Case highlights care needed in Norwich Pharmacal applications

EUI Ltd had made an application to court in order to access location data and SMS/MMS records held by the telecoms giant on one of the insurer’s customers and his mother – both suspected of insurance related fraud.

In 2019, the customer told EUI that he had been forced to leave his insured London home because of water damage and had temporarily moved in with his parents.

EUI paid the customer displacement costs, limited to £1,000 per month because he was staying with relatives, for several months, before he told them he planned to sign a shorthold tenancy agreement on a different property.

The insurers made payments covering the rent of £1,850 per month from December 2019 to May 2020, before discovering that the leased property was owned by the customer’s parents.

The man initially told an enquiry agent that his parents had travelled to India for six months and that he had agreed to rent their vacant home, before claiming that they had actually visited relatives in Milton Keynes with the intention of travelling to India later – but returned to their London home when the mother fell ill.

Investigating suspicions of fraud, EUI asked the High Court in 2020 to order Vodaphone to disclose the location data and text messages that it held from the mother’s mobile phone under the principle originally set out in Norwich Pharmacal v Customs and Excise Commissioners.

The ‘Norwich Pharmacal’ principle says that people who unwittingly facilitate wrongdoing still have a duty to assist the person who has been wronged by giving them full information and disclosing the identity of the wrongdoers.

Vodaphone did not oppose the making of the order sought by EUI, but given the intrusive nature of Norwich Pharmacal orders it is common for organisations in their position still to require the court to make an order before they will provide the information requested.

EUI’s barrister argued that mobile phones enabled people to lie about their whereabouts, and that Vodaphone had therefore facilitated the ability of a person to pretend they were living at an address.

But Judge Sephton QC was not persuaded by the “ingenious argument”, stating in his decision: “We are talking here about a means of communication, and to suggest that somebody who provides the means of communication is so wrapped up in the matter as to have gone beyond the role of mere witness, in my judgment, is to strain language.”

Sephton also raised concerns over the mother’s right to privacy, adding: “The claimant says that it can only prove fraud if they have the telephone details, and yet the telephone details may prove to be entirely benign.

“However, they may contain, as I discussed in argument earlier on, matters which are private to [the policy holder's mother] which may be embarrassing to her.”

At the Court of Appeal hearing last week, Lord Justice Baker agreed, dismissing the appeal after calling EUI’s argument “misconceived.”

“It is true that the phone records may assist in establishing the truth of the parents' whereabouts. But in that regard the phone company is manifestly a mere witness,” Baker said.

“Its position is no different from anyone else who may be able to provide evidence about that issue,” he added.

Andrew Herring, fraud expert at Pinsent Masons, said the Court of Appeal’s decision highlighted the need for victims of fraud to “carefully consider their investigations of wrongdoing and fraud before launching Norwich Pharmacal applications.”

“Fraudsters are always innovating and one of the great strengths of the English common law is its flexibility to enable fraud victims to obtain effective relief,” he said. “The power to order Norwich Pharmacal relief is expansive and the courts are open to extending its use to help victims right a wrong in novel situations.”

“However, because Norwich Pharmacal relief is such a powerful tool in the litigator’s armoury, the courts naturally adopt a cautious approach,” Herring added.

“This case is an example of the courts being unwilling to accept the insurer applicant’s ‘ingenious argument’, and it illustrates the need for victims to carefully consider their investigations of wrongdoing and fraud before launching Norwich Pharmacal applications,” he said.

“In this case, the application failed on a number of grounds, including overriding human rights concerns, the fact that the mobile phone company was not engaged in the wrong and the availability of alternative routes to obtain evidence of fraud,” he said.

Herring added that, while the decision did not “close the door” on future Norwich Pharmacal relief against telecommunication companies, “it is a cautionary reminder of the need to ensure that any such applications do meet the relevant legal tests, which were fully upheld in this Court of Appeal decision.  Had the use of mobile phones been an essential component of the fraud, the court might well have reached a different conclusion.”