Babco Chemicals Inc v HSBC UK Bank Plc

The court may vary or discharge an undertaking given to the court where circumstances justify doing so, with particular attention to any material change in circumstances and the interests of justice. Information obtained under a disclosure order should not become a fishing tool against the disclosing institution. However, where the material was obtained properly and supports an arguable claim against that institution, justice may require that the claimant be permitted to rely on it in pursuing the claim. Any variation should preserve protection against use for extraneous purposes. Costs may be determined immediately where the applicant’s conduct and the likely ultimate order are sufficiently clear.

Babco Chemicals Inc applied without a hearing to discharge an undertaking given on 22 May 2024. The undertaking restricted use of documents and information obtained from HSBC UK Bank Plc under an order made principally under the Bankers Book Evidence Act 1879 and/or the Norwich Pharmacal jurisdiction.

Babco alleged that it had been the victim of a push payment fraud and wished to use the material not only for tracing the proceeds, but also in claims against HSBC and the alleged fraudster. The application arose urgently because Babco was required to plead those claims in related stakeholder proceedings. The issues were whether the application was necessary, whether any prior use or delay mattered, whether the undertaking should be discharged, and what costs order should be made.

1. Application to discharge undertaking. The application was urgent because Babco had to comply with an order in related Commercial Court stakeholder proceedings requiring points of claim to be served by 14 July 2025. It was appropriate to determine the application without a hearing because HSBC was essentially neutral on the central issue and further evidence was unlikely to assist.
2. Alleged breach and delay. The court did not decide whether sending draft particulars to HSBC breached the original undertaking. On the face of it, use of the material to advance a claim other than tracing, even if based on the same facts, might breach the undertaking. Any breach was not material to the discretion, because the court would probably have discharged the undertaking in any event. Delay was likewise not a reason to refuse relief.
3. Discretion to vary an undertaking. Following the broad guidance in Birch v Birch [2017] UKSC 53, the court considered whether circumstances justified variation. It had insufficient material to assess the merits of Babco’s allegations, but held that, if the pleaded matters could be established, it would be contrary to the interests of justice to prevent Babco relying on material obtained properly under the disclosure order. The order could not be used as a fishing expedition, but there was no basis to find that Babco had acted improperly in obtaining it.
4. The court was minded to discharge the existing undertaking, subject to a more limited undertaking restricting use of the material to proceedings against HSBC, proceedings against the alleged fraudster concerning the fraud, and tracing the proceeds. The court invited confirmation that Babco would give that undertaking before making the discharge order.
5. Costs. No order for costs was made. Babco had obtained a windfall by receiving material supporting a claim against HSBC that had not been contemplated when the documents were sought, and the costs resulted from its attempt to regularise that position.

First-instance decision. No appellate history is stated in the judgment.