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Norwich Pharmacal Relief: Is it Available when it Appears to Conflict with a Statutory Duty?

Author: Nicola Sharp  8 November 2023
3 min read

The Privy Council recently overturned a decision by the Supreme Court in Mauritius, and allowed Norwich Pharmacal relief after it was refused in Mauritius. In Stanford Asset Holdings Ltd and another v AfrAsia Bank Ltd (Mauritius) [2023] UKPC 35 the Privy Council allowed the Appellants’ appeal and made the disclosure order they sought.

The decision looked at interesting questions around the applicability of the Norwich Pharmacal jurisdiction in circumstances where it appeared to conflict with local legislation.

This particular decision revolved around the potential conflict between section 64 of the Banking Act 2004 (applicable in Mauritius) and the Norwich Pharmacal jurisdiction to allow a disclosure order for information relating to the identities of certain of the bank’s customers.

Brief Summary of the Facts

The appellant was a company incorporated in the Seychelles. Two of its employees paid out $11 million from its bank account, situated at its bank in Mauritius. It transpired that these employees did not have the relevant authority to authorise the payment and the payment was fraudulent.

The stolen money was eventually distributed to other parties in Mauritius or abroad. The appellant sought an order from the Supreme Court for the bank to disclose to them the names and other particulars of the recipients of the stolen money.

The appellants’ case was that (i) the Supreme Court of Mauritius had the power to order the disclosure sought, pursuant to section 64 of the Banking Act 2004, and (ii) the court had the jurisdiction to make such an order on the basis of the decision in Norwich Pharmacal Co v Customers and Excise Commissioners [1974] AC 133

By way of brief summary of section 64 Banking Act 2004, the main thrust of it is that it imposes a duty of confidentiality on every person who has access to the books, accounts, records, financial statements or other documents of a financial institution.

Resistance to the Norwich Pharmacal Jurisdiction

The bank’s reasons for resisting the disclosure order were:

  • Such an order contradicted the statutory duty of non-disclosure on placed on people working within financial institutions
  • there were other protections available to the appellants.

The Privy Council disagreed with these arguments and granted the order.

Balancing the Statutory Duty with the Equitable Relief

The first question here is whether the Mauritian courts in fact have the power to grant equitable remedies in line with the same principles as the High Court in England and Wales. Citing Banymandbub v Kwan Chung Woo 1965 MR 102, the Privy Council commented that it is “well established” that they do.

The next question is how the equitable relief (under which Norwich Pharmacal orders sit) interact with the statutory duty of non-disclosure. The Privy Council agreed with the appellants that the court enjoys a free-standing jurisdiction to grant Norwich Pharmacal relief, irrespective of the Banking Act 2004.

The final question is whether any exceptions to the duty of non-disclosure are applicable.

Here, the court made a distinction between duties owed by the bank, and duties owed by the employees.

Section 64 does not impose an obligation of confidentiality on the bank itself. It is an obligation on the employees. This is demonstrated by the fact that an oath is required, and only a natural person can take an oath.

However, an obligation of confidentiality is owed by the bank at common law. The Privy Council found that there is “no difficulty “about giving effect to a common law exception of the kind recognised in Norwich Pharmacal.

A Norwich Pharmacal application constitutes “civil proceedings involving the financial institution and the customer or his account”, which is expressly carved out in section 64 of the Banking Act 2004 as an exclusion. The Privy Council held that this must extend to a situation where the disclosure in question has been ordered by the court.

To add further weight to the argument, the Privy Council took a step back and considered the objective of the statute. They found it would be “remarkable” if the Banking Act 2004 had the effect of preventing the court from exercising what is an important and salutary jurisdiction to assist victims of fraud. That was clearly not the purpose of section 64.

Weight Placed on the Availability of other Protections

The respondents’ other argument was that it was not necessary to grant the Norwich Pharmacal order, which is viewed as “exceptional and intrusive” in circumstances in which other routes to justice were available.

The court clarified that “The reason why the Norwich Pharmacal jurisdiction is referred to as ‘exceptional’ is that it involves an innocent third party being required to supply (typically confidential) information to an apparent victim of wrongdoing to whom they would otherwise owe no duty”.

It is true that the applicant had recourse to several judicial remedies to secure their interests, including (i) a statutory demand (ii) a Mereva order (freezing injunction) (iii) a provisional attachment order.

In the respondents; favour in this argument is the decision in Santander UK Plc v National Westminster Bank [2014] EWHC 2626 (Ch), where the judge made the order for disclosure of the minimum information sought (of the recipients of mistaken payments), because it was an order of last resort and the claimant had no other option.

But in the current case, the court exercised its discretion in deciding whether it was “just and convenient” to grant the relief to uphold its duty to assist the person that has been wronged. In this case, the Privy Council considered that it was an “appropriate and proportionate response” and the order was necessary to do justice.

 

Nicola Sharp C 09983

Nicola Sharp

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Nicola is known for her fraud, civil recovery, arbitration and business crime expertise, her experience of leading the largest financial disputes and multinational investigations and her skills in devising preventative measures and conducting internal investigations for corporates.

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