Stuart Benzie and Matthew Tonnard, instructed by Asserson Law Offices, acted for the Second Defendant, VW-Leos Investment Holdings Ltd, in successfully setting aside a Norwich Pharmacal order obtained without notice in the Business List. The Claimants, a 49% shareholder in a property development joint venture and its principal, had obtained a Norwich Pharmacal order requiring the joint venture company to disclose the books and financial records of the company and all of its subsidiaries going back to 2020, together with a range of schedules to be compiled from scratch, under a penal notice and within 15 days.
The order was founded on an alleged technical breach of the shareholders’ agreement by the majority shareholder’s parent company, to which the joint venture company was not a party.
Christopher Pymont KC, sitting as a Deputy High Court Judge, set the order aside on all three Defendants’ applications.
Points of wider interest in the judgment:
- The wrong relied upon to satisfy the Arguable Wrong Condition must be the same wrong the disclosure is intended to vindicate. A ‘serious mismatch’ between the (narrow) breach relied on and the (wide-ranging) disclosure sought is fatal: AQR Capital Management v LME applied.
- The Company was not ‘mixed up in’ the alleged breach of the SHA so as to have facilitated it. A company whose own records are sought to enable a shareholder to investigate whether it has a claim is not a proper Norwich Pharmacal respondent; the application was ‘a clear case of a fishing expedition’.
- Norwich Pharmacal relief is not a substitute for an unfair prejudice petition, which was the obvious vehicle for the Claimants’ complaints.
- The without notice procedure was not justified: there was ample time to give notice and no evidence of any risk that documents would be destroyed.
- The Court had ‘no hesitation’ in granting the Company relief from sanctions for a 72-hour notice requirement which, on the Claimants’ chosen method of service, left an unrepresented company less than one clear working day to comply.
The judgment is a useful reminder that the Norwich Pharmacal jurisdiction remains exceptional and narrow and cannot be used to compel a company to arm one of its own shareholders with the material for a speculative claim.
