The Queen's Bench Division has refused to grant a Norwich Pharmacal Order ("NPO") to an investment firm which was contemplating the private prosecution of two individuals on the basis that the matter was already the subject of civil proceedings and the order was not "necessary" in the interests of justice.
On the 18 October 2018 an NPO application was refused in the case of FCFM Group Ltd v (l) Hargreaves Landsdown Asset Management (and ors).
Hargreaves Landsdown Asset Management (the applicant) was considering the private prosecution of two individuals it suspected of insider dealing. These individuals had negotiated to buy shares in a company shortly before a public announcement increased its share value. The individuals commenced civil proceedings seeking specific performance of the contract for the shares while the applicant served a defence and counterclaim. The applicant sought an NPO to obtain information which it hoped would substantiate a case for a private prosecution for offences of fraud by false representation and conspiracy to defraud.
An NPO is a civil order to obtain information from a third party. It requires the third party (who is the respondent to the order) to disclose certain documents or information to the applicant. It is a tool which may be used to identify a proper defendant to an action or to obtain information to plead a claim. NPOs differ from applications for disclosure under CPR 31.16 (pre action disclosure from a prospective party) and CPR 31.17 (third party disclosure in the course of proceedings) in that they allow a court to order disclosure by a respondent, who is not a prospective party, before proceedings have started.
An NPO is an equitable remedy and the court is only required to order disclosure if it is satisfied that to do so is necessary in the interests of justice.
The court decided against the applicant on the question of whether an NPO was necessary to obtain justice. The court was influenced by two factors. First there were existing civil proceedings, based on the same facts, through which the applicant could obtain the disclosure of relevant documents, (whereas an NPO would require disclosure of all material). Second, the court was not persuaded that a private prosecution was necessary for the applicant to obtain justice (beyond any civil remedy) because the case had been referred to the Crown Prosecution Service (CPS) which the court said was well placed to make a judgment about the interests of justice.
The judgment is a reminder of the equitable nature of the jurisdiction but it is a feature of that nature that each case will turn on its own facts. Applying for an NPO will continue to be relevant consideration for prospective private prosecutors.