Tchenguiz v Director of the Serious Fraud Office & Anor [2014] EWCA Civ 1409

Case No A3/2014/2548[2014] EWCA Civ 1409
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION
COMMERCIAL COURT
THE HONOURABLE MR JUSTICE EDER
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate Friday 31 st October 2014
Before
LORD JUSTICE JACKSONLADY JUSTICE SHARPLORD JUSTICE VOS
Between
ROBERT TCHENGUIZAppellant/
(Transcript of the Handed Down Judgment ofWordWave International LimitedA Merrill Communications Company165 Fleet Street, London EC4A 2DYTel No: 020 7404 1400, Fax No: 020 7831 8838Official Shorthand Writers to the Court)
Miss Catherine Newman QC and Mr John Robb (instructed by Stephenson Harwood LLP) for Appellant and the second Intervening Party.Mr Pushpinder Saini QC and Mr James Segan (instructed by The Treasury Solicitor) for RespondentMr Khawar Qureshi QC (instructed by Law Officers of The Crown, Guernsey) for first Intervening PartyHearing Hearing dates: 13 th& 14 th October 2014
Judgment
[1]This judgment is in seven parts, namely: Part 1. Introduction Paragraphs 2 to 11 Part 2. The facts Paragraphs 12 to 46 Part 3. The application for permission to make use of disclosed documents Paragraphs 47 to 51 Part 4. The appeal to the Court of Appeal Paragraphs 52 to 54 Part 5. The law Paragraphs 55 to 67 Part 6. Decision Paragraphs 68 to 96 Part 7. Executive summary Paragraphs 97 to 101

Part 1. Introduction

[2]This is an appeal against an order of the Commercial Court refusing permission for documents disclosed in English litigation to be used in litigation proceedings in Guernsey. The principal issue is whether the judge correctly weighed up the conflicting public interests which are in play.[3]Mr Robert Tchenguiz was first claimant in the English litigation (“the Tchenguiz proceedings”). He was applicant in the application to the judge and is appellant in this court. I shall refer to him as “RT”.[4]R20 Ltd (“R20”) is a company controlled by RT. It was second claimant in the Tchenguiz proceedings, but not a party to the present application or appeal.[5]Rawlinson and Hunter Trustees SA (“R & H”) is a company incorporated in Switzerland. It is the current trustee of the Tchenguiz Discretionary Trust (“TDT”) of which RT and his family are the principal beneficiaries. R & H was third claimant in the Tchenguiz proceedings (in its capacity as trustee of the NS1 Trust and Tchenguiz Discretionary A Trust) and second intervening party in the present appeal.[6]The Director of the Serious Fraud Office (“the Director”) was defendant in the Tchenguiz proceedings and is respondent in the present appeal. I shall refer to the Serious Fraud Office as “SFO”.[7]Mr Vincent Tchenguiz (“VT”) is the brother of RT. Although he too has been embroiled in complex litigation about related matters, he only appears on the fringes of the present appeal. I shall refer to RT and VT collectively as “the Tchenguiz brothers”. VT and his family are the principal beneficiaries of the Tchenguiz Family Trust.[8]Other abbreviations which I shall use in this judgment are as follows: “BVI” means British Virgin Islands. “CJA 1987” means Criminal Justice Act 1987. “CPR” means the Civil Procedure Rules 1998, as amended. “CPS” means Crown Prosecution Service. “Eliza” means Eliza Ltd, a company registered in the BVI. “GCA” means Guernsey Crown Advocate. “Glenalla” means Glenalla Properties Ltd, a company registered in the BVI. “HMP” means HM Procureur of the Bailiwick of Guernsey. “Investec” or “ITGL” means Investec Trust (Guernsey) Ltd, a company registered in Guernsey and the former trustee of TDT. “Kaupthing” means Kaupthing Bank hf, which was once the largest Icelandic bank but became insolvent and collapsed in October 2008. “LOR” means the Letter of Request dated 26th August 2011, referred to in Part 2 below. “Oscatello” means Oscatello Investments Ltd, a company registered in Guernsey. “SPV” means special purpose vehicle. “Thorson” means Thorson Investments Ltd, a company registered in the BVI. “WGM” means Weil, Gotshal and Manges, the American international law firm.[9]The Crime (International Co-operation) Act 2003 (“the 2003 Act”) provides a framework within which the SFO and similar bodies may co-operate with overseas authorities in the investigation of crime. Section 7 of the 2003 Act provides:
“Requests for assistance in obtaining evidence abroad (1) If it appears to a judicial authority in the United Kingdom on an application made by a person mentioned in subsection (3) — (a) that an offence has been committed or that there are reasonable grounds for suspecting that an offence has been committed, and (b) that proceedings in respect of the offence have been instituted or that the offence is being investigated, the judicial authority may request assistance under this section. (2) The assistance that may be requested under this section is assistance in obtaining outside the United Kingdom any evidence specified in the request for use in the proceedings or investigation. (3) The application may be made — (a) in relation to England and Wales and Northern Ireland, by a prosecuting authority.” (a) that an offence has been committed or that there are reasonable grounds for suspecting that an offence has been committed, and (b) that proceedings in respect of the offence have been instituted or that the offence is being investigated, (a) in relation to England and Wales and Northern Ireland, by a prosecuting authority.”
[10]Section 9 of the 2003 Act provides:
“Use of evidence obtained (1) This section applies to evidence obtained pursuant to a request for assistance under section 7. (2) The evidence may not without the consent of the appropriate overseas authority be used for any purpose other than that specified in the request.”
[11]Having set out the relevant statutory provisions, I must now turn to the facts.

Part 2. The facts

[12]RT is a businessman, who has operated a range of businesses through a complex corporate structure based offshore. At the centre of this structure is the Tchenguiz Discretionary Trust (“TDT”), of which RT and his family are the principal beneficiaries. For many years the professional trustee which administered the TDT was Investec. On 2nd July 2010 R & H replaced Investec as trustee. Since that date R & H has been administering the TDT.[13]R20 is a UK company owned by RT and based in London. At all material times RT has been a director of R20. R20 is the vehicle through which RT has conveyed to the trustees his wishes as to what investments should be made and what transactions should be effected by TDT’s trustees.[14]TDT used a number of offshore companies to carry out individual transactions. Many of these were SPVs. Oscatello, which was registered in the BVI, controlled a number of these companies.[15]By the autumn of 2007 TDT had built up a substantial share and property portfolio. It had acquired these assets with extensive financial support from Kaupthing.[16]In early 2008 Kaupthing made further loans to Oscatello. By 30th May 2008 Oscatello’s indebtedness to Kaupthing was approximately £600 million. Between January and July 2008 Kaupthing made money market loans to Oscatello totalling £345 million. Of these loans £143 million was repaid, but £156 million was outstanding when Kaupthing collapsed.[17]As is well known, during the summer and autumn of 2008 the financial markets deteriorated significantly. On 15th September Lehman Brothers collapsed. On 8th/9th October Kaupthing collapsed. By then the indebtedness of Oscatello to Kaupthing substantially exceeded the value of its assets and the value of the security which Oscatello had provided to Kaupthing.[18]On 9th October 2008 a Resolution Committee was appointed to get in the assets of Kaupthing and to make recoveries for the creditors. Grant Thornton Iceland was a member of the Resolution Committee. In mid-November 2008 the Resolution Committee instructed WGM to examine Kaupthing’s lending to entities associated with RT.[19]On 13th November 2008 the TDT companies entered into a series of transactions through which the security previously pledged to Kaupthing for loans to Oscatello was replaced by “payment in kind” notes. The purpose of these transactions appears to have been to put certain assets of substantial value beyond the reach of Kaupthing’s liquidators, at least for the time being. Investec immediately notified the Resolution Committee of the transactions.[20]In December 2008 the Resolution Committee brought proceedings in the BVI against Investec and the Oscatello companies. Those proceedings were settled in June 2010 for £137 million.[21]In December 2008 WGM and Grant Thornton presented a report to the Resolution Committee. This report concluded that Kaupthing’s lending to TDT and its associated companies had been highly irregular. There was strong prima facie evidence that potentially fraudulent activities had taken place within Kaupthing with regard to the TDT/Oscatello lending.[22]On 13th May 2009 Kaupthing obtained judgment against Oscatello in Iceland for £643.92 million.[23]On 15th December 2009 the Director of the SFO authorised a formal investigation into possible criminal offences committed by RT and his brother VT. The Director exercised his statutory powers to require Grant Thornton to produce reports which they had prepared.[24]On 24th March 2010 Grant Thornton made a presentation of its findings to the SFO. Grant Thornton alleged that Oscatello appeared to have been technically insolvent from late 2007; this had been masked by successive reconstructions. According to Grant Thornton, there were documents which appeared to show R20 instructing Kaupthing to give unqualified support, notwithstanding the insolvent position of Oscatello; it appeared that RT and VT were protected at a senior level within the bank.[25]During the course of its investigation the SFO worked closely with the authorities in Iceland. The Iceland authorities were investigating whether there had been criminality in the lending by Kaupthing to the various entities associated with the Tchenguiz brothers.[26]By February 2011 the SFO considered that it had sufficient evidence of fraudulent conduct to justify arresting the Tchenguiz brothers and searching their premises. On 4th March 2011 the Director applied to the Central Criminal Court for warrants to carry out the searches. The SFO delivered an Information in support of that application.[27]On Monday 7th March 2011 there was a hearing before His Honour Judge Worsley at the Central Criminal Court. An in-house advocate employed by the SFO presented the application. He called the case manager to give evidence. HHJ Worsley was persuaded by the evidence before him and authorised the issue of the warrants.[28]On 9th March 2011 the SFO executed the search warrants at the homes and business premises of the Tchenguiz brothers. On the same date the City of London Police arrested RT and VT. Both men were interviewed while in police custody and then released on bail.[29]In May 2011 RT, R20 and R & H (in its capacity as trustee of the Tchenguiz Family Trust) commenced judicial review proceedings, challenging the legality of the arrests and the searches. VT was joined as an interested party. For present purposes I need not recount the details of that litigation, which began as judicial review proceedings and later continued as an ordinary Queen’s Bench action. I shall refer to that litigation as “the Tchenguiz proceedings”.[30]The SFO was now fighting on two fronts. It was defending the Tchenguiz proceedings. At the same time it was pursuing its criminal investigation into the conduct of the Tchenguiz brothers.[31]The SFO decided to extend its inquiries to Guernsey, which was where Investec was based. On 26th August 2011 Ms Kay Rogers, an SFO case manager, sent a Letter of Request (“LOR”) to HM Attorney General for Guernsey requesting the provision of mutual legal assistance. The Guernsey Crown Advocate (“GCA”) dealt with the matter.[32]The LOR stated that the SFO suspected fourteen individuals, including the Tchenguiz brothers, of conspiracy to defraud and related offences. It requested assistance in obtaining relevant material from Investec and three associated companies all operating from the same address at Investec House, St Peter Port. The letter also requested that twenty six named individuals be interviewed with members of the SFO sitting in. The twenty six named individuals were all directors or employees of Investec or one of the three associated companies. They included Robert Clifford, the managing director of Investec, and Lydia Peck (now Mrs Bleasdale). Ms Peck was an authorised signatory of Investec and a director of two of the associated companies.[33]The LOR arrived at a time when the GCA was hard pressed with other litigation commitments. Furthermore during 2011 Investec was engaged upon preparing for a major civil action, due to come on for trial the following year (“the Guernsey action”). The issues in the Guernsey action included(i) whether Investec was liable for substantial sums said to be due to Oscatello, Glenalla, Thorson or Eliza;(ii) if so, whether Investec was only liable to the extent that it currently held trust assets;(iii) if Investec’s liability was not so limited, whether it was entitled to be indemnified against the trust assets of TDT;(iv) whether Investec was liable to the beneficiaries of the TDT for negligent breach of trust.[34]In the event the SFO did not secure interviews with the relevant Investec staff during 2011 or 2012. The SFO maintains that this was because Investec was heavily engaged in preparing for and then conducting the trial in the Guernsey action. RT rejects that explanation and maintains that Investec was anxious to avoid speaking to the SFO. According to the SFO Ms Kay Rogers, the case manager, used her best endeavours in that regard. On 8th February 2012 she attended a meeting in Guernsey with both the GCA and Investec’s lawyers. At that meeting the lawyers said (amongst other things) that because of the pressures of the civil litigation the relevant staff were not currently available for interview.[35]Meanwhile back in London the Tchenguiz brothers were having some success in the Tchenguiz proceedings. The Director of the SFO conceded that the search warrants issued against VT and one of his companies could not be defended because of errors in the Information placed before HHJ Worsley. Nevertheless he wished to retain certain of the documents seized during the searches. He therefore served a “here and now” notice under section 2 of the CJA 1987 for that purpose. On 21st May 2012 the new Director of the SFO conceded that the SFO had not been entitled to retain documents pursuant to the “here and now” notice.[36]On 22nd May 2012 the Tchenguiz proceedings came on for hearing before the Divisional Court, comprising the President of the Queen’s Bench Division and Mr Justice Silber. The hearing lasted three days. The court reserved its judgment.[37]On 18th June 2012, while the Divisional Court was preparing its judgment, the SFO discontinued its criminal investigation against VT. The SFO promptly informed both the court and VT of that decision. The criminal investigation against RT continued.[38]During June 2012 the Guernsey action came on for trial before Lieutenant Bailiff Sir John Chadwick. The trial lasted for three weeks. Two witnesses gave evidence on behalf of Investec, namely Mr Clifford and Mrs Bleasdale. The Lieutenant Bailiff reserved his judgment.[39]On 31st July 2012 the Divisional Court handed down its judgment in the Tchenguiz proceedings. The court quashed the search warrants relating to RT’s and R20’s premises. It declared the searches and seizures conducted pursuant to those warrants to be unlawful. The court rejected the challenge to the lawfulness of RT’s arrest on the basis that the City of London Police were entitled to rely on information provided by the SFO. The court directed that the Tchenguiz proceedings be transferred to the ordinary list of the Queen’s Bench Division, so that the claimants could plead and the court could determine any claims for damages.[40]On 15th October 2012 the SFO discontinued its investigation against RT. All that remained therefore was the resolution of the various claims for damages against the SFO.[41]In accordance with the order of the Divisional Court the Tchenguiz proceedings continued as an ordinary action in the Queen’s Bench Division, assigned to the Commercial Court. Mr Justice Eder (“the judge”) undertook the case management.[42]On the 6th December 2013 Lieutenant Bailiff Sir John Chadwick handed down his reserved judgment in the Guernsey action. He held that the intercompany loans which Investec as trustee of TDT had put in place gave rise to valid loans between Investec and Glenalla and Thorson in the sums of approximate £62.7m and £80.6m respectively; that there was no loan agreed between Investec and Oscatello, but instead Oscatello had a valid claim in restitution against Investec in the sum of approximately £39.4m; that Investec was personally liable to these companies. The Lieutenant Bailiff rejected Investec’s case that it was entitled to limit its liability. He held that Investec was entitled to be indemnified from the TDT trust assets for its various liabilities. The Lieutenant Bailiff rejected the case advanced by R & H that Investec was prevented from recovering an indemnity by reason of its misconduct or gross negligence. He held that Investec had not acted unreasonably or grossly negligently.[43]R & H was aggrieved by that judgment. Accordingly it served notice of appeal.[44]Meanwhile the Tchenguiz proceedings were moving forward. On 15th April 2014 the claimant served a pleading entitled “further particulars of fact”. In paragraph 126 of those particulars the claimant strongly criticised the SFO for failing to interview Investec staff, in particular Robert Clifford.[45]On 12th June 2014 the SFO served a pleading entitled “response to the claimant’s further particulars of fact”. I shall refer to it as the “response”. In paragraph 117 of the response the SFO joined issue with paragraph 126 of the claimant’s further particulars. The SFO stated:
“It is denied that the SFO’s failure to conduct interviews with individuals employed at ITGL can properly be considered “egregious”
. The SFO sought to arrange such interviews but faced the following difficulties: 1) ITGL and its staff were located in an overseas jurisdiction (Guernsey). The SFO was therefore required to proceed via a Letter of Request and formally engage the assistance of the Guernsey authorities in order to obtain information from ITGL. 2) The Case Team progressed the Letter of Request throughout the course of 2011, including preparing and circulating a number of drafts for consideration by senior members of the Case Team. Ms Popat, the Grade 7 Case Lawyer assigned to KAU01, sent the Letter of Request to the office of the Guernsey Crown Advocate (“GCA”) on 26 August 2011. 3) The office of the GCA was unable to turn its attention to the Letter of Request at that time due to other litigation commitments. Ms Rogers spoke with the office of the GCA on numerous occasions between October 2011 and March 2012 to try and progress matters. She attended a meeting in Guernsey with the GCA and ITGL’s lawyers on 8 February 2012. Despite these efforts, Ms Rogers was unable to schedule a meeting for earlier as a result of the GCA’s limited availability and resourcing limitations. 4) Ms Rogers was informed by ITGL’s lawyers that a number of ITGL staff members were at that time focussed on preparing for, and involved as witnesses in, ongoing civil litigation, which had been listed for trial in April 2012. Accordingly ITGL was going to have great difficulties complying with the SFO’s Letter of Request at that stage. 5) Ms Rogers discussed with ITGL’s lawyers whether it would be possible to interview one or some of the ITGL lawyers who were more minor witnesses in the civil case, and whether there was any flexibility in the timetable when they would be available to the SFO reviewers. However, ITGL remained inflexible.”[46]In addition to exchanging pleadings, both parties also gave disclosure of relevant documents. On examining the documents disclosed by the SFO, RT and his lawyers took the view that certain documents would assist R & H’s appeal in the Guernsey action. Accordingly RT issued an application for permission to make use of the disclosed documents.

Part 3. The application for permission to make use of disclosed documents

[47]On 23rd June 2014 RT issued an application under CPR 31.22 (1) (b) for permission to make use of 22 documents relating to the SFO’s inquiries in Guernsey. Those documents were identified in a schedule to the application and I shall refer to them as “the 22 documents”. RT identified three purposes for which he wished to use the 22 documents, namely: i) to give them to the lawyers acting for R & H in the Guernsey action; ii) to rely upon them in the Guernsey action and any appeal in that action; iii) to give them to counsel advising RT on whether there was evidence to show that criminal offences had been committed by employees of Grant Thornton or the SFO. I shall refer to those three purposes as “purpose (i)”, “purpose (ii)” and “purpose (iii)”.[48]The SFO opposed the application, as did HMP who was permitted to intervene. The position of those two parties (as it emerged during the hearing below) was that they would consent to(i) use of the LOR without any redactions and(ii) use of the other documents with a number of specified redactions. RT was not prepared to accept that limited offer.[49]Mr Justice Eder heard the application on 21st July 2014 and reserved his judgment for a week. During that week the parties were negotiating on the damages issue. On 30th July the SFO agreed to pay £1.5 million plus costs to the RT claimants and £3.5 million plus costs to the VT claimants in settlement of their various claims.[50]On 28th July 2014 the judge handed down his judgment: Tchenguiz v Serious Fraud Office [2014] EWHC 2597 (Comm). He granted RT permission to use the documents for purpose (i) and purpose (iii). He refused RT permission to use the documents for purpose (ii). I would summarise the judge’s reasons as follows: i) The 22 documents constitute or record communications between the SFO and the Guernsey authorities. It is arguable that they constitute “evidence” within the meaning of section 9 of the 2003 Act. If so, there is a statutory prohibition upon the use of the 22 documents for a collateral purpose without the consent of the Guernsey authorities. However, it is not necessary to decide the point. The judge was content to proceed on the assumption that the 22 documents were not “evidence” within section 9. ii) An application under CPR 31.22 requires the court to carry out a balancing exercise. On the authorities a party seeking permission under that rule must show cogent and persuasive reasons amounting to special circumstances, if it is to persuade the court to grant permission. iii) The judge recognised there was a strong public interest in establishing the truth in the Guernsey action. He acknowledged the potential relevance of the 22 documents to the Guernsey appeal and had regard to the written opinion of Lord Goldsmith, who was then advising RT. iv) On the other hand there were powerful public interest considerations which pointed against permitting the 22 documents to be used for a collateral purpose. The documents related to liaison between the SFO and the Guernsey authorities concerning a criminal investigation. They contained information as to (a) the methodology of the SFO and (b) interaction between the SFO and the Guernsey authorities. v) To allow the 22 documents to be used for a collateral purpose may jeopardise the willingness of foreign states to co-operate in respect of future criminal investigations. vi) Although of lesser significance, the grant of permission under rule 31.22 (b) might cause unfairness to other parties in the Guernsey action. They had not had a chance to sift through and select from the voluminous documents disclosed by the SFO. vii) The balance came down in favour of refusing permission under rule 31.22.[51]RT is aggrieved by the judge’s decision. Accordingly he appeals to the Court of Appeal.

Part 4. The appeal to the Court of Appeal

[52]By an appellant’s notice dated 1st August 2014 RT appeals against the decision of the judge on a multiplicity of grounds, which I would summarise as follows: i) The judge failed properly to explain why there was a strong public interest in protecting these particular documents from wider use. In fact there is none. The grant of permission under rule 31.22 would not cause prejudice to the Guernsey authorities or the SFO. ii) The judge applied too stringent a test for the grant of permission under rule 31.22. iii) The judge should have dealt with the documents individually, seeing which ones could be the subject of permission, rather than dismissing RT’s application outright. iv) The judge failed properly to carry out the balancing exercise or to give adequate reasons for his decision. v) The judge was wrong to have regard to potential unfairness to other parties in the Guernsey action. vi) The judge failed to take into account that the Ladd v Marshall application in the Guernsey action could take place in a closed session.[53]RT’s appeal was heard on 13th and 14th October 2014. At the start of the hearing the court gave permission for both HMP and R & H to intervene. Both the SFO and HMP strongly resisted RT’s appeal. R & H’s presence in the appeal was purely formal. They became a party so that, if RT’s appeal succeeded, the court could authorise R & H to make use of the 22 documents in the Guernsey action.[54]Before addressing the grounds of appeal and counsel’s arguments, I must first review the law.

Part 5. The law

[55]Before the enactment of the Civil Procedure Rules 1998 it was an established rule that documents disclosed upon discovery could not be used for any collateral purpose without either the consent of the disclosing party or the leave of the court. See Riddick v Thames Board Mills Ltd [1977] QB 881; Harman v Secretary of State for the Home Office [1983] AC 280. I shall refer to this as “the collateral purpose rule”.[56]The courts have stated the rationale of the collateral purpose rule on a number of occasions. First, a party receiving documents on discovery impliedly undertakes not to use them for a collateral purpose. Secondly, the obligation to give discovery is an invasion of the litigant’s right to privacy and confidentiality. This is justified only because there is a public interest in ensuring that all relevant evidence is provided to the court in the current litigation. Therefore the use of those documents should be confined to that litigation. Thirdly the rule against using disclosed documents for a collateral purpose will promote compliance with the disclosure obligation.[57]In Crest Homes Plc v Marks & Others [1987] 1 AC 829 the plaintiffs brought two successive actions against the same defendants (Mr Marks and Wiseoak Homes Ltd) for breach of copyright. They obtained Anton Piller orders in both actions. The documents which the plaintiffs obtained from the defendants in the second action showed that the defendants had not complied with the Anton Piller order in the first action. Both the Court of Appeal and the House of Lords permitted the plaintiffs to use the documents obtained from the defendants in the second action for the purpose of bringing contempt proceedings in respect of the defendants’ breach of the Anton Piller order in the first action. In the House of Lords Lord Oliver gave the leading speech, with which Lords Keith, Templeman, Griffiths and Mackay agreed. Lord Oliver stated that it was for the party seeking release from the collateral purpose rule to “demonstrate cogent and persuasive reasons”. The court would not permit the use of disclosed documents for a collateral purpose “save in special circumstances and where the release or modification would not occasion injustice to the person giving discovery.” In the Crest Homes case “special circumstances” existed.[58]In Taylor v Director of the Serious Fraud Office [1999] 2 AC 177 the House of Lords held that the collateral purpose rule applied in criminal litigation to documents which the prosecution disclosed as unused material. Although not part of the ratio of the case, it is significant that Lord Hope (with whom Lord Hutton agreed) observed at 219 D-E:
“I do not think that it is possible to overstate the importance, in the public interest, of ensuring that material which is disclosed in criminal proceedings is not used for collateral purposes”
. I draw attention to that dictum because it underlines the high public interest in ensuring the integrity of the criminal process.[59]The Civil Procedure Rules 1998 in effect codified the collateral purpose rule. Rule 31.22 (1) provides:
“(1) A party to whom a document has been disclosed may use the document only for the purpose of the proceedings in which it is disclosed, except where – a) the document has been read to or by the court, or referred to, at a hearing which has been held in public; (b) the court gives permission; or (c) the party who disclosed the document and the person to whom the document belongs agree.” a) the document has been read to or by the court, or referred to, at a hearing which has been held in public; (b) the court gives permission; or (c) the party who disclosed the document and the person to whom the document belongs agree.”
[60]The first case after the introduction of the CPR upon which counsel rely is Frankson v Home Office [2003] EWCA Civ 655; [2003] 1 WLR 1952. That case concerned an application for third party disclosure under rule 31.17. The court ordered the police to disclose witness statements obtained during a criminal investigation, because that was necessary in order to dispose fairly of a civil action about the same subject matter.[61]The issue in SmithKline Beecham Plc v Generics (UK) Ltd [2003] EWCA Civ 1109; [2004] 1 WLR 1479 was whether documents disclosed in patent proceedings could be used in a later patent action. The Court of Appeal made an order under rule 31.22 permitting such use. The court cited with approval a dictum in pre-CPR authority to the effect that simple assertions of confidentiality and damage done by publication should not prevail. The court will require specific reasons why a party will be damaged by publication. The most important consideration is the interests of justice. That involves weighing up the interest of the party seeking to use the documents and the interest of the party protected by rule 31.22.[62]The claimants in Marlwood Commercial Inc v Kozeny [2004] EWCA Civ 798; [2005] 1 WLR 104 brought an action for fraudulent misrepresentation. The documents disclosed by the defendants indicated there had been criminal conduct including bribery of the Azeri authorities. The Director of the SFO served notices under section 2 of the CJA 1987 requiring both parties to produce the relevant documents to the SFO. The claimants sought permission under CPR 31.22 to hand over the documents. The defendants opposed that application. The court granted permission as sought by the claimants. Rix LJ, delivering the judgment of the court, noted that the court was resolving a conflict between the public interest in the proper disclosure of documents in civil litigation and the separate public interest in the investigation of allegations of serious fraud. He then proceeded to weigh up those two conflicting interests, paying close attention to the particular circumstances of the case under appeal. Rix LJ concluded that “the public interest in the investigation or prosecution of a specific offence of serious or complex fraud should take precedence over the merely general concern of the courts to control the collateral use of compulsorily disclosed documents”.[63]Gohil v Gohil [2012] EWCA Civ 1550, [2013] Fam 276 concerned the operation of the 2003 Act. The CPS obtained evidence from foreign states pursuant to section 7 and used that evidence in a successful prosecution of G for fraud. Subsequently G’s wife in matrimonial proceedings against G sought an order that the CPS disclose that evidence. The judge ordered disclosure. The Court of Appeal set aside that order, holding that the prohibition in section 9 (2) of the 2003 Act was absolute. The court had no discretion to order disclosure in the absence of consent from the relevant overseas authority. Lord Dyson MR, giving the judgment of the court, explained the policy underlying that statutory provision. If the UK were unable to give guarantees concerning collateral use of documents obtained from foreign authorities in criminal investigations, there would be a reduction in the level of international co-operation.[64]In IG Index Ltd v Cloete [2014] EWCA Civ 1128 the Court of Appeal held that the provisions of CPR 31.22 applied by implication to documents disclosed in employment tribunal proceedings. Christopher Clarke LJ (with whom Arden LJ and Barling J agreed) stated at [52] that the court would not lightly interfere with the judge’s exercise of discretion under that rule. Nevertheless the court reversed the judge’s decision in that case, because he had failed to take into account powerful factors weighing in favour of granting permission to use the disclosed documents.[65]Upon reviewing the authorities it seems to me that the decisions reached are highly fact sensitive. The court is weighing up conflicting public interests in a variety of different circumstances. There is sometimes a tendency in the judgments to slant the language used, or at least the emphasis, somewhat in favour of the public interest which prevails in that particular case.[66]The general principles which emerge are clear: i) The collateral purpose rule now contained in CPR 31.22 exists for sound and long established policy reasons. The court will only grant permission under rule 31.22(1) (b) if there are special circumstances which constitute a cogent reason for permitting collateral use. ii) The collateral purpose rule contained in section 9(2) of the 2003 Act is an absolute prohibition. Parliament has thereby signified the high degree of importance which it attaches to maintaining the co-operation of foreign states in the investigation of offences with an overseas dimension. iii) There is a strong public interest in facilitating the just resolution of civil litigation. Whether that public interest warrants releasing a party from the collateral purpose rule depends upon the particular circumstances of the case. Those circumstances require careful examination. There are decisions going both ways in the authorities cited above. iv) There is a strong public interest in preserving the integrity of criminal investigations and protecting those who provide information to prosecuting authorities from any wider dissemination of that information, other than in the resultant prosecution. v) It is for the first instance judge to weigh up the conflicting public interests. The Court of Appeal will only intervene if the judge erred in law (as in Gohil) or failed to take proper account of the conflicting interests in play (as in IG Index).[67]Having reviewed the legal principles, I must now decide the issues which are under appeal.

Part 6. Decision

[68]Miss Catherine Newman QC, on behalf of RT and R & H, began her submissions by reviewing the 22 documents and their importance in relation to the Guernsey action. I shall take the same course.[69]The 22 documents are dated between April 2011 and March 2012. They all relate to liaison between the SFO and the authorities in Guernsey. The documents show that the SFO sought mutual legal assistance from the GCA, including interviews with Investec staff. On one occasion Ms Rogers of the SFO attended a meeting with (amongst others) the GCA and Investec’s lawyers, but no interviews with the Investec staff took place. In essence, the 22 documents record or relate to the events which the SFO summarised in paragraph 117 of its response (see paragraph 45 above).[70]Miss Newman submits that these documents are highly relevant to the Guernsey action. She points to the discussion in the Lieutenant Bailiff’s judgment concerning certain book entries which Louw Rabie of Investec (now resident in South Africa) made during July and October 2008. The discussion of those book entries can be found at paragraphs 34 to 38, 156, 157, 161 and 162 of the Lieutenant Bailiff’s judgment. R & H’s case was that(a) the effect of those book entries was to remove the liability of TDT for its substantial indebtedness to Eliza and Oscatello;(b) the book entries demonstrated that Investec had sought to remove the inter-company loans, even if it had done so ineffectively or incompetently.[71]Investec did not call Mr Rabie to give evidence at trial. Mr Clifford and Mrs Bleasdale said that they had no recollection of the relevant book entries. The Lieutenant Bailiff accepted that evidence. At paragraph 162 he said:
“No evidence was given by Ms Kerins or by Ms Gurney. I am not satisfied, from the evidence that was adduced at the trial, that, at the time when the October 2008 book entries were made, they were made with the knowledge and approval of senior managers within the Tchenguiz team; as submitted on behalf of the present trustee at paragraph 3.51 of its written opening submissions. Accordingly, I hold that there is no basis of fact on which it can be said that the changes made by those entries “would have had the effect of altering the liabilities as between the Former Trustees and Eliza”
. I should add that, even if the present trustee had established on the evidence that senior managers within the Tchenguiz team had known and approved of the October 2008 book entries at the time that those entries were made, I am not persuaded that that, of itself, would lead to the conclusion for which the present trustee contends. ”[72]R & H’s case at trial was that Mr Clifford and Mrs Bleasdale were giving untruthful evidence. The senior management of Investec were well aware of and intended the relevant book entries to be made. Investec’s failure to adduce evidence from Mr Rabie at trial was a deliberate tactic. The mere fact that he now lived in South Africa was not an obstacle to calling him as a witness.[73]Miss Newman contends that if the 22 documents had been available at trial they would have been powerful ammunition for R & H’s Advocate to use in cross-examination of Investec’s witnesses. He could also have relied upon those documents in his submissions.[74]In support of her argument Miss Newman relies upon a letter of advice from Lord Goldsmith QC to RT dated 20th June 2014. In that letter Lord Goldsmith stated:
“The case of the present trustee, Rawlinson & Hunter Trustees S.A (“R & H”) was that these book keeping entries were made with the knowledge and approval of senior managers dealing with the TDT and, in particular, Mr Clifford, Ms Bleasdale, Ms Gurney and Ms Kerins. If the entries had been authorised by senior management R & H’s contention is that they would have had the effect of altering the liabilities between Investec as trustees of the TDT and Eliza. R & H’s assessment that the book entries had been authorised by senior management was derived from a number of email exchanges between Mr Clifford and Ms Bleasdale which had discussed the need to correct the book keeping. The evidence on behalf of Investec came from two people, Mr Clifford and Ms Bleasdale, whose evidence was to the effect that the specific book entries which had been made by Mr Rabie had not been authorised, or approved by senior management. As is apparent from the finding of Lieutenant Bailiff Sir John Chadwick (“the Judge”) at paragraph 162 of the Judgment, this was a critical issue. The Judge held that he was not satisfied “from evidence that was adduced at the trial” which he noted was incomplete since it did not include evidence from two individuals, Ms Kerins or Ms Gurney, or indeed from Mr Rabie (although the Judge did not specifically refer to this in the Judgment), that the book entries were made with the knowledge and approval of senior management.”
[75]After further discussion of the issues Lord Goldsmith concluded:
“In these circumstances, had there been other significant evidence bearing on the likelihood that senior management had known and approved these transactions but the relevant witnesses subsequently had a reason to take a different position, the Judge would have had to take it into account. At the very lowest, the recently provided documentation could very well have filled the evidential gap that the Judge perceived and as such may have led him to reach a different conclusion.”
Lord Goldsmith, however, also qualified his position noting that he had not had access to certain trial materials, nor had he had an opportunity to discuss the issues with Advocate Swan, and that therefore it was possible that a fuller review might have persuaded him that there were explanations that undermined the value of the new evidence.[76]Both Mr Pushpinder Saini QC for the SFO and Mr Khawar Qureshi QC for HMP resist those submissions. They submit that the 22 documents add little to what R & H already has. Furthermore Mr Qureshi submits that in his advice Lord Goldsmith overlooks the last two sentences of paragraph 162 of the Lieutenant Bailiff’s judgment, which tend to contradict Lord Goldsmith’s conclusions.[77]I have carefully considered the 22 documents in the light of counsel’s submissions. I have also taken into account two decisions of the Guernsey Court of Appeal dated 29th November 2013 and 11th September 2014.[78]I conclude that the 22 documents, if released, would only be of limited utility to R & H in the Guernsey action. I reach this conclusion for six reasons: i) The arguments which R & H wishes to advance concerning lack of co-operation by Investec and the GCA with the SFO can be based upon the documents which R & H already has, in particular the LOR and paragraph 117 of the SFO’s response (which the SFO have undertaken to verify by a short witness statement). ii) It is self evident that there was communication between the GCA and Investec in early 2011. It is also self-evident that Investec knew of the SFO’s interest in their conduct in relation to TDT and the Kaupthing loans. If R & H wishes to argue that Investec tailored its evidence in the Guernsey trial in order to avoid the risk of Investec or its staff being prosecuted in England, R & H can deploy that argument on the material currently available. It is for the Guernsey courts to decide whether they accept that argument. I do not see the 22 documents as being of particular importance in relation to that issue. iii) R & H’s advocate was able to comment at trial and will be able to comment at the appeal about Investec’s failure to call seemingly important witnesses concerning the book entries, in particular Mr Rabie. iv) Even if the book entries were made with the knowledge of Investec’s senior management, they would not have had the legal effect for which R & H contended: see the last two sentences of paragraph 162 of the Lieutenant Bailiff’s judgment. v) The 22 documents, in so far as they add anything to the material which R & H already has, essentially go to the credit of Investec’s witnesses. vi) The case did not turn on the credibility of Investec’s witnesses: see paragraphs 75 and 88 of the Guernsey Court of Appeal’s judgment dated 28th November 2013.[79]I turn now to the grounds of appeal as developed in Miss Newman’s two skeleton arguments and her oral submissions. I shall adopt the numbering set out in Part 4 above.

The first ground

[80]The appellant’s first ground is that the judge failed properly to explain why there was a strong public interest in protecting these particular documents from wider use. In fact Miss Newman says there is no such strong public interest. The grant of permission under rule 31.22 would not cause prejudice to the Guernsey authorities or the SFO. Miss Newman submits that the 22 documents were all “low grade” relating to administration and practical matters. They did not contain any evidence gathered or furnished by the GCA for the assistance of the SFO. The judge’s characterisation of the 22 documents hardly warrants preserving their confidentiality. The judge described the documents in this way at paragraph 16 of his judgment:
“The documents do contain details of the interaction of the SFO and the Guernsey authorities as well as the expression of certain views of the SFO and the Guernsey authorities with regard to their investigations.”
[81]I do not accept Miss Newman’s submissions on this issue. The liaison between the SFO and foreign authorities is inherently confidential. The extent to which and the manner in which they co-operate are matters which should not ordinarily go into the public domain, except in so far as they are relevant to any criminal prosecutions which follow.[82]I am prepared to make the same assumption as the judge, namely that the 22 documents fall outside the absolute prohibition (absent consent) imposed by section 9 (2) of the 2003 Act. Nevertheless there is a high public interest in maintaining the co-operation of foreign states in the investigation of offences with an overseas dimension. In the present case the Guernsey authorities are strongly opposed to the use of the 22 documents for any collateral purpose, at least without a number of redactions. That is a matter to which the court must have regard.[83]There are two separate public interests which militate against release of the 22 documents. First, the SFO disclosed those documents as they were required to in the course of civil proceedings. Absent special circumstances, the court will not ordinarily permit use of such documents for a collateral purpose: see Riddick and Crest Homes. Secondly, the documents arose in the course of liaison between the SFO and a foreign authority concerning a criminal investigation and that foreign authority objects to release of the documents in unredacted form. There is a strong public interest in protecting the confidentiality attaching to such documents.

Second ground

[84]The appellant’s second ground of appeal is that the judge applied too stringent a test for the grant of permission under rule 31.22.[85]It is true that in the course of his judgment the judge rejected the suggestion that the 22 documents were “crucial or decisive” to the Guernsey appeal. If that was the test which the judge applied, then I would agree it would be too strict a test. But I do not read the judgment as imposing a “crucial or decisive” test. I think the judge was merely rejecting a claim made in RT’s witness statement about the importance of the 22 documents.[86]Miss Newman submits that the judge appears to have accepted Lord Goldsmith’s assessment of the importance of the 22 documents: see paragraph 28 of the judgment. Miss Newman argues that if Lord Goldsmith is correct in saying that those 22 documents may have led to a different outcome of the trial, then(a) they may well satisfy the Ladd v Marshall test and(b) they may determine the outcome of the Guernsey appeal.[87]If the documents have that degree of importance, then there would be a high public interest in permitting their use in the Guernsey action. That high public interest would have to be placed in the balance.[88]It is not entirely clear to me whether the judge was actually accepting Lord Goldsmith’s opinion or merely commenting on the effect of that opinion if correct. Be that as it may, unlike Lord Goldsmith, this court has heard full argument on the significance on the 22 documents. For the reasons set out in paragraphs 69 to 78 above, I do not consider that those documents have the high degree of importance which Lord Goldsmith attaches to them.

Third ground

[89]The third ground of appeal is that the judge should have dealt with the documents individually, seeing which ones could be the subject of permission, rather than dismissing RT’s application outright.[90]The judge was faced with two opposing cases. HMP and the SFO were proposing the use of redacted documents. RT argued that the proposed redactions would blank out all or practically all of the relevant information. RT pressed for permission to make full use of all 22 documents unredacted. There was no sensible middle ground upon which the judge could alight.

Fourth ground

[91]The fourth ground of appeal is that the judge failed properly to carry out the balancing exercise or to give adequate reasons for his decision.[92]I do not accept this contention. The judge correctly identified the conflicting public interests which were in play. He gave adequate and proper reasons for his decision at paragraphs 31 to 35 of the judgment.

Fifth ground

[93]The fifth ground of appeal is that the judge was wrong to have regard to potential unfairness to other parties in the Guernsey action.[94]It can be seen from paragraph 31 of the judgment that the judge attached less weight to this factor than the other factors. In my view the judge was right to take that matter into account in the manner that he did. The SFO disclosed some 44,000 documents in the course of the Tchenguiz proceedings. RT’s lawyers sifted through that mass of material and selected a very few documents which they believed would assist R & H’s case in the Guernsey action. The other parties to the Guernsey action had no similar opportunity.

Sixth ground

[95]The sixth ground of appeal is that the judge failed to take into account that the Ladd v Marshall application in the Guernsey action could take place in a closed session.[96]I do not accept this criticism. Miss Newman’s argument below was that the English court should, so to speak, hand over to the Guernsey Court of Appeal all decisions concerning the 22 documents, because that court was in a better position to evaluate the conflicting considerations: see the judge’s summary of Miss Newman’s argument at paragraph 27 of the judgment. The judge was right to reject that argument. It is for the English courts to deal with the permission issue under CPR 31.22. It will then be for the Guernsey Court of Appeal to deal with the Ladd v Marshall application. Even if RT’s appeal to this court fails, as I understand it R & H will still be making a Ladd v Marshall application about the LOR and others of the 22 documents, albeit in redacted form. Whether the Guernsey Court of Appeal deals with that application in private or in an open session will be entirely a matter for that court.

Conclusion

[97]Let me now draw the threads together. In my view the judge correctly evaluated the conflicting public interests which were in play. He reached a decision which cannot be impugned. I would therefore dismiss this appeal.

Part 7. Executive summary

[98]The appellant seeks to overturn the decision of Mr Justice Eder refusing permission under CPR 31.22 to hand over 22 specified documents to the second intervening party for use in Guernsey proceedings.[99]The appellant contends that the 22 documents are of critical importance in the Guernsey proceedings and they may well lead to the Lieutenant Bailiff’s adverse decision being reversed upon appeal. He also argues that there is no public interest in protecting these particular documents from wider use.[100]The documents in question arose from liaison between the SFO and the Guernsey authorities concerning an investigation into suspected fraud and related offences. The SFO disclosed those documents in the course of civil litigation in London between the appellant and the SFO. Both the SFO as respondent to this appeal and HM Procureur for Guernsey as first intervening party oppose the use of the 22 documents unredacted in the Guernsey proceedings.[101]I have come to the conclusion that the judge correctly weighed the conflicting public interests which were in play and reached an appropriate decision. I would therefore dismiss this appeal.[102]I agree.[103]I also agree.

Cited in 29 later judgments

and 20 more of the most senior