Asset Tracing in Guernsey and Jersey

Unlike some other jurisdictions, such as England and Wales, pre-action disclosure is not generally available in Guernsey and Jersey (save for in certain defined circumstances). However, there remain some legal mechanisms whereby assets may be traced, identified and preserved prior to the commencement of substantive proceedings.

The two primary means are Norwich Pharmacal Orders and Bankers Trust Orders. 

Whilst it is extraordinarily rare for allegations of wrongdoing to be raised against the islands’ financial services businesses, they may be the target of relevant orders given the level of information that they hold in relation to transactions, account holders and those with a beneficial interest in the same.  

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Guernsey

Norwich Pharmacal Orders

This type of Order derives from the English case of Norwich Pharmacal Co. v Customs and Excise Commissioners and requires the respondent to disclose specified information or documents to the plaintiff. Norwich Pharmacal Orders are often used to identify the proper respondent against whom the plaintiff should bring a claim.

In the Guernsey case of Equatorial Guinea (President) v Royal Bank of Scotland International, it was held that, in relation to Norwich Pharmacal Orders, the Court: “…had the power to make such orders in aid of proceedings in other countries, provided that in all the circumstances they were necessary and appropriate to assist in achieving justice…”

The Court confirmed that this conclusion was due at least in part to the importance of financial services to Guernsey and that the Island should not become a “safe haven for those wishing to evade their financial liabilities”.

The Court set out the relevant principles (distilled from English authorities) which may lead to a Norwich Pharmacal Order, as follows:

  1. that the order was not merely made to obtain pre-trial disclosure of what a witness might say if called at substantive trial (the “mere witness” rule);
  2. that the respondent is must have become involved (in the widest sense and even if entirely innocently) in the wrongdoing;
  3. the person seeking disclosure has to identify the wrongdoing being complained of (at least generally);
  4. the information which could be sought is potentially wide ranging;
  5. the “wrongdoing” has to be such as to be recognized as wrong in law (as a matter of criminal or civil law);
  6. it is sufficient that the plaintiff has a legitimate interest to protect and it is not a prerequisite that the plaintiff seeking disclosure has started or intendeds to start civil proceedings;
  7. the plaintiff has to identify the purposes for which the disclosure would be used when made;
  8. the Court’s power is discretionary and it should not order discovery unless it is satisfied that it is just and convenient to do so.
Bankers Trust Orders

This type of Order derives from the English case of Bankers Trust v Shapira and can assist a plaintiff to obtain disclosure of material that is ordinarily protected by the confidentiality obligations of a banking (or similar) relationship. Such orders will require the disclosure of facts that would enable the location and protection of assets over which a proprietary claim (i.e. a claim attaching to property) may be made.

Bankers Trust Orders are only available in Guernsey where it can be shown that there is strong evidence of fraud; good grounds for concluding that the assets to be traced belong to the applicant; and a degree of urgency due to the risk of dissipation of the asset/s.

Whilst the asset protection focus of a Bankers Trust Order differs from the disclosure focus of a Norwich Pharmacal Order, the two may overlap and where the circumstances permit they may be sought together.

Bankers’ Books Orders

These are a statutory form of relief provided for under the Bankers’ Books Evidence (Guernsey) Law, 1954, as amended which will enable a party to legal proceedings in Guernsey or Alderney to apply for the purposes of those proceedings to be permitted to inspect and take copies of any entry within a banker’s book. Banker’s books are defined to include ledgers, day books, cash books, account books and “other records used in the ordinary course of the business of the bank”.

Jersey

Norwich Pharmacal Orders

Norwich Pharmacal Orders are also available in Jersey as a means of obtaining pre-action disclosure. The leading Jersey authority is the Court of Appeal’s judgment in Macdoel Investments Limited –v- Federal Republic of Brazil and the principles in Macdoel have been clarified by the Royal Court in a number of subsequent authorities. In summary, the test to be applied is:

  1. Is the Court satisfied there is a good, arguable case that the plaintiff is the victim of wrongdoing?
  2. Is the Court satisfied there is a reasonable suspicion that the third party has been mixed up in the wrongdoing?
  3. As a matter of discretion, is it in the interests of justice to order the third party to provide the disclosure required by the plaintiff?
In practice, the Royal Court has demonstrated a willingness to apply an expansive approach when faced with these questions. Recognising the development of its jurisdiction in this area since Norwich Pharmacal itself, the Jersey court in Riba Consultaria Empresarial Limitada v Pinnacle Trustees Limited made clear that “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”.

Comparing the two islands, as with Guernsey the Jersey approach places key importance upon the interests of justice in any application for Norwich Pharmacal relief. Similarly, the Jersey courts have also highlighted that “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.”

Bankers Trust Orders

Bankers Trust Orders are also available in Jersey to assist a plaintiff seeking to trace assets.   In contrast to Guernsey, the Jersey courts have treated Bankers Trust Orders and Norwich Pharmacal Orders as very similar creatures, essentially based upon the same interests of justice principles, and in granting orders to assist in the tracing of assets (Bankers Trust type relief), the Court of Appeal in Macdoel confirmed its view that:

“the scope of the principle is not extended if the purpose of the disclosure which is sought in any particular case is, for example, to determine the location of embezzled funds or the methodology of the fraud rather than the identity of the wrongdoer. In our judgment, where disclosure is sought from a defendant who is alleged to have become innocently mixed up in wrongdoing, the determinative question is any particular case is whether justice requires discovery to be ordered.”

Bankers’ Books Orders

Jersey law also provides a statutory form of relief under the Bankers’ Books Evidence (Jersey) Law 1986, enabling a litigant in Jersey proceedings to make an application for the inspection and copying of entries in a banker’s books. As with the equivalent Guernsey statute, the purpose of seeking a Bankers’ Books Order is to obtain copies of bank records during a specific period which are material to the proceedings in question. Evidence to demonstrate materiality and the necessity for the inspection, together with the admissibility of the evidence at trial, should be provided in support.

Conclusion

These potential pre-action steps in Guernsey and Jersey may be utilised by a plaintiff in order to obtain information and/or documentation which is essential to their case

GUERNSEY
Sarah BrehautPartnerT +44 (0)1481 748 930sarah.brehaut@walkersglobal.com
Adam ColePartnerT +44 (0) 1481 748 912adam.cole@walkersglobal.com
Alison OzannePartnerT +44 (0) 1481 748 905alison.ozanne@walkersglobal.com
Katherine JensenAssociateT +44 (0) 1481 748 944katherine.jensen@walkersglobal.com

JERSEY
Nigel SandersPartnerT +44 (0) 1534 700 862nigel.sanders@walkersglobal.com
Marc SeddonPartnerT +44 (0)1534 700 761marc.seddon@walkersglobal.com
James TurnbullSenior AssociateT +44 (0)1534 700 776james.turnbull@walkersglobal.com