Applications for Norwich Pharmacal relief are on the rise in the Cayman Islands and last months’ decision of the Court of Appeal in the UK relating to the costs of such applications will be keenly noted by practitioners in this jurisdiction.

In Jofa v Benherst Finance, the Court of Appeal found that the High Court Judge had erred in ruling that the starting point for costs in Norwich Pharmacal applications was for no order to be made: the correct starting point was that the applicant should normally be ordered to pay the costs of the party ordered to give Norwich Pharmacal disclosure, including the costs of the application and the costs of complying with the order. 

Although the parties agreed that this was correct, they disagreed as to the extent of this presumption and the circumstances which justify departure from the general rule.

The conduct of the respondent in Jofa prior to the issuing of the application was the main bone of contention. Amid allegations of fraud, the applicant had requested disclosure of a long list of documents and asked for a response within 14 days; failing such response, it would issue a Norwich Pharmacal application.  The letter emphasised that the applicants would pay the reasonable costs of such disclosure.  However, no response was received and the application was then made.

This failure to engage would, in normal litigation, often expose a respondent to an adverse costs order. However, the Court of Appeal’s decision was grounded on the proposition that a person from whom assistance is sought under the Norwich Pharmacal principle does not owe any legal duty to the party seeking assistance in the ordinary sense of the term. The general rule as to costs is displaced by one which holds that the applicant should recover its costs of obtaining the information that it needs from the wrongdoer rather than from the respondent, who is an innocent party.

In Jofa, the Court of Appeal further took into account the “obvious disparity” between the parties in terms of their resources, sophistication and legal representation and took a dim view of the “heavy-handed” accusations of criminal conduct and requests to interview under caution against the respondent.

We previously blogged about a key recent Cayman decision in this area in the matter of Discover Investment Company.