In an era where increasing numbers of businesses are caught up in financial investigations through no fault of their own, it is perhaps unsurprising that we are increasingly seeing applications for so called Norwich Pharmacal orders (NPOs) – a little-known way for victims of wrongdoing to access vital evidence.
NPOs take their name from the first case in which such an order was used. In 1974, Norwich Pharmacal Co brought proceedings against the former HM Customs and Excise (now HM Revenue & Customs), forcing them to disclose information that would otherwise have remained hidden.
An NPO requires an innocent party caught up in the wrongdoing of others to disclose information to identify the unknown wrongdoer and/or provide information that enables claims to be advanced.
NPOs are typically sought when legal proceedings for alleged wrongdoing cannot be brought because the identity of the wrongdoer is unknown.
In the judgement granting the first Norwich Pharmacal order Lord Reid summarised the principle of the Norwich Pharmacal jurisdiction 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”.
It could be that a third party, such as a bank, possesses information and has unwittingly facilitated the wrongdoing.
If served with an NPO, the bank must assist the applicant of the order, who is usually the victim of the alleged wrongdoing.
For example, these orders could be employed in fraud cases, where a bank is required to disclose information about an account used by a fraudster.
In such a case, the bank would be made to reveal the identity of the wrongdoers and the details and holders of accounts to which funds have been diverted, including any suspicious transactions. This information can then be used in court to prove the applicant’s innocence.
Roger Isaacs, Forensic Partner at Milsted Langdon, said: “Advances in digital tracing techniques mean that it is now possible to identify any bank in the world with a link to a given individual as long as you know the individual’s email address. This can be a vital first step in the identification of hidden bank accounts but obtaining information from those banks can be difficult. In England and Wales NPO’s can play an important part in unlocking information that would otherwise be protected by client confidentiality so that it can be analysed by forensic accountants.”