Zeus Investors v HSBC Bank Plc

Norwich Pharmacal relief is exceptional and confined to disclosure of necessary information, rather than evidence or material sought to explore whether a claim exists or to obtain a complete picture of alleged wrongdoing. The applicant must satisfy the arguable wrong, mixed up in, possession and overall justice conditions. Disclosure is not necessary where the applicant already has enough material to plead and pursue a claim. Wide-ranging searches and documentary fishing expeditions are impermissible. The same limitation applies to pre-action disclosure: the documents must fall within the respondent’s standard disclosure duty and early disclosure must be desirable for fairness, settlement or saving costs.

The applicants, described as “Zeus Investors”, sought disclosure from HSBC in contemplation of claims by investors arising from tax mitigation schemes. They relied principally on the Norwich Pharmacal jurisdiction and, belatedly, also referred to pre-action disclosure under CPR 31.16. The proposed claims were said to involve breach of contract and negligence.

The court considered the applicants’ failure to identify the parties, the absence of a good arguable contractual claim, the asserted tortious assumption of responsibility, the scope and necessity of the documents sought, and whether the requirements for either form of disclosure were met.

1. Norwich Pharmacal relief dismissed. The applicants had not demonstrated that the requirements for relief were satisfied. The court also held that, even if those requirements had been met, relief would not have been appropriate in the exercise of discretion.
2. The applicable conditions were: a good arguable case that a legally recognised wrong had been committed; that the respondent was mixed up in facilitating it; that the respondent possessed or was likely to possess information enabling the wrongdoer to be pursued; and that disclosure was an appropriate and proportionate response in the overall interests of justice. The arguable wrong condition required more than material barely capable of serious argument.
3. The jurisdiction is narrow. It permits focused disclosure of necessary information, including in an appropriate case a missing piece of the jigsaw. It does not permit wide-ranging disclosure of evidence, a search for a complete picture, or a fishing expedition to determine whether a good arguable case exists.
4. The applicants already possessed the Agreement and documents which enabled them to plead a proposed claim. The requested internal HSBC documents were not vital to deciding whether to sue or to an inability to plead. The asserted tortious claim also faced formidable hurdles, although the court deliberately expressed no concluded view on its merits so as to preserve a clean slate for any later interlocutory application.
5. The requested search was unfocused and disproportionate. It was likely to generate extensive irrelevant material, require manual review, and raise privilege issues. It therefore fell outside the narrow Norwich Pharmacal jurisdiction and would not have been appropriate pre-action disclosure.
6. The applicants’ continuing failure to identify the persons or entity making the application was independently significant. The court needed to know who would receive confidential information, give undertakings and bear costs. The procedural failure could not be cured merely by naming one investor or suggesting later evidence.
7. The proposed CPR 31.16 application was not properly made or supported. In any event, the documents sought exceeded HSBC’s standard disclosure duty under CPR 31.6, and early disclosure was not desirable to dispose fairly of the anticipated proceedings, assist settlement or save costs. The claimants were not entitled to the documents as pre-action disclosure.