Monopoly

A bank’s mistake can lead to the wrong person receiving a transfer of money. In this situation, Norwich Pharmacal Orders (a Court Order for disclosure of documents or information) have been used by banks to identify the recipient. However, a recent High Court decision [1] suggests that future usage could be more restricted.

Once a bank has accounted to its customer for the mistake, it is faced with two options:

  1. Write off the monies.
  2. Seek to recover them.

Should a bank elect for the second option, it may be unclear who the recipient is. However, a 2014 High Court decision [2], provided guidance on this issue when requiring the recipient bank to disclose identifying information.

The recent decision [1] has openly criticised the decision made in 2014 [2].

Firstly, it was noted that, whilst there was a requirement of wrongdoing for a Norwich Pharmacal Order, the Judge did not consider that this applied in cases of mistaken payments given the act concerned was receiving the monies and, in itself, this did not involve any wrongdoing.

Secondly, whilst there was a requirement that the respondent to the application must have facilitated the wrongdoing, the Judge again did not consider that this applied given the recipient bank had merely processed an incoming payment.

Ultimately, whilst the Judge believed the previous decision [2] was “flawed”, the recent decision was bound to follow this decision and the Judge granted the applications. However, the identifying information was limited to the name and address of the recipients only.

It is worth noting the following guidance:

  • The information sought should be limited to what is strictly necessary (i.e. a name and address);
  • It must be evidenced that all other avenues to obtain the information have been exhausted (i.e. enquiries with the customer and recipient bank);
  • Generally, the information obtained should be limited to usage in conjunction with the claim for mistaken payment only;
  • The order should be sought by way of a claim form rather than an application form.

This blog post was edited by Ian Tattersall. For more information, email blogs@gateleyplc.com.

[1] Santander UK plc v The Royal Bank of Scotland plc and others

[2] Santander UK plc v National Westminster Bank plc


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This blog is intended only as a synopsis of certain recent developments. If any matter referred to in this blog is sought to be relied upon, further advice should be obtained.