Jofa Ltd & Anor v Benherst Finance Ltd & Anor

On an application for a Norwich Pharmacal order, the normal costs starting point is that the applicant pays the respondent’s reasonable costs of the application and compliance. The respondent owes no ordinary legal duty to volunteer information; the relevant duty is the court’s equitable jurisdiction to order disclosure. A respondent who merely requires the applicant to obtain and satisfy the court of the order will rarely justly be ordered to pay the applicant’s costs. Silence may be criticised where a request is made, but it does not justify an adverse costs order if an express refusal would have led to the same application and evidence. The discretion must be exercised on the correct basis, with the particular privacy interests and circumstances in view.

The investors sought a Norwich Pharmacal order requiring Jofa Ltd and Joseph Farah to disclose documents concerning alleged fraud by JMT Property Ltd and its director in a property redevelopment. The appellants had initially been accused of criminal offences and invited to provide information voluntarily. They did not oppose disclosure when the application was heard, but disputed liability for the investors’ costs. The High Court ordered them to pay £23,000, treating no order as to costs as the usual position and their silence as justification for a partial costs award. The appeal concerned the correct starting point and the proper exercise of the costs discretion.

1. Disposition. The appeal was allowed. The High Court’s costs order was set aside and replaced by no order as to the costs of the investors’ application for Norwich Pharmacal relief.
2. Correct starting point. The High Court had adopted the wrong starting point by treating no order as to costs as usual. The general rule is that the applicant for a Norwich Pharmacal order pays the respondent’s costs of the application and of complying with the order. That rule was stated in Totalise Plc v The Motley Fool Ltd [2001] EWCA Civ 1897 and approved by the Supreme Court in Cartier International AG v British Sky Broadcasting Ltd [2018] UKSC 28.
3. Nature of the respondent’s position. A person innocently mixed up in alleged wrongdoing owes no ordinary legal duty to provide information voluntarily. References to a duty to assist describe the equitable jurisdiction of the court to require disclosure. It was therefore generally reasonable for Jofa and Farah to require the investors to establish entitlement to an order and to give an undertaking to reimburse reasonable compliance costs.
4. Departure from the general rule. There is no absolute rule preventing an award against a respondent, but it is difficult to envisage a just award where the respondent has done no more than require the applicant to satisfy the court that disclosure is appropriate. Matters such as confidentiality, uncertainty about legal obligations, exposure to proceedings, possible damage, or infringement of another legitimate interest may justify retaining the ordinary rule. The exceptions identified in Totalise were not exhaustive.
5. Application of the discretion. Farah’s failure to answer the December 2017 letter could be criticised, but an express refusal to disclose without a court order would still have required the same application and substantially the same evidence. The silence therefore caused no relevant prejudice. The analogy with rules 31.16 and 31.17 of the Civil Procedure Rules 1998, including conditional costs orders where there is a prospective claim against the respondent, did not assist because this application proceeded solely on the basis of innocent involvement. The appellants were awarded the costs of the appeal, summarily assessed at £13,000.

1. Court of Appeal (Civil Division): allowed the appeal and substituted no order as to the costs of the investors’ application.
2. High Court of Justice (Queen’s Bench Division): ordered Jofa Ltd and Joseph Farah to pay £23,000 towards the investors’ costs of obtaining the disclosure order.