new intended defendant on the basis set out above. The argument that there is an insufficiently settled intention to use the information obtained abroad is weaker because it is inherently probable that the new defendant will be joined to existing proceedings abroad, rather than be the subject of a standalone claim on the same subject matter in this jurisdiction. Indeed, the new defendant may in fact already be within a category of persons unknown already listed as a defendant in the foreign proceedings and thus, in that sense, the intended defendant may already be party to those foreign proceedings.
This draws into focus the issue with the Ramilos exception and the possible workaround identified here. There is a straightforward conflict between the principle identified by Flaux J (that the statutory mechanism impliedly excludes the residual common law regime) and the court’s policy of enabling victims of fraud swiftly to identify – and bring proceedings against – the perpetrators.
A second, more limited possible exception to the otherwise broad rule in Ramilos can be seen in the English decision of Arcelormittal USA LLC v Essar Steel Limited [2019] 2 All ER (Comm) 414, which was distinct from the Cayman Islands proceedings mentioned above. In the English proceedings, Jacobs J held that it would not be “appropriate” to make such an order where the “sole purpose was to facilitate enforcement proceedings abroad”. However, the court did have the power to grant relief in support of, and to make effective, an English freezing order. Thus, ancillary disclosure could be sought for this limited purpose.
Third, relief may be sought against respondents who are not considered to be wholly innocently mixed up in the wrongdoing, though the court will be careful in such cases. As a matter of principle, Norwich Pharmacal relief is not contingent on the respondent being innocent; that is not a barrier to relief. Thus, in Ashworth Hospital Authority v MGN Ltd [2002] 1 WLR 2033 at [30], Lord Woolf CJ explained that:
what is required is involvement or participation in the wrongdoing and that if there is the necessary involvement, it does not matter that the person from whom discovery is sought was innocent and in ignorance of the wrongdoing by the person whose identity it is hoped to establish.
The judge confirmed this at [58], stating that the “requirement” is “that the person from whom disclosure is sought must have been involved, whether innocently or otherwise, in the wrongdoing”.
However, care must be taken when seeking Norwich Pharmacal relief against persons who may be legally responsible for the wrongdoing. Although Norwich Pharmacal relief is not a ‘last resort’ route to obtain the required information, the court may consider that relief ought not to be granted against a particular respondent if that are other means by which that information could reasonably be sought. It may be that the respondent also has a privilege against self-incrimination which would operate as a partial defence to any order.
Benhurst Finance Ltd v Colliac [2018] EWHC 2188 (QB) is a recent example of Norwich Pharmacal relief granted against a party who was not said to be innocently involved in the wrongdoing. Norwich Pharmacal relief was sought against an individual who the applicant was seeking to join to separate Swiss arbitration proceedings, with the information sought by the relief being intended for use in that arbitration. The court allowed the claim for relief, ruling that there was no more suitable route to obtain the relief. It is reasonable to expect that the court will give greater scrutiny to the question of whether there is a real ‘need’ for Norwich Pharmacal relief where that relief is sought against the suspected wrongdoer, who may then be compelled to give evidence against themself.
Fourth, and linked to the previous point, when obtaining an order, the claimant will invariably be required to give undertakings to the court – including as to the use to which the disclosure will be put. It is, of course, important to ensure that the undertakings permit any use to which the claimant reasonably expects to put the information.
Where this may become contentious is where disclosure is sought from a party believed to be innocently mixed up, but who might be independently liable in the right circumstances. An example of this may be a bank which has received the proceeds of a fraud; a later chapter of this guide explores banks’ potential liability in these circumstances. The bank may insist on including an undertaking that the claimant will not use any information disclosed by the bank for the purpose of proceedings against the bank. What undertakings are required in any given case is a matter within the discretion of the judge hearing the claim.
Where a claimant wants to use documents for a purpose which is barred by their undertakings, the claimant must obtain a partial release from the court to vary the undertakings that have previously been given. This is a matter between the court and the claimant, so the defendant cannot consent to a variation of the undertaking (though this will be relevant to the court’s decision on whether to vary the undertakings). Claimants should be aware that ‘use’ of documents has been held to include both their deployment, but also the consideration of documents to decide whether those documents could be deployed: Tchenguiz v Grant Thornton [2017] EWHC 310 (Comm). Whether the court will permit a claimant to use documents beyond the terms of the undertakings is a discretionary matter, and the court will be principally concerned with whether there are “special circumstances” or a “cogent reason” why the use should be permitted: Tchenguiz v Serious Fraud Office [2014] EWCA Civ 1409. The approach of the court will be analogous to its approach to an application for permission to make collateral use of evidence pursuant to CPR 31.22.
Fifth, a potential applicant needs to give consideration as to whether or not to make the application ex parte. Generally, an applicant should give at least short notice to the intended respondent, even if that short notice means that the application will formally be made ex parte with the attendant duties of full and frank disclosure. The alternative would be to seek minimal disclosure at the ex parte hearing, arranging a return date to take place on full notice but relatively shortly after the initial hearing. This latter order was made in Asiya Asset Management (Cayman) Ltd v Dipper Trading Co Ltd [2019] HKCFI 1090, where the Hong Kong court refused to allow the full application to be made ex parte. The claimant was only granted disclosure which was limited to the balance of the target bank account, coupled with a non-disclosure order, pending a return date.
If an applicant does decide to make the application ex parte, it is necessary to demonstrate why that is required, with the court scrutinising any explanation given. In particular, the applicant will need to show either real urgency (in which case any delay in making the application should be explained) or that secrecy is justified on the basis that to make an inter partes application might mean that the purpose of the application will be defeated (which is likely to only be applicable where the third party against whom disclosure orders are sought is suspected, on substantial grounds, of being likely to notify the perpetrators of the underlying wrongdoing).
Disclosure pursuant to the Bankers Trust jurisdiction
In addition to the Norwich Pharmacal jurisdiction, the court has an equitable jurisdiction derived from Bankers Trust v Shapira [1980] 1 WLR 1274.
There is some uncertainty as to whether these two jurisdictions stem from the same or different sources. It would seem that they are separate though similar jurisdictions: Murphy v Murphy [1999] 1 WLR 282 at 290 (Neuberger J). In Bankers Trust, the later of the two decisions, Norwich Pharmacal was mentioned only by Lord Denning MR (at 1281), and then only in passing as an exemplar of “the court’s armoury to be able to order discovery”. By contrast, Lord Denning MR indicated (at 1282) that he considered the court to be affirming a new jurisdiction which had only been exercised in 3 unreported instances before. Notwithstanding the brevity of its mention, there are suggestions that Bankers Trust is founded on Norwich Pharmacal: MacKinnon v Donaldson, Lufkin and Jenrette Securities Corporation [1986] Ch 482 at 498 (Hoffmann J). The two jurisdictions have developed in parallel, applying different tests before relief can be granted, and crucially being targeted at different information. Norwich Pharmacal is concerned with obtaining evidence necessary to bring an action against suspected wrongdoers, whereas Bankers Trust is squarely concerned with identifying and tracing assets over which the claimant asserts a proprietary interest.
The apparent distinction between the jurisdictions is affirmed by the divergence between the two jurisdictions, as discussed below. In LMN v Bitfly [2022] EWHC 2954 (Comm) at [18], Butcher J identified the competing views but did not consider it necessary to decide whether Bankers Trust emanates from the Norwich Pharmacal principle or whether the two jurisdictions are separate lines of authority stemming from the court’s underlying equitable jurisdiction (as was suggested to be the case in AOOT Kalmneft v Denton Wilde Sapte [2002] 1 Lloyd’s Rep 417 at [11] (HHJ McGonigal)).
In Bankers Trust, fraudsters presented a forged cheque to Bankers Trust, who on the strength of that document paid money to the fraudsters’ account with Discount Bank. Bankers Trust subsequently brought an action against Discount Bank, claiming that Discount Bank should disclose various documents relating to the fraudsters and their account. Lord Denning MR, giving the lead judgment of the Court of Appeal, held (at 1282, references omitted) that:
So here the Discount Bank incur no personal liability: but they got mixed up, through no fault of their own, in the tortious or wrongful acts of these two men: and they come under a duty to assist the Bankers Trust Co. of New York by giving them and the court full information and disclosing the identity of the wrongdoers. In this case the particular point is “full information.”
This new jurisdiction must, of course, be carefully exercised. It is a strong thing to order a bank to disclose the state of its customer’s account and the documents and correspondence relating to it. It should only be done when there is a good ground for thinking the money in the bank is the plaintiff’s money – as for instance when the customer has got the money by fraud – or other wrongdoing – and paid it into his account at the bank. The plaintiff, who has been defrauded, has a right in equity to follow the money. He is entitled, in Lord Atkin’s words, to lift the latch of the banker’s door… . The customer, who has prima facie been guilty of fraud, cannot bolt the door against him.
Owing to his fraud, he is disentitled from relying on the confidential relationship between him and the bank… . If the plaintiff’s equity is to be of any avail, he must be given access to the bank’s books and documents – for that is the only way of tracing the money or of knowing what has happened to it… . So the court, in order to give effect to equity, will be prepared in a proper case to make an order on the bank for their discovery. The plaintiff must of course give an undertaking in damages to the bank and must pay all and any expenses to which the bank is put in making the discovery: and the documents, once seen, must be used solely for the purpose of following and tracing the money: and not for any other purpose. With these safeguards, I think the new jurisdiction – already exercised in the three unreported cases – should be affirmed by this court.
The principles governing the Bankers Trust principle were summarised by Warby J in Kyriakou v Christie Manson & Woods Ltd [2017] EWHC 487 (QB) at [12]-[19]:
First, there must be good grounds for concluding that the money or assets about which information is sought belonged to the claimant; secondly, there must be a real prospect that the information sought will lead to the location or preservation of such assets; and thirdly, the order should, so far as possible, be directed at uncovering the particular assets which are to be traced. … the fourth principle; namely that interests of the claimant in obtaining the order must be balanced against the possible detriment to the respondent in complying with the order, … Fifthly (and finally), it is established that the applicant must provide undertakings, first of all to pay the expenses of the Respondent in complying with the order; secondly, to compensate the respondent in damages, should loss be suffered as a result of the order; and thirdly, only to use the documents or information obtained for the purpose of tracing the assets or their proceeds.
What is notable in this statement, which is generally regarded as an authoritative summary of the relevant requirements, is that it does not require that the defendant be mixed up in the wrongdoing, a jurisdictional threshold to engage the Norwich Pharmacal principle. This was effectively recognised in LMN at [25] (Butcher J), though there are suggestions that the ‘mere witness’ rule does apply to Bankers Trust as well: e.g. Arab Monetary Fund v Hashim (No.5) [1992] All ER 911 at 914 (Hoffmann J). There is likewise no requirement that there be a ‘need’ for the order sought to enable action to be brought (though this factor would arguably form part of the analysis under Warby J’s fourth principle). This tends to suggest that the Bankers Trust principle, at least as now understood, is distinct from Norwich Pharmacal.
A further observation on Warby J’s second principle is that it may be met even where the party seeking disclosure knows that the assets have moved on. There does not need to be a real prospect of assets held with the disclosure target, only that the disclosure sought will enable the prospective location of such assets. Thus, in the context of a transfer of crypto-assets, it may be that the assets can be seen no longer to be associated with a particular exchange. However, disclosure against the exchange may still be sought where there is a real prospect of enabling the preservation of the assets (e.g. by identifying the account holder, who may have control over the assets in their subsequent location).
A particular strength of orders under the Bankers Trust jurisdiction, as compared with Norwich Pharmacal, is that they may be granted against parties outside of the jurisdiction notwithstanding the authority of AB Bank in respect of Norwich Pharmacal orders. In CMOC v Persons Unknown [2018] EWHC 2230 (Comm) (cf. [2017] EWHC 3599 (Comm) at [10]), such orders were made against international banks in foreign jurisdictions (i.e. not their branches within the jurisdiction) to require those banks to provide information about accounts which had received the misappropriated proceeds of a cyber fraud. Hoffmann J explained the jurisdictional basis for this in MacKinnon v Donaldson, Lufkin and Jenrette Securities Corporation [1986] Ch 482 at 498F-499A, confirming that the Bankers Trust jurisdiction has extra-territorial effect in the following terms:
In Bankers Trust Co. v. Shapira the order was made against an English bank in respect of an account maintained in London. The question of international jurisdiction was not considered. However, in one of the cases cited by the Court of Appeal, London and County Securities Ltd. (In Liquidation) v. Caplan (unreported), 26 May 1978, Templeman J. had ordered an English bank to procure from its foreign banking subsidiaries documents relating to accounts connected with the defendant in order to trace assets which he was said to have embezzled. Templeman J. described the relief which he was granting as “onerous and … to be granted only in the most exceptional circumstances.” The exceptional circumstances were that the case was one of crime and fraud where “unless effective relief is granted, justice may well become impossible because the evidence and the fruits of crime and fraud may disappear.” The foreign subsidiary banks were indemnified against liability in damages under the local law by the cross-undertaking in damages and the infringement of sovereignty was excused by a commercial equivalent of hot pursuit.
In my judgment, the authorities on Bankers Trust Co. v. Shapira [1980] 1 W.L.R. 1274 discovery against a bank are consistent with what seems to me to be correct in principle, namely, that its international jurisdictional limits are the same as those of a subpoena duces tecum or an order under the Bankers’ Books Evidence Act 1879.
The approach taken in CMOC, avoiding the difficulties encountered with regards Norwich Pharmacal orders in AB Bank, in respect of Norwich Pharmacal orders has been doubted. In AA v Persons Unknown [2020] 4 WLR 35 at [44]-[49], Bryan J queried whether the orders were correctly granted in CMOC in the face of the authority of AB Bank, though did not need to determine the matter on that occasion: at [69]. However, the approach in CMOC was followed (albeit not expressly) in Ion Science Limited v Persons Unknown (unreported, 21 December 2020) at [21] (Butcher J), Fetch.ai Limited v Persons Unknown [2021] EWHC 2254 (Comm) at [29]-[30] (HHJ Pelling QC) and D’Aloia v Person Unknown [2022] EWHC 1723 (Ch) at [35]-[36] (Trower J).
At present, the position in Mackinnon, as applied in CMOC and subsequently, may be relied on. However, this distinction which has been identified has now been overtaken by an amendment to the CPR, by which a new gateway (25) has been added to CPR PD6B para 3.1. This introduces a new basis on which both Norwich Pharmacal and (if required) Bankers Trust claims can be served out of the jurisdiction in limited circumstances. It is discussed further in the procedural guidance section of this guide. However, where the gateway is not engaged, the principled approach identified in CMOC may still be relied on in order to serve out a claim for Bankers Trust relief.
Notwithstanding the new gateway (25), the distinction (if there is one) between Norwich Pharmacal and Bankers Trust remains of relevance for two reasons.
First, it is possible that disclosure orders may be sought against foreign-domiciled defendants which do not pass through the gateway but would be capable of being brought under Bankers Trust.
In LMN at [36]-[37], Butcher J expressly considered whether Bankers Trust orders should only be made against foreign defendants in exceptional circumstances. The judge did not decide that there was no case where exceptionality would be required, but indicated that LMN was not such a case because: (a) there was a possibility that the documents were within the jurisdiction; (b) the documents were electronic and thus their physical location “of little significance” (though this point is directly contradicted by Gorbachev v Guriev [2022] EWCA Civ 1270 at [83], albeit there to establish jurisdiction partly on the basis that the documents sought were in the jurisdiction); and (c) this was a case of crime and fraud (albeit not of ‘hot pursuit’, given that the fraud was at that time 2 years past).
Second, the closeness of the two principles affects how persuasive decisions in respect of one principle may be in respect of the other. If Bankers Trust is a sub-species of Norwich Pharmacal, decisions on the type of disclosure orders which are permitted under the former should likewise provide an illustration of what is permitted under the latter. However, the view expressed above is that the jurisdictions have developed in parallel, such that it is not possible to directly cross-apply illustrations in this way.
Terms of disclosure orders
Naturally, it is advisable that a party seeking disclosure orders is as specific as reasonably practicable as to the information and documents sought by the order. The claimant should ensure that the terms of the disclosure order sought are clear and specific, targeted at information or documents to which the claimant considers it is entitled and which is reasonably necessary for the order’s purpose (such as discovering…