High Court grants variation of Norwich Pharmacal undertakings to allow use of documents against disclosing bank

In Babco Chemicals Inc v HSBC UK Bank Plc [2025] EWHC 1749 (Comm), the High Court allowed a potential claimant to use documents it received from a bank under a Norwich Pharmacal Order (NPO) to bring a claim against that same bank. This was in the context of an authorised push payment (APP) fraud which had resulted in monies being paid into an account held by the bank and is a further example of a claimant seeking to hold a receiving bank liable.

The High Court considered the circumstances in which it could exercise its discretion to vary undertakings attached to an NPO; these typically limit the use of any documents provided to bringing a claim against the third-party wrongdoer. The decision illustrates the balance a court will try to strike between upholding undertakings for their proper purpose and the interests of justice.

Whether receiving banks can be liable in an APP fraud scenario remains uncertain. However, this decision highlights another area of risk for receiving banks, where potential claimants use an NPO to seek information to fully plead their claim.

Background 

Babco Chemicals Inc (the Claimant) claimed that it was the victim of APP fraud, as a result of which monies were sent to an account held with the Defendant bank. 
In May 2024, the Claimant obtained an NPO requiring the Defendant to provide certain documents to assist the Claimant with its claim against the fraudsters. The NPO was granted on the basis that the Claimant undertook not to use the documents beyond the purposes of either: (i) commencing proceedings against the alleged fraudsters; or (ii) tracing the proceeds of the fraud.

In July 2025, the Claimant applied to be released from that undertaking as it wished to seek relief against the Defendant and wanted to use the documents disclosed pursuant to the NPO to fully particularise that claim. Specifically, the Claimant sought to recover over $390,000 held by the Defendant by way of restitution and/or damages.

The key issues to be determined by the Court were:

• whether the Claimant was in breach of its undertaking by using material obtained via the NPO to draft Particulars of Claim which it had served in draft on the Defendant; and
• whether the Court should discharge the Claimant from its undertaking in the NPO. 

Decision

Regarding the first issue, the Court noted that a breach of an undertaking would be relevant to the exercise of the Court’s discretion to discharge the undertaking. The Defendant argued that using the material in any way other than advancing a tracing claim must be a breach of the undertaking. The Court determined, however, that it did not need to opine as to whether there had been a breach. In the circumstances, any breach would have been technical in nature (as the information was disclosed only to the Defendant who had provided it in the first place) and not material to the exercise of the Court’s discretion.

The Court also declined to penalise the Claimant for its delay in bringing its application to court. The delay was attributed to the Claimant’s genuine belief that its actions were within the scope of the undertaking. Had the Claimant applied earlier, the Court would likely have discharged the undertaking then.

On the second and more substantive issue, the Court noted an earlier Supreme Court authority which identified a court’s broad discretion to vary undertakings and the need to focus on whether there had been a change in circumstances that might justify such a variation. The Court acknowledged that it did not have the material to assess the merits of the Claimant’s allegations against the Defendant at this stage (and noted the Defendant’s defence of its actions). Nonetheless, if the Claimant was able to make out the matters in its draft Particulars of Claim, it would be contrary to the interests of justice to prevent it from doing so because of the existence of the undertaking. The Court was further persuaded by the Claimant’s argument that it would be entitled to the material disclosed under the NPO if it could make out an arguable case in any event.

The Court emphasised that the NPO jurisdiction is not to be misused as a basis for a fishing expedition to bolster an otherwise speculative or unmeritorious claim. However, the Court found no evidence of improper conduct on the part of the Claimant in obtaining the NPO in the first place, and if the order brought to light material that supported its claim against the Defendant, the Claimant ought to be entitled to rely on it.

The Court ordered a limited variation to the Claimant’s undertaking such that documents obtained through the NPO could also be used for the purposes of commencing proceedings against the Defendant.

Key takeaways

Undertakings in NPOs remain a crucial guardrail to prevent claimants from misusing pre-action disclosure powers and conducting fishing expeditions; however, they are not absolute. The Court’s decision shows that the interests of justice may override the original undertaking and enable material to be used against the disclosing party, not just the third-party wrongdoer. This decision is a further issue for banks to keep in mind when they are responding to NPO applications.

The decision also shows that a breach of an undertaking may not be fatal to any application to vary it. However, in the circumstances of this case, any breach would have been technical in nature and therefore not material to the Court’s discretion to vary the undertaking. Generally, parties to undertakings should seek the Court’s permission to vary the undertaking before taking steps that could breach their obligations.

With thanks to Alex Jones for his assistance in preparing this post.