Key Issue: Establishing the Necessity and 'Good Arguable Case' for Norwich Pharmacal Orders in The Kingdom Bank Corporation v Moorwand Ltd Case

Citation: [2023] EWHC 3069 (Comm)
Judgment on

Introduction

The case of The Kingdom Bank Corporation v Moorwand Ltd ([2023] EWHC 3069 (Comm)) offers significant insights into a range of legal principles, particularly concerning the equitable jurisdiction of Norwich Pharmacal orders (NPOs), jurisdictional matters, and the assessment of “good arguable case.” This article aims to analyze the said case, linking critical legal principles and outcomes to deliver a coherent understanding for UK legal professionals.

Key Facts

In this case, the claimant, an offshore banking company, alleges that approximately EUR 1.4 million transferred to accounts held by the defendant, an English electronic money institution (EMI), has gone missing. The claimant seeks an NPO for disclosure related to transactions and balances of these accounts. The defendant, authorized by the Financial Conduct Authority (FCA), raises objections on the grounds of jurisdiction, threshold conditions for NPO relief, and discretion.

Norwich Pharmacal Order (NPO)

The NPO is an equitable remedy aimed at aiding a wronged party to seek information necessary to take action against a putative wrongdoer. The principles established in “Norwich Pharmacal Co v Customs and Excise Comrs” ([1974] AC 133) outline that this remedy is non-statutory, exceptional, and to be used judiciously, specifically not as a means for a ‘fishing expedition’ to establish a claim.

Criteria crystallized from “Mitsui & Co Ltd v Nexen Petroleum UK Ltd” ([2005] EWHC 625 (Ch)) require:

  1. An arguable case of wrongdoing by an ultimate wrongdoer.
  2. Necessity of the order to enable action against the ultimate wrongdoer.
  3. The respondent being mixed up in the wrongdoing and likely able to provide the necessary information.

Additionally, jurisdictional arguments guided by “Ramilos Trading Ltd v Buyanovsky” ([2016] EWHC 3175 (Comm)) indicate NPOs cannot be applied to gather information for use in foreign civil proceedings, which must be addressed under the Evidence (Proceedings in Other Jurisdictions) Act 1975.

Jurisdiction and Discretion

The judgment details that alternative procedural mechanisms, especially pre-action disclosures under CPR 31.16, may limit the necessity and thus the applicability of an NPO. The case “Mitsui v Nexen” underscored the exceptional nature of Norwich Pharmacal relief and affirmed that alternatives must be considered before resorting to an NPO.

Good Arguable Case

The case highlights the necessity of establishing a “good arguable case” that a legally recognized wrong has occurred. The court relies on the principles from “Ashworth Hospital Authority v MGN Ltd” ([2002] 1 WLR 2033) which stipulate that the claimant must clearly identify the basis of the wrongdoing.

Electronic Money Institutions (EMIs) and Electronic Money

The case references the decision “Re ipagoo LLP” ([2022] EWCA Civ 302), which clarifies that electronic money holders do not retain a proprietary or equitable interest over funds paid to an EMI, as dictated by the Electronic Money Directive (EMD) and the EM Regulations. The existence of proprietary rights would be a pivotal factor in the context of tracing claims and establishing constructive or resulting trusts.

Outcomes

The court ruled against the claimant, finding that they failed to establish both the necessity for an NPO against SPS (the supposed original wrongdoer) and the existence of a good arguable case of a legal wrong against any subsequent wrongdoer, which in this context would have been Moorwand Ltd. Additionally, the court found that the claimant did not prove the information sought was necessary to pursue an action against a wrongdoer.

The judgment also underscored that the claimant failed to pursue clear recourse against SPS prior and post its liquidation, thus undermining the claimant’s position on the need for an NPO.

Conclusion

The case of The Kingdom Bank Corporation v Moorwand Ltd is indicative of the complex nature of Norwich Pharmacal orders and the imperative of establishing a clear necessity and a ‘good arguable case’ of wrongdoing before such relief can be granted. This case serves as a reminder of the need for precision in articulating a claim and exhaustively pursuing available remedies before seeking equitable relief. The judgment reinforces the principle that equitable remedies such as NPOs are not to be employed liberally or in lieu of other procedural routes, upholding their status as exceptional measures within the English legal system.