Totalise plc v The Motley Fool Ltd

A Norwich Pharmacal application is not an ordinary adversarial proceeding. In the normal case, an innocent intermediary required to disclose information should recover from the applicant its reasonable costs of the application and disclosure. The applicant should ordinarily recover those costs from the wrongdoer.

An intermediary which reasonably owes duties of confidence or privacy may leave compelled disclosure to the court. The court must consider the data subject’s rights and legitimate interests before ordering disclosure of identity. A different costs order may be justified where the intermediary supports or is implicated in the wrong, or obstructs justice.

Totalise plc complained that anonymous postings on financial-information websites were defamatory. It sought a Norwich Pharmacal order requiring the website operators to identify the poster, known as Zeddust.

Owen J ordered disclosure and required both operators to pay Totalise’s costs. Interactive Investor Ltd had not opposed disclosure. It maintained a neutral position because of its contractual privacy obligations and the possible effect of data-protection law.

Interactive appealed only the costs order. The issue was whether an innocent website operator which reasonably declined voluntary disclosure should bear the costs of a successful identity-disclosure application.

1. Appeal allowed. The judge had exercised the costs discretion on a wrong basis. He had not sufficiently distinguished Interactive’s neutral position from that of the first defendant, its obligations of confidence, and Totalise’s ability to recover its costs from the alleged wrongdoer.

2. The Court held that a Norwich Pharmacal application is not truly ordinary adversarial litigation. The applicant must satisfy the court that disclosure should be ordered. An innocent intermediary is entitled to leave the decision to the court, particularly where duties of confidence, privacy and the interests of an absent data subject are engaged. The Court followed the costs approach in Norwich Pharmacal Co v Customs & Excise Commissioners [1974] AC 133.

3. The normal order is that the applicant pays the disclosure party’s costs, including the costs of compliance, and recovers them from the wrongdoer if successful. A reasonable doubt about entitlement to disclosure, a legal or uncertain obligation of confidence, possible proceedings for voluntary disclosure, possible reputational damage, and possible prejudice to another’s legitimate interests do not ordinarily justify depriving the innocent intermediary of those costs.

4. A different order may be appropriate where the intermediary supports or is implicated in the tort or crime, or seeks to obstruct justice. The Court also stressed that, before ordering identity disclosure, it must consider the data subject’s rights and legitimate interests under the Data Protection Act 1998 and convention rights. A website operator may notify the user and convey worthwhile representations to the claimant and court.

5. The respondents were ordered to pay Interactive’s costs below and on appeal, summarily assessed at £2,339.50 and £17,300 respectively. Costs already paid were to be repaid within 28 days.

• Court of Appeal (Civil Division): Allowed Interactive Investor Ltd’s appeal against the costs order and substituted an order requiring the respondents to pay its costs: [2001] EWCA Civ 1897 .
• Queen’s Bench Division: Owen J granted the identity-disclosure order and ordered the defendants to pay Totalise’s costs: [2001] 1 P & T 764.