Pre-action Disclosure Orders

Making Payments Inadvertently to the Wrong Account!

Whilst paying your suppliers electronically has real advantages – it saves money, is quicker and is less bureaucratic – it does present risks. I was recently asked to get involved by a client who thought they had paid £5,000 into a supplier’s bank account only to find out that they had input the account number incorrectly by one digit. The money was transferred to the wrong account and despite numerous exchanges of emails with both the paying bank and receiving bank, my client was unable to get the money refunded back to their account.

If the account holder refuses to respond to a query from the bank, the bank is unable to divulge its/hers/his name. My client was therefore in the position where it could not pursue the account holder.

Norwich Pharmacal Orders

All is not lost, however, as there is a legal process whereby you can obtain the account holders’ details. It is called a pre-action disclosure order (sometimes referred to as a Norwich Pharmacal Order after a case of that name). It is a general procedure and not specific to payments to wrong bank accounts but the process can be used in these circumstances. It involves applying to court for an order to require the respondent (in this case, the bank) to provide information on the wrong-doer (in this case, the account holder).

This does mean that you will incur costs up-front and it would be preferable to avoid these if at all possible. The approach that we took is that we phoned the receiving bank and then followed up with an email. We asked the bank to help by writing to the account holder explaining that if they do not transfer the money back:

1. we will apply to the court for a pre-action disclosure order to release the account holder’s details. We are sure that the order will be granted and, on receipt, we will initiate an action against the account holder for the outstanding sum together with costs; and

2. retaining the funds knowing that they have been transferred by mistake may be considered ‘theft’ under English law and the account holder could be prosecuted in a criminal court.

This had the desired effect and within a couple of weeks, the cash was back in my client’s account.

Of course, this is not likely to work every time as, for example, the bank may not be willing to help or the account holder may have spent the money but it is worth trying.

This should not be relied upon for legal advice. If you would like any further information or advice please email richard@clariclegal.co.uk.