Introduction

A short but important recent judgment ruled that the Serious Fraud Office was not prevented by virtue of the Criminal Justice Act 1987 (“the CJA”) from giving disclosure and permitting inspection in the course of civil proceedings of documents received from third parties (in response to a Section 2 CJS Notice).

The ruling came during the course of the ongoing proceedings between the Tchenguiz brothers and the Serious Fraud Office in which the brothers allege that unlawful searches, seizures and entry into their premises at the instigation of the SFO led to damages in the amount of approximately £300 million.

Following a court order that the parties give disclosure, the SFO wrote to third parties who had provided documents to the SFO pursuant to Section 2 of the CJA. Such documents had been gathered by the SFO to assist with its now abandoned investigation into the Tchenguiz brothers. Some of those third parties objected to the SFO giving disclosure and so a question arose as to whether such material could be disclosed to the claimants in the civil proceedings without the third parties’ consent. The SFO disagreed with the third parties’ position and so filed an application seeking a declaration from the Court that the SFO was permitted to make such disclosure pursuant to a court order without requiring third party consent. RBS, Deutsche Bank, BNP Paribas and Goldman Sachs were served with the application but only Deutsche Bank made submissions at the hearing although the other third parties did not formally row back from their stated objection.

Submissions

It was common ground that the SFO owed a duty of confidence to third parties in relation to documents obtained by virtue of Section 2 of the CJA (or documents provided voluntarily). It was also agreed by both sides that such duty of confidence could be overridden if any of the circumstances pursuant to section 3(5) of the CJA applied although none were relevant for the purpose of the application. The SFO also accepted it did not have the power to voluntarily disclose the documents to the claimants.

But where the SFO and Deutsche Bank parted company is whether the SFO was prohibited by the CJA from making any disclosure at all to the claimants even with a court order in place. Deutsche Bank argued that whilst the SFO was not voluntarily disclosing the documents because such disclosure was required pursuant to a court order, and although it accepted the CJA did not expressly prohibit the SFO from complying with such an obligation, the Bank’s position was that there was an “implied restriction” on disclosure, and where the section 3(5) “gateways” did not apply, “that restriction overrides any obligation to give disclosure under CRP31”.

Judgment

The presiding Judge, Mr Eder, was unable to agree with Deutsche Bank for the following reasons:

  1. The language of the CJA itself contains no express prohibition.
  2. As to whether implying such a blanket restriction was legitimate, the Judge turned to Bennion on Statutory Interpretation, 5th Edition which considered whether an approach based on what is “necessary” or “obvious” was too narrow, rather than finding an implication based on what is “proper” or “legitimate”. Whichever test one applied, the Judge found an absolute bar to be too strong a beast, and this militated against an implied restriction.

  3. The Judge looked at the authorities which pointed against the absolute bar contended for by Deutsche Bank. In particular he highlighted the case of Marcel v Commissioner of Police [1992] Ch 225, which made it clear that whilst the SFO owed a duty of confidence in respect documents obtained pursuant to Section 2 of the CJA, such duty not to disclose remained in place “save under order of the court”; the Vice-Chancellors choice of words in that case undermined the proposition of an absolute bar.

  4. In contrast to the CJA other statutes do contain an express absolute bar against disclosure including s19(2) of the Anti-Terrorism, Crime and Security Act 2001, section 33(1) of the Serious Organised Crime and Police Act, Section 82 of the Banking Act 1887 and section 348 of the Financial Services and Marketing Act 2000.

Final thoughts

We considered in a previous article how evidence obtained in criminal proceedings could be used and vitally assist in a civil claim to recover say the proceeds of corruption available here. So the concept of obtaining disclosure of documents from criminal proceedings for use in civil proceedings is not a new one. This Judgment serves to emphasise this fact. This application, however, dealt with a point of principle and did not go on to consider whether certain categories of documents should not be disclosed if the original document owner objected based on public interest factors or for reasons of, for example, legal privilege.

For third parties disclosing information to the SFO pursuant to a Section 2 Notice, there must be recognition that such material may possibly see the light of day if perhaps the SFO was sued or a third party with connected or related civil proceedings was interested in such documents. One step the document owner can take once it is aware of a third party’s interest in its Section 2 material is to liaise closely with the SFO to identify those documents it objects to disclosure of and ensure it is in a position to defend such disclosure. In the case of Deutsche Bank in this action there may well be another round of argument where it seeks to object to disclosure of specific classes of material.

Disclosure of documents obtained through a criminal investigation is only likely to be made available for civil proceedings where the criminal process has been completed so as to avoid prejudicing any ongoing investigation or prosecution. As Lord Reid stated in Conway v Rimmer (1968) I All ER 874: "it would generally be wrong to require disclosure in a civil case of anything which might be material in a pending prosecution, but after a verdict has been given, or it has been decided to take no proceedings, there is not the same need for secrecy". In a case involving Nigeria against Governor Alamieyeseigha, Nigeria argued that it was in the public interest to disclose the evidence collected by the Metropolitan Police using its compulsory powers on the basis that: (a) it intended to use the documents to secure and recover the proceeds of corruption; (b) successful proceedings would assist in efforts to reduce corrupt activities; (c) it would demonstrate that the UK was not a safe haven for corruptly acquired assets; and (d) it would permit their recovery where Alamieyeseigha's flight would otherwise thwart the criminal confiscation process. The police confirmed to the Court that the criminal investigation would not be jeopardised by the disclosure and in that case a Disclosure Order was granted by the Court.