Towergate Underwriting Group Ltd v Albaco Insurance Brokers Ltd

By notice in Form N244 under CPR Part 23 dated 4 September 2015, but sent to and issued by the Court on 7 September 2015, Towergate Underwriting Group Ltd (“the Applicant”) applied to the Court for (i) an order under CPR 31.16 (pre-action disclosure), and also for (ii) a Norwich Pharmacal order against Albaco Insurance Brokers Ltd (“the Respondent”). There were no existing proceedings within which the application was made. In the notice, the Applicant sought a hearing for both parts of the application estimated at 4 hours’ duration. The application was supported by a witness statement from Andrew Ronald Bedford, dated 4 September 2015, with one exhibit. I was asked to and, after consideration of the papers, did in fact give permission for the application under CPR r 31.16 to be listed for four hours. In an email from the Court dated 16 September 2015, the Applicant was informed that I gave that permission so long as it was confined to the rule 31.16 application. However, the Applicant was also told that if it wished to apply in addition for a Norwich Pharmacal order against the Respondent, I had decided that a claim form (and not just a Part 23 application notice) would need to be issued for that purpose.

By a letter addressed to me dated 28 September 2015, DLA Piper UK LLP, the solicitors for the Applicant have queried my decision, expressed in the email of 16 September, arguing (in summary) that in all the circumstances the application for a Norwich Pharmacal order could be made by Part 23 application notice, and asking me to revisit my decision that the Applicant should issue a claim form for that relief. I have accordingly revisited the question, once more on the papers, without a hearing. Having done so, I have decided that the most appropriate way to deal with this is to set out my reasoning formally in this written decision. This will facilitate any appeal which may be sought to be made from my decision.

In my original decision communicated to the Applicant in the email of 16 September, I referred to the decision of Mr Justice Birss in Santander Bank plc v National Westminster Bank [2014] EWHC 2626 (Ch). There the learned judge said:

“51.

First, these applications have been brought under Part 23 by using an application notice (form N244). This may well have contributed to the difficulties the court administration has encountered in trying to find the other outstanding Santander applications. In Norwich Pharmacal itself the claim for relief was commenced by originating summons. In Golden Eye the claim was commenced under the Part 8 procedure. When a Norwich Pharmacal order is sought in a complex case some form of originating process ought normally to be used. The White Book paragraph 31.18.11 notes that the application may be brought under CPR Part 7 or Part 8. On the other hand, as Santander rightly pointed out, paragraph 4.2 of the Chancery Guide provides that although such applications may be made by Part 7 and Part 8 claims, if the application is or is thought likely to be uncontested the court may entertain an application under Part 23 supported by evidence.

52.

In these cases the beneficiary bank does not consent but does not oppose the applications and so the application is unlikely to be contested. That is why Santander has used the Part 23 procedure up to now. In doing so it acted properly however an unforeseen consequence of that approach has been that the applications are not readily identifiable once they have been made. With the benefit of hindsight, in future an applicant embarking on an exercise of this kind would be well advised to bring its first application(s) as claims under Part 7 or Part 8 as appropriate even if they are likely to be uncontested so that issues relating to them can be identified early and they can be managed appropriately.”

The Applicant says that this decision can be distinguished from the present case, for (in substance) three reasons. First, that case concerned some 85 individual but related applications, with many more to follow. Thus the Court struggled to keep track of the applications. Originating process would have assisted in doing so. But the present is a single application for a Norwich Pharmacal order. Hence (it is said) there is no need for originating proceedings to allow the application to be identified and managed properly. Second, in the present case the Applicant seeks the information in question in order to explore whether the matter might be resolved without the need to issue “formal proceedings” (which I take to mean to substantive proceedings against the ultimate defendant(s) who may have caused the wrong suspected to have been committed). This is said to “commit both parties to incurring the time and costs of litigating this matter”. Accordingly, it is submitted that issuing such proceedings at this stage would be “premature and disproportionate”. Thirdly, the application is said to be unlikely to be contested factually. Hence (it is further said) an application under Part 23 is appropriate.

I take these three points in turn. First, I accept that the Santander case involved many different applications, which in itself rendered the management of those applications difficult. But I do not accept that this distinction means that the law is different when there is only one application. I deal with this aspect further below.

Second, the whole point of an application for a Norwich Pharmacal order is to obtain information to enable a claim to be made which otherwise could not be made. It is not the purpose of such proceedings to dispose early of a claim which would fail. That is instead the point, or one of the points, of the application under CPR rule 31.16, which the Applicant is already making. Indeed, an order cannot be made under that rule unless the Court is satisfied, amongst other things, that the advance disclosure would be desirable in order to dispose fairly of the anticipated proceedings, or to assist the dispute to be resolved without proceedings, or to save costs (see CPR rule 31.16(3)(d)). In any event it is not clear to me how on the evidence put forward in the present case a Norwich Pharmacal order would add anything to an order under CPR rule 31.16. Indeed, there must be a question as to whether a Norwich Pharmacal order can or should be made at all in circumstances where the applicant avers (as in this case the Applicant does) that, if substantive proceedings were started, the Respondent would be a party and would be obliged to give disclosure in the ordinary way of the very documents sought in the application.

Thirdly, the fact that the application may not be contested does not even begin to address the problems inherent in making this application under CPR Part 23. If that is not the right procedure under the rules, the fact that in the particular circumstances of the case it may not be contested is, in my view, irrelevant. The rules are as they are because the legislator has decided that that is the right way procedurally to deal with the questions which arise. This matters particularly nowadays, because of international obligations undertaken by the UK, such as those under the ECHR. In any event, the present case is different from the decision of Mr Justice Birss, precisely because it is not yet known whether, once the proceedings are served, the respondent will consent to the Norwich Pharmacal order or not. Indeed, to judge from the allegations made against the Respondent, and the correspondence exhibited in the evidence, I consider that it is very doubtful that it will so consent.

I start from the most basic proposition. Subject to any statutory exceptions that there may be (eg CPR rule 19.8A), and to cases of intended actions against a person (see paragraph 24 below), if the Court is to make an effective order against someone, proceedings must first be started against that person, or that person must be joined into existing proceedings.

When the Norwich Pharmacal case was decided, the English procedural system was that governed by the RSC in the High Court and the CCR in the county courts. The relevant rule in the High Court was that in RSC Order 5 rule 1:

“Subject to the provisions of any Act and of these rules, civil proceedings in the High Court may be begun by writ, originating summons, originating motion, or petition”.

All of these methods were forms of originating process, that is, means of starting civil proceedings. Each had their particular rules, to be found somewhere in the RSC.

By way of example, where a claim was made for pre-action discovery (as it was then called) under the Supreme Court Act (now the Senior Courts Act) 1981, s 33(2), RSC Order 24 rule 7A (1) required that this be made by originating summons. There was no existing action in which the application could be made, so a new one was started. (It was different, for instance, if there was an application for third-party discovery in an existing action, when it could be made by summons in that action: RSC Order 24 rule 7A(2).) Similarly, and as Mr Justice Birss himself noted, the Norwich Pharmacal case itself was one begun by originating summons. That form of originating process was no doubt chosen because there was expected to be no serious dispute of fact: see the Supreme Court Practice 1999, 24/2/2.

In 1999 the whole civil litigation system was both changed and simplified. The RSC (and the CCR in the county courts) were replaced by the CPR. The CPR form a new procedural code and their interpretation is not to be governed by reference to the RSC, even if reference to the RSC may still prove instructive. But the idea of an originating process, expressed in RSC Order 5 rule 1, is also found in the CPR. CPR Part 7 deals with the commencement of civil proceedings now. CPR rule 7.2(1) provides that

“Proceedings are started when the court issues a claim form at the request of the claimant.”

So instead of writs, originating summonses, originating motions, and petitions, to start proceedings we now just have ‘claim forms’. And there are only two versions, that under Part 7 and that under Part 8. There are many rules and practice directions distinguishing between them, but for present purposes I can put it shortly by saying that generally Part 7 applies where there is or may be a substantial dispute of fact, and Part 8 otherwise. Accordingly, you would expect that a Norwich Pharmacal order would be sought by a Part 8 claim form, just as it was sought by originating summons under the RSC. And it is clear that, at least until recently, that is how it was done: see eg Golden Eye (International) Ltd v Telefónica UK Ltd [2012] EWCA Civ 1740.

Each originating process is given a unique claim number by the issuing court, making it easy to locate in a filing system, and enabling the proper filing within that claim of all the documents associated with it. The comments of Mr Justice Birss cited above were directed to the difficulties created when an applicant issued many similar such applications as ordinary Part 23 applications. But such difficulties could and did also arise, albeit on a smaller scale, with a single application. As it happens, with the recent introduction of a computerised case management system in the Chancery Division, Chancery Chambers now allocates unique numbers in exactly the same format as claim form numbers to applications in intended actions. This enables them to be entered on the computer system, and thus located more easily. This practice extends to Norwich Pharmacal applications under Part 23 as well. So the particular problems which Mr Justice Birss referred to are now less likely to recur in future.

However, there are rather more to the situation than just this. Claim forms under the CPR, like originating process under the former RSC, form part of an integrated civil justice system. The CPR, as the RSC did before them, provide therefore for a multiplicity of situations which may arise when legal proceedings are commenced against another person. For example, they provide for the case where the defendant is out of the jurisdiction, and questions arise whether the process can be served out, and whether (and how) the defendant can challenge the jurisdiction. They also provide for the circumstances in which parties and non-parties can obtain copies of documents on the court file. More, they set out a detailed timetable for procedural steps, first for responses to the original claim to be filed and served, and then for directions to be given and other steps to be taken. These include the disclosure of relevant documents, and the provision of other information. They deal with such things as the joinder of other parties, appointment and change of solicitors, and also the possibility of non-compliance with the rules and with directions and other orders that may be made, leading to (for example) judgments in default. And they deal with how proceedings can be brought to an end, eg by discontinuance.

Applications under CPR Part 23 do not provide for any of these things, precisely because it is anticipated that all such applications will take place within existing claims to which all these rules in the CPR apply. That is, after all, the whole point of an integrated procedural code. If, however, free-standing applications are allowed to be made without originating process, the courts are faced with the problem of what to do about such situations and problems. In practice, they can only refer back to the rules for originating process, which ex hypothesi these are not. This only begs the question why they are not.

The fee for issuing a Part 23 application is much less than the fee for issuing a claim form. So the cynic in me cannot help wondering whether a large (if unspoken) part of the enthusiasm for the Part 23 procedure in Norwich Pharmacal applications is not the much reduced court fee. But the political decision has been taken elsewhere that court users should pay a greater share of the cost of providing the court system, and that policy is implemented by higher fees on the issue of claim forms. It is not for me sitting here to subvert that policy by permitting litigants to bypass the need for originating process when they in fact start fresh proceedings.

Further, a particular consequence of proceeding by Part 23 application, as compared with Part 8 claim form, is that, according to CPR rule 2.3(1), the application notice appears not to be a ‘statement of case’ for the purposes of the rules relating to the supply of court documents to parties and non-parties (see CPR Part 5). Indeed, I wonder whether even the Respondent to the present application can be regarded as a party to proceedings which presumably the Applicant considers have not yet started.

It is right also to mention briefly the relative burdens of the parties in a Norwich Pharmacal application made under a Part 23 application as compared to a Part 8 claim form. A Part 23 applicant must fill in the application notice, support it by evidence (usually in the form of a detailed witness statement with exhibits) and issue it at court. Then it must serve it on the respondent. An applicant by claim form must do exactly the same, except that it must use a claim form, and in serving it must enclose the prescribed response pack. Apart from paying a higher fee, then, the claimant’s burden is scarcely any greater than that of the Part 23 applicant.

A respondent to a Part 23 application has to decide what to do, but without the benefit of the response pack. It also has to decide this potentially within the much shorter period applicable to Part 23 applications compared to claim forms. CPR rule 23.7 requires a minimum of only three days’ notice to the respondent to consider its position, and to decide how (if at all) to respond. This may be contrasted with a Part 8 claim form, which gives the defendant 14 days (CPR rule 8.3).

In the recent spate of Norwich Pharmacal cases brought against banks in this Division, the almost invariable response of the respondent bank has been to write a letter stating that it neither consents to nor opposes the application, and wishes without disrespect to the court not to incur any further expense, for example in being represented at the hearing or even putting in a witness statement. A defendant to a Part 8 claim form will have been supplied with a response pack containing an acknowledgement of service form. As stated, this allows the defendant 14 days to consider its position. If it does not oppose the application, the defendant may tick the box in section A (“I do not intend to contest the Claim”) , give its name under section F, sign and date under section G, give an address for any notices to be sent to, and post the form back to the court. I assume that this is actually less trouble than writing a letter from scratch, but it is certainly no more difficult.

I should specifically mention the question of the application for pre-action disclosure under the Senior Courts Act 1981, s 33(2), now regulated by CPR rule 33.16. I am not altogether sure that the change from RSC to CPR has altered the need for a new claim to be started in the case of such an application. But in this respect the new rules, unlike the old, are at the least unclear. It may be – and for present purposes I will therefore assume, without deciding – that applications under CPR rule 31.16 form an implied statutory exception to the need for an originating process to result in an order against a third party. So be it. In that case the CPR themselves would be the authority for such applications not being made in an originating process.

A further provision that may be thought relevant is contained in CPR rule 7.2, to which I have already referred. After the operative provisions in rules 7.2(1) and 7.1(2), the following note appears, but in brackets:

“A person who seeks a remedy from the court before proceedings are started or in relation to proceedings which are taking place, or which will take place, in another jurisdiction must make an application under Part 23.”

Since it is a note in brackets, it must be doubted how far this is a substantive procedural rule, as opposed to merely being a pointer to the substantive provisions of Part 23. As I say below, the remedy sought is one which will or would be sought in the proceedings once started, and the applicant for a Norwich Pharmacal order who thereafter sues the wrongdoer whose identity the order has disclosed does not then go on in that claim to ask for the same relief again.

Turning then to Part 23, paragraph 5 of Practice Direction A to that Part provides that

“All applications made before a claim is commenced should be made under Part 23 of the Civil Procedure Rules. Attention is drawn in particular to rule 23.2(4) and (4A).”

Rules 23.2(4) and (4A) in fact deal with venue rather than mode of proceeding. Thus rule 23.2(4) provides that

“Subject to paragraph (4A), if an application is made before a claim has been started, it must be made to the court where it is likely that the claim to which the application relates will be started unless there is good reason to make the application to a different court.”

Paragraph (4A) deals with venue in county court applications, and does not assist the point under discussion.

To my mind, these provisions do not provide a general exception to the rules in rule 7.2(1), but are instead concerned with the procedure for applications made in “intended actions”. For example, a proposed claimant seeks a freezing injunction or search order against the intended defendant before proceedings have been commenced. But these are very different cases from Norwich Pharmacal applications. For one thing, the anticipated claim is against the respondent to the application for injunction or other order, whereas the Norwich Pharmacal order is to obtain information to enable an action to be launched, if thought fit, against a third party whose identity is not yet known. For another, the relief sought in a Norwich Pharmacal application is not ancillary, but substantive: see eg Lockton Company International v Persons Unknown [2009] EWHC 3423 (QB). For a third, the applicant is required, as part of the ‘price’ for the interlocutory injunction or order, to give an undertaking to issue the claim form as soon as possible. So a claim form there will be. It is just procedure catching up with an emergency. But by contrast a Norwich Pharmacal order may not lead to any further proceedings, and the applicant is never required to give an undertaking to issue substantive proceedings against anyone. So the practice in relation to intended actions does not help.

The provisions of the CPR just discussed are clearly based on the premise that what is being sought in the pre-claim application is relief which either will or would be sought in the claim itself when it gets under way or is otherwise ancillary to that claim. If the claim had already been started, Part 23 would be the means by which an application in the claim would be made. However, as I have already said, a Norwich Pharmacal order is substantive rather than ancillary relief. In this respect it is analogous, for example, to the Beddoe order sought by trustees considering whether to launch or take part in legal proceedings concerning the trust estate: see Re Beddoe [1893] 1 Ch 547. Except where there is an existing claim within which it is appropriate to apply under Part 23 for the order, such relief is always sought by separate Part 8 claim: see Civil Procedure, 2015, paragraph 64.2.3.

So none of this justifies an applicant for a Norwich Pharmacal order in beginning the claim for disclosure of the wrongdoer’s identity by ordinary application under Part 23. In my judgment, that applicant must show that there is some authority for seeking such an order without the need to issue originating process against the respondent. This the Applicant in the present case has not done. It is true that the Chancery Guide, February 2015, states:

“Although applications for disclosure pursuant to Norwich Pharmacal v Customs and Excise Commissioners [1974] AC 133, [1973] 2 All ER 943, HL may be made under Part 7 or Part 8 (as the case may be), nevertheless if the application is or is thought likely to be uncontested the court may entertain in the alternative an application under Part 23 supported by evidence.”

This passage is cited for the same proposition in other works, such as Atkin’s Court Forms, vol 13(2), [59], and Matthews and Malek on Disclosure, 4^th edition, para 3.27 (a work for which I am jointly responsible), though without any other citation in support. 

But, with great respect to the learned authors of the Chancery Guide, it is neither a statutory nor a judicial authority itself, and it cites none for the proposition in the second half of the sentence. It is true that there are cases in the books where a Norwich Pharmacal order has been sought and granted by interlocutory application, but all those that I have been able to find are cases where that application was made inside an existing action.

The decision of Mr Justice Birss to which I have referred did not decide the point, first because it was not argued (and in any event there was argument only on one side), and, second, because the rules to which I have referred were not discussed. Rather, that decision assumed it. For the reasons given, therefore, I conclude that for present purposes there is no authority overriding CPR rule 7.2(1), and that for an application for a Norwich Pharmacal order a claim form (in most cases under Part 8) is necessary. Accordingly I confirm my earlier decision. If the Applicant wishes to apply for a Norwich Pharmacal order, it must do so by claim form.