NML Capital Ltd v Chapman Freeborn Holdings Ltd & Ors

A Norwich Pharmacal order requires the respondent to have become involved in the furtherance of the transaction constituting the relevant wrongdoing. A person does not satisfy that requirement merely by trading in good faith with a judgment debtor who uses assets for commerce instead of satisfying the judgment.

The jurisdiction must retain principled limits despite its flexibility and its purpose of doing justice. If it is available after judgment to assist execution, it can arise only in particular and restricted circumstances involving conduct amounting to wilful evasion. The court may also give substantial weight to the innocent respondent’s commercial interests.

NML Capital Ltd held an English judgment against the Republic of Argentina. After learning that an English aircraft charter broker had arranged transport for the Argentine President, NML sought Norwich Pharmacal disclosure of the bank account used to pay for the charter. NML hoped that the information would reveal assets against which it could enforce its judgment.

Cooke J initially made an order without notice but, after hearing the respondents, refused relief on discretionary grounds in (2013) EWHC 266 (Comm). NML appealed. The respondents contended that the jurisdiction was unavailable in aid of execution and, in any event, that their bona fide trading activities did not involve them in Argentina’s alleged wrongdoing.

The central issue was whether arranging the charter connected the broker sufficiently with the failure or evasion relied upon by the judgment creditor.

1. Appeal dismissed. The essential involvement requirement for Norwich Pharmacal relief was not satisfied. The third party must be involved in the furtherance of the transaction identified as the relevant wrongdoing. The requirement preserves the principled limits of an intrusive jurisdiction and distinguishes an involved person from a mere onlooker or witness.

2. The relevant wrongdoing had to be identified precisely. Chartering an aircraft was not inherently wrongful. Nor was it wrongful merely because Argentina used funds for trading rather than satisfying the judgment. Treating every bona fide trader with a judgment debtor as involved in wrongdoing would give the jurisdiction an absurd and exorbitant width and encourage speculative applications.

3. Chapman Freeborn’s services did not further Argentina’s failure to discharge the judgment. Argentina had no obligation to place assets in jurisdictions where execution could be levied, and choosing not to use or sell the presidential aircraft was not itself a breach of contract, tort or other wrongdoing. The broker had no real connection with the failure to satisfy the judgment and was not mixed up in that transaction.

4. The court therefore did not decide whether Norwich Pharmacal relief is available after judgment in aid of execution. The disclosure order in Mercantile Group (Europe) AG v Aiyela was ancillary to a freezing injunction and derived from section 37(1) of the Supreme Court Act 1981 and the court’s power to make that injunction effective. If Norwich Pharmacal relief is available post-judgment, it can arise only in particular and restricted circumstances. Mere trading is insufficient, and the required involvement would probably have to concern conduct necessarily amounting to wilful evasion of execution.

5. Cooke J was also correct to consider the respondents’ commercial interests. The possible damage caused by exposing a bona fide international trader to intrusive disclosure orders was a vital discretionary consideration. Trading activity of the present kind fell far short of conduct capable of engaging the jurisdiction.

Tomlinson LJ gave the judgment. Floyd and Jackson LJJ agreed.

1. Court of Appeal (Civil Division): In [2013] EWCA Civ 589, the court unanimously dismissed NML’s appeal and upheld the refusal of Norwich Pharmacal relief because the respondents were not involved or mixed up in the relevant wrongdoing.
2. High Court, Queen’s Bench Division (Commercial Court): In (2013) EWHC 266 (Comm), Cooke J refused the requested disclosure after hearing the respondents. He considered that the potential enforcement benefit did not justify the likely intrusion into their commercial interests and business relationships.