Jersey Unreported Judgments

Business - application by W for a stay of his own appeal against JFSC.

[2014]JRC250

Royal Court

(Samedi)

15 December 2014

Before     :		Advocate Matthew John Thompson, Master of the Royal Court, sitting alone
Between	W		Appellant
And	Jersey Financial Services Commission		Respondent

Advocate P. C. Sinel for the Appellant.

Advocate B. H. Lacey for the Respondent.

Advocate D. J. Hopwood for the Attorney General.

 

CONTENTS OF THE JUDGMENT

		Paras
1.	Introduction	1-3
2.	The relevant legal principles	4-17
3.	The respondent's criticisms	18
4.	The parties' submissions	19-32
5.	Decision	33-54

judgment

the master:

Introduction

1.        This is an application by W for a stay of his own appeal against the decision of the Jersey Financial Services Commission ("respondent") to issue a public statement in respect of W and others.  The basis of the application brought by the W is by reference to the maxim le criminal tient le civil en etat. 

2.        The general background to the application is set out at paragraph 3 of my earlier judgment reported at UV and W-v-JFSC [2014] JRC 202.  I also refer to paragraphs 23 to 34, which set out the approach of the Royal Court to an appeal against a decision of the respondent. 

3.        What has led to the present application is that, in August 2014, Advocate Sinel was informed by the director of the criminal division of the Law Officers' Department that the relevant financial service business was under "active consideration by the Law Officers' Department in relation to what steps were being taken by the Attorney General", I comment on this further in more detail below but I also note that the statements made by Advocate Sinel that two years ago the Attorney General, exercising the powers vested in him under the Investigation of Fraud (Jersey) Law 1991, seized a set of servers from the relevant financial services business.  In producing this judgment I am proceeding on the assumption that this assertion is accurate because, if it were not, I would have expected Advocate Hopwood on behalf of the Attorney General to have corrected an incorrect assertion of the position. 

The relevant legal principles

4.        There was little dispute between the parties as to the relevant authorities which have considered the maxim le criminal tient le civil en etat.  The maxim was helpfully summarised by Southwell J. A. in Glazebrook v Housing Committee [2000] JLR 301 which decision was then considered by Birt, Deputy Bailiff in Haworth & Ors v States of Jersey Policy & Resources Committee [2005] JLR 1.  Paragraphs 14 to 19 of Haworth are as follows:-

"The applicable principles

14 The effect of the maxim was helpfully summarized by Southwell, J.A. in Glazebrook v. Housing Cttee. (1) (2000 JLR at 306-307):

"In the light of these Jersey and English authorities, I can summarize what is in my view the true application of the Jersey law principle that le criminel tient le civil en état in this way:

(a) Where there are, or may be, concurrent civil and criminal proceedings, the Jersey courts have a discretionary power to control the conduct of the civil proceedings so as to ensure that there is no real danger of prejudice to the fair trial of existing or potential criminal proceedings.

(b) The burden of persuading the court to exercise this power is on the person seeking such exercise.

(c) If the same or similar questions of fact will have to be decided in both sets of proceedings, it will generally be wrong to allow a decision to be made in the civil action before it is made in the criminal proceedings, because that would create a real danger of prejudice to the fair trial of the criminal proceedings.

(d) But it may be appropriate even in such a case to allow the interlocutory stages of the civil action to proceed so that there is not undue delay.

(e) If and in so far as the civil action can be decided without impinging on the question of fact to be decided in the criminal proceedings, then the civil action can be allowed to go to trial."

15 Although the maxim is not quoted as such in English cases, the underlying principles in both jurisdictions are the same. Helpful passages are to be found in two English cases. The first is Jefferson Ltd. v. Bhetcha (2). In that case the claimant was seeking summary judgment in respect of matters which were to be the subject of pending criminal proceedings. At first instance, the judge either adjourned the application for summary judgment or stayed the whole action (it was not clear which). The Court of Appeal held that the judge had been in error, that the "right to silence" which was available in criminal proceedings did not apply in civil proceedings, that the burden of showing that a stay or adjournment of the civil proceedings in whole or in part was necessary lay on the defendant, and that in that case this burden had not been discharged. We would refer in particular to two passages from the judgment of Megaw, L.J. First ([1979] 2 All E.R. at 1113):

"I should be prepared to accept that the court which is competent to control the proceedings in the civil action ... would have a discretion ... to stay the proceedings, if it appeared to the court that justice (the balancing of justice between the parties) so required, having regard to the concurrent criminal proceedings, and taking into account the principle, which applies in the criminal proceeding itself, of what is sometimes referred to as the 'right of silence' and the reason why that right, under the law as it stands, is a right of a defendant in criminal proceedings. But in the civil court it would be a matter of discretion, and not of right. There is, I say again, in my judgment, no principle of law that a plaintiff in a civil action is to be debarred from pursuing that action in accordance with the normal rules for the conduct of civil actions merely because so to do would, or might, result in the defendant, if he wished to defend the action, having to disclose, by an affidavit under Ord. 14, or in the pleading of his defence, or by way of discovery or otherwise, what his defence is or may be, in whole or in part, with the result that he might be giving an indication of what his defence was likely to be in the contemporaneous criminal proceedings. The protection which is at present given to one facing a criminal charge (the so-called 'right of silence') does not extend to give the defendant as a matter of right the same protection in contemporaneous civil proceedings."

"In my judgment, while each case must be judged on its own facts, the burden is on the defendant in the civil action to show that it is just and convenient that the plaintiff's ordinary rights of having his claim processed and heard and decided should be interfered with.

16. Of course, one factor to be taken into account, and it may well be a very important factor, is whether there is a real danger of the causing of injustice in the criminal proceedings. There may be cases (no doubt there are) where that discretion should be exercised. In my view it would be wrong and undesirable to attempt to define in the abstract what are the relevant factors. By way of example, a relevant factor telling in favour of a defendant might well be the fact that the civil action, or some step in it, would be likely to obtain such publicity as might sensibly be expected to reach, and to influence, persons who would or might be jurors in criminal proceedings. It may be that, if the criminal proceedings were likely to be heard in a very short time ... it would be fair and sensible to postpone the hearing of the civil action. It might be that it could be shown, or inferred, that there was some real, not merely notional, danger that the disclosure of the defence in the civil action would, or might, lead to a potential miscarriage of justice in the criminal proceedings, by, for example, enabling prosecution witnesses to prepare a fabrication of evidence or by leading to interference with witnesses or in some other way."

17 Both Glazebrook (1) and Jefferson involved civil proceedings. The case of R. v. B.B.C., ex p. Lavelle (3) concerned disciplinary proceedings against an employee of the BBC in circumstances where the employee had been charged with theft of some tapes belonging to the BBC which had been found at her home. The BBC took the view that the removal of the tapes was misconduct which justified her dismissal regardless of whether she was guilty of theft. It therefore wished to hold a formal disciplinary hearing with a view to her dismissal. The employee sought the intervention of the High Court. Woolf, J. refused to intervene and had this to say ([1983] 1 All E.R. at 255):

". . . [I]t seems to me that while the court must have jurisdiction to intervene to prevent a serious injustice occurring, it will only do so in very clear cases in which the applicant can show that there is a real danger and not merely a notional danger that there would be a miscarriage of justice in the criminal proceedings if the court did not intervene."

18 Some of the matters which he took into account in reaching his decision to refuse relief to the employee can be found in his conclusion (ibid., at 256):

"Furthermore, approaching the matter in the way indicated by Megaw, L.J. and Phillips, J., I have considerable reservations whether or not there was any risk of a real injustice to the applicant in this case. The proceedings before Mr. Singer were to be in private. The applicant had already on 2 February given a version of events which was presumably substantially true. Although a witness from the BBC was to be an important witness at the criminal trial, it is fanciful to suggest that he would fabricate his evidence to incriminate the applicant in some dishonest manner. Finally, the matters which are going to have to be proved in the criminal proceedings are much more extensive than those in the disciplinary proceedings. In disciplinary proceedings the removal of the tapes to where they were found would be sufficient to establish a disciplinary offence in the contention of the BBC."

19 In our judgment, it is clear from the cases that, in the ordinary course, the fact that a defendant has been charged with a criminal offence should not prevent a third party from seeking to enforce a civil claim which he may have against the defendant or, in the case of an employer, from seeking to dismiss the defendant if he has grounds upon which to do so. The burden lies upon the defendant to show that there is a real danger of injustice to him in the criminal proceedings so that the third party should be prevented from enforcing his ordinary rights, whether as a plaintiff in civil proceedings or as an employer. Clearly, as Southwell, J.A. indicated, this may arise where the very same issue has to be resolved in civil proceedings which will be publicly known. We are not convinced that many difficulties will arise in most disciplinary hearings. As Woolf, J. pointed out, these are generally in private so that jurors will not get to hear of the material produced at the hearing. Furthermore, even though one or more other employees of the employer might be witnesses in a criminal case, the prosecution as such will not be represented in a disciplinary hearing before a private employer and, indeed, will have no right to be present.""

5.        However the facts of Haworth were unusual in that the disciplinary proceedings concerned police officers and the police officers were also carrying out a criminal investigation.  During the hearing undertakings were given by the Deputy Chief Officer of Police that the contents of the disciplinary hearings would only be known to the police officers conducting the hearing and one other individual and that none of them would disclose anything that took place in the disciplinary hearings to those carrying out the criminal investigation.  The court therefore stated at paragraphs 23 to 26 of Haworth as follows:-

"23. We remind ourselves that the test is whether there is a real (the burden being on the plaintiffs) rather than a notional danger of a miscarriage of justice in any criminal proceedings if the disciplinary hearings proceed.  The court has received solemn undertakings from the Deputy Chief Officer that the contents of the disciplinary hearings will be known only to the three senior police officers whom he has named and a senior civil servant, and that none of them will disclose anything which takes place at the hearings.  A breach of an undertaking to the court may of course amount to a contempt of court. The additional undertaking requested by the court is aimed at preventing any inadvertent disclosure by reason of the process of transcription of any record of the hearings.  In our judgment, we are entitled to rely upon the solemn undertaking given by such a senior officer.  In the face of that undertaking, we cannot possibly say that there is a real danger of leakage with a consequent risk of injustice. 

24 Mr Blakeley drew our attention to a passage from the judgment of the Royal Court in Wood v. Establishment Cttee. (4), where the court was considering whether to allow a disciplinary hearing against a civil servant to proceed in the light of criminal proceedings pending against that civil servant. The court held that the issues to be decided in the disciplinary hearing were not the same as those in the criminal trial and therefore dismissed the application. However, in passing, it considered an undertaking by the Crown that no publicity would be given to any disciplinary proceedings and in particular the outcome would not be revealed to any party other than committees of the States, and then only on a need-to-know basis. It was, however, the case that three members of the proposed disciplinary hearing were to be principal witnesses in the criminal prosecution. Hamon, Commr. said this (1989 JLR at 235):

"We have, however, more sympathy when it is said that however solemn the undertaking and however careful the restraints, in a small Island such as this, publicity is inevitable. It might be a remote case but the very possibility that a member of the jury (if the matter comes to an Assize trial) might get to know of the hearing and, one might add, its possible consequences, is sufficient caveat to make the court extremely wary of lifting the injunction."

25 It is not possible for this court to know what views the court in Wood formed as to the risks of inadvertent disclosure in that case. Clearly there were a number of people involved in the disciplinary hearing in that case. For our own part, we respectfully consider that the court in Wood was perhaps unduly reluctant to place weight upon a solemn undertaking on behalf of the Crown but, in any event, we are quite satisfied that we can and should rely upon the undertaking given in the case before us.

26 In the circumstances, that is sufficient to dispose of this matter. We are satisfied that there is no real danger of injustice being caused to the plaintiffs in any criminal proceedings which may follow if we allow the disciplinary hearings to continue."

6.        However, the Royal Court went on to consider what its decision would have been if the disciplinary proceedings had not been in private.  While these remarks are obiter, they are relevant because, but for the undertakings I have referred to, the hearing on the first allegation would have been stayed because any criminal charges might have been closely related to that allegation.  The Royal Court was unable to accept the argument that the first allegation did not technically require a finding of dishonesty and could therefore be distinguished from any criminal charge.  Paragraphs 27 to 29 of the judgment state as follows:-

"27. It follows that it is not strictly necessary for us to consider whether, if the disciplinary hearings had not been in private and an undertaking had not been given, the issues involved in the disciplinary hearings and any criminal proceedings would be so similar as to lead us to conclude that injustice might be caused if a public decision were made in the disciplinary proceedings prior to the criminal proceedings. Nevertheless, because the point was argued, it might be helpful if we simply give the conclusions which we would have reached on that aspect. It is of course difficult to be sure because no criminal proceedings have been instituted and the court has very little evidence as to what if any criminal charges might be brought. However, it seems likely that they would be closely related to Allegation 1, namely, the suggestion that desktop computers of this specification were ordered by the plaintiffs, not because they were in reality necessary for the performance of their work, but because the plaintiffs wished to use them at home for their own purposes. In our judgment, that is so closely related to Allegation 1 that we would have considered that there was a real danger that they would raise the same issues. We were unable to accept the Solicitor General's argument that Allegation 1 did not technically require a finding of dishonesty and should therefore be distinguished from any criminal charge which might arise out of the acquisition of these desktop computers.

28. As to the remaining allegations, we are quite satisfied that these all relate to breaches of States or police policies, rules and guidelines and do not (save in relation to Allegation 6 against the third defendant, where he has already been convicted) involve any need to establish that a criminal offence has been committed or consideration of whether the necessary elements of dishonesty or criminal intent are present. The disciplinary hearings will simply have to ascertain whether certain events took place and whether these events amounted to a breach of the relevant policies and rules. As in Wood (4), we consider that to be a quite different issue to whether the defendant has committed a criminal offence, and we do not consider that there would be real danger of injustice even if such a hearing were to be held in public.

29. It follows that had the disciplinary hearings been in public we would have stayed the hearing on Allegation 1 but not on the remaining allegations against either plaintiff. However, for the reasons we have given, these matters do not fall for decision in the light of the undertakings and we declined to stay the disciplinary hearings."

7.        The issue of the relationship between disciplinary proceedings and a criminal offence was explored in R v BBC Broadcasting Corporation ex parte Lavelle [1983] 1 WLR 23.  Paragraph 3 of the headnote reads as follows:-

"(3) That where an employee was charged with a criminal offence and applied for an adjournment of disciplinary proceedings before a domestic tribunal, the domestic tribunal, the domestic tribunal should consider whether the employee would suffer prejudice and, unless there was good reason to the contrary, the tribunal should adjourn the proceedings if it was satisfied that the employee would suffer real prejudice; but that the court would only intervene and reverse a tribunal's decision to continue with the proceedings in circumstances where the employee could show that there was a real danger of a miscarriage of justice in the criminal proceedings and, since it had not been proved that there would be a miscarriage of justice at the trial if the domestic appeal was heard, the application failed."

8.        In Secretary of State for Trade and Industry v Crane & Anor [2004] B.C.C. 825, Ferris J. considered the general approach that should be taken to a stay of civil proceedings when there where existing or possible criminal proceedings.  He stated as follows:-

"9 A number of authorities were cited to me by counsel. I do not propose to review them. Nor do I find it possible to set out an exhaustive statement of the principles and considerations which are applicable when an application is made to stay civil proceedings because of the existence or threat of criminal proceedings arising from the same circumstances. However I think that those which are most relevant can be summarised as follows:

(i) There is no principle of law that a claimant in a civil action is to be debarred from pursuing that action in accordance with the normal rules for the conduct of civil actions merely because to do so would, or might, result in the defendant having to disclose what his defence is or may be. The so-called 'right of silence' which (now subject to certain qualifications) is afforded to a person facing a criminal charge does not extend to give a defendant as a matter of right the same protection in contemporaneous civil proceedings. In this respect the right of silence is to be distinguished from the privilege against self-incrimination, which applies in both criminal and civil proceedings unless expressly taken away. (See Jefferson Ltd v Bhetcha [1979] 1 WLR 898 , especially at pp.904-905; Re DPR Futures Ltd (1989) 5 BCC 603 at pp.612-613; [1989] 1 WLR at pp.790-791 ).

(ii) Nevertheless the court which is competent to control the proceedings in a civil action has jurisdiction to stay the proceedings if it appears to the court that justice so requires, having regard to the concurrent criminal proceedings (see Jefferson Ltd v Bhetcha (supra)).

(iii) The same underlying principle applies whenever there are two sets of proceedings arising out of the same factual situation, as for example when there are civil proceedings before a court and disciplinary proceedings before a professional body. The principle was stated by Neill LJ in R v Panel on Takeovers and Mergers, ex parte Fayed [1992] BCC 524 at p.531E as follows:

'It is clear that the court has power to intervene to prevent injustice where the continuation of one set of proceedings may prejudice the fairness of the trial of other proceedings ... but it is a power which has to be exercised with great care and only where there is a real risk of serious prejudice which may lead to injustice.'

(See also R v Institute of Chartered Accountants in England and Wales, ex parte Brindle [1994] BCC 297 and R v Chance, ex parte Smith [1995] BCC 1095 .)

(iv) Although the court having control of the civil proceedings will be concerned lest those proceedings lead to injustice in concurrent criminal proceedings, it should not lose sight of the fact that the judge in the criminal proceedings has extensive powers to control those proceedings. In Attorney-General's Reference (No. 3 of 1999) [2001] 2 AC 91, the House of Lords considered whether it was lawful for the prosecution to use in criminal proceedings DNA evidence which had been improperly retained by the police after earlier proceedings. In that case Lord Steyn observed, in relation to an abandoned argument based upon Art.6 of the European Convention of Human Rights :

'That [ i.e. the abandonment of the argument] was not surprising ... Under the general law the trial judge has adequate powers to ensure fairness: (1) he has jurisdiction to stay the proceedings as an abuse of the process and (2) he has a discretion to exclude evidence under section 78 [of the Police and Criminal Evidence Act 1984] if it would be unfair to admit the evidence "having regard to all the circumstances, including the circumstances in which the evidence was obtained"' (see [2001] 2 AC 91 at p.119)

(v) In R v P [2002] 1 AC 146 Lord Hobhouse of Woodborough said (at p.158):

'The right in issue [under Art.6] is the right to a fair trial-a fair hearing. This involves the same criterion as is applied in section 78 of the 1984 Act.'

(vi) In the light of points (iv) and (v) I think it may fairly be said that the responsibility for doing justice in the criminal proceedings lies primarily with the criminal court. This is not to say that the civil court has no responsibility in the matter. Clearly it will strive to avoid a manifest risk of injustice. But in my judgment it should not go out of its way to anticipate the existence of a mere possibility of injustice. *830

(vii) The Secretary of State has a public duty to apply for the disqualification of unfit directors. He cannot be held up indefinitely by other proceedings over which he has no control (see Re Rex Williams Leisure plc [1994] BC 551 at p.561F; [1994] Ch 350 at p.368F per Hoffmann LJ). In Secretary of State v Willars (unreported, July 19, 1996) , Chadwick J said that, although the 'other proceedings' in Rex Williams were civil proceedings, the principle must apply equally where the other proceedings are criminal proceedings.

(viii) The cases in which concurrent disqualification proceedings and civil proceedings arising from the same conduct are most likely to exist are cases where serious misconduct is alleged. In such cases the public interest in the disqualification proceedings being brought to a substantive hearing is particularly strong. As Jacob J observed in Jibrail v Secretary of State for Trade and Industry (unreported, November 20, 1997) :

'Disqualification proceedings exist for the protection of the public. It can hardly be the case that the more deserving an individual is of disqualification, the more he is in a position to say he is entitled to a stay or that a stay should be granted merely because he worries about his right to silence'"

9.        In Crane, a stay was initially granted by the Registrar of Bankruptcy of disqualification proceedings when he was informed that the police intended to press criminal charges.  The Secretary of State appealed against that decision.  At paragraph 19, in allowing the appeal, Ferris J. stated:-

"The fact that a trial may lead to a greater risk of injustice than an interlocutory application was mentioned by Millett J in Re DPR Futures Ltd and, as the registrar said, by Timothy Lloyd QC, sitting as a deputy High Court judge, in Re Landhurst Leasing plc, ex parte Ashworth (unreported, July 4, 1995) . But in my judgment it is not a principle to be slavishly applied. A court which is asked to take account of it must, in my view, consider what the practical risk is in the particular case. The usual reason why a trial may involve greater risk than an interlocutory hearing is that there is likely to be more publicity for a trial. In a high-profile case attracting considerable public attention this may be important. It is difficult to see, however, how a low-key trial of disqualification proceedings before a registrar in bankruptcy in November 2000 could prejudice the fairness of a future criminal trial on charges which had not then, and still have not, been laid."

10.      In Secretary of State for Trade and Industry v Carr [2006] B.C.C., two respondents applied for a stay of disqualification proceedings and a direction that they should not be required to serve their written evidence in the disqualification proceedings before the commencement of the trial of criminal proceedings arising out of a conduct company directors. 

11.      I observe on the facts of Carr that there was no question of any trial of the disqualification proceedings coming before the criminal trial and the real question in issue was therefore whether the relevant directors were to be required to serve their evidence in the disqualification proceedings before the commencement of the trial.  The court at paragraph 20 cited with approval the observations of the Ferris J. at paragraph 9 of Crane set out above. 

12.      The real prejudice complained about in Carr was that, if each defendant had to put in evidence in the disqualification proceedings, the other defendant could use that evidence in criminal proceedings against his co-defendant.  There was also a complaint that the Secretary of State might interview actual or potential witnesses in the criminal proceedings with a view to preparation of evidence in reply, giving rise to a risk of witness contamination.

13.      These concerns were dealt with by firstly the evidence of each director only being served on the Secretary of State but not on the co-defendant unless the judge in the criminal trial ordered disclosure.  The Secretary of State also provided undertakings that the evidence of either director would not been shown to any witness or potential witness in the criminal trial pending the outcome of that trial or subsequent further order. 

14.      Finally, I refer to Financial Services Authority v Anderson & Ors [2010] EWHC 308.  The defendants sought a stay of a summary judgment application brought by the FSA because they were subjects of a criminal investigation.  The background to the application was that the FSA claimed that each of the defendants was carrying on unauthorised regulated activities.  A declaration was sought to that effect, together with an order preventing the defendants from carrying out such activity and compensation.  The defendants were also under investigation for conspiracy to defraud money laundering and fraud by misrepresentation.  No charges had been brought to date and no date had been given when the decision whether not to charge might be made. 

15.      The relevant parts of the judgment are as follows:-

"18 The trial of these proceedings (i.e. the FSA action) has been listed for three weeks from 14th June. The first ground upon which it sought to adjourn the summary judgment application is, as I have said, that the defendants fear prejudice to their position in the criminal investigation. The principle to be applied in such cases is that the applicant for a stay or adjournment of civil proceedings on the ground that it may prejudice actual or threatened criminal proceedings must show a real risk of serious prejudice which may lead to injustice. That was confirmed, for example, by the Privy Council in Panton v The Financial Institutions Services Ltd [2003] UKPC 86 ; a case which, although in relation to a foreign country, was on the face of it similar to this one since it involved criminal proceedings and civil proceedings arising out of the same facts, brought by a body set up by government in the public interest to manage certain financial institutions.

19 Although there is not a fresh statement of the principles, the Privy Council's approval of the principle which I have just described (which had been applied by the courts below) demonstrates its continuing vitality. It is not enough, for example, that both the civil and criminal proceedings arise from the same facts, or that the defence of the civil proceedings may involve the defendants in taking procedural steps such as exchanging witness statements and providing disclosure of documents which might not be imposed upon them in the criminal proceedings.

20 In the present case the defendants say firstly that the subject matter of both the FSA's claim and the criminal investigation is in the public domain and in particular, they say, on the internet. They say that any judgment, for example, that the defendants were conducting regulated business while unauthorised will be prejudicial to them if criminal charges are brought, I suppose in the mind of jurors who may have picked up publicity about these proceedings on the internet or elsewhere. On 11th February the third defendant produced a letter from solicitors advising him in relation to the criminal investigation, suggesting that the police could charge him with an offence under section 19 of the Act, and that a summary judgment against him might be used in evidence in the criminal proceedings.

21 I am not persuaded that a summary judgment hearing would cause a risk of serious prejudice which may lead to injustice in relation to any criminal proceedings which may follow from the present investigation. My reasons follow.

22 First, proof in these proceedings of the claim that the defendants were in breach of sections 19 and 21 of the Act will be of no real consequence in the context of the suspected crimes of fraud, conspiracy and money laundering. Dishonesty is not alleged in these proceedings, but it is likely to lie at the heart of criminal charges of that nature.

25 The summary judgment application will be heard mainly on the statements of case, including these defendants' own defences, which are subject to no confidentiality regime and upon documents of the defendants rather than upon oral evidence, let alone upon cross-examination. There is therefore no scope for the summary judgment hearing to travel down some unexpected and prejudicial avenue, likely to lead to self-incrimination or other admissions damaging to the defendants' defence of the potential criminal charges under investigation.

26 There is only a criminal investigation at present, not criminal charges. A trial must therefore, if criminal charges are brought, be many months away. In my judgment there is no sufficient reason to suppose that potential jurors will include anyone with a present interest in the publicity about these proceedings which sticks in his or her mind when criminal proceedings come on for trial."

16.      Ultimately, it was not disputed by any of the parties that there is a discretion vested in me to stay proceedings where the continuation of one part of the proceedings may prejudice the fairness of the trial of the other proceedings.  It also was not really in dispute that the power to be exercised is one that can only be exercised with great care and where there is a real risk of serious prejudice which may lead to injustice.  It should also be remembered that the judge in criminal proceedings has extensive powers to control those proceedings and ensure fairness. 

17.      I also accept that what the Court should be concerned about, as referred to in Crane, is a manifest risk of injustice rather than the existence of a mere possibility of injustice.  I also must have regard to the strong public interest in the respondent being able to exercise its functions just as there is a strong public interest in disqualification proceedings being exercised for the protection of the public.  It is clearly important that the respondent is not unduly restricted in the exercise of its powers because of the possibility of a criminal investigation.  The issue for me to decide is whether, and if so how, I should exercise the discretion vested in me to stay W's appeal, having regard to the above principles. 

The respondent's criticisms

18.      While it is not right for me to set out in detail the respondent's criticisms of W, it is right to observe that W, who was a principal person and significant shareholder in the financial services business concerned, was criticised for showing a most serious lack of integrity and a level of incompetence of the most serious kind.  There are also findings that W deliberately misled colleagues and acted with wilful disregard to his fiduciary obligations.  These criticisms all related to the creation of a particular structure and customers money being used in relation to that structure. 

The parties' submissions

19.      Advocate Sinel submitted forcefully there was real prejudice.  What was central to his argument was that determination of his client's appeal would cover the same issues as a criminal trial.  His client had no choice but to go through the respondent's process as described in my earlier judgment at paragraphs 4-6.  Although he was only legally required to appear before the Commission to answer questions under the force of compulsion, the reality of the respondent's Board being minded to make a public statement, meant he had no choice but to appear before the Board and ultimately to appeal to challenge the Board's initial view and final decision.  The proposed criticisms, it was contended, were effectively allegations of dishonesty.  This was not a case of a public statement that an individual was unfit to be employed without the respondent's approval.  Rather the criticisms were highly prejudicial. 

20.      Advocate Sinel also reminded me that his client disputed every factual finding of the respondent and that W alleged that cherry picking of documents by the respondent had occurred.  The Royal Court on the civil appeal would therefore have to determine and consider the same factual matters that a criminal trial would look at.  If the appeal was unsuccessful, a decision of the Royal Court was highly prejudicial.  No directions by a judge in a criminal trial could protect W against the reality of adverse findings by the Royal Court including its reasons.  This was not about unfair publicity but about the prejudice W would suffer as a result of a prior determination by the Royal Court of the same facts and matters.  The findings of the respondent in a public statement, confirmed by a decision of the Royal Court, as Advocate Sinel put it, effectively meant that his client might as well plead guilty.  The position his client faced was much more extreme than all the reported cases.  It was obvious in this case that any criminal trial should come first.  This was so that the safeguards applicable in the criminal process could apply. 

21.      This did not mean he contended that the regulator was powerless.  Far from it, the regulator had already exercised its powers.  The business had also ceased trading although it was a point of contention between the parties whether this was due to solvency issues or a consequence of the respondent exercising its functions.  Furthermore, the defendant was no longer in Jersey and was willing to undertake not to perform a regulated function for, or be employed by, or take any position with any entity required to be regulated in Jersey until determination of his appeal.  In other words he would not do anything falling within the jurisdiction of the respondent to regulate the provision of financial services. 

22.      Finally, Advocate Sinel complained that the lack of any response from the Attorney General as to the status of the criminal investigation was highly unsatisfactory, given that it appeared that the matter had been under investigation for something approaching two years. 

23.      Advocate Lacey contended that it was speculation as to what the Attorney General was doing.  The position was simply not known.  There were no charges and it was not known whether or not W was in fact under investigation and, even if he was, what was being investigated.  She was not in a position to say whether or not the Attorney General was acting due to a complaint by the respondent or a complaint from a member of the public.  This was because it was not in the public interest to explore any communications between the respondent and the Attorney General or his department.  It may also be that the investigation would lead nowhere.  It was therefore wrong to prevent the regulator from acting merely because of a possible criminal investigation the outcome of which was unknown.  I was also reminded that the prosecution that led to the Court of Appeal's decision in Lewis v AG [2013] JLR 325 took some four years.  A delay of determination of any appeal, if a similar timeframe was to apply, was of real concern to the respondent.  This was because there was a public interest in allowing the regulator to exercise its powers to maintain the reputation of Jersey including the making of a public statement.  Finally, the burden of proof was on W to show that there was real prejudice. 

24.      Advocate Lacey also contended that any application was premature.  The court could make its decision on an appeal and then the Attorney General could decide whether or not publication of any judgment could occur.  It was also always open to the respondent to revisit its decision. 

25.      She also argued that integrity was not the same thing as dishonesty. In relation to integrity, I was referred to an internal note of the respondent referring to various decisions of the Financial Services and Markets Tribunal in England which note approaches the definition of integrity as follows:-

"The Commission's established approach to a "lack of integrity" is based on English legal authorities as follows:-

Hoodless and Blackwell v FSA (3 October 2003): the Financial Services and Markets Tribunal endorsed the following guidance:-

"'Integrity' connotes moral soundness, rectitude and steady adherence to an ethical code.  A person lacks integrity if unable to appreciate the distinction between what is honest and dishonest by ordinary standards."

"Milan v Vulkelic v FSA (13 March 2009): the complainant was found to be "not dishonest but lacked integrity" in turning a blind eye to the obvious. The Tribunal did not disagree with what was said about integrity in Hoodless & Blackwell but stated that did not take it as being a comprehensive test which is of general application beyond the facts of that case.  They added:-

"In an area of life giving rise to circumstances of great variety and complexity there may well be many other circumstances in which the FSA could fairly conclude that an applicant lacked integrity, a concept elusive to define in a vacuum but still readily recognisable by those with specialist knowledge and/or experience in a particular market."

Atlantic Law LLP and another v FSA (1 March 2010): the Tribunal considered "integrity" in the assessment of "fitness and propriety" by the Financial Conduct Authority and stated that it would be "unwise to attempt a comprehensive definition of integrity."

First Financial Advisors Ltd v FSA (21 June 2012): the Upper Tribunal concluded:-

"[even] though a person might not have been dishonest, if they either lack an ethical compass, or their ethical compass to a material extent points them in the wrong direction, that person will lack integrity."

In that case the complainant's failure to appreciate or manage conflicts of interest was held to go to the question of a person's integrity and reputation and also competency and capability. The Tribunal did not accept that there was "any distinction between a conflict of interest and a potential conflict of interest."

Karan -v- FSA (20 December 2011): it was stated:-

"we are nonetheless satisfied that the duty of integrity can be breached where someone else initiates the wrongdoing and where the person in question is put in a position of choosing to go along with it."

Whether an individual has, or lacks, "integrity" is assessed on the particular facts of each case as established to the required satisfaction of the Board of Commissioners."

26.      The respondent's position was also that W was not compelled to appear before the Board.  The only compulsion was in respect of attending at interviews. 

27.      If there was a criminal trial, which was uncertain at present, both the Jurats and the jury (depending on the charge) could be directed to distinguish what was required to prove any criminal charges from a previous decision in a civil court.  I was also reminded that the burden of proof in a criminal trial is obviously different from that in civil cases and the respondent itself did not operate to a criminal standard. 

28.      Advocate Hopwood on behalf of the Attorney General contended firstly it was not for the Master to direct how the Attorney General might exercise his powers or carry out investigations.  In Acturus Properties Ltd v AG [2001] JLR 43, at paragraph 31, the Royal Court stated:-

"We agree that, for historical and policy reasons, the Attorney General of Jersey is in a special position in relation to many of his functions in the same way as his counterpart in the United Kingdom.  Nothing we say in this judgment is intended to be wider than is necessary for this particular decision.  For example, nothing we say is intended to cast any doubt on the observations of the Royal Court in McMahon concerning decisions of the Attorney General in relation to prosecutions."

29.      Although McMahon was departed from in Acturus in relation to the availability of judicial review, a decision to investigate and prosecute is still a matter for the Attorney General alone.  It is not therefore for the Master or indeed any court to limit the actions of the Attorney General.  It is also not for any Court to review any decision to investigate or to prosecute.  It was therefore not appropriate for the Attorney General to reveal anything about the progress of any investigation.  At this stage there is only a prospect of a prosecution.  The Attorney General may not in fact prosecute. 

30.      The Attorney General also contended that publication of any statement would not give rise to any significant injustice.  Any risk of publicity could be dealt with by the judge giving directions.  An argument to the contrary relating to press publicity was rejected by the Court of Appeal in the decision of Lewis referred to above at paragraphs 261 to 267.  At paragraph 264, the Court of Appeal stated:-

"Courts of first instance are generally considered capable of dealing with any unfair press publicity within the trial process itself."

The same reasoning it was contended applied to a public statement. 

31.      Any right to silence in a criminal process was also not a reason to stay the determination of civil proceedings.  Any ruling in civil proceedings did not bind a criminal trial.  Again directions could be given by the trial judge in criminal proceedings to make this clear.  The trial judge also has a power to exclude evidence obtained unfairly or improperly.  Advocate Hopwood therefore contended that there was nothing to make him think that the applicant had discharged the heavy burden to show that there was a real danger of prejudice. 

32.      Finally, it had to be remembered that the respondent was seeking to exercise its public law duties. 

Decision

33.      The starting point for my decision is that at this stage there is only an investigation.  I accept the Attorney General's submissions that I am not entitled to know what the scope of the investigation might be or who is being investigated.  I am also not entitled to know whether W might face prosecution and, if he is to face prosecution, what charges might be laid and when this might occur.  These are all matters for the Attorney General.  

34.      However, the mere fact that any matter is only at the stage of a criminal investigation does not prevent the maxim in principle from applying.  That can be seen most clearly from Haworth where, but for the undertakings offered by the Deputy Chief Officer and accepted by the Court, part of the disciplinary action would have been stayed.  In Carr, while procedural steps were not stayed, it appears to have been conceded by the Secretary of State that a criminal trial should occur before disqualification proceedings.  A decision the other way is Crane but it was not challenged in Crane that a risk of prejudice might arise.  Rather, the court concluded that disqualification proceedings would not prejudice the fairness of a future criminal trial.  What the court in Crane did not say is that the mere fact of an investigation could not be a basis to grant a stay of civil proceedings as a matter of discretion.  Rather, what has to be considered is whether there is a real risk of prejudice. 

35.      To decide whether or not there is a real risk of prejudice, it is necessary for me to consider the effect of the proposed public statement and in particular the references to W acting with a most serious lack of integrity.  The view I have reached is that a criticism that W acted with a most serious lack of integrity is capable of overlapping with a finding of dishonesty in a criminal trial.  Indeed I note that the first definition relied on in the internal note of the respondent states:-

"A person lacks integrity if unable to appreciate the distinction between what is honest and dishonest by ordinary standards."

36.      In Bhojwani v AG [2011] JLR 249 the Court of Appeal approved the definition of dishonesty in R v Gosh [1982] QB 1064 namely, that for a jury to decide whether the prosecution has proved that the defendant was acting dishonestly, it must first of all decide whether, "according to the ordinary standards of reasonable honest people, what was done was dishonest".  (See paragraph 110). 

37.      Although other cases referred to in the respondent's internal note suggested it was unwise to attempt a definition of integrity, and one case notes that a lack of integrity does not necessarily equate to dishonesty (see First Financial Advisers Ltd v The Financial Services Authority [2012] WL 2500434), in my judgment a lack of integrity can amount to dishonesty.  While it may not do so in every case, there can be a sufficient overlap between someone reaching a view that a person lacks integrity and a finding that someone is dishonest.  To the extent it was suggested by Advocate Lacey that the two concepts are mutually exclusive, I do not accept that submission.  

38.      Having considered the public statement as a whole, the view I have also reached is that, if there is to be a prosecution, which is a matter for the Attorney General, there is a material risk of that prosecution being against W and that allegations of dishonest conduct might be made against W.  This is because W was a principal person, was a significant shareholder and serious criticism is made of him in the public statement.  Such allegations might be that investors were misled by reference to one or more of the statutes that create an offence for making misleading statements to investors (see for example Lewis v Attorney General referred to above), or may be a charge of common law fraud.  In this case, I consider there is an overlap between the findings of a serious lack of integrity by the respondent and a criminal investigation into, and a possible prosecution for, acts of dishonesty. 

39.      I have also reached the view that it is right to proceed on the assumption that W is under investigation.  Given the criticisms of W in the public statement, and given the Attorney General has confirmed there is an investigation, it would be surprising if W were not being investigated.  Whether in fact he is and, if he is, to what extent is a matter for the Attorney General as I have stated.  That does not mean however that I am unable to form a view whether it is likely that W is under investigation for the purposes of the decision I am asked to make.  

40.      In deciding whether to exercise a discretion to stay any appeal by reference to the maxim le criminal tient le civil en etat, the combination of my considering the proposed public statement and that the fact that an investigation is taking place in relation to the financial services business, leads me to reach the conclusion that the discretion vested in me may be exercised even though there is only an investigation and I can only assume that W is one of the persons under investigation.  

41.      Whether I should exercise my discretion to order a stay is a separate question to which I now turn.  Firstly, I accept that there is a public interest in the respondent being able to exercise its regulatory powers.  In this case the regulator has acted.  Individuals have been interviewed and material has gathered under the powers available to the respondent.  The respondent has also followed its process leading to its decision to wish to make a public statement.  A public statement has also been made in respect of the financial services business and other individuals.  In this case therefore the respondent has been far from powerless in terms of protecting the financial position of the Island.  

42.      What the respondent cannot do is complete its process if a stay were granted.  In some cases the fact of a public statement might be important, if not essential to protect the public.  In the present case, to the extent there is a danger of W acting within the Island or elsewhere through an entity regulated by the respondent, at present he states he is not doing so and is prepared to undertake not to do so.  The financial services business has ceased to operate.  Investors or customers who use the island's services are therefore protected while the appeal remains outstanding. 

43.      The present appeal does however raise the issue more generally of how far the respondent may act where there is an overlapping criminal investigation.  In my judgment, generally the respondent can act in the manner that it has acted in this case.  This is because the issues between a regulated business or individuals working within that business and the respondent are private.  As with the BBC case, the fact that such proceedings are in private, unless or until it comes to the making of the public statement, means that an individual is, subject to one point I consider below, protected from the risks of a subsequent criminal trial.  It is only if an individual does not accept any decision of the respondent to make a public statement and wishes to appeal where there is a parallel criminal investigation might the maxim apply.  Whether it will apply is a matter of discretion and will involve consideration of the circumstances of each case including an analysis of the extent to which any public statement and criticisms of an individual or a financial services business might overlap with any subsequent criminal prosecution to create a real risk of serious prejudice. 

44.      Where a difficulty might arise is because of the power permitting the respondent to make disclosure to the police in respect of any investigation of a suspected offence (see for example Article 38(1) E of the Financial Services (Jersey) Law 1998)).  An issue may arise in a future case as to whether it is right for the respondent to make disclosure to the Attorney General of information obtained by it under compulsion from an individual or an entity because of the maxim.  The issue does not arise in deciding whether or not to grant any stay at all in the present case because the respondent has completed its investigations and made its decision.  The Attorney General has also apparently already exercised the powers invested in him without reference to the respondent.  I also note in relation to this issue that it may have arisen in Haworth but for the undertakings given by the Deputy Chief of Police. 

45.      It is also right to observe that the respondent has other powers available to it to protect the public.  The powers to issue directions to an individual are extensive (see for example Article 23 Financial Services (Jersey) Law 1998)), which would allow the respondent to reduce the risk to the public while a criminal investigation or prosecution was taking place.  The respondent also has powers to intervene (see Article 26) as well as the powers to require information or carry out investigations (see Articles 32 and 33).  The interrelationship between the exercise of all these powers and any criminal investigation has to be determined on a case by case basis against the key question of whether the exercise of such powers gives rise to a real risk of serious prejudice.  In my judgment even if serious prejudice can be established in a particular case, such prejudice would be unlikely to prevent the respondent from acting at all and exercising powers vested in it to protect the public. 

46.      It is only where the exercise of such powers leads to public statements being made or a public determination of the position of an individual or a regulated entity by the respondent, which is then challenged, is it likely that the possibility of the maxim coming into play may arise.  The exercise of such powers with a public element is different from third party civil actions, in particular interlocutory steps or low-key disqualification proceedings where the maxim will not generally apply.  This is because a public pronouncement against an individual by the respondent in a small community, which covers both Jersey and its finance industry, is significant for an individual.  A public statement will become known as will the content.  They are published in the Jersey Evening Post and on the respondent's website.  Such statements are therefore different from the concerns that were raised in the cases I have referred to.  Even then, whether prejudice will arise depends on what is contained in the statement.  In this case, what is proposed to be said is extremely critical of W and is capable of being read as concluding that W was dishonest.  

47.      As I have noted above, it is right to assume that W is likely to be at the heart of any criminal investigation.  As W is challenging not just the conclusions of the respondent, but the underlying findings of fact giving rise to those conclusions, I am also of the view that there is a significant risk of the Royal Court, (albeit on the applicable test for administrative appeals) reaching conclusions in respect of the same matters that I am assuming are under investigation and which may lead to a criminal prosecution.  It is the fact of the criticism of W in the public statement coupled with different divisions of the Royal Court considering what appear to be the same essential facts and documents that in my judgment gives rise to a real risk of serious prejudice. 

48.      The dilemma this case raises is that the more serious the (mis)conduct of a financial services business or an individual within that business that is under investigation, the more likely it is that the maxim may come to play.  As I have already found, however, such a possibility does not prevent the respondent from investigating matters and acting; what it might prevent is an ultimate public appeal against its decisions, should those decisions be challenged.  In my judgment that is outweighed by ensuring that the safeguards of a criminal prosecution are preserved.  If that were not the case, then the maxim would in practice never apply.  Yet, to quote Southwell J.A., as he stated in Glazebrook :-

"If the same or similar questions of fact will have to be decided in both sets of proceedings, it will generally be wrong to allow a decision to be made in the civil action before it is made in the criminal proceedings, because that would create a real danger of prejudice to the fair trial of the criminal proceedings". (emphasis added)

49.      I am of the view that in this case that there is a significant overlap between the Royal Court considering W's appeal and any later criminal trial which has led me to conclude that a stay should be granted because there is a serious risk of real prejudice.  In my judgment, the Royal Court, in hearing W's appeal, will have to consider and pronounce upon the same or similar facts as any criminal prosecution against W, if one is brought.  It will have to consider and form a view as to whether the respondent's Board was right to conclude that W demonstrated a most serious lack of integrity.  The issue is not just a risk of adverse publicity because I consider that publicity alone can be usually dealt with by appropriate directions from a trial judge in any criminal prosecution.  Rather the issue is the fact that the Royal Court, by the time of any prosecution, if I were to accept the respondent's and the Attorney General's arguments, would already have determined in a civil court the same or similar questions of fact, that could arise in a criminal trial, thus endorsing any public statement that was then issued.  It is also not speculation at this stage, given W's roles, to assume that W would be at least part of, if not at the centre of, any prosecution, should one be brought. 

50.      I am also satisfied that in practice W was acting under compulsion.  Insofar he was required to attend for interview he was legally obliged to do so.  Insofar as he chose to appear before the Board, this followed the respondent stating that it was minded to make a public statement as part of its process.  Accordingly, if W wished to challenge the initial view reached by the Board in its "minded to letter" W had no option in practice but to appear.  Likewise he had no option in practice but to appeal if he wished to challenge the decision of the Board of the respondent as being unreasonable. 

51.      Equally it is right to observe that any investigation is just that at present.  No decision to prosecute has been made and it is not for the Royal Court or the Master to trespass on the Attorney General's jurisdiction.  There may therefore never be a prosecution.  Even if there is, it is possible that any prosecution that occurs might not involve W.  Any prosecution might also not overlap with the public statement, contrary to the assumptions I have made. 

52.      In the exercise of the discretion vested in me, the view I have reached therefore is that a hearing of the appeal should at present be stayed until 31^st May, 2015.  The purpose of granting a stay for this period is to allow further time to the Attorney General to proceed with his investigations.  If by May the position has altered then whether or not the stay is maintained can be considered at that time.  If on the other hand the position remains the same, then an application to extend the stay for a further period can be made.  I consider an initial stay for this length of time, as matters stand, strikes the appropriate balance between the concerns expressed by the appellant, which have led me to conclude that a serious risk of prejudice does exist, and the fact that the involvement of the Attorney General appears only to be at the investigation stage. 

53.      Finally I do not accept that the application was premature and that matters can be left until the appeal is heard.  There was no indication that the Attorney General or the respondent would reconsider matters at that stage; in the case of the respondent it is difficult to see why it would, if it had just resisted successfully an appeal.  In any event, the appellant is entitled to ask the Court to consider applying the maxim, as a matter of discretion, given the appeal is pending. 

54.      In light of my decision I will hear further argument on what steps should be taken by reference to the principles set out above.  However, subject to hearing further argument, the general approach from the cases I have referred to, is that evidence should be filed so that the appeal is ready to proceed, once any further stay expires.  This is subject to consideration of appropriate safeguards for any evidence filed in respect of the appeal so that such evidence is not disclosed to the Attorney General pursuant to Article 38 gateway while the stay is in place. 

Authorities

UV and W-v-JFSC [2014] JRC 202.

Fraud (Jersey) Law 1991.

Glazebrook v Housing Committee [2000] JLR 301.

Acturus Properties Ltd v Attorney General [2001] JLR 43.

Haworth & Ors v States of Jersey Policy & Resources Committee [2005] JLR 1.

Bhojwani v Attorney General [2011] JLR 249.

Lewis v Attorney General [2013] (1) JLR 325.

R v Ghosh [1982] QB 1064

R v BBC Broadcasting Corporation ex parte Lavelle [1983] 1 WLR 23

Secretary of State for Trade and Industry v Crane & Anor [2004] B.C.C. 825

Secretary of State for Trade and Industry v Carr [2006] B.C.C.

Financial Services Authority v Anderson & Ors [2010] EWH C308

First Financial Advisers Ltd v The Financial Services Authority [2012] WL 2500434

Financial Services (Jersey) Law 1998.