Royal Court
8 December 1998
Before Sir Godfray Le Quesne, QC, Commissioner
Action 94/6
Between:Mayo Associates SA
Troy Associates Ltd
TTS International SAPlaintiffs
And:Anagram (Bermuda) Limited
Robert Young
Maureen YoungDefendants
And:Lionrock Limited
Edgefield Properties Limited
Box Limited
Starshield Limited
Cantrade Private Bank Switzerland (CI) Limited
TSB Bank Channel Islands LimitedParties Cited
AGIntervener
Action 94/254
Between:Mayo Associates SA
Troy Associates Limited
TTS International SAPlaintiffs
And:Cantrade Private Bank Switzerland (C.I.) Limited
Touche Ross & Co.
(Being the person listed in Exhibit A to the Order of Justice)Defendants
And:Robert John Young
(joined at the instance of the First Defendant)
Anagram (Bermuda) Limited
(joined at the instance of the First Defendant)
Myles Tweedale Stott
(joined at the instance of the First Defendant)
Michael Gordon Marsh
(joined at the instance of the First Defendant)
Monica Gabrielli
(joined at the instance of the First Defendant)
Touche Ross & Co
(joined at the instance of the First Defendant)
Cantrade Private Bank Switzerland (C.I.) Limited
(joined at the instance of the Second Defendant)Third Parties
AG Intervener
IN THE MATTER OF the leave granted to the Attorney General by the Royal Court, as appears by Act of Court, dated 14 October 1998, to file an Intervention in relation to both of the above actions for the purpose of opposing the use of documents by any party to these actions which were provided to any accused person for the purposes of the related criminal prosecution, and the inspection by any party of any such documents.
C E Whelan, Esq., Crown Advocate, appearing on behalf of the Attorney General;
Advocate P C Sinel for the Plaintiffs in both actions and for the 3rd, 4th, and 5 Third Parties in Action 94/254 was indisposed and did not appear;
Advocate D R Wilson for the 5th Party Cited in Action 94/6, the Defendants in Action 94/254;
Advocate A J D Winchester for the 2nd Defendant in Action 94/6, the 1st Third Party in Action 94/254 did not appear;
Advocate N.F. Journeaux for the 6th Third Party in Action 94/254;
Advocate D.F. Le Quesne for the 1st Defendant and the 3rd Defendant in Action 94/6, the 2nd Third Party in Action 94/254 did not appear.
The 1st, 2nd, 3rd, and 4th Parties Cited in Action 94/254 have been released from the proceedings.
JUDGMENT
THE COMMISSIONER: Troy Associates Limited, who are the Second Plaintiffs in these actions, invited deposits to be used for trading in foreign currency, and represented with their invitation that this trading offered excellent prospects for both profit and security. Money was actually paid to Mayo Associates, the First Plaintiffs, and was put by them into the branch in Jersey of the Cantrade Private Bank, Party cited in the first action and Defendant in the second, under an arrangement by which the Bank were to allow trading in foreign currency on credit. The trading was actually carried out on the directions of Anagram (Bermuda) Limited, one of the Defendants in the first action and a Third Party in the second action, a company owned by the Second and Third Defendants, Dr and Mrs Young. Mr A G Williams, who was at that time a partner in Touche Ross, purported at a certain stage to audit and certify the result of Anagram’s trading and to do this in the name of the firm, Touche Ross. Touche Ross are now Defendants and Third Parties in the second action, and also joined with them are all their individual partners at the relevant time, including Mr Williams.
Large sums, which had been deposited as a result of Troy Associates invitation, were in fact lost and in due course Dr Young, Mr Williams, the Bank and an official of the Bank, were prosecuted for inducing named people to take part in arrangements by statements known to be false, misleading or deceptive. Dr Young and Mr Williams were convicted of these offences. The Bank pleaded guilty not to these offences but guilty to the offence of the reckless making of statements which induced people to enter into arrangements. The Crown accepted the Bank’s pleas, and did not persist in the proceedings against the official who had been charged.
I am now concerned with civil proceedings, the object of which is to recover money said to have been lost in the transactions which I have just described. There are two actions comprehending many parties but a sufficient outline for todays purposes is this: Troy Associates and Mayo Associates are Plaintiffs. They seek to recover loss which they say they have suffered from Anagram, from Dr and Mrs Young, from the Bank, from Touche Ross and from Mr Williams. That, I repeat, is not a compete description of these actions, but it is sufficient for todays purposes. These two actions have now reached the stage of discovery. In the course of the criminal proceedings the Crown, under its duty of disclosing any unused material, disclosed to the Defendants a large quantity of documents. These documents have been included both by the Bank and by Touche Ross in the affidavits, or lists of documents, which they have provided in the civil proceedings. At that stage the Attorney General obtained leave to intervene in the proceedings. He did so in order to represent that the documents which he had disclosed in the criminal proceedings had been disclosed on the implied undertaking of the Defendants, to whom they were given, that they would use those documents for the purpose of their defence in those proceedings and for no other purpose. Obviously, if this is right, it would preclude any use of those documents in these civil proceedings.
It is common ground that, in the light of the recent decision of the House of Lords in Taylor -v- S.F.O (29 October 1998, Unreported Judgment, House of Lords), the Attorney General’s contention is right and the disclosure of the documents in the criminal proceedings did give rise to the implied undertaking which he puts forward. (All parties accept that the law of Jersey follows English law as settled by the House of Lords on this point.) However, it is also agreed that the Defendants can be released from that undertaking by the Court, and the question which I have to decide now is, should they be?
The material disclosed by the Crown in the criminal proceedings has been analysed in the Attorney Generals Intervention into four categories, viz.
In the case of Taylor -v- SFO the House of Lords left open the question whether the implied undertaking continued to apply to material which was used and proved in open Court at the criminal trial, that is to say, material falling into the Attorney Generals category a). In this case the Attorney General does not seek to restrict the use of material either in category a) or category b) Mr Whelan has made it clear, however, that the reason why the Attorney General adopts this position is that the greater part of the material which in this case falls into category a) falls also into category b). Mr Whelan has made it clear that the Attorney General does not intend any concession of what the position of documents in category a) would be apart from this special circumstance.
As I have said the Attorney General does not, in the circumstances of this case, seek to restrict the use of documents in category a) or category b). I turn then to category c), upon which the argument before me has principally concentrated. Category c) consists for the most part of statements of two kinds. First, witness statements taken in the ordinary way in the course of the criminal investigation. Secondly, statements obtained in the course of that investigation by the use of compulsory powers under the Investigation of Fraud (Jersey) Law 1991. The Attorney General does not object to a release of the undertaking as regards documents in this category which are relevant to the issues in the civil proceedings. He does, however, submit that I should not grant a comprehensive release covering all the documents in this category because that would enable the Plaintiffs to pursue a fishing expedition through the whole mass of documents and to bring to the surface anything relevant, anything diversionary or anything merely prejudicial.
The problem before me arises from the conflict of two principles. The first may be stated thus: the statements comprised in category c) contain information given by the makers of the statements about their own affairs and activities. Disclosure to the Defendants of these statements would amount to an infringement of the privacy of the makers of the statements, and possibly not merely of their privacy but of confidentiality to which they may be entitled. It was necessary that that infringement of their privacy should take place because of the public interest in fairness to the Defendants at the criminal trial and the proper administration of justice therein, but the infringement should not be enlarged by the disclosure of the documents further in the civil proceedings. That is the first principle. The second is this: there is a public interest in the administration of justice and that public interest extends to these proceedings as well as the criminal proceedings. When individuals claim to recover money which they say they have lost as the result of some breach of the law there is a public interest in the proper trial of those claims. That means, in the circumstances of these proceedings, that all relevant documents in the hands of any of the parties should be available for consideration by the Court.
As I seek to apply these considerations to the circumstances before me there are certain particular factors which in my judgment are relevant. The first is this: in this case the criminal trial and these civil proceedings both arise out of exactly the same transactions. Both are rightly to be regarded as parts of the investigation and settlement of legal liabilities arising from those transactions. The second factor is this: the law has already compelled infringement of the privacy of the makers of the statements by disclosure to those participants in the transactions who were Defendants in the criminal trial. The further infringement which would result now from disclosure to the other participants in those transactions must be seen in relation to the infringement which has already been required and made. The third consideration is this: two of the Defendants in these actions, the Bank and Dr Young, have already seen the material under discussion because they were Defendants in the criminal trial and it was disclosed to them then. It is possible that Touche Ross are in the same position, but I say only ‘possible’ because there is some uncertainty whether the disclosure of the documents to Mr Williams in fact involved knowledge of them by other members of the firm. However that may be, the documents have certainly been seen by two of the Defendants and the Plaintiffs might fairly feel aggrieved if they were denied an opportunity to see the material as well. It is, in my judgment, no answer to this to say that the Bank could be ordered not to use the material for the purpose of these proceedings. Not only has the Bank already used the material to a considerable extent, in circumstances to which I shall refer later, it would also be very difficult for them to prevent knowledge which they have already gained from their familiarity with these documents from influencing their future action as these proceedings go on.
Mr. Whelan has submitted, as I have said, that I should not order any comprehensive release of the undertaking but should confine it in some way to documents which are relevant to the issues in these actions. In considering this submission it is important to remember that all the documents in category c) were ‘created for the purpose of the criminal investigation’. Those are the Attorney General’s words used in his Intervention and they are, indeed, confirmed by the description of the documents which he has given. That is to say, all the documents in category c) were created for the investigation of transactions with which these proceedings are concerned. In fact the Bank and Touche Ross have both included all these documents in their affidavits or lists for discovery. Mr Wilson has frankly told me that this was the result of an approach with, as he put it, a broad brush to the question of what should be included and what should not, but it indicates at least a preliminary view of the possible relevance of these materials to the issues of these two actions.
I appreciate that there may be some small risk that a comprehensive release of the undertaking may lead to the disclosure of something which on a strict view of the law would not be discoverable. That risk, in my judgment, is too small to change the assessment which I should otherwise have made of the relevant principles which I have described.
Finally, there is category d). That consists, as I have been told, only of certain lists of telephone numbers to which calls were made on the lines of Dr Young, Mr Williams, Mr Morton and Mr Stoneman, the two latter having been at relevant times officials of the Bank. These lists naturally included many numbers belonging to people quite unconnected with the transactions with which we are concerned, and Mr Whelan submits that the numbers of these people should not be disclosed. I sympathise with this submission, but I think that the difficulty can be overcome. I am sure it will be possible for Mr Whelan and Counsel for the Defendants to agree which numbers appearing in these lists are those of individuals connected in any way with the transactions under consideration. Other numbers in the lists should be deleted in some way before inspection is allowed.
Before the decision in the House of Lords in Taylor -v- SFO there was a period when English law did not recognise any implied undertaking arising on the disclosure of unused material in criminal cases. During that period, with the knowledge of the Attorney General, the Bank did make use, for the purpose of these actions, of the material which had been disclosed. The way in which they made use of it is set out in an appendix to their answer to the Intervention. The Attorney General agrees that a retrospective release of the undertaking must be given covering this use made by the Bank of the disclosed material during that period, and I order that release.
As to the rest of the material, having considered everything which I have set out in this judgment, I come to the conclusion that the proper course in the circumstances of this case is that the Bank should be released from the implied undertaking which arose on disclosure by the Crown of unused material in the prosecution. This means that that material may be disclosed and used in these proceedings but subject to the undertaking of all parties not to use it for any purpose other than the conduct of these proceedings.
Mr Whelan told me this morning that some of the statements which were obtained under compulsory powers were not, in fact, obtained under the provisions of the Jersey law. The statements were taken in England under the corresponding English statute as the result of a request addressed by the Attorney General to the English authorities, for their help in the criminal investigation. This help was granted, Mr Whelan tells me, only on an undertaking by the Attorney General that any information obtained would be used only for the purpose of the prosecution. Unfortunately, this information was only given to me at the last possible moment, when Mr Whelan was delivering his reply at the end of the argument today. I entirely accept that there was nothing deliberate about the delay of this information, but it is, nonetheless, to be regretted. It means that the matter must now be handled under pressure of time which might otherwise have been avoided.
I am now going to invite the help of the parties about the way in which the decision I have given should in fact be put into practice, and in the course of that I shall deal with what is to be done about the undertaking given by the Attorney General to the authorities in England.
Authorities
Taylor -v- S.F.O. [1997] 3 All ER 687 C.of A
Taylor -v- S.F.O. (29 October 1998) Unreported Judgment House of Lords
Mahn -v- Rahn [1998] QB 424 C.of A