THE QUEEN on the application of CLEGG v (1) THE SECRETARY FOR TRADE AND INDUSTRY (2) CHRISTOPHER KONSTANTINE BARRINGTON MAYHEW (3) ANTHONY HARRY SETON ROBERTSHAW [2002] EWCA Civ 519

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CHANCERY DIVISION
(The Hon. Mr. Justice Stanley Burnton)
[2002] EWCA Civ 519Case No Case No: C/2001/1111Venue Royal Courts of Justice, Strand,, London, WC2A 2LL
Between
THE QUEEN on the application of CLEGGAppellant(1) THE SECRETARY FOR TRADE AND INDUSTRY (2) CHRISTOPHER KONSTANTINE BARRINGTON MAYHEW (3) ANTHONY HARRY SETON ROBERTSHAWRespondents
Before
Lord Justice SchiemannLord Justice ChadwickSir Christopher StaughtonMr M Collings (instructed by Messrs. Peters & Peters, London) for the AppellantMr R Hildyard QC & Mr J Crow (instructed by the Treasury Solicitor, London) for the Defendants/RespondentsDate 18 April 2002

Lord Justice Chadwick :

This

[1]is an appeal from an order made on 15 November 2001 by Mr Justice Stanley Burnton in proceedings for judicial review brought by the appellant, Mr John Michael Clegg, against the Secretary of State for Trade and Industry and two individuals appointed by him to be inspectors under section 442 of the Companies Act 1985 and section 177 of the Financial Services Act 1986. The judge dismissed the proceedings. In the circumstances to which I shall refer the appellant no longer seeks any relief against the Secretary of State. The respondents to this appeal are the two inspectors.[2]Section 442(1) of the Companies Act 1985 empowers the Secretary of State, where it appears to him that there is good reason to do so, to appoint one or more competent inspectors to investigate and report on the membership of any company, and otherwise with respect to the company, for the purpose of determining the true persons who are or have been financially interested in the success or failure (real or apparent) of the company or able to control or materially to influence its policy. Section 177 of the Financial Services Act 1986 (now repealed, and replaced by section 168 of the Financial Services and Markets Act 2001) contained a power to much the same effect in respect of insider dealing. It is not in dispute that inspectors appointed under those provisions have a duty to act fairly towards those whose conduct they may criticise in the report that they are required to make. As it was put by Lord Denning, Master of the Rolls, in In re Pergamon Press Ltd [1971] 1 Ch 388, at page 400A, in relation to inspectors appointed under section 165 of the Companies Act 1948 (now section 431 of the 1985 Act):
“before they condemn or criticise a man, they must give him a fair opportunity for correcting or contradicting what is said against him.”
[3]On 21 February 1992 the Secretary of State appointed the respondents to investigate and report on the membership of, and any insider dealing in respect of the securities of, Wace UK Holdings Limited, a listed public company formerly known as Parkway Group Limited which had been the subject of an agreed takeover offer by Wace Group Plc in 1990. Until 31 January 1992 the appellant had been managing director of both Wace Group Plc and Wace UK Holdings Ltd. On 9 March 1992 further appointments of the same two inspectors were made under section 442 of the 1985 Act in respect of two other companies, Tinsley Robor Plc and European Colour Plc. In the event the section 177 enquiry was subsumed in the section 442 enquiry; and the inspectors produced a single combined report in relation to the three companies, Wace UK Holdings Ltd (or Parkway), Tinsley Robor Plc and European Colour Plc. The report was dated 21 June 2000; and a signed copy was delivered to the Department of Trade on that or the following day.[4]The inspectors’ report contained criticism of the appellant. The tenor of that criticism can be gauged from paragraph 11.2, which is set out in the judgment below:
“As many previous Companies Acts inspectors have discovered, where an individual intent on misleading a company’s board of directors and its advisers gains control of a company, there is sometimes very little that can be done to prevent the abuse of that power for personal gain. Mr J M Clegg, as managing director of Wace throughout the relevant period covered by our report, was no exception. Most notably we believe he benefited from substantial secret dealings in the shares of Wace, European Colour, Tinsley Robor and Parkway through bank accounts in his name with Credit Suisse and in the name of William Clegg (the name which he had been given at birth) with Anglo Irish Bank.”
[5]The question whether or not to publish a report made under section 442 of the 1985 Act is not a matter for the inspectors. Their task is to report to the Secretary of State. It is the Secretary of State, or others within the Department, who decides whether the report should be published – see sections 437(3)(c) and 443(1) of the 1985 Act. In the present case that decision was taken by ministers on 13 July 2000. The report was published on 31 August 2000. Copies were available thereafter for purchase from Her Majesty’s Stationery Office.[6]These proceedings were commenced by the issue of a claim form on 17 October 2000. Relief was sought under the following heads:(a) orders quashing (i) the decision of the inspectors to complete the report of the investigation under section 442 of the Companies Act 1985 and to deliver that report to the Secretary of State and (ii) the decision of the Secretary of State to publish that report; and an order prohibiting further publication, dissemination and sale of that report;(b) an order prohibiting the completion, submission and publication of any report of the investigation under section 177 of the Financial Services Act 1986 into insider dealing in respect of securities of Wace UK Holdings Limited; and(c) declaratory relief as to the unlawfulness of those decisions, the completion, delivery and publication of the report under section 442 of the 1985 Act and the completion, delivery and publication of any report under section 177 of the 1986 Act. It was not then appreciated by the appellant or his advisers that the section 177 enquiry had been subsumed in the section 442 enquiry and that the report completed on 21 June 2000 was a combined report of the inspectors’ findings in both enquiries.[7]By the time that the matter came before Mr Justice Stanley Burnton for hearing in April 2001 it was accepted that no separate relief was required in respect of any future report of the investigation under section 177 of the Financial Services Act 1986. Relief was no longer sought under head (b). It was accepted also – and, if not accepted, the judge so decided – that there was no case for relief in relation to the publication on 31 August 2000 or in relation to any further dissemination through sale by HMSO. The reasons why such relief could not be granted are(i) that the decision to publish was not taken by the inspectors,(ii) that those who did take that decision were not party to (and had no knowledge of) any alleged unfairness on the part of the inspectors and(iii) that, out of a print run of 200 copies, only a few remained unsold – so there would be little purpose in seeking to restrain further dissemination. As the judge identified, correctly, the substance of the appellant’s complaint was that the inspectors had acted unfairly in deciding to complete their report and deliver it to the Secretary of State; and, in relation to that decision, the only available remedy was declaratory relief. An order quashing that decision would have no practical effect; the decision had already been acted upon and was, in that sense, spent.[8]That the only available remedy in relation to the alleged unfairness about which the appellant complains is declaratory relief is now recognised by the terms in which he seeks relief from this Court. The order sought in the appellant’s notice, as served, was a declaration that the inspectors completed and submitted the report of 21 June 2000 “without giving [the appellant] any, or any adequate, opportunity to answer the criticisms against him.” It was accepted, however, in the course of the hearing – as it had to be, for reasons which I shall explain – that it could not be said that the appellant had been given no, or no adequate, opportunity to answer the criticisms against him. The real question was whether the inspectors had acted unfairly in completing and submitting their report at a time when – some five years after provisional criticisms had been put to the appellant - they had received no written response from him. So it was that application was made in the course of the hearing to amend the appellant’s notice, so as to seek a declaration in these terms:
“. . . that the [inspectors] completed and submitted a report dated 21 June 2000 in respect of investigations under section 442 of the Companies Act 1985 concerning Wace UK Holdings Ltd, European Colour Plc and Tinsley Robor Plc without first receiving and considering any written response by the Claimant in answer to the criticisms made against him notwithstanding that the Claimant was led to believe that no such report would be completed and submitted without him being given the opportunity to provide such a response.”
[9]A declaration in those terms would not meet the point. It is not in dispute that the inspectors did complete and submit their report without receiving a written response from the appellant to criticisms made against him. Nor, as I shall explain, is there really any dispute that the appellant was given an opportunity to provide a written response to those criticisms. Whether the inspectors acted unfairly in completing and submitting their report in the absence of a written response from the appellant turns, in my view, on the answers to two further questions:(i) whether the inspectors did lead the appellant to believe that they would not complete and submit their report without first telling him that they intended to proceed notwithstanding that they had received no written response from him; and, even if they did not lead him to believe that,(ii) whether, in the circumstances, fairness required that they would not proceed without telling him that that was their intention.[10]If the first issue in this appeal - whether the inspectors did act unfairly in completing and submitting their report in the absence of a written response from the appellant - is answered in the appellant’s favour, then there is a second issue: would it be appropriate for the court to make a declaration to that effect. In order to answer that question (if it arises) it is necessary to give some thought – rather more thought, I think, than the point has received in the attempts to formulate a declaration made so far on behalf of the appellant – as to whether a declaration could be made in terms which were truly reflective of the unfair conduct which the court had identified. There is an obvious danger that a declaration of unfair conduct may lead the uninformed to think that the court’s disapproval of some procedural irregularity wholly undermines the inspectors’ conclusions; and an even more obvious danger that the appellant might seek to use such a declaration for that purpose. Unless those dangers can be contained, the court may have to conclude that to make a declaration would be a disproportionate response in the particular case. The underlying facts[11]The investigation which the inspectors had been appointed to carry out required them to unravel transactions of some complexity and which (as they found) had been designed to obscure rather than to reveal what had really taken place. The progress of the investigation was not assisted by the fact that the appellant was no longer in England; he had relocated in the United States. But, by May 1995, the inspectors had reached provisional conclusions. On 25 May 1995 the secretary to the inspectors wrote to the appellant in these terms:
“The Inspectors are preparing their report and have asked that you be appraised of their provisional views where these are, or may be construed as, critical of you. These provisional views are contained in the schedule attached to this letter. The wording used is meant to convey the issues concerned and is not necessarily that intended to be used in any report. I would stress that the Inspectors views are only provisional and, even at this late stage, any evidence which you wish to give to the Inspectors will be carefully considered by them. The Inspectors have asked me to indicate that they do not think that it has been in your best interests to fail to attend before them to give evidence. Should you wish to produce any evidence or comment on any item in the schedule please do so within 21 days of the date of this letter.”
The schedule enclosed with that letter contained, in 44 paragraphs extending over eleven pages, a number of serious criticisms of the appellant – including criticism of deliberate dishonesty.[12]The date for a response to those criticisms was extended to 14 July 1995; and, after solicitors (Messrs Peter & Peters) had written, on 12 July 1995, to notify the Department that they had been consulted by the appellant, to 31 July 1995. On 11 August 1995, after a further reminder from the inspectors, Peters & Peters wrote a long letter, the purpose of which appears from the fifth paragraph:
“The purpose of this letter is to request the material by reference to which the Inspectors have reached the provisional views set out in the Schedule, many of which are severely critical of our client. Without this material our client is not afforded a fair opportunity of responding to those criticisms prior to the completion and publication of the Inspectors’ report.”
The letter went on to make the point that:
“We do not accept, as a matter of principle, that the duty to inform persons of whom criticism is proposed to be made so that they may have a fair opportunity to address it in advance is satisfied by a summary of inspectors’ provisional findings, conclusions and views without reference to the material on which those findings have been made or conclusions drawn or views reached. One is left to second guess the reasons for inspectors making findings or drawing conclusions, and it is frequently difficult or impossible to correct or contradict such findings or views with any particularity in the absence of the underlying material. This is not a fair procedure.”
There followed, in fourteen numbered paragraphs, what are said to be examples of the difficulties in which the appellant and his advisers were placed by the absence of the underlying material. The letter continued:
“You will appreciate that the points which we make are not exhaustive. This is a case in which our client cannot fairly or properly deal with the criticisms made against him without seeing the material upon which the Inspectors make these criticisms.”
[13]The inspectors refused the request that they produce the underlying material which had led them to form the provisional views reflected in the schedule of criticisms. In a letter dated 16 August 1995 from their secretary it was pointed out that the Court of Appeal, in the Pergamon case, had indicated that inspectors “need not provide chapter and verse. An outline of the charge will usually suffice”. The letter went on:
“Even at this late stage the Inspectors are prepared to offer your client the opportunity to give evidence before them as he has been required to do. In order to assist your client and for the avoidance of doubt [he] is required to attend . . . and give evidence before the Inspectors. The Inspectors have indicated that they would be prepared to treat the provisional criticisms as an agenda. . . .”
[14]The offer of a further opportunity to attend on the inspectors to give evidence was accepted by Peters & Peters on behalf of the appellant in a letter of 4 September 1995. The letter concluded:
“We must, however, reserve our client’s position with respect to answering the provisional criticisms against him in due course. In the light of the interview, the Inspectors will wish to reconsider the provisional criticisms sent under cover of your letter dated 25 May 1995. The interview, and the documents which are put to our client in the course of it, may answer the points made in our letter dated 11 August, but on the other hand they may not, or not entirely. Our client’s position is therefore reserved. In the fourth paragraph of your letter you mention the attendance of our client to give evidence, and that the Inspectors have indicated that they would be prepared to treat the provisional criticisms as an agenda. We wish to make it clear, for the avoidance of doubt, that the purpose of the interview is not simply that our client should be required to answer the provisional criticisms on oath. This would not address any of the matters set out in our letter dated 11 August, and there is no justification for answers to provisional criticisms to be given on oath instead of in the usual way.”
[15]As those paragraphs make clear, the position which Peters & Peters were concerned to maintain on behalf of the appellant was that adopted in their letter of 11 August 1995: that the appellant could not be expected to respond to the provisional criticisms without seeing the underlying material. The reason for seeking to maintain that position is, if I may say so, reasonably plain. If, as could be expected, the inspectors continued to refuse to produce all the underlying material – relying on what they clearly regarded as a practice sanctioned by this Court in the Pergamon case – the appellant could (if he chose) refuse to respond to the schedule of criticisms and seek to justify his refusal to respond on the basis that it was unreasonable to expect him to do so. That would, or might, provide a basis for challenge, on grounds of procedural unfairness, to a decision by the inspectors to complete and submit their report; or to a proposal by the Secretary of State to publish that report. Whether or not a challenge on that basis would have succeeded is not a question which is before this Court on the present appeal. The relevance of the point is that (for what it was worth) it had been raised and was being maintained; and that, while it was being maintained, there was an obvious possibility that the appellant might well be advised that his best interests lay in refusing to respond to the provisional criticisms, with a view to mounting a challenge, on the grounds of procedural unfairness, to a later decision to publish the report. For my part, I view with some scepticism the suggestion, now advanced, that the appellant would have been only too anxious to respond to the provisional criticisms if he had been given the opportunity to do so.[16]The inspectors replied to the letter of 4 September 1995 by a letter of 11 September 1995, on which the appellant places much reliance. After pointing out that the appellant was attending to give evidence in the unusual circumstances that he had already received the provisional criticisms, and after referring to certain documents - copies of which the inspectors were making available in advance because they were “documents which your client would or may have seen at the relevant times” - the letter went on:
“As you rightly point out, and the Inspectors accept, your client is attending to give evidence not answer the provisional criticisms. Depending on his answers to questions it may be necessary to put to him a variety of documents. In most instances these documents were provided by third parties and are confidential to the enquiry. In those circumstances the Inspectors are not prepared to consider the release of copies of such documents. If in the course of his giving evidence, your client wishes to consider any document further, either because of its length or its technical nature, then time will be given to enable him to do so. Indeed, as was mentioned on the telephone, the Inspectors consider that the documents are better presented at a structured interview when they can be put in context. . . . Clearly the provisional criticisms may well have to be amended in the light of your clients evidence. Although the suggestion to treat the earlier provisional criticisms as an agenda was no more than an expectation that your client might give evidence covering those areas, it may assist to have a formal agenda for the interview. Such an agenda is also attached to this letter. The main areas which the Inspectors will wish to cover are clearly identified in the provisional criticisms previously forwarded to your client.”
The agenda attached to that letter lists twelve items, all of which can be identified in the schedule of criticisms.[17]Peters & Peters wrote back on 15 September 1995, to express disappointment the proposed release of documents was, as they put it, so limited. The letter confirmed that the appellant would attend for interview on 5 and 6 October 1995. It contained the following paragraph:
“We note that the main areas which the inspectors will wish to cover are those identified in the provisional criticisms, and that you accept that such provisional criticisms may well have to be amended in the light of the interview. We repeat the reservation of our client’s rights in the penultimate paragraph of our letter dated 4 September.”
In the final sentence of that paragraph Peters & Peters were continuing to maintain the position that the appellant could not be expected to respond to the provisional criticisms – whether or not those criticisms were amended in the light of the interview - unless and until all the underlying material on which those criticisms were based had been disclosed.[18]The interview took place on 5 and 6 October 1995. On 24 October 1995 the inspectors sent transcripts of those interviews to Peters & Peters. It is clear from those transcripts that neither the appellant, nor the very experienced solicitors who were advising him, could have taken the view that the inspectors were likely to be led, by the answers given by the appellant to the questions put to him, to withdraw, or modify to any material extent, the provisional criticisms which had been sent to him some four months earlier and which formed the basis for the interview. They could not have thought that the inspectors were satisfied that those criticisms had been met. The appellant’s suggestion, in paragraph 38 of his witness statement of 13 February 2001, that “both my solicitors and I believed that my recollection of events and other evidence I submitted in relation to other paragraphs of provisional criticisms . . . appeared to clarify and satisfy the points which had been unclear to the inspectors” is not credible. It is important to keep in mind that the appellant had, himself, been in practice as a solicitor specialising in commercial law. He cannot be regarded as naïve. The true position, born out by examination of the transcripts, is summarised by Mr Robertshaw, one of the inspectors, at paragraph 44 of his witness statement dated 5 January 2001:
“Further, Mr Clegg must have realised both by the tenor of the interview and from reading the transcript that our views had not altered. Our questioning of Mr Clegg during the interview was in the style of cross-examination. We did not indicate that we accepted the version of events put forward by Mr Clegg. At times we expressly conveyed the opposite impression. We did not suggest at any time during the interview that what we had heard would require us to reformulate our provisional views.”
[19]The appellant appears to have gone through the transcripts with some care. Under cover of a letter dated 20 November 1995 Peters & Peters sent to the inspectors a long schedule of typographical and grammatical corrections “identified by Mr Clegg”. In acknowledging that list of corrections, the inspectors indicated that they were expecting “further substantive comments”. In a letter from Peters & Peters dated 4 December 1995 it was said that they anticipated that those further comments would be provided by 8 December 1995. They were, in fact, contained in a letter dated 13 December 1995. The letter is central to this appeal:
“We now comment on the interview of our client which took place on 5 and 6 October. There are a number of points which we would raise about the course of the interview, and the form, content and method of questioning. In particular the documents which were provided in advance were only an unrepresentative sample of the very many documents which the Inspectors have. The concern expressed in the third paragraph of our letter of 15 September was fully justified. It was unsatisfactory for our client to be presented with documents during the interview of which copies had not been previously provided. At the interview, it appeared that the Inspectors had a great many documents available to them. The transcript refers to at least 17 files (which were all substantial ring binders) and it appeared that there were additional files containing many more documents besides. In the penultimate paragraph of our letter of 4 September we said that the interview, and the documents put to our client in the course of it, might serve to answer the points made in our letter of 11 August. Neither the interview, nor the documents which were put to our client during the interview or made available to our client prior to the interview, do meet the fundamental point made in our letter of 11 August that, in the circumstances of this case and in the event of the Inspectors now deciding to make any provisional criticisms of our client, our client would need to see the material upon which the Inspectors reached those provisional conclusions in order for him to be able to deal with them properly. However, we do not consider it worthwhile to explore these matters at this stage and we hope that it will not be necessary to so at all. But if the Inspectors still propose to criticise our client in their Report, we await amended provisional criticisms. If the need arises we can then deal with all matters in the response to such provisional criticisms. Accordingly, we continue to reserve all our client’s rights.”
[20]The inspectors acknowledged that letter on 15 December 1995. Their letter of 15 December 1995 does not suggest that the provisional criticisms contained in the schedule sent on 25 May 1995 would be amended or withdrawn. But neither does the letter indicate that the inspectors were expecting a response to those provisional criticisms by any specified date, or at all. The letter is silent on the point. The judge thought that regrettable. He took the view that an appropriate response, insisting on immediate submission of any further comments on the provisional criticisms, was called for.[21]There was further correspondence between the inspectors and Peters & Peters during the first half of 1996, relating to an account with Credit Suisse. That culminated in a letter, dated 13 May 1996, in which Peters & Peters told the inspectors that they were instructed not to enter into any further correspondence on that point. The correspondence in 1996 throws no light on the question whether the appellant was expecting to receive amended provisional criticisms, or whether the inspectors were expecting a response to the provisional criticisms already made. The most that can be said is that Peters & Peters had no reason to think that the inspectors were no longer proceeding with the enquiry which they had been appointed to carry out.[22]We have been shown no correspondence between 13 May 1996 and 27 July 2000. As is now known, the inspectors completed, and signed their report on 21 June 2000, and submitted the report to the Secretary of State on that or the following day.[23]On 27 July 2000 the Department wrote to Peters & Peters to enquire if that firm still represented the appellant. The purpose of that enquiry, as appears from a subsequent letter of 9 August 2000, was to make arrangements for the appellant to have access to the report prior to publication. That, it is said (and there is no reason to doubt), was the first that the appellant or Peters & Peters knew of the completion of the report.[24]The report was published on 31 August 2000. It received considerable publicity in the press. But that had not, I think come to the attention of Peters & Peters by 8 September 2000, when they wrote to the Department in these terms:
“On 11 th August 1995 we wrote to you concerning the provisional criticisms procedure. Essentially we were asking for the material by reference to which the Inspectors reached their provisional views, so that our client could address such views fairly and properly. However you requested a further interview of our client, and this duly took place in October 1995. Thereafter we were expecting you (i) to revise or confirm the Inspectors’ provisional views, (ii) to address our letter of 11 th August and provide the materials, and (iii) to receive our client’s response to the provisional views. Instead, it now appears that the Inspectors have reported.”
The judgment below[25]The judge regarded the inspectors’ failure to respond appropriately to Peters & Peters’ letter of 13 December 1995 as an error. But he did not think that that error had led to unfairness. He said this, at paragraphs 48 and 49 of his judgment:
“48. I do not think that the conduct of the Inspectors towards Mr Clegg taken as a whole can be said to be unfair. He was given an opportunity to address the original provisional criticisms of him in writing following the letter of 25 May 1995 and during the interviews of 5 and 6 October 1995. The object of the Inspectors at the interviews was to elicit Mr Clegg’s evidence on the subjects of their provisional criticisms: see the last paragraph of their letter of 11 September 1995. I do not read their acceptance, in that letter, of the fact that he was attending before them “to give evidence not to answer the provisional criticisms” as detracting from that stated object. Mr Clegg’s solicitors appreciated that this was the object of the interviews: see their letter of 15 September 1995 . . . The interviews did in fact deal with the matters in the provisional criticisms. The transcript shows that Mr Clegg gave his evidence and comments in relation to these matters. Mr Clegg’s solicitors could have elicited, and he could have given, any testimony they thought appropriate that was not given in response to the Inspectors’ questions. He and his solicitor could have made any comment they thought appropriate. 49. Mr Clegg was clearly in a position to provide further comments (and I emphasise the word “further”) in December 1995, as appears from his solicitors’ letter of 4 December 1995. I note, however, that what that letter (and the previous letter from Peters & Peters of 22 November 1995) envisaged was “our comments in relation to the interviews of 5 and 6 October”, which is not necessarily the same as comments on the provisional criticisms. The subsequent letter of 13 December was a forensic tactical step. Mr Hildyard [counsel for the inspectors] accepted that the failure of the Inspectors thereafter to require Mr Clegg’s comments to be provided immediately, without waiting for any amended provisional criticisms, was a regrettable oversight. In my judgment their failure to respond appropriately to the letter of 13 December 1995 was an error, but it was not such as to render the entire process unfair or its findings unreliable.”
[26]The judge pointed out (at paragraph 52 of his judgment) that the appellant had not identified any criticisms contained in the Inspectors’ report which had not been included in the schedule of provisional criticisms sent in May 1995. Nor had he identified any criticism made of him in the report that was not addressed by him in the October 1995 interviews. He invited counsel for the appellant to put forward, by way of example, the six most important points which the appellant would have wished to put to the inspectors in response to the provisional criticisms; so that he could see whether there was any substance in the complaint that the appellant had lost the opportunity to put forward matters of substance. He described the matters advanced in response to that invitation as “unimpressive in the extreme”. He went on, at paragraph 58 of his judgment to say this:
“Mr Collings wholly failed to persuade me that if any of the matters now put forward had been provided to the Inspectors in writing the serious criticisms of Mr Clegg in the Report would or should have been affected. Mr Clegg’s complaints lack substance. He has seized on the regrettable failure of the Inspectors to respond to his solicitors’ letter of 13 December 1995 to make an unmeritorious attack on the findings of the Inspectors.”
[27]The judge took the view that the failure of the inspectors to respond to the letter of 13 December 1995 made it appropriate to give leave to seek relief by way of judicial review; but he dismissed the substantive application. This appeal[28]The judge handed down his judgment on 8 May 2001. Permission to appeal from his order (not then drawn up) was granted by this Court (Lord Justice Keene) on 3 July 2001. The principal ground of appeal is that the judge was wrong to conclude that the inspectors’ conduct of their enquiry was not unfair.[29]It is significant that Mr Collings (who appears for the appellant in this Court as he did below) has not felt able to put before us any point which, if his client had had the opportunity to respond to the inspectors’ provisional criticisms which (as he says) was denied him, could have been expected to have affected the criticisms made in the report. He submits that he does not need to do so. The point is said to be one of principle. It is not necessary to show that the outcome would or might have been different if the appellant had been given an opportunity to respond to the provisional criticisms. It is enough that the procedure was unfair; and the Court must so declare.[30]I accept that it is not necessary for the appellant to show that the outcome would have been different if the appellant had responded to the provisional criticisms. I accept that, if procedural unfairness is established, it would be enough to show that, but for that procedural unfairness, the outcome might have been different. But, for my part, I reject the submission that it is not necessary even to surmount that hurdle. It is, I think, pertinent to have in mind the observations of Lord Wilberforce in Malloch v Aberdeen Corporation [1971] 1 WLR 1578, at page 1595:
“The appellant has first to show that his position was such that he had, in principle, a right to make representations before a decision against him was taken. But to show this is not necessarily enough, unless he can show that if admitted to state his case he had a case of substance to make. A breach of procedure, whether called a failure of natural justice, or an essential administrative fault, cannot give him a remedy in the courts, unless behind it there is something of substance which has been lost by the failure. The court does not act in vain.”
[31]The judge held that the appellant had lost nothing of substance as a result of the procedural unfairness of which he complained. Mr Collings has made no serious attempt to persuade us that the judge was wrong to take that view. I think that the judge was right to regard the application before him as an opportunistic attempt to seize on the regrettable failure of the Inspectors to respond to the letter of 13 December 1995 as a basis upon which to make an unmeritorious attack on the findings of the Inspectors. I would uphold the judge’s order, and dismiss the appeal, on that ground alone.[32]It is appropriate, however, to address the complaint of procedural unfairness. As I have said, earlier in this judgment, the real question is whether the inspectors acted unfairly in completing and submitting their report in the absence of a written response from the appellant to the provisional criticisms sent to him in May 1995; and the answer to that question turns on the answers to the two further questions:(i) whether the inspectors did lead the appellant to believe that they would not complete and submit their report without first telling him that they intended to proceed notwithstanding that they had received no written response from him; and, even if they did not lead him to believe that,(ii) whether, in the circumstances, fairness required that they would not proceed without telling him that that was their intention.[33]It is, I think, convenient to summarise the position that had been reached immediately following the receipt by the inspectors of the letter of 13 December 1995 from Peters & Peters. It was this:(i) the appellant had had the schedule of provisional criticisms since May 1995;(ii) his solicitors had taken the point, in their letter of 11 August 1995, that it was procedurally unfair to expect him to respond to those criticisms without sight of the underlying material;(iii) that point was rejected by the inspectors on the basis of a practice which they clearly regarded as having received the sanction of this Court in the Pergamon case;(iv) it was, therefore, most unlikely – and must have been recognised by experienced solicitors as most unlikely – that the inspectors would make the underlying material available for inspection;(v) nevertheless, the point was maintained, in letters dated 4 September, 15 September and 13 December 1995;(vi) in those circumstances, it was evident that the appellant was not going to make a written response to the provisional criticisms sent in May 1995 unless and until Peters & Peters changed their position on that point;(vii) in the absence of a change of position, the effective “stand-off” on that point would continue unless and until the inspectors withdrew the provisional criticisms sent in May 1995 – or, so modified those criticisms that they were no longer a matter of concern to the appellant;(viii) the interview on 5 and 6 October 1995 had provided an opportunity for the appellant to give explanations which might have led the inspectors to amend their provisional criticisms, as they had recognised in their letter of 11 September 1995; but(ix) nothing had occurred at the interview on 5 and 6 October 1995 which could have led the appellant, or Peters & Peters, to think that the inspectors would withdraw or modify those criticisms.[34]In those circumstances, what were the inspectors to make of the statement in the letter of 13 December 1995 that:
“. . . if the Inspectors still propose to criticise our client in their Report, we await amended provisional criticisms. If the need arises we can then deal with all matters in the response to such provisional criticisms.”
The judge described that letter as “a forensic tactical step”. I agree with his view. In the circumstances which I have set out Peters & Peters could not have thought that there was any real likelihood that the inspectors would withdraw, or modify in any substantial respect, the existing provisional criticisms; nor that what they described, in that letter, as “the fundamental point . . . that our client would need to see the [underlying] material” would be resolved, or would cease to be a “fundamental point”, as a result of any amended provisional criticisms which the inspectors might send. The real purpose of the letter, as it seems to me, was to lay the ground for an additional argument in the event that the appellant decided that his best interests were served by refusing to respond – or by delaying his response - to the provisional criticisms which, as he must have appreciated, the inspectors were likely to make in a report.[35]Had the inspectors been more astute, they would have appreciated the real purpose of the letter of 13 December 1995; and would have recognised the need to respond to it. The fact that they did not has led to these proceedings. But it does not lead to the conclusion that they treated the appellant unfairly. It cannot be said, in the circumstances of the present case, that the inspectors’ failure to respond to that letter led the appellant to believe that they would not complete and submit their report without first telling him that they intended to proceed notwithstanding that they had received no written response from him. Nor can it be said, in my view, that fairness – as distinct from prudence and good administration – required that (even though they had done nothing to encourage that belief) they would not proceed without telling him that that was their intention. Had the appellant been in any doubt – by, say, March 1996 - whether the inspectors were intending to proceed without either sending him amended provisional criticisms or receiving his response to the original criticisms he could have enquired as to the position. I am unable to avoid the conclusion that he decided not to do so; and that that decision was taken for tactical reasons.[36]It follows that I would dismiss this appeal on the grounds, also, that the complaint of procedural unfairness has not been made out.[37]In those circumstances it is unnecessary to decide whether, if procedural unfairness had been established, it would have been appropriate to grant declaratory relief. But I find much force in the observations of

the judge at paragraph 44 of his judgment:

“The reasons for the exceptional nature of relief [by way of declaration] in cases such as the present are not difficult to see. A declaration made by the court in general terms that inspectors had acted unfairly would be perceived as undermining their entire report, and their conclusions would be seen as deprived of any value, even if the unfairness in question might be minor or affect only part of the report. A declaration that an individual had been treated unfairly would undermine all of the findings and conclusions of the Inspectors adverse to that individual. On the other hand, a particularised declaration, aimed at specific findings or criticisms, would involve the Court in trying the facts in question and constituting itself a court of appeal against the findings of the Inspectors. Parliament has not provided for any such appeal procedure. A declaration of the kind sought in this case is not only a discretionary remedy: it is to be given only in exceptional circumstances.”
If I had been satisfied that procedural unfairness were established in this case, I have little doubt that it would have been right to refuse declaratory relief on the basis that a declaration in general terms would be likely to be used to undermine criticisms by the inspectors to which the appellant has made no attempt to suggest an answer; and that the court is in no position to attempt the task which it would have to undertake in order to justify a particularised declaration. But I should not be taken as endorsing a view that declaratory relief can never be appropriate in a case where procedural unfairness has denied a party the opportunity of putting before inspectors matters which might have made a real difference to their conclusions. This is not such a case. Sir Christopher Staughton:[38]I agree. Lord Justice Schiemann: 39. I also agree.

Order

The appeal herein be dismissed. The Appellant do pay the Respondents’ costs of the appeal, such costs to be assessed if not agreed. (Order does not form part of the approved judgment)

Cited in 4 later judgments