Disclosure in Jersey: What, When and From Whom? (Part 1)

1. This is the first of two short articles on four aspects of disclosure in civil proceedings in Jersey. The first focuses on the differences between pre-action and post-judgment disclosure and the measure of uncertainty which has developed around these separate jurisdictions. The second will address trustee disclosure and the position of foreign insolvency office-holders following the decision of the Royal Court in Smith v Nedbank Private Wealth Limited.¹
2. The terms disclosure and discovery are often used interchangeably. In Jersey discovery refers to the process by which parties to substantive proceedings are required to disclose all relevant documents in their possession, custody or control to their opponent(s). Accordingly discovery falls outside the scope of these articles.

Pre-action disclosure

3. Except for a provision under the Law Reform (Disclosure and Conduct before Action) (Jersey) Law 1999 which only applies to personal injury cases, a Norwich Pharmacal Order (“NPO”) is the primary way to obtain pre-action disclosure in Jersey. A NPO enables material to be obtained from a third party in accordance with the test set out in Riba Consultaria Empresarial Ltda v Pinnacle Trustees Limited:²

1. 1. Are we satisfied there is a good arguable case that the plaintiff is the victim of wrongdoing?
   2. Are we satisfied that there is a reasonable suspicion that the [third party] has been mixed up in the wrongdoing?
   3. As a matter of discretion, do we consider it to be in the interests of justice to order the [third party] to make disclosure?

4. The situation is slightly different for foreign insolvency office-holders and beneficiaries of a Jersey trust as will be addressed in the second article. It is also possible to obtain disclosure ancillary to a freezing order (formerly known as a Mareva injunction). In exceptional cases a search order can be granted to enable an applicant to collect and preserve material in advance of civil proceedings. This draconian power will only be used where the applicant can show (i) an extremely strong prima facie case, (ii) that the damage (potential or actual) would be very serious for the applicant and (iii) clear evidence that the respondent possesses incriminating material and a real possibility that such material may be destroyed before an inter partes application can be made.
5. Jersey has developed a broad NPO jurisdiction based on English common law. There is no bright-line distinction between NPO and Bankers Trust principles.³ It does not share the same legal framework which applies to third party disclosure as a matter of English law⁴ and places a greater reliance upon the inherent jurisdiction of the Court. The law is also shaped by policy considerations which militate in favour of assisting victims where the Island’s financial services have been used as instruments of wrongdoing.⁵ In Macdoel Investments Ltd and Others v Federal Republic of Brazil and Others⁶ the Court of Appeal reflected on the classic statement of principle from the speech of Lord Reid in Norwich Pharmacal Company & Ors v Customs and Excise.⁷

“In any event, whilst the cases in which the Norwich Pharmacal jurisdiction has been developed in England and Wales provide useful guidance on how Lord Reid’s statement of principle may be applied, the courts of Jersey are in no sense bound by the scope of the jurisdiction that may have been delineated de facto by the circumstances of these cases. Nor are these courts constrained by the limits which may be placed on the application of the principle in the different social and economic conditions that may prevail from time to time in England and Wales (see, generally, State of Qatar v. Al Thani . . .). They will have regard to, amongst other things, the policy considerations which shape the law of Jersey and the social and economic context in which it operates.

We are conscious that, as the Court of Appeal of Jersey remarked in Durant Intl. Corp. v. Att. Gen. . . . (2006 JLR 112, at para. 1, per Sumption, J.A.):

‘Over the last half-century, Jersey has become a major financial centre, providing trust and banking facilities for an extensive international clientele . . . It has for some time been the policy of the legislature and of the executive agencies exercising statutory powers that the commercial facilities available in Jersey should not be used to launder money or mask criminal activities here or anywhere else.’

Although these remarks were made in the context of an action that concerned the provision of assistance by the authorities in Jersey to foreign prosecutors, they have relevance in the sphere of civil litigation, where the courts are conscious that Jersey’s reputation as a major financial centre might suffer if it were not willing to assist victims of wrongdoing to obtain redress.”

6. The NPO jurisdiction is arguably not as ‘exceptional’ as it once was⁸ and applicants can expect the court to take a permissive view of the disclosure available. The expansion in its scope as matter of English law (notwithstanding pockets of judicial resistance)⁹ has been mirrored in Jersey and reinforced by domestic considerations (see above). In Riba¹⁰ Sir Michael Birt QC (sitting as a Commissioner) acknowledged developments since Norwich Pharmacal¹¹:

“Although that case was concerned with information about the identity of the wrongdoer, the principle has regularly been applied to include information about the whereabouts of assets or other information to support the existence of a cause of action.”

7. This is not to say that the jurisdiction is set to become a back door to pre-action discovery or even to reflect the generous regime in the United States under 28 U.S.C §1782. It is difficult to define the position (and thus assess the extent to which it may have departed from English law) due to the limited number of authorities and the fact that the majority of respondents are financial institutions which often adopt a neutral stance. In the absence of adversarial argument written judgments are rarely handed down.
8. There are some notable points of caution. The court has refused to hear ex parte applications brought as a matter of convenience and directed counsel to serve the proceedings on the respondent(s) and return for an inter partes hearing.¹² An NPO will be refused where its predominant purpose is to supplement the disclosure process in an overseas court.¹³ Parties seeking disclosure in support of foreign proceedings should therefore apply before commencing their substantive claim. This also meets the obvious concern that disclosure cannot be said to be necessary to formulate a claim which has already been commenced.
9. The most significant pitfall concerns the locus of office-holders appointed by a foreign court, which will be addressed separately.

Post-judgment disclosure

10. A judgment creditor can bring an application against either the judgment debtor or a third party (or both) for information required to aid enforcement or execution of a judgment or arbitral award anywhere in the world and need only establish that it is in the interests of justice for such disclosure to be ordered.
11. This is a separate jurisdiction which can usefully be referred to as a Goldtron Order (where disclosure is sought from the judgment debtor) or a Jomair Order (where disclosure is sought from a third party). As the authorities discussed below illustrate, a freestanding disclosure order can be obtained in either circumstance.
12. The power to order post-judgment disclosure has been affirmed in a number of cases, the earliest of which is Goldtron Limited v Most Investment Limited.¹⁴ These decisions approve and develop the dicta of Coleman J in Gridrxsime Shipping Co Ltd v Tantomar-Transportes Maritimos LDA¹⁵ at 310:

“It is to be observed, however, that both in Ashtiani -v- Kashi and in Derby & Co Limited-v-Weldon (Nos 3 and 4) the courts were concerned with pre-judgment orders which included Mareva injunctions. The orders for disclosure were therefore orders ancillary to those injunctions. There was no question of there being any other order in support of which a disclosure order could be justified. Where, by contrast, one has the position that a judgment has been already obtained or an award made and where a Mareva injunction in aid of execution is justified, the jurisdiction to make a disclosure order arises both as a power ancillary to and in support of the injunction and independently of the injunction as a power in support of the execution of the judgment or award. …”

And at 312:

“That case was concerned with a pre-trial worldwide Mareva injunction coupled with a worldwide disclosure order. In my judgment, quite different considerations apply in the case of a post-judgment or post-award disclosure order. In such cases it is just and convenient that the judgment or award creditor should normally have all the information he needs to execute the judgment or award anywhere in the world. It does not need the supervision of these courts to ensure that double execution is not achieved or that the information is not otherwise abused.”

13. As per the first emphasised passage above, the power to order disclosure exists independently of the power to order disclosure in support of an injunction.¹⁶ In Jomair Leasing v Hourigan¹⁷ it was confirmed (by reference to Goldtron at para 26) that the evidential threshold for obtaining disclosure is substantially lower post-judgment¹⁸ and that the jurisdiction extends to third parties:

“We are quite satisfied that the interests of justice require disclosure of his assets in Jersey. We note that disclosure is sought from the party cited rather than the defendant but this does not affect the position. The essential principle remains that the Court can make disclosure orders whether against a defendant or third parties in order to aid in the execution of a judgment or award and the interests of justice would usually point in favour of ordering such disclosure.”

14. This leaves the concept of a post-judgment NPO, which is known to both English and Jersey law,¹⁹ on the verge of irrelevance. A post-judgment applicant is not subject to the traditional restrictions on the scope of NPO relief and need only establish that disclosure is the interests of justice which, as the court in Jomair observed, it usually will be.

A Separation of Powers

15. The basic distinction between applications brought pre and post judgment is a useful one. The potential for confusion is illustrated in Riba which was brought as a NPO application despite the applicants being judgment creditors. It made no material difference to the outcome (because the respondent was ordered to disclose any documents in its possession relating to the six entities in question) however the identical relief would have been available as a Jomair Order – an approach which would have reduced the legal and evidential burden on the applicant. In different factual circumstances overlooking the post-judgment jurisdiction might well prejudice an applicant’s prospects.
16. An aspect of the confusion is due to the absence of distinct terminology. This is not a new issue. As the court in Goldtron observed (in respect of freezing orders)²⁰:

“As Donaldson M.R. stated in Deutsche Schachtbau GmbH-v-Ras Al Khaimah National Oil Co (1987) 2 All ER 769 at 780, it is at least doubtful whether a post-judgment injunction is correctly described as a Mareva injunction. The Mareva injunction introduced into English Law the concept of freezing assets of a defendant in advance of judgment. The Court had always assumed a jurisdiction to grant an injunction in aid of enforcement of a judgment. Nowadays the expression ‘Mareva’ has come to include post-judgment as well as pre-trial relief.”

17. In an article published in 2012 Advocate Nicholas Journeaux²¹ examined the jurisprudential basis for third party disclosure and, following a careful review of authorities from England, Jersey and Guernsey, posited a set of principles common to the various circumstances in which a financial institution may be required to disclose confidential client information to a third party. This effort to reconcile Jomair and the line of authorities preceding it with conventional NPO principles leads to a closely reasoned conclusion focussed on the relationship between the disclosing party and the wrongdoing. Notwithstanding the rigour of this analysis I would respectfully argue that it overlooks the importance of the pre/post judgment distinction and, in doing so, seeks to elide concepts which sit more comfortably when separated.
18. The central commonality between the two jurisdictions is the imperative to do justice. Even here the landscape is not the same. In Rugby Football Union v Consolidated Information Services Ltd ²² Lord Kerr, having emphasised that the essential purpose of the remedy (NPO) is to do justice, distilled a series of factors from the relevant case law which should be considered as part of the court’s discretion²³. It is immediately evident that these factors (which I shall not list here) would not apply in the same way (or in some cases at all) to an application brought by a judgment creditor. While the success or failure of an application can be determined by factors outside the pre/post judgment rubric, the differences between the two are a consideration of fundamental importance to parties seeking disclosure in Jersey.

By Charlie Sorensen, Senior Associate

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¹ [2018]JRC156

² [2018] JRC033A. This formulation reflects the alteration proposed by the Court at para 21.

³ The key authorities are Macdoel Invs. Ltd and others v. Federal Republic of Brazil and others [2007 JLR 201] and New Media Holding Company Llc v Capita Fiduciary Group Limited ²⁰¹⁰JLR 272] see also Templeton Insurance Limited and another v Minerva Trust Company Limited (as former trustee of The Avalon Trust) and another [2011] JRC205

⁴ See Stephen Gee QC, Commercial Injunctions (6th Ed) at 23-041 et seq

⁵ New Media Holding Company LLC v Capita Fiduciary Group Limited [2010 JLR 272] at para 15 citing Macdoel Invs. Ltd and others v. Federal Republic of Brazil and others [2007 JLR 201] at paras 38-39 (which includes citation of passage from the judgment of Sumption JA in Durant International Corporation and Others v Attorney General and Federal Republic of Brazil 2006 JLR 112 at para 1)

⁶ 2007 JLR 201 at 38-39

⁷ [1974] ACC 133 at 175

⁸ New Media Holding Company LLC v Capita Fiduciary Group Limited [2010 JLR 272] at para 23

⁹ See general discussion in Paul McGrath QC, Commercial Fraud in Civil Practice at 15.126 to15.129

¹⁰ [2018] JRC033A at para 14

¹¹ [1974] ACC 133

¹² See Riba Consultaria Empresarial Ltda v Pinnacle Trustees Limited [2018] JRC033A and Templeton Insurance Limited and another v Minerva Trust Company Limited (as former ^rusteeof The Avalon Trust) and another [2011] JRC205

¹³ New Media Holding Company LLC v Capita Fiduciary Group Limited [2010 JLR 272] at para 31(iv)

¹⁴[2002] JLR 424 at paras 25–28, see also Apricus Investments-v-CIS Emerging Growth Limited [2003] JLR N40 [2003] JRC 151 at paras 16–20, Africa Edge SARL-v-Incat Equipment ^entalLimited [2008] JLR N41 [2008] JRC 175 at paras 8–10, ENRC v Zamin Ferrous Limited [2015] JRC217 at para 26 et seq

¹⁵ [1994] 1 WLR 299 at 310

¹⁶ See Offshore Civil Procedure at p501 JA6.35.43 citing Dalemont v Senatorov [2012] JRC 014 at para 16, Apricus Investments-v-CIS Emerging Growth Limited [2003] JLR N 40 and ^fricaEdge SARL-v-Incat Equipment Rental Limited [2008] JLR N 41

¹⁷ [2011] JRC 042

¹⁸ Ibid at para 10

¹⁹ See Mercantile Group (Europe) AG v Aiyela [1994] QB 336 and Riba Consultaria Empresarial Ltda v Pinnacle Trustees Limited [2018] JRC033A

²⁰ [2002] JLR 424 at para 25

²¹ Advocate Nicolas Journeaux, Third Party Disclosure Of A Debtor’s Assets: What Are The Limits? Jersey & Guernsey Law Review – February 2012

²² [2012] UKSC 55

²³ Ibid at para 17