Norwich Pharmacal jurisdiction does not extend to disclosure by a ‘mere witness’

This is an amended version of an article which was first published on LexisPSL accessible here.

On 24 November 2021, the English Court of Appeal handed down its decision in EUI Ltd v UK Vodaphone Ltd [2021] EWCA Civ 1771. This was an appeal by EUI Ltd against a High Court decision rejecting its application for a Norwich Pharmacal order for the disclosure of mobile phone call records and location data by UK Vodaphone Ltd.

The Court of Appeal upheld the High Court decision and dismissed the appeal on the basis that the third condition of the test for granting a Norwich Pharmacal order laid down in Mitsui was not satisfied – i.e. Vodaphone was not mixed up in the wrongdoing, so as to have facilitated it.

Key take-aways

• When seeking a Norwich Pharmacal order, practitioners should consider whether all three conditions under Mitsui have been satisfied for the court to exercise the power to grant such order. In terms of the third condition, the question is whether the defendant is a mere witness (or metaphorical bystander) or whether its engagement with the wrong is such as to make it more than a mere witness.
• A mobile phone provider is in no different position to any other mere witnesses or bystanders (examples given including the neighbours, the milkman or a security company with CCTV cameras) simply because the phone account holder would have been able to pretend he or she was somewhere he or she was not, by using a mobile phone.
• In a fraud case, if the identity of a wrongdoer is already known, the claimant should instead seek pre-action orders or third-party disclosure directly against a third party.

Background

The claimant insurance company issued a policy of home insurance. In August 2019, the policy holder reported an escape of water at the insured property and claimed for the displacement costs, i.e. the cost of alternative accommodation. Where the policy holder was staying with relatives, there was a cap of GBP1,000 per month. The insurers paid that sum for the Autumn of 2019.

Towards the end of 2019, the policy holder told the insurers that he and his family were intending to rent a house at GBP1,850 per month. The insurers made payments covering the rents from December 2019 to May 2020. Further enquiries revealed that the “rented” house was in fact his parents’ home.

The insurers became suspicious that the rental agreement was a cover to circumvent the cap. During an enquiry by the insurers, the policy holder made inconsistent statements as to the whereabouts of his parents at the time. This led the insurers to believe that there may be grounds for a claim against the policy holder and his mother in deceit and conspiracy.

On 3 November 2020, the insurers issued a claim against UK Vodaphone Ltd under the Norwich Pharmacal jurisdiction and sought information relating to the mobile phone call records of the policy holder’s mother and the cell site data showing the location of her phone during the period in question.

Norwich Pharmacal order

In the seminal case of Norwich Pharmacal Co. & Others v Customs and Excise Commissioners [1974] AC 133, the House of Lords held that a court has discretion to grant a disclosure order which allows information to be obtained from a third party who has become “mixed up” in wrongdoing, whether by voluntary action on his part or because it was his duty to do what he did, and comes under duty to assist the victim by giving him full information and disclosing the identity of the wrongdoers.

In Mitsui & Co Ltd v Nexen Petroleum (UK) Ltd [2005] EWHC 625 (Ch), Lightman J summarised the following three conditions which must be satisfied for the court to exercise the power to order Norwich Pharmacal relief¹:

“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.”

Norwich Pharmacal Orders are typically sought against banks where they provide accounts used to facilitate the movement of fraudulent proceeds, and the identity of those who have assisted a fraudster and/or benefitted from the receipt of monies is unknown.

A “mere witness”

To decide whether it should grant the Norwich Pharmacal Order sought by the claimant, the Court of Appeal focused on the third condition of the test laid down in Mitsui. The Court pointed out that the crucial question in this appeal was whether the defendant was more than a “mere witness” or “bystander”².

Decision

The Court of Appeal dismissed the claimant’s main argument that service providers such as Vodaphone have “facilitated the ability of a person to pretend they were living at an address” and emphasised the limits to the Norwich Pharmacal jurisdiction: the power to order disclosure in such circumstances does not extend to a “mere witness” or “bystander” who would not be drawn into the relevant wrongdoing.

Practical consequence and conclusion

In this case, the Court of Appeal refused to accept that a mobile phone provider was in a different position to any other mere witness or bystander simply because of the fact that the phone account holder (the policyholder’s mother) would have been able to pretend she was somewhere she was not by using her mobile phone. The Court also found that it was not necessary for the applicant to obtain the information in order to be able to plead its case – unlike in the classic Norwich Pharmacal scenario, the identity of the alleged wrongdoers was already known, and the claimant had already shared a number of other sources of information with the court in the course of seeking the relief.

The Court has therefore retained the narrow ambit of the Norwich Pharmacal jurisdiction, refusing to move beyond established principles, and shutting down what could have been a flood of similar applications against mobile phone companies and other providers (such as internet providers who are in possession of location data or security companies who hold CCTV footages).

The Court did comment that it may be possible to apply for third party disclosure against the defendant under CPR 31.17 once the claim had been issued, if the relevant test could be satisfied, i.e. that disclosure is “necessary in order to dispose fairly of the claim”.

¹ Mitsui & Co Ld. v Nexen Petroleum UK Ltd [2005] EWHC 625 (Ch), Lightman J at paragraph 21.
² Baker LJ at paragraph 5.