England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL ( CIVIL DIVISION)
ON APPEAL FROM MR JUSTICE GRIGSON
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL Friday 8th June, 2001

LORD JUSTICE MUMMERY:

The Appeal

1. This is an appeal against an order made by Grigson J on 15 February 2001. After an inter partes hearing he continued until trial freezing and disclosure orders made on a without notice application to Henriques J on 7 February. The defendants appeal with the permission of the judge.
2. The appeal raises a novel point. The question is: what use can properly be made in civil proceedings of information which has been obtained by a party to the civil proceedings from a prosecuting authority, that information having been acquired by the prosecuting authority as a result of letters of request under the provisions of the Criminal Justice (International Co-operation) Act 1990 (the 1990 Act) ? We are indebted to Mr Ralls QC, who appears for the defendants, and to Mr Flint QC, who appears for the claimants, for their excellent arguments.

The Proceedings.

3. On 10 December 1999 proceedings for fraudulent misrepresentation were started against the first four defendants. Particulars of Claim were served on that date. They were subsequently amended in May and November 2000.
4. The first claimant, BOC, manufactures and sells vacuum equipment. After 28 April 1996 the purchasing side of the business was conducted by the second claimant, Edwards High Vacuum International Limited. The first defendant, Instrument Technology Limited (ITL), supplied precision machined couplings and connectors to the claimants. At that time ITL was owned and managed by Mr Frederick Barlow and his son David. They are the second and third defendants. The fourth defendant, Mr Youngman, was the claimants' senior buyer for factored goods.
5. The action is based on allegations that, in breach of duty, Mr Youngman received from the Barlows and/or ITL between November 1995 and April 1998 bribes and improper payments totalling over £315,000. It is claimed that the Barlows and ITL are guilty of fraud and dishonest assistance ; that the Barlows and/or ITL defrauded the claimants by overcharging for goods supplied and by invoicing for goods which were not supplied ; and that those actions were fraudulently concealed from the claimants.

The Freezing and Disclosure Orders

6. On 10 December 1999 Langley J made a without notice order freezing the assets of the Barlows up to the limit of £1.4m. He also made orders for the disclosure of assets. Mr Frederick Barlow was later charged with criminal offences. He has been committed for trial at the Crown Court. Information relevant to the criminal proceedings was obtained by the police under the 1990 Act by means of letters of request to the Swiss authorities. The parties have not been able to obtain copies of the letters of request from the prosecuting authority. So this appeal was argued and has to be determined without the parties or the court having had the advantage of seeing the precise terms of the letters of request. The application and this appeal have proceeded on the footing that the letters of request were confined to information and documents relating to the investigation and prosecution of crime.
7. The information supplied by the prosecuting authority to the claimants' solicitor in the course of its criminal investigation was that there are three Swiss Bank accounts directly or indirectly under the control of the Barlows, which were not disclosed by them in accordance with the order of Langley J. It therefore appears that they have given false evidence as to their overseas assets.
8. On 7 February 2001 Henriques J made a without notice world-wide freezing order on the application of the claimants, replacing the earlier order against the Barlows. The order identified bank accounts in Zurich. At the inter partes hearing on 14 February 2001 Grigson J, continued the order until trial and rejected the Barlows' contention that the earlier without notice order should be discharged on the ground that it was based on evidence the use of which is expressly prohibited by section 3(7) of the 1990 Act.

The 1990 Act

9. One of the purposes of the 1990 Act is to enable the United Kingdom to co-operate with other countries in criminal proceedings and investigations. In particular, Part 1 enabled the Government to ratify the 1959 European Convention on Mutual Assistance. Sections 3 to 6 govern the mutual provision of evidence. Section 3 is concerned with obtaining evidence from overseas for use in the United Kingdom in the investigation of, and in proceedings for, an offence. Application may be made to the court under section 3(1) to issue a letter of request for assistance in obtaining outside the United Kingdom such evidence as is specified in the letter for use in the proceedings or investigation. The application may be made by a prosecuting authority or, if proceedings have been instituted, by the person charged in those proceedings: section 3(2). In the case of a designated prosecuting authority the letter of request may be issued without an application to the court. The letter of request is sent to the Secretary of State for transmission to (a) the court or tribunal specified in the letter and exercising jurisdiction in the place where the evidence is to be obtained or (b) to any authority recognised by the government of the country or territory in question as the appropriate authority for receiving requests for assistance of the kind to which the section relates: see subsection (4).
10. The critical provision is subsection (7) -

"Evidence obtained by virtue of a letter of request shall not without the consent of such an authority as is mentioned in subsection (4) (b) above be used for any purpose other than that specified in the letter;and when any document or other article obtained pursuant to a letter of request is no longer required for that purpose (or for any other purpose for which such consent has been obtained), it shall be returned to such an authority unless that authority indicates that the document or article need not be returned."

11. The consent of the authority mentioned in subsection (4)(b) has not been sought or obtained. Three points should be noted.
12. First, the provisions in this Part of the 1990 Act are confined to mutual assistance in criminal proceedings and in the investigation of criminal offences. There is no reference at all to mutual assistance in civil proceedings or to the use of evidence in civil proceedings.
13. Secondly, the sections do not expressly provide that the evidence requested and supplied shall be inadmissible as evidence in civil proceedings or that its use in such proceedings would be a contempt of court. No penalty, sanction or other consequence of any kind is expressly attached to contravention of the prohibition in section 3 (7). This is in contrast to the provisions in section 18 in Part 1 of the Criminal Procedure and Investigations Act 1996 to the effect that it is a contempt of court for a person knowingly to use or disclose an object or information recorded in it if the use or disclosure is in contravention of an obligation of confidentiality imposed by section 17 (see section 18 (1) ) and that information is inadmissible as evidence in civil proceedings if to adduce it would, in the opinion of the court, be likely to constitute a contempt (see section 18(9)).
14. Thirdly, section 3(7) does not expressly identify the person or persons who are prohibited from using the evidence for a purpose different from that specified in the letter of request. It does not expressly refer to the use of derivative evidence by a third person i.e.by one who has been supplied with the information by the person who has obtained it pursuant to a letter of request.

The Judgment

15. The judge's reasons for refusing to discharge the freezing order and the disclosure order were briefly as follows.
16. The information supplied by the police to the claimants' solicitor was prima facie evidence of deliberate concealment of assets and of a breach of the 1999 disclosure order.
17. The purpose of the letter of request to the Swiss authorities was investigation of the allegation of fraud against the Barlows and Mr Youngman.
18. The 1990 Act is solely concerned with criminal proceedings.
19. The prosecuting authorities and the person charged with a criminal offence are the only persons entitled to request information under the 1990 Act and they are the only persons governed by the restriction in section 3(7). The claimants could not have made the request direct to the Swiss authorities under the 1990 Act.
20. As for the contentions that the police were bound by an express or implied undertaking not to use the material for a purpose other than that for which it was acquired, or were bound by a duty of confidentiality to the defendants, the police had a positive duty to disclose relevant information to the alleged victim of crime i.e. the claimants. See Preston BC v. McGrath (Unreported CA Transcipt).
21. Once the information was in the hands of the claimants neither the police nor the operation of section 3(7) could prevent the claimants from using it in a proper way.
22. The victim of the alleged criminal offence was entitled to use the information in civil proceedings and the evidence was admissible in such proceedings.

The Defendants' Submissions

23. Mr Ralls QC submitted that the use of evidence obtained by virtue of the letter of request is clearly prohibited by the wide mandatory terms of section 3(7).It is an absolute blanket prohibition. So that provision does not allow evidence obtained for the purpose of a criminal prosecution to be voluntarily handed over by the recipient to the claimants for them to use in support of a private claim in civil proceedings or in support of an application for contempt of court in such proceedings. If, on the application of the claimants, an order had been sought against the prosecuting authority for the disclosure and production of the documents and information obtained pursuant to the letter of request , it would have been entitled to invoke section 3(7) as a ground for withholding the documents and information sought.
24. He cited R v. Gooch (Unreported ,26 June 1998) in which the Court of Appeal refused to sanction the use of evidential material obtained in connection with illegal importation of drugs for the ancillary purpose of bringing confiscation proceedings.
25. He argued that the judge was wrong in construing section 3(7) as governing only the prosecuting authority. The duty to observe the prohibition is owed by any person who wishes to use the information for a different purpose than that specified in the letter of request. There was a duty on the prosecuting authority to seek and obtain the consent of the overseas authority which supplied the information. Without that consent the use of the information to obtain the freezing order and the disclosure order was a breach of the statutory obligation.
26. It was submitted that, in exercising the discretion to grant a freezing order or a disclosure order, it was wrong of the judge to take account of information obtained and used in breach of a statutory obligation prohibiting its use. Further, a duty of confidence is owed by the police to the Barlows and to ITL. The police are subject to a duty of confidence in respect of evidence obtained by the use of statutory powers: Marcel v. Commissioner of Police [1992] Ch 225. Material disclosed by the police to the defence in criminal proceedings is subject to an implied undertaking that it will only be used for the purposes of the defence: Taylor v. Serious Fraud Office [1999] 2 AC 177.
27. In balancing the competing aspects of the public interest the most important aspect is in encouraging international co-operation by the provision of information under the Treaty for the purpose of prosecuting crime. The proper course was for the police to seek the consent of the Swiss authorities in relation to the use of the material in civil proceedings.

Conclusion

28. This appeal should be dismissed.
29. It is not disputed that the evidence to which objection is taken is highly relevant to the exercise of the discretion to make a freezing order and a disclosure order. Its truth has not been challenged on this application. It is evidence that the defendants did not comply with the earlier disclosure order and gave false evidence to the court. It accordingly is of assistance to the victim of the alleged crime in pursuing his rights to damages in civil proceedings and possibly an application for contempt of court.
30. The critical question is this : is there any valid legal objection to the claimants tendering that cogent evidence to the court in civil proceedings brought for the protection of their legitimate interests or to the court in admitting and acting on such evidence?
31. As to the law of evidence there is no general principle of common law or of European Convention law that unlawfully obtained evidence is inadmissible, though it may be excluded in certain circumstances in the exercise of judicial discretion : see A-G's Reference (No 3 of 1999) [2001] 2 WLR 56 at 64C, 65F-66B and 68A-C. This is an a fortiori case, as it is not suggested that the evidence concerning the Swiss bank accounts was obtained by unlawful means by the claimants' solicitor from the police or from anyone else. Apart from section 3(7) there is no bar on the use and admissibility of the evidence in these proceedings.
32. As to section 3(7) the principal difficulty with the contention that it prohibits the claimants from using the evidence in their civil proceedings for fraud is that the relevant provisions of the 1990 Act are only concerned with the investigation and prosecution of criminal proceedings. Section 3 is not directed at obtaining evidence for use in civil proceedings; so, it may be asked, why should there be any prohibition of its use in such proceedings.?
33. The scope of the prohibition must be coloured by the context of the relevant provisions of the 1990 Act. In my view, the width of the prohibition is implicitly restricted to the use of information by the prosecuting authority or the defendant in criminal investigations and proceedings. The provisions are aimed at collaboration in criminal proceedings. It is not therefore surprising to find that the provisions of the 1990 Act are silent on both (a) the use of documents and information in civil proceedings and (b) the use of documents and information by someone other than the person making a letter of request in the context of the investigation and prosecution of crime.
34. For these short reasons I would dismiss this appeal.

LORD JUSTICE KAY:

35. I agree with the judgment of Mummery LJ and I would only wish to add one other consideration. If Section 3 (7) of the 1990 Act was held to provide the blanket prohibition in both criminal and civil proceedings contended for by Mr Ralls QC, then I can see no logical reason why it would not continue to apply even after the evidence has been made public at a criminal trial. Mr Ralls recognised that in respect of civil proceedings once the evidence is in the public forum, it would be impossible to exclude that evidence for example, in proceedings by the victim seeking to recover his loss. In criminal proceedings the fact that the evidence had been given publicly in other criminal proceedings would not permit the court to hear that evidence if its use had not been sanctioned by the foreign authority either by the inclusion of such matters in the letter of request or by subsequent consent. If it were otherwise it would defeat the very object of the legislation. Hence if the concession made by Mr Ralls is right, as I consider it plainly is, a distinction between the applicability of Section 3 (7) to criminal proceedings and civil proceedings is inevitable. The only sensible distinction is that the subsection applies to criminal proceedings but not to civil proceedings. This is the conclusion to which Mummery LJ has come in his judgment. I too would dismiss the appeal.
ORDER: Appeal dismissed with costs summarily assessed in the sum of £13,988.96. (Order does not form part of approved Judgment)