QUEEN'S BENCH DIVISION
B e f o r e :
(Lord Phillips of Worth Matravers)
MR JUSTICE SILBER
|The Queen on the application of|
|(1) BENNO HAFNER|
|(2) HAFNER AND HOCHSTRASSER (a firm)||Claimants|
|- v -|
|CITY OF WESTMINSTER MAGISTRATES' COURT||Defendant|
|AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION||Interested Party|
Wordwave International Ltd (a Merrill Communications Company)
190 Fleet Street, London EC4
Telephone No: 020 7421 4040
(Official Shorthand Writers to the Court)
London EC1M 4AJ) appeared on behalf of the Claimants
Mr Ian Winter QC (instructed by Peters & Peters, London
EC4A 1BW) appeared on behalf of
Australian Securities Investments Commission (Interested Party)
Crown Copyright ©
Wednesday 5 March 2008
THE LORD CHIEF JUSTICE:
"13(1) Where a request for assistance in obtaining evidence in a part of the United Kingdom is received by the territorial authority for that part, the authority may --
(a) if the conditions in section 14 are met, arrange for the evidence to be obtained under section 15....
14(1) The territorial authority may arrange for evidence to be obtained under section 15 if the request for assistance in obtaining the evidence is made in connection with --
(a) criminal proceedings or a criminal investigation, being carried on outside the United Kingdom ....
15(1) Where the evidence is in England and Wales or Northern Ireland, the Secretary of State may by a notice nominate a court to receive any evidence to which the request relates which appears to the court to be appropriate for the purpose of giving effect to the request."
Schedule 1, so far as relevant, provides:
The court has the like powers for securing the attendance of a witness as it has for the purposes of other proceedings before the court.
Rules of court under section 49 may, in particular, make provision in respect of the persons entitled to appear or take part in the proceedings and for excluding the public from the proceedings.
(1) The evidence received by the court is to be given to the court or authority that made the request or to the territorial authority for forwarding to the court or authority that made the request."
The territorial authority for England and Wales referred to in CICA is the Secretary of State for the Home Department ("SSHD").
"5. Subject to the terms of this order, the defendant shall be permitted to proceed pursuant to section 15 of the Crime (International Co-Operation) Act 2003 (the Act) to ascertain the documents to be produced by Mr Lavin and Ms Venturi for the purpose of determining whether they are 'evidence to which the request relates which appears to the [defendant] to be appropriate for the purposes of giving effect to the request' (within the terms of section 15 of the Act).
6. The defendant shall be permitted to consider any such documents produced in accordance with paragraph 5 above and to make a determination as to which of them, if any, have no connection with the claimants or either of them or raise no issues in relation to any of the rights of the claimants or either or them (the Unconnected Documents). In making that determination the defendant shall be permitted to take account of written submissions filed by the claimants.
7. The defendant shall be permitted to determine whether the Unconnected Documents or any of them are 'evidence to which the request relates which appears to [the defendant] to be appropriate for the purposes of giving effect to the request' (within the terms of section 15 of the Act) and if so to order that those documents be forwarded to the Secretary of State.
8. The defendant shall be permitted to hear from counsel for the claimants or any other party (that in the exercise of the discretion in Criminal Procedure Rule 32(4) it considers should be heard) for the purpose of determining whether any of the remaining documents apart from the Unconnected Documents (the Connected Documents) and if so which are 'evidence to which the request relates which appears to the defendant to be appropriate for the purposes of giving effect to the request'. The defendant shall determine which parties shall be present during any such submissions and whether or not the public should be excluded.
9. The defendant shall make such orders and/or give such directions as it considers appropriate in relation to the Connected Documents save that no order for the forwarding of any of the Connected Documents shall be made until the extant application for judicial review has been resolved by ruling of the Administrative Court.
10. The extant application for judicial review shall be stayed."
"1. The claimant shall have the right to appear and take part and be legally represented during such part of the proceedings as relate to the consideration of their rights pursuant to section 15 of the Crime (International Co-operation) Act 2003 ('the Act') and to the Criminal Procedure Rule 32.4.
2. On a date to be fixed and which is convenient to counsel for all parties, Mr Lavin and Ms Venturi (the witnesses) shall be compelled by summons to produce, in the first instance to the court alone, the documents relevant to the Letter of Request and to answer in writing the questions in the list of the initial sixteen questions as agreed between ASIC and the witnesses annexed hereto.
3. The court shall consider the documents and the written answers produced by the witnesses for the purpose of determining whether they are:
a. 'evidence to which the request relates' and
b. 'appropriate for the purposes of giving effect to the request' (within the meaning of section 15 of the Act).
4. For the purpose of that consideration the court shall make the following determination:
a. as to which of the documents and the written answers so produced, if any, have no connection with the claimants or either of them or raise no issues in relation to any of the rights of the claimants or either of them (hereinafter, 'the Unconnected Documents'). In making that determination, the court shall take account of such written submissions and/or evidence which has been filed by the claimants by [ ] and the 'Hafner Concerns Documents' filed on terms of confidentiality with the court on 18th August 2006;
b. whether the Unconnected Documents or any of them are 'evidence to which the request relates which appears to the court to be appropriate for the purposes of giving effect to the request' (within the meaning of section 15 of the Ace) and, if so, receive and forward such evidence to the Secretary of State under [paragraph 6 of Schedule 1 of the Act]. In making that determination, the court shall take account of any submissions, including any submissions from ASIC as to the relevance to the Letter of Request of any of the documents or written answers.
5. The court shall communicate a summary of the determinations specified in paragraph 4 above in writing to all parties.
6. The court shall hear oral submissions from counsel for the claimants and counsel for the witnesses at a hearing on [ ] which shall otherwise be held in private and shall determine whether any of the remaining documents apart from the Undisclosed Documents (hereinafter, 'the connected Documents') and, if so which, are evidence to which the request relates but which are nevertheless inappropriate for the purpose of giving effect to the request in the light of the rights under Article 8 ECHR of the claimants.
7. If the court shall determine that the Connected Documents or any of them are 'evidence to which the request relates which appears to the court to be appropriate for the purposes of giving effect to the request' (within the meaning of section 15 of the Act) notwithstanding the submissions by counsel for the claimants the court shall, subject to the objections of any other proper party, receive such evidence provided that the court shall not forward such evidence to the Secretary of State or otherwise pending the determination by the Administrative Court of the application for judicial review brought by the claimants (Claim No CO/6008 of 2006) or otherwise with their consent.
The sixteen questions as agreed between ASIC and the witnesses referred to in paragraph 2
Questions 1-10, 33, 96, 342, 447, 492 and 546 from the original list of questions contained in Appendix 1 to the Summons issued on 20 May 2005 by the Bow Street Magistrates' Court to Mr Dennis Lavin."
"(i) all the material from the MPI employees complied with the Request and none of it fell outside the Request;
(ii) Article 8 is not engaged in any way, shape or form;
(iii) the unredacted version of the Commercially Sensitive Document was included in the material considered to be within the terms of the Request; and
(iv) the defendant could not proceed further until the matter returned to the Administrative Court to establish whether the present judicial review would be pursued and, if so, whether that court was content with the defendant's decision or not."
"(i) that the defendant has powers under Parts 1 to 3 and 32 of the Criminal Procedure Rules and section 15 of the 2003 Act to make directions to determine the procedure (including representation and participation matters) for receiving evidence to which the request relates and for the determination of whether evidence is 'appropriate' for the purpose of giving effect to the request within the meaning of section 15(1) of the 2003 Act;
(ii) that the defendant should not proceed to ascertain or receive evidence until it has made such procedural directions (including on representation and participation matters) as are necessary to comply with its duty to act compatibly with the claimants' Article 8 rights and its duty to further the overriding objective under Criminal Procedure Rule 1.1 and 3.2."
In addition, the claimants' principal claim for relief is a quashing order in respect of the defendant's decision of 27 March 2007.
"Right to respect for private and family life
1. Everyone has the right to respect for his private and family life, his home and his correspondence.
2. There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well-being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others."
"(i) The fact that the correspondence is of a business character does not exclude the protection of Article 8 in respect of both 'private life' and 'correspondence': Funke v France (1993) 16 EHRR 297 and Niemietz v Germany (1992) 16 EHRR 97.
(ii) The fact that the documents are sought in proceedings in which the claimants were not initially concerned does not exclude the protection of Article 8: Z v Finland (1997) 25 EHRR 371.
(iii) Public authorities which obtain documents by compulsion engage the right to respect for private life and correspondence in respect of each step of such measures (ie obtaining, storage and subsequent use of the material): Amann v Switzerland (2000) 30 EHRR 843."
"Undoubtedly, in the field under consideration -- the prevention of capital outflows and tax evasion -- States encounter serious difficulties owing to the scale and complexity of banking systems and financial channels and to the immense scope for international investment, made all the easier by the relative porousness of national borders. The Court therefore recognises that they may consider it necessary to have recourse to measures such as house searches and seizures in order to obtain physical evidence of exchange-control offences and, where appropriate, to prosecute those responsible. Nevertheless, the relevant legislation and practice must afford adequate and effective safeguards against abuse ...."
(1) Upon the claimants undertaking not to disclose to any third party any of the information contained in them, the claimants should be permitted to examine the documents and the replies to questions presently held by the defendant at a venue to be designated by the court. No copies of the documents are to be taken.
(2) The claimants should be permitted to set out in writing any further concerns about or objections to the disclosure of the documents within a short period after such examination (the court to specify the period). It is for the court to decide whether the claimants should be permitted to support their concerns and objections at an oral hearing.
(3) The court should give reasons for the decision that it reaches. As to these reasons, we consider that the following statement of this court in R v Southampton Crown Court, ex party J and P  Crim LR 962 (a decision of 21 December 1992 of Watkins LJ, Auld and Laws JJ) as to the desirability of giving reasons when granting access to special material under section 9 of the Police and Criminal Evidence Act 1984 provides some guidance:"The Criminal Evidence Act 1984 does not require a circuit judge to give reasons when making an order inter partes or issuing a warrant ex parte for access to special procedure material. However, challenges to decisions of circuit judges which have come before this court demonstrate, in my opinion, especially as to ex parte applications, the need for this to be done. Reasons need not be elaborate, but they should be recorded and be sufficient to identify the substance of any relevant information or representation put before the judge in addition to the written information. They should set out what inferences he has drawn from that material relevant to the statutory conditions governing the content and form of the order or warrant sought. Where he has considered the question of legal privilege he should explain why, if he does, he has included in the order or warrant material which is prima facie privileged, or why he has excluded material as subject to privilege."
We would only add that, as what are in issue are the claimants' privacy rights, the reasons should be so tailored as not to disclose matters that would defeat the protection to which the claimants are entitled.
MR GARDNER: My Lord, I am obliged. Perhaps as a matter of housekeeping I would only mention that we were able to contact the first claimant and he has re-arranged his business affairs to be able to be present in court today. He was not initially certain as to the costs of the court, if any, to follow, so Mr Hafner is present.
THE LORD CHIEF JUSTICE: I see. We are grateful to him for that. I am sorry if his journey has been unnecessary. At least he has had the satisfaction of listening to the judgment.
MR GARDNER: My Lord, indeed. In that respect, my Lord, the first matter upon which I should like to address the court is the question of costs. Our application is that costs should follow the event in respect of the entirety of the judicial review. That application is obviously affected by the nature of the parties to these proceedings: in the first instance the defendant being a court which has not participated actively in the proceedings, and secondly the interested party, ASIC.
Perhaps I can take those matters briefly in turn. In relation to the availability of a costs order against a non-participating defendant -- here the tribunal -- the first general rule is naturally the costs are in the discretion of the court.
THE LORD CHIEF JUSTICE: Yes.
MR GARDNER: The second general rule is that no award would normally be made, save where there have been exceptional matters at issue.
THE LORD CHIEF JUSTICE: Yes.
MR GARDNER: My Lord in the court's judgment has referred to the absence of any stated reason why the defendant did not adopt the agreed procedure which had been worked out after considerable difficulty between ASIC with the claimants and which was endorsed by the witnesses. We submit that to the extent that that procedure was not adopted, and to the extent in particular that, following the order of this court of 24 November 2006, which made the permissive indications to which my Lord has referred in the judgment, until 18 January when the matter came back before the court in a manner where the claimants were at least able to be present and to make representations, and that was a period during which great activity was undertaken by the defendant in respect of which we had no notice -- or quite inadequate notice, only indirect notice through the witnesses' solicitors. That was a quite exceptional factor and we submit that for that period it would be appropriate to make an apportionment order under the Civil Procedure Rules in respect of the costs against the defendant, notwithstanding that they did not participate in these proceedings. So that would be our first submission.
In relation to the position of the interested party, ASIC, we maintain our primary submission that we should recover our costs and recall in passing that in judicial review proceedings (1) reflecting similar principles of the costs following the event and the claimants who were there found to have made a pre-emptive strike were made liable for the costs of ASIC as well as those of the Secretary of State.
But the substantial reason why of course a special consideration is required in relation to the interested party, in respect of whom there is clear authority, as I am sure the court is aware, to make a costs order in these circumstances where they have been principal protagonists, as plainly has been the case here, is that there must be some allowance made -- and it is absolutely accepted that that was completely proper -- in relation to the efforts that ASIC and the claimants made together to establish an agreed procedure.
THE LORD CHIEF JUSTICE: Yes.
MR GARDNER: And during that period, of course, we would not seek a costs order against ASIC in the mysterious failure of the defendant to give a reason, or indeed to adopt the agreed procedure which caused extensive costs to the claimants, but we would not put those at the door of ASIC. That would take out of account the period from approximately September 2006, which is when those negotiations began, until really the adoption of the November order by this court, and onward to the procedure before the magistrates' court which gave rise to the immediate cause of the decision which is under attack today on 27 March. So we would not make a claim in relation to costs against ASIC for that period for the reasons which I have made clear.
THE LORD CHIEF JUSTICE: Yes.
MR GARDNER: However, for the subsequent period in particular -- for the period from 27 March onwards -- ASIC have been the only opponent in these proceedings and the terms of their opposition have been very clear. They filed grounds of opposition -- and I can, of course, take the court to the relevant provisions, but perhaps in the interests of brevity that will not be unnecessary -- and they maintained their opposition throughout.
MR JUSTICE SILBER: I suppose you would say that if they had consented there would have just been a simple consent order and it would have gone through on the nod very soon after?
MR GARDNER: Well, my Lord, it certainly would have been a very straightforward matter to this, and would not have been a day-and-a-half's estimate, which was our estimate, in a contested matter. But where it was agreed that the court had made a mistake and it was uncontested by any other party -- and may I come to the question of whether it was agreed; in fact, it had never been made -- but if there was only one context, it would have been a time estimate, I should anticipate, certainly less than half a day. It would have been listed, I anticipate, within three or four months of the decision and the speed with which all parties are concerned -- and the court has already indicated its own concern -- would, of course, have been greatly accelerated. We should not have had to wait virtually a year for the opportunity for this matter to be resolved in the way that it has been resolved today. So there is no question at all but that the position would have been as my Lord indicates.
But I take it further -- and I take it further for the specific reason on the basis of the submissions made, as I understand it, by Mr Winter when he addressed my Lords yesterday afternoon in relation to the commercially sensitive document. When he referred to the transcript at page 220 and the fact that in addressing the magistrates' court in relation to the commercially sensitive document on 27 March, the counsel for the witnesses had indicated his great concern about the retention of the -- I apologise, this was on 18 March, not the 27th.
THE LORD CHIEF JUSTICE: Yes.
MR GARDNER: The counsel for the witnesses underlined his concern in relation to the redaction of this document and Mr Winter, as I understand it and if my memory serves, in his submissions to the court yesterday, referred to the fact that Mr Davies had indicated that perhaps this was a matter which could be dealt with outside the court with Mr Winter, and Mr Winter went on to address the court -- and I paraphrase only, and of course my friend will correct me if I have misunderstood, and the court will as well -- to say that ASIC would have no wish, and indeed would have no power or authority to receive material which went outside the terms of the request. If that is in fact ASIC's position in relation to the commercially sensitive document, then the question is why that submission was made yesterday afternoon and not as an exception to the ground of resistance to the judicial review (as amended) in May last year, or why indeed in respect of that aspect of the matter ASIC did not join our objection to the decision made by the judge in which this court has highlighted that he was completely wrong.
So, without wishing to labour the issue, our opponent has been ASIC and ASIC must pay the price of the judgment that has been given today by the court. I do not wish to labour the matter further. I could make further submissions about the earlier stages of the proceedings, but we obviously recognise that during the period of the agreed procedure no order for costs would be appropriate. Unless I can assist the court further?
THE LORD CHIEF JUSTICE: No, thank you.
MR WINTER: May I say simply this? The defendant did not concede this action; it just did not play. It made a finding of fact based upon documentation that ASIC has had no sight of, and that finding of fact were that the rights of the (inaudible) were not (inaudible) in any form. ASIC's participation in these proceedings has been wholly on that basis. Therefore it is that complete error that has brought about this hearing and I can tell your Lordships that it is clear from the previous occasions upon which we have come to court, that had we appreciated that there were problems with that essential finding of fact, we would have arranged a consent order immediately. We have been anxious from the very moment of that order on 27 March to bring this matter before the court and resolve it. Now, in our submission, for there to be such a fundamental error of fact is very, very unusual, and ASIC was entitled to regard it as an accurate finding of fact so as to --
THE LORD CHIEF JUSTICE: It is not quite a finding of fact, is it?
MR WINTER: Well, it is a finding of fact as contained in the document and they give rise to an issue under Article 8. In other words, it is a construction point on the evidence that the court looked at and I cannot do anything about that. I have never seen it. I do not know what it contains. I am not in a position to form any judgment and therefore we were completely stuck with the fact finding -- fact/law -- and it is very, very unusual for a finding of that nature to be so fundamentally wrong.
In those circumstances, bearing in mind this matter would have had to have come to court because it was not conceded by the defendant, we have come here to assist the court and have done so very shortly and, I hope, helpfully to enable this matter to move forward. So if there is to be a costs order, we would invite you in your discretion to make it a minor one.
THE LORD CHIEF JUSTICE: Yes.
MR GARDNER: My Lords really have the point that we make. This is so fundamental. It was not an error of fact at all; it was an error of law. Furthermore, it was an error of law in respect of the confidential document which ASIC was fully familiar with and, in relation to the origins of the confidential document and correspondence emanating from the claimants, was completely familiar with as a result of the amendment of the grounds which were filed as we commenced this part of the action in May of last year. It is, I am afraid, my Lords, simply not correct to say that ASIC was not aware of that aspect of the matter. It could have said that it recognised that that correspondence engaged Article 8(1). Its position was total resistance or, alternatively, and the much more fascinating conclusion, that the fact that there was a point under Article 8 suggested that the judge had somehow considered Article 8(1) to apply in spite of the fact that he was (inaudible). Unless I can assist the court further?
THE LORD CHIEF JUSTICE: No, thank you. We will retire for a moment.
(The court adjourned for a short time)
THE LORD CHIEF JUSTICE: We consider that it should have been quite plain to ASIC that the judge had erred, particularly in relation to the commercially sensitive document. There would have had in any event, however, to have been an application for judicial review; but had it not been opposed it would have been very much shorter and less expensive. In these circumstances we think the appropriate order is that ASIC should pay two-thirds of the claimants' costs since 27 March.