'Disclose At Your Peril' – English Court Of Appeal Addresses Appropriate Response To Threatened Norwich Pharmacal Applications

The Court of Appeal's recent decision in Jofa Ltd & Anor v Benherst Finance Ltd & Anor1 provides a timely reminder of issues that commonly arise, as well as important practical guidance, in the context of requests for disclosure from a third party and applications, or threatened applications, for "Norwich Pharmacal" orders, and the competing pressures of responding to a threatened order on the one hand, whilst honouring duties of confidentiality on the other. The key take away message for respondents to such requests seems to be: tread carefully. Resisting disclosure of information, particularly if it is potentially confidential, until a court order has been issued, will be a reasonable position to adopt. Indeed, where duties of confidentiality are involved, complying with a request for disclosure in the absence of an order may be hazardous.

Background Norwich Pharmacal Orders, familiar territory for many financial institutions, reflect the equitable jurisdiction of the Court to order a third party - not directly involved in a dispute - to provide to the applicant information or documents thought to be relevant to a wrong that has been done, to enable the applicant to pursue the alleged wrongdoer. The principle was first established in the seminal case of Norwich Pharmacal v Customs and Excise Commissioners 2 and is a valuable tool for prospective litigants seeking to establish the basis of putative claims.

Jofa v Benherst

The present case involved two companies, Benherst Finance Limited and Chestone Industry Limited (the "Investors"), seeking Norwich Pharmacal relief against small company, Jofa Limited ("Jofa"), owned by Mr Farah, as well as against a bank. The Investors had participated in a joint venture to purchase and redevelop a property in London SW7 (the "Project") and had engaged a company called JMT Property Limited ("JMT"), whose sole director and shareholder was Mr Elie Taktouk, to manage the Project. During the Project, between February 2015 and February 2016, JMT made periodic cash calls, often supported by invoices (certain of which were purportedly issued by Jofa), said to be required to pay contractors and suppliers. However, during the course of a review of the Project by a chartered surveyor in May 2016, it became apparent that far less work had been done to redevelop the property than Mr Taktouk had represented. Indeed, the value of the work done was estimated to be in the region of only £250,000, significantly less than the total value of...