Norwich orders and privilege for professional secrecy: the court of appeal clarifies the process in the presence of a crime exception

What is a Norwich Order?

A Norwich order is generally used to obtain documents and information regarding the movement of funds following a fraud. Its purpose is to enable the swift and effective seizure of misappropriated funds and to identify the true wrongdoers.[1]

This type of order requires proof of a prima facie case of fraud and is issued ex parte[2], meaning in the absence of the alleged fraudster.

The Dispute

In the case of Checkbook Inc[3], the Court of Appeal reviewed a Superior Court judgment that denied applications for various disclosure orders (Norwich proceeding) sought by the Appellant, Checkbook Inc., a company facilitating payments between businesses.

The Appellant, alleging it had been a victim of fraud committed by the Respondents, requested that the notaries involved (the “Notaries”) disclose information related to their file involving the alleged fraudster, namely:

• The nature and purpose of the mandate, as well as any subsequent instructions given by the Respondents to the Notaries regarding funds transferred into their trust account;
• Details and copies of all bank transfers, cheques, bank drafts, bills of exchange, debits, deposits, credits and withdrawals made from the Notaries’ trust account regarding the amounts misappropriated from the Appellant by the Respondent, along with all explanations and information related to these transactions;
• The identity and contact information of the holders and signatories of any account to which a transfer of funds was made from the Notaries’ trust account, involving amounts misappropriated from the Appellant, as well as the account number to which said transfer was made and the name and contact information of the financial institution of the account(s) to which said transfer was made;
• A copy of the final documentation (i.e., deed of sale, share purchase agreement, etc.) prepared by the Notaries to carry out the mandates entrusted by the respondents or in their possession.

The appeal concerned whether a judge may apply the crime exception to professional privilege in the absence of the beneficiary of the privilege.

In this context, the Court clarified the process that a judge sitting in first instance must follow when faced with such a matter.

Guidance

Recognizing that the issue raised goes beyond the immediate interests of the parties, the Court of Appeal provided guidance to judges sitting in first instance who are called upon to deal with similar questions on an urgent ex parte basis.

The Court of Appeal stated that, in such contexts, the judge should take cognizance of the documents sought so as to determine if privileged information is in play and, if necessary, proceed to its analysis ex parte and in camera.[4]

Where the professional privilege of an innocent third party may be at stake, the Court of Appeal referred the matter to the judge hearing the application, who, once informed of the situation by the professional’s lawyer, may take the necessary measures to ensure its protection.

Application of the Analytical Framework to the Facts

In this case, the Court of Appeal confirmed the prima facie privileged nature of the documents and information requested, particularly with respect to information related to a notary’s trust account.[5] However, the Court determined that the crime exception justified lifting professional privilege in this instance.

The Court noted that the Appellant established a prima facie proof of fraud, which had been recognized by the judge sitting in first instance, and that, consequently, the transfer of funds obtained through the alleged fraud to professionals should not prevent the issuance of a Norwich order. [6]

The Court of Appeal emphasized that although the crime exception applies, as an exception to the principle of privilege, the resulting intrusion should be limited to what is necessary to make the Norwich order effective.[7] The Court ultimately ordered the Notaries to communicate to the Appellant the following information only:

• Instructions received regarding the funds received from the fraudulent Respondents;
• Details of the source of the funds transferred to the Notaries;
• A copy of the final documentation prepared by the Notaries regarding the use or disposal of the said funds.

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If you have any questions on this matter or believe you are facing a situation requiring a Norwich order or involving professional privilege, do not hesitate to contact our civil litigation team.