Miles Smith Broking Ltd v Barclays Bank Plc

The Norwich Pharmacal jurisdiction may be used where there is a good arguable case that wrongdoing has occurred, disclosure is needed to identify the wrongdoer or enable legitimate redress, and the respondent was mixed up in the wrongdoing and can provide the necessary information. The court retains a discretion after those conditions are met.

An agency relationship alone does not establish that money received by an agent is held on trust for the principal. The result depends on the terms of the agency agreement. A trustee with a proprietary claim may obtain Bankers Trust relief to trace misapplied trust money, even where the claimant is not the ultimate beneficial owner.

The claimant, a reinsurance broker, sought disclosure from Barclays Bank plc concerning an account formerly held by Square Mile Partnership Limited. Premiums connected with a reinsurance policy had been paid into the account but were not paid to the relevant consortium. Square Mile had subsequently been dissolved.

The claimant relied on the Norwich Pharmacal jurisdiction and the separate Bankers Trust jurisdiction. It contended that it had a beneficial or proprietary interest in the premiums, or alternatively that it could pursue claims against persons who had procured their misapplication. The bank did not oppose the application. The issues were whether the jurisdictional requirements were satisfied and whether relief should be granted.

1. Order granted. The court ordered disclosure in the form sought, as amended during the hearing.
2. For Norwich Pharmacal relief, the claimant had to establish a good arguable case that a wrong had been committed, that disclosure was necessary to enable proceedings or other legitimate redress, and that the respondent had been mixed up in facilitating the wrongdoing and could provide information identifying the wrongdoer.
3. The claimant had a good arguable case that the premiums were beneficially owned by it. The run-off agreement required the assets to be held separately, restricted their transfer, contemplated the appointment of an agent or sub-trustee, and required Square Mile to process and account for the relevant funds. Those provisions indicated that beneficial ownership had not passed to Square Mile.
4. An agency relationship alone does not give the principal proprietary rights in money received by the agent. Whether a trust arises depends on the agreement. Here, the agreement provided a sufficient basis for the claimant’s arguable proprietary claim.
5. The misapplication of the premiums constituted arguable wrongdoing. The claimant had good arguable claims against persons who had procured or directed the payments, including claims involving breach of trust and related accessory or conspiracy liability. A director is not liable merely because of office, but may be liable for a wrong personally committed or procured.
6. The disclosure was necessary because it might identify those responsible for instructing the payments and might assist the claimant in defending the consortium’s claim. Barclays had been mixed up in facilitating the transactions and was likely to possess the required information. The discretion to grant relief was properly exercised because the only person who could assert confidentiality, Square Mile, no longer existed.
7. The claimant was also entitled to Bankers Trust relief. A trustee with a claim to recover and trace trust money may obtain such relief. The possibility that the claimant itself held the premiums on trust for another did not prevent the order.