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England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Barings Plc & Ors v Co Lybrand & Ors [2000] EWCA Civ 148 (5 May 2000)
URL: http://www.bailii.org/ew/cases/EWCA/Civ/2000/148.html
Cite as: [2000] EWCA Civ 148, [2000] Lloyd's Rep Bank 225, [2000] 3 All ER 910, [2000] 1 BCLC 523, [2000] 1 WLR 2353, [2000] WLR 2353
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Case No:
CHANI
2000/0106/A3
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (
CIVIL
DIVISION)
ON APPEAL FROM
THE
HIGH COURT OF JUSTICE
CHANCERY DIVISON (MR JUSTICE EVANS-LOMBE)
Royal Courts of Justice
Strand, London, WC2A 2LL
Friday 5 May 2000
THE MASTER OF THE ROLLS
LORD JUSTICE ROBERT WALKER
and
MRS JUSTICE SMITH
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Barings Plc & Ors |
Appellants/Claimants | |
- and - |
||
Coopers Lybrand & Ors |
Respondents/ |
(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 180 Fleet Street
London EC4A 2HD
Tel No: 0171 421 4040, Fax No: 0171 831 8838
Official Shorthand Writers to the Court)
- - - - - - - - - - - - - - - - - - - - -
Mr Edward Bannister QC and Mr Guy Morpuss (instructed by Messrs Clifford Chance, London EC1A 4JJ, appeared on behalf of Deloitte & Touche, one of the Defendants)
Mr Mark Phillips QC and Mr Jeremy Goldring (instructed by Messrs Freshfields, London EC4Y 1HS appeared on behalf of the Financial Services Authority)
Judgment
As Approved by the Court
Crown Copyright ©
LORD WOOLF MR :
Introduction
1. T his is a judgment of the Court on an appeal by Deloitte & Touche ("D&T"), one of the defendants to the action, against the order of Mr Justice Evans-Lombe made on 15th December 1999. Evans-Lombe J declared that the transcripts of certain interviews carried out by Mr Ian Watt on behalf of the Board of Banking Supervision ("BoBS") in the course of an investigation into the collapse of the Barings Group in February 1995 were and still are subject to the restriction on disclosure contained in Part V of the Banking Act 1987 ("the Banking Act").
2. In the action, the claimant, Barings PLC in liquidation, seeks damages for the alleged professional negligence of its accountants and auditors in the period before the collapse. Following the collapse, BoBS was asked by the Chancellor of the Exchequer to report on the collapse. BoBS instructed Mr Ian Watt, Head of the Bank of England's Special Investigations Unit ("SIU") to investigate the facts. That investigation resulted in the production of a large number of transcripts of interviews, disclosure of which was sought by the defendants in the proceedings before the Judge.
3. The Financial Services Authority ("FSA") has responsibility for supervising institutions authorised under the Banking Act, having taken over that role from the Bank of England as a consequence of the Bank of England Act 1998. The FSA were permitted to intervene in the proceedings. The claimant has taken no part in the appeal.
4. The applications before the judge and this appeal raise questions which depend on the of interpretation of the Banking Act. Of particular importance is Part V which is entitled ´Restriction on Disclosure of Information'. Section 82 which is included in Part V provides:
(1) Except as provided by the subsequent provisions of this Part of this Act--
(a) no person who under or for the purposes of this Act receives information relating to the business or other affairs of any person; and
(b) no person who obtains any such information directly or indirectly from a person who has received it as aforesaid,
shall disclose the information without the consent of the person to whom it relates and (if different) the person from whom it was received as aforesaid.
(2) This section does not apply to information which at the time of disclosure is or has already been made available to the public from other sources or to information in the form of a summary or collection of information so framed as not to enable information relating to any particular person to be ascertained from it.
5. There are two principal issues on this appeal. The first is whether transcripts were ever subject to the restriction against disclosure contained in s.82(1) as information received "under or for the purposes of" the Banking Act. If they were not, the defendants would be entitled to see them and deploy them in the litigation. If they were, then the second issue arises. This is whether those transcripts had "been made available to the public" and, in consequence, had ceased to be subject to the restriction in accordance with s.82(2). This is alleged to be the result of the transcripts being exhibited to an affidavit filed on behalf of the Secretary of State for the Department of Trade and Industry in the course of proceedings under the Company Directors Disqualification Act 1986 (CDDA) brought against some directors of Barings. The Judge held first, that the transcripts were subject to the restriction and second, that it had not been proved that those transcripts exhibited in the CDDA proceedings had been made available to the public.
The Framework of Banking Supervision
6. We are grateful to the FSA for providing most helpful and uncontroversial written submissions. The following account is based largely upon those submissions and on the affidavit evidence of Mr DG Choyce, a solicitor and Chief Counsel of the Banking and General Department within the General Counsel's Division of the FSA. He exhibited and referred to an affidavit sworn by Mr Michael D. K. W. Foot, in April 1997, in connection with similar proceedings for the disclosure of documents subject to the restriction of s.82(1). Mr Foot was then the Executive Director responsible for the Supervision and Surveillance Division of the Bank of England and now occupies a comparable position at the FSA.
7. Prior to 1979, there was no formalised system of banking supervision in England, but the Banking Act 1979 established for the first time a formal supervisory system for banks and credit institutions operating in the UK for which the Bank was responsible. In 1984, a committee was established by the Chancellor of the Exchequer under the then Governor of the Bank, Robin Leigh-Pemberton, to report on banking supervision with a view to identifying areas of possible improvement. A Treasury White Paper, published in December 1985, incorporated many of the committee's recommendations and in the light of that the supervisory system created in 1979 was modified and strengthened by the Banking Act.
8. The wide purposes of the Banking Act are clear from its pre-amble:
`An Act to make new provision for regulating the acceptance of deposits in the course of a business, for protecting depositors and for regulating the use of banking names and descriptions...and for purposes connected with those matters'.
Section 1(1) of the Banking Act creates the Bank's supervisory power. The section states :
`The [Bank] shall have the powers conferred on it by this Act and the duty generally to supervise the institutions authorised by it in the exercise of those powers.'
Section 1(2) provides:
`It shall be the duty of the [Bank] to keep under review the operation of this Act and developments in the field of banking which appear to it to be relevant to the exercise of its powers and the discharge of its duties.'
9. In order to fulfil its statutory responsibilities, it is essential that the Bank has access to information about authorised institutions. The information necessary to its functions is obtained by the Bank in four main ways. These are;
(i) statutory returns from authorised institutions under sections 36-38 of the Act;
(ii) pursuant to a request for information or a report by a suitably qualified person under section 39;
(iii) by an investigation under section 41; and
(iv) by voluntary disclosure.
10. S.41(1) provides:
"If it appears to the Bank desirable to do so in the interests of depositors or potential depositors of an authorised institution the Bank may appoint one or more competent persons to investigate and report to the Bank on -
(a) the nature, conduct or state of the institutions business or any particular aspect of it; or
(b) the ownership or control of the institution;
and the Bank shall give written notice of any such appointment to the institution concerned."
Section 41(2) provides if a person appointed under section (1) thinks it necessary for the purposes of his investigation he may also investigate the business of any body corporate which has at any relevant time been related to the company under investigation.
Section 41(5) provides that it shall be the duty of every person who is or was a director, controller, manager, employee, agent, banker, auditor or solicitor of a body under investigation to produce documents, attend on request and to give all assistance which he is reasonably able to give. Failure to co-operate without reasonable excuse would be an offence under section 41(9).
11. BoBS is a statutory committee established by and within the Bank in 1987 as required by section 2 of the Banking Act to assist the Bank in its supervisory role. The White Paper made clear that its purpose was to assist in banking supervision by providing a forum in which independent commercial banking experience could be applied to assist the Governor.
12. The form and function of BoBS as contemplated in the White Paper finds expression in section 2 and Schedule 1 of the Banking Act. At the relevant times, BoBS consisted of three ex officio members (the Governor, the Deputy Governor and the executive director responsible for bank supervision) and six independent members appointed by the Governor and the Chancellor. The Governor acted as chairman.
13. BoBS' advisory function under section 2 is defined by reference to the Bank's broad supervisory role as defined by section 1. Section 2(3) states that:
`It shall be the duty of the independent members to give such advice as they think fit to the ex officio members--
(a) on the exercise by the Bank of its functions under this Act either generally or in any particular respect or in relation to a particular institution or institutions; and
(b) on any matter relating to or arising out of the exercise of those functions.'
In accordance with its statutory function, BoBS provides advice to the Governor on the principles and policy of supervision of institutions authorised under banking supervisory legislation; the development and evolution of supervisory practice; the administration of banking supervisory legislation and the structure, staffing and training of banking supervisors. Under s.2(4) the Bank was required to make regular reports to BoBS and to provide them with such other information as they reasonably require.
14. The Chancellor of the Exchequer is responsible to Parliament for the legal framework of banking supervision. Accordingly, the Bank is obliged to make annual reports to the Chancellor about its activities, which the Chancellor must lay before Parliament: section 1(3)
15. The Bank also has a Special Investigations Unit (`SIU') which was set up in October 1992, following the Report by Bingham LJ into the collapse of BCCI. The SIU is directly accountable to the Governor. Ian Watt, formerly a partner in KPMG, was appointed Head of the SIU on its creation and remained so at the time of the factual investigation which he carried out into the collapse of Barings. Mr Watt was an `Advisor to the Governor'.
The Confidentiality Regime
16. The maintenance of confidentiality under Part V of the Banking Act for information provided to the Bank is plainly of great importance. Protecting those who provide information to the Bank, encourages voluntary disclosure from institutions, third parties and whistle blowers, any of whom might otherwise be unwilling to divulge material. The Bank is of the view that, absent such protection, it would be deprived of the raw material it requires for effective supervision.
17. The Act lays down a detailed statutory code by which the disclosure of information obtained under or for the purposes of the Act is regulated. In addition to providing the basic restriction on disclosure in s.82 (set out above), the Act delineates with precision those circumstances in which it may be overridden. Section 82 does not provide an absolute bar on disclosure of Banking Act information. Rather it prohibits (subject to gateways and availability to the public) disclosure without the consent of the person to whom the information relates and, if different, the person from whom it was received. Where there is unauthorised disclosure of information caught by the Part V restrictions, the information does not cease to be subject to those restrictions unless it has become available to the public.
18. The specific `gateways' which permit the disclosure of restricted information in specified circumstances and/or to named parties are contained in sections 83 to 85. These 'gateways' enable the Bank to receive and impart restricted information to various bodies in furtherance of its or their functions. D&T require the transcripts for the purposes of their litigation, but there is no gateway which provides for disclosure for the purposes of civil litigation.
19. S.82(3) makes the disclosure of information falling within section 82(1) of the Act a criminal offence, punishable on conviction on indictment by up to two years' imprisonment. We were told that no prosecution has yet been brought.
The factual background
20. Barings Plc and other companies within the group were placed in administration on 26 February 1995. Barings Brothers & Co Limited (`Old Barings') was a banking subsidiary of Barings Plc. On the following day, the Chancellor of the Exchequer made a statement to the House of Commons ("the Statement") in which he said that losses in excess of £600 million had been incurred due to unauthorised dealings on exchanges in the Far East. He acknowledged that the House would be concerned to know how such events could occur without Old Barings, the exchanges or the regulators learning of them. He stated that he was determined to address that question rigorously and to review the regulatory system thoroughly. He had invited BoBS to investigate fully and urgently all aspects of the collapse and to report back to him. He promised to report to the House as soon as possible with an analysis of the case and the lessons to be learned and recommendations for the future. He expected to publish the report subject only to the need to protect the legitimate confidentiality of innocent third parties and any other legal constraints.
21. On 2nd March 1995, BoBS, comprising six independent and three ex-officio members (one of whom is Mr Eddie George, the Governor of the Bank of England) met and decided upon a two stage enquiry. First, they would invite Mr Ian Watt, as the Head of the Bank's SIU, to establish the facts leading up to the collapse. Mr Watt would retain a team comprising the Bank's SIU, accountants, solicitors and a banker. He was also to have access to the Banks' supervisory records. Second, the Board would draw out any broader lessons there may be for supervisory and regulatory arrangements.
22. On 9th March 1995, the Governor of the Bank of England wrote, on notepaper headed the Bank of England, to the Chancellor. The letter referred to what had been agreed by the "Board" on the 2nd March and added that the "Board has agreed on the following terms of reference for its enquiry" :
"To establish in detail the events that led to the collapse of Barings; to identify the lessons to be drawn, for institutions, for the bank's own regulatory and supervisory arrangements, and for the UK system of regulation more generally; and to report to the Chancellor of the Exchequer."
23. The Chancellor was asked whether he was satisfied with the terms of reference. The Governor explained the arrangements proposed and said that it was the intention that the section of the report which would deal with the adequacy of the Bank's supervision of Barings would be written by the independent members alone. The Chancellor approved the terms and the arrangements made on the same day.
24. On 10th March, a newly formed company named Baring Brothers Limited ("New Barings"), controlled by International Nederlanden Groep ( ING), took over the business, assets and liabilities of the old Barings companies. It also took on some of the Old Barings' former staff and directors.
25. On 27th March, Mr Watt's secretariat wrote the first of a series of letters inviting people with information relevant to the enquiry to be interviewed. At this stage, Mr Watt had no power to compel attendance at interview or co-operation with the enquiry. The letters explained however that both the Administrators of Old Barings and ING had expressed an intention to co-operate and to encourage their staff to do likewise. The Administrators and ING would be represented at the interviews. The letter enclosed a schedule of topics to be discussed and warned that the schedule was confidential under the Banking Act. Disclosure to any person other than for the purpose of taking legal advice in connection with the interview 'would be an offence punishable with imprisonment'. Further, the transcript which would be made of the interview would likewise be confidential under the Act and although access would be allowed for correction and comment, disclosure to any other person ´may be an offence'. Finally, the letter warned that although much of the material which would go before BoBS would be confidential, no blanket undertaking of confidentiality could be given to interviewees, because BoBS intended to write a report. BoBS would seek to respect any claim to confidentiality advanced by an interviewee, so far as the law required and its duty to report permitted.
26. Two interviews took place under the arrangements just described on 28th March and one on the morning of 29th March. However, in the afternoon of 28th March, Mr Watt was appointed by the Bank under section 41(1) of the Banking Act 'to investigate and report in writing to the Bank of England by the end of June 1995 on those aspects of the nature, conduct and state of the business of Baring Brothers Limited (New Barings) described below'. The Bank wished to ensure that it had sufficient information with which to form a view about the administration of New Barings. In particular, the Bank would need to know whether those who were to be directors, controllers or managers of the new company, some of whom had been in responsible positions in the old company, were fit and proper persons to hold office. Also the Bank would need to know whether the new company's accounting methods and systems of control would be adequate. These issues were to be addressed in the light of the circumstances leading to the collapse of Old Barings.
27. It was not disputed at the hearing of this appeal that Mr Watt conducted only one investigation and one series of interviews but that he did so for two purposes, the BoBS enquiry and his own s.41 investigation. The two purposes were not co-extensive although there was substantial common ground.
28. The appointment under s.41 provided Mr Watt with the power to compel the attendance and co-operation of witnesses, backed by a criminal sanction. As from 29th March, all letters of invitation informed the recipient that as well as conducting an investigation into the collapse of Barings, Mr Watt was 'at the same time appointed by the Bank under s.41 of the Banking Act'. The letter did not specify what he had been appointed to do under s.41 but informed the recipient that the appointment would make 'no difference' to the conduct of the forthcoming interview but he or she 'should be aware of (his or her) legal obligations under this section to co-operate with this investigation'. In all other respects, the letter was similar to the earlier letter of invitation. When the transcripts were produced, they carried a rubric on the front sheet which said: 'BoBS: Confidential under the Banking Act 1987'.
29. On 13th July 1995, BoBS submitted its report, under cover of a letter signed by Mr George as Chairman of the Board and Sir Alan Hardcastle as 'Convenor of the Independent Members'. The letter was addressed not to the Chancellor but to the Bank of England itself. It requested the Bank to pass the report to the Chancellor. On 18th July 1995, the report was ordered by the House of Commons to be printed and was published by Her Majesty's Stationery office. This Court has not been invited to read the whole of the BoBS report, but it is apparent from a cursory inspection that it quotes verbatim passages from the interview transcripts and no attempt appears to have been made to conceal the source of any information.
30. The report refers to the statutory duty of the independent members of BoBS to advise the ex-officio members. The report is divided into two parts. The first sets out and analyses the events that led to the collapse of Barings. The second, the lessons to be drawn from this episode. So far as it is concerned with the supervision of Barings by the Bank and other regulators "it is based upon an investigation conducted on behalf of the independent members of BoBS only and the conclusions expressed (were) those of the independent members alone". Paragraph 1.5 stated that the report represented the product of an investigation conducted by BoBS with the assistance of a team led by Mr Ian Watt. A footnote explained that Mr Watt had also been appointed by the Bank under section 41 to conduct an investigation into certain aspects of the nature, conduct and state of business of New Barings. However, we were told that Mr Watt never prepared a written report on New Barings. In August 1995, he deposited with the Bank material in the form of interview transcripts and 'supporting documents' and offered to answer questions of those who had to assess the material. That offer was taken up some time later.
31. In June 1998, the Chancellor of the Exchequer was asked by a Member of Parliament to list all the departmental enquiries and reviews instigated by Treasury Ministers which had been chaired by individuals outside his Department. The list supplied in response contained a reference to the BoBS Enquiry into Barings in 1995 which was said to have been chaired by Sir Alan Hardcastle.
32. During 1998, Jonathan Parker J. conducted hearings of applications by the Secretary of State for the Department of Trade and Industry under the CDDA against 10 former directors of Barings. The affidavit in support of the case against all ten was sworn by a Mr Taylor on behalf of the Secretary of State. It exhibited some but not all of the transcripts which had emanated from the BoBS Enquiry. Some of the directors did not contest the applications; some were dealt with under the "Carecraft procedure" and three were dealt with at fully contested hearings in respect of which Mr Justice Jonathan Parker gave a reserved judgement in December 1998, a copy of which has been provided to us. Evidence in CDDA proceedings in the Chancery Division is presented on affidavit but is subject to cross-examination in open court. We were told that some parts of the BoBS transcripts were deployed in cross- examination of the respondents. No application has been made by the defendants in this action to Jonathan Parker J under RSC Order 63 rule 4 or under CPR Part 5 for leave to inspect documents on the court file.
33. In the affidavit sworn by Mr Choyce of the FSA for the purpose of these proceedings Mr Choyce states that Mr Watt "gathered information using s.41 powers and he reported to the Bank. Mr Watt also provided information to BoBS through the gateway in s.85(1)(a) of the Banking Act". He further states that he believes that the transcripts include a record of information received or obtained by Mr Watt and his team for Banking Act purposes.
The First Issue : Were the transcripts subject to Part V of the Banking Act?
34. In order to fall within Part V, information has to be received "under or for the purposes" of the Banking Act. As indicated already, the purposes of the Banking Act are widely drawn in s.1. Mr Bannister QC, on behalf of D&T, submits that the inquiry which resulted in the transcripts being obtained was a departmental inquiry for the Chancellor on behalf of his Department, the Treasury, and that it had nothing to do with the Banking Act. He relies strongly on the terms of the Chancellor's statement to the House of Commons of 27 February 1995 which started the exercise and the answer of the Chancellor to the question in June 1998 after the report had been made. He also refers to the terms of s.2 of the Banking Act, which do not fit comfortably with the role which the Chancellor assigned to BoBS.
35. The points which Mr Bannister makes undoubtedly have substance and require careful consideration. However, although the position may have been unclear at the outset for reasons we will explain, we have come to the conclusion that the inquiries by Mr Watt and the report by BoBS were respectively conducted and produced both under and for the purposes of the Banking Act.
36. As Mr Phillips QC, on behalf of the FSA, argued in his revised submissions there was only one investigation although there were two inquiries; the first being conducted by BoBS and the second under s.41. The second inquiry was necessarily more restricted than the first because of the terms of s.41. In so far as the investigation was being conducted under s.41 it could only be conducted for Banking Act purposes. It should not be readily assumed that the Bank would abuse its powers and appoint Mr Watt for improper collateral purposes and there is not in the evidence anything which causes us to infer that this did happen.
37. Usually, and possibly invariably, in the case of a departmental inquiry, the inquiry is supported by the department concerned. Here the inquiry was supported and the expenses met by the Bank. It would be unusual for a statutory committee to be instructed to perform a task other than in its statutory role. However, if this was the case it would be remarkable for only part of the members conducting a departmental inquiry to be responsible for the whole report. By contrast, if in preparing the report, BoBS was acting in its statutory role, as happened, it would be in accordance with s.2(3) of the Banking Act for the independent members alone to give the "advice" on the manner in which the Bank had performed its functions or on any matter relating to the exercise of those functions.
38. As to the role of the entire committee of BoBS, s.2, apart from requiring BoBS to produce an annual report on its activities, is strangely silent. BoBS title does, however, give some general indication of its reason for existence. The most that can be said is that, it would not be inconsistent with its powers for BoBS to respond on behalf of the Bank to an invitation of the Chancellor to make a report as a result of an investigation conducted on behalf of the Bank, in which the Bank's own supervisory powers were in issue (see the judgment of Millett J in Price Waterhouse (a firm) v BCCI [1992] BCLC 583 at pp. 600-1). We would agree with Evans-Lombe J that it was not fortuitous that the Board's report was not made to the Chancellor directly but to the Bank "with the intention that it is to be passed to the Chancellor of the Exchequer".
39. We were referred to Laddie J's judgment in BCCI v Price Waterhouse [1998] Ch. 84. In that case one of the issues Laddie J considered was what would be the position under s.82 if information was collected or received for dual purposes, one being under or for the purposes of the Act and the other not (97H). Laddie J expressed views as to the application of s.82(1) in those circumstances. He said that it was "the recipient who will determine for what purposes he has received the information" (98C) and that s.82(1) had no application if the information was received for a dual purpose. Laddie J's reasoning was based on his conclusion that s.82(3) creates an offence of strict liability and it was necessary to mitigate the harsh results which would follow by construing the section narrowly. There is, however, no reason to regard s.82(3) as creating an absolute offence. It is not easy to ascertain what is in the mind of a recipient when he receives information and a test which involves this has drawbacks. In addition Laddie J had considerable difficulty in making sense of s.82, on the assumption he was correct that s.82 did not apply when information was obtained for dual purposes. The complications involved provide in themselves a justification for concluding s.82 does not create an absolute offence. S.82 is straightforward to apply if s.82(3) is regarded as requiring mens rea in the normal way. An offence is, then, only committed if the person alleged to have committed the offence had knowledge of the circumstances which mean that the information is information to which s.82(1) applies. S.82(1) requires no more than the application of its provisions to the facts of a particular situation. A duality of purpose is only relevant if the non-Banking Act purpose is dominant so that a Banking Act purpose can be ignored as being of no significance. Both counsel agreed that when scrutinised Laddie J's approach could not be supported. The practical effect here of adopting the correct approach is that both aspects of the inquiry would prima facie attract s.82(1) protection.
The Second Issue : Is the information in the transcripts already available to the public from other sources.
40. Here we are required to do no more than identify the correct approach. The parties will then be able to decide what parts of the transcripts (if any) are still entitled to protection. The parties are agreed that, if and in so far as, in the course of the proceedings before Parker J the transcripts were available to the public the protection of s.82 is lost. Evans-Lombe J decided the issue on the burden of proof. He concluded that as to the controversial sections of the transcripts which were exhibited D & T had failed to establish the transcripts were available to the public.
41. This raises an important general issue as to how to reconcile the requirement that court proceedings are required to be open to the public so that the public can be aware of what happens in court proceedings with the increasing resort to practices such as the judge reading documents in his room away from the public gaze. If the judge does not state in open court what he has read what is assumed to be the position in the absence of evidence to the contrary?
42. It is important to note that this is a different although related question to that which arises under RSC 63 rule 4 (and now under CPR Part 5) on an application for permission to inspect documents on the file of the Court. It is also distinct from the question of the use to which documents disclosed on discovery can be put.
43. As a matter of basic principle the starting point should be that practices adopted by the courts and parties to ensure the efficient resolution of litigation should not be allowed to adversely affect the ability of the public to know what is happening in the course of the proceedings.
44. This is a principle on which Mr Bannister strongly relies and in support refers to the clear statements of this Court in Re Hinchliffe [1894] 1 Ch.. They are so succinct we quote them in full. Firstly, Lord Herschell LC at p. 119 :
"I think that questions of property and of privilege have in reality nothing to do with this application. The documents may be the property of the committee, prepared and taken for her own satisfaction. It may be that, being her property, production of them could not have been ordered in the action. But she chooses to bring them before the Court herself, as part of her affidavit, in order to induce the Court to act in a manner which may affect and may prejudice the lunatic's rights. I cannot, in the absence of authority, see any ground on which the lunatic, if she had become sane, or her executor if she were dead, could be refused inspection of these documents. They form as much part of the affidavit as if they had been actually annexed to and filed with it. For these reasons I think it is impossible to hold that the committee is entitled to refuse to the executor inspection of these documents."
45. Lord Justice Lindley added (at p.120):
"I think that the application for inspection of the case and opinion of counsel, said to be annexed to the affidavit, does not turn upon questions of property or privilege. It is only a matter of convenience that exhibits are not lodged in the Master's office with the affidavit. In my opinion, any one who has a right to see an affidavit has also a right to see an exhibit referred to in the affidavit so as to be made part of it, just as if it were annexed to the affidavit. That is all I need say on the question."
46. And Lord Justice A L Smith (at p.120):
"When a person makes an affidavit, and states therein that he refers to a document marked with a letter A, the effect is just the same as if he had copied it out in the affidavit. It is only made an exhibit to save expense. Therefore any person who is entitled to see the affidavit is equally entitled to see the document referred to therein."
47. This issue was also helpfully considered by a judgment of this Court of Potter LJ in GIO Services Ltd v Liverpool and London Ltd [1999] 1 WLR 984. Unfortunately it does not appear that Re Hinchliffe was cited to the Court in that case. The case concerned an application by a non party to inspect documents. An application was made under O.38 r2A of the RSC to obtain copies of documents referred to in witness statements. There was also an application to obtain copies of skeleton submissions and any documents referred to in those submissions; and any documents the judge was requested to read, or which were included in a reading list or which were read or referred to during the trial.
48. The application under O.38 r.2A failed as a matter of interpretation of the language of that Order. Potter LJ did however recognise that if the statements had documents annexed or scheduled to the witness statement it "might well be successfully argued that such documents form part of the witness statement" (991F). With regard to the more general application Potter LJ said (994H-995A):
"It should be noted that the authorities I have quoted and other leading statements on the question of public justice (see for instance Scott v Scott [1913] AC 417, per the Earl of Halsbury, at pp. 440-443, and per Lord Shaw, at p. 482, Rex v Governor of Lewes Prison, Ex parte Doyle [1917] 2 KB 254, 271, per Viscount Reading CJ and Hodgson v Imperial Tobacco Ltd [1998] 1 WLR 1056, 1069-1070, 10781E and 1072A-C, per Lord Woolf MR) deal with the matter in broad terms of "open doors", the right of the press and the public not to be excluded, and the need for public announcement of the court's decision. They do not condescend to greater particularity than that and they certainly do not seek to suggest that, in devising and applying its procedures for the expeditious dispatch of judicial business, the public should be given access to such documentary material as may be before the court by way of evidence."
49. and (995F-H and 996E-G):
"So far as concerns documents which form part of the evidence or court bundles, there has historically been no right, and there is currently no provision, which enables a member of the public present in court to see, examine or copy a document simply on the basis that it has been referred to in court or read by the judge. If and in so far as it may be read out, it will "enter the public domain" in the sense already referred to, and a member of the press or public may quote what is read out, but the right of access to it for purposes of further use or information depends upon that person's ability to obtain a copy of the document from one of the parties or by other lawful means. There is no provision by which the court may, regardless of the wishes of the parties to the litigation, make such a document available to a member of the public. Nor, so far as such documents are concerned, do I consider that any recent development in court procedures justifies the court contemplating such an exercise under its inherent jurisdiction."
"If, as in the instant case, an opening speech is dispensed with in favour of a written opening (or a skeleton argument treated as such) which is not read out, or even summarised, in open court before the calling of the evidence, it seems to me impossible to avoid the conclusion that an important part of the judicial process, namely the instruction of the judge in the issues of the case, has in fact taken place in the privacy of his room and not in open court. In such a case, I have no doubt that, on application from a member of the press or public in the course of the trial, it is within the inherent jurisdiction of the court to require that there be made available to such applicant a copy of the written opening or skeleton argument submitted to the judge."
50. GIO Services involved an application to obtain copies of the documents. Here D&T do not require the court's assistance for this purpose. D&T only need to establish that the absence of any evidence that Parker J actually read the documents is not fatal to their case; that even without such evidence the documents, because of their use in the proceedings, were available to the public for inspection. This is not without significance because Potter LJ thought that the comment which he cited of Sir Donald Nicholls V-C in Dobson v Hastings [1992] Ch. 394 at p.402 when he said "if and when affidavits and other documents are used in open court, their contents will become generally available" should be read restrictively. In our judgment the contrast which the Vice Chancellor drew between that position and documents on the court file is accurate.
51. The tension between the need for a public hearing of court proceedings and what happens in practice in the courts will be increased when the Human Rights Act 1998 comes into force and the courts will be under an obligation to comply with Article 6. Already, this Court has recognised the need to give "appropriate weight to both efficiency and openness of justice" in the judgment of the Court given by Lord Bingham of Cornhill CJ in Smith Kline Beecham Biologicals SA v Connaught Laboratories Inc [1999] 4 All ER 498 at p.512d-e. As Lord Bingham recognised, it "may be necessary, with suitable safeguards, to avoid too wide a gap between what has in theory, and what has in practice passed into the public domain". Since the CPR came into force it is important to reduce the gap since judges will be increasingly performing their role out of court as well as in court.
52. Here the transcripts were put forward by the Department as part of the evidence on which the Department relied to obtain orders of disqualification. If the transcripts had been read in open court they would have been in the public domain. If they were read by the judge, in or out of court, as part of his responsibility for determining what order should be made, they should be regarded as being in the public domain. This is subject to any circumstances of the particular case making it not in the interests of justice that this should be the position.
53. When documents are put before the Court for the purpose of being read in evidence as here the onus is no longer on the person contending they have entered the public domain to show this has happened. The onus is on the person contesting this is the position to show that they did not enter the public domain because, for example, the judge did not in fact read them or because of the need to protect the ability of the court to do justice in a particular case. This is the only practical solution. The judge cannot be cross-examined as to what he has or has not read.
54. The question of inspecting and copying the documents raises difficulties which do not arise in this case. The Court can for the future bear in mind Part 1.3 CPR which requires the parties to help the Court to further the overriding objectives set out in Part I of the CPR.
55. We dismiss the appeal as to the first issue but allow it on the second issue. We would be grateful for the assistance of the parties as to the terms of the order we should make.
(Order does not form part of the approved judgment)