Barings Plc ((in Liquidation)) v Coopers & Lybrand (No. 1)
| Jurisdiction | England & Wales |
| Judgment Date | 05 May 2000 |
| Judgment citation (vLex) | [2000] EWCA Civ J0505-5 |
| Docket Number | Case No: CHANI 2000/0106/A3 |
| Court | Court of Appeal (Civil Division) |
| Date | 05 May 2000 |
[2000] EWCA Civ J0505-5
The Master Of The Rolls
Lord Justice Robert Walker And
Mrs Justice Smith
Case No: CHANI 2000/0106/A3
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISON (MR JUSTICE EVANS-LOMBE)
Mr Edward Bannister QC and Mr Guy Morpuss (instructed by Messrs Clifford Chance, London EC1A 4JJ, appeared on behalf of Deloitte & Touche, one of the Defendants)
Mr Mark Phillips QC and Mr Jeremy Goldring (instructed by Messrs Freshfields, London EC4Y 1HS appeared on behalf of the Financial Services Authority)
LORD WOOLF MR :
Introduction
This is a judgment of the Court on an appeal by Deloitte & Touche ("D&T"), one of the defendants to the action, against the order of Mr Justice Evans-Lombe made on 15 th December 1999. Evans-Lombe J declared that the transcripts of certain interviews carried out by Mr Ian Watt on behalf of the Board of Banking Supervision ("BoBS") in the course of an investigation into the collapse of the Barings Group in February 1995 were and still are subject to the restriction on disclosure contained in Part V of the Banking Act 1987 ("the Banking Act").
In the action, the claimant, Barings PLC in liquidation, seeks damages for the alleged professional negligence of its accountants and auditors in the period before the collapse. Following the collapse, BoBS was asked by the Chancellor of the Exchequer to report on the collapse. BoBS instructed Mr Ian Watt, Head of the Bank of England's Special Investigations Unit ("SIU") to investigate the facts. That investigation resulted in the production of a large number of transcripts of interviews, disclosure of which was sought by the defendants in the proceedings before the Judge.
The Financial Services Authority ("FSA") has responsibility for supervising institutions authorised under the Banking Act, having taken over that role from the Bank of England as a consequence of the Bank of England Act 1998. The FSA were permitted to intervene in the proceedings. The claimant has taken no part in the appeal.
The applications before the judge and this appeal raise questions which depend on the of interpretation of the Banking Act. Of particular importance is Part V which is entitled `Restriction on Disclosure of Information'. Section 82 which is included in Part V provides:
(1) Except as provided by the subsequent provisions of this Part of this Act—
(a) no person who under or for the purposes of this Act receives information relating to the business or other affairs of any person; and
(b) no person who obtains any such information directly or indirectly from a person who has received it as aforesaid,
shall disclose the information without the consent of the person to whom it relates and (if different) the person from whom it was received as aforesaid.
(2) This section does not apply to information which at the time of disclosure is or has already been made available to the public from other sources or to information in the form of a summary or collection of information so framed as not to enable information relating to any particular person to be ascertained from it.
There are two principal issues on this appeal. The first is whether transcripts were ever subject to the restriction against disclosure contained in s.82(1) as information received "under or for the purposes of" the Banking Act. If they were not, the defendants would be entitled to see them and deploy them in the litigation. If they were, then the second issue arises. This is whether those transcripts had "been made available to the public" and, in consequence, had ceased to be subject to the restriction in accordance with s.82(2). This is alleged to be the result of the transcripts being exhibited to an affidavit filed on behalf of the Secretary of State for the Department of Trade and Industry in the course of proceedings under the Company Directors Disqualification Act 1986 ( CDDA) brought against some directors of Barings. The Judge held first, that the transcripts were subject to the restriction and second, that it had not been proved that those transcripts exhibited in the CDDA proceedings had been made available to the public.
The Framework of Banking Supervision
We are grateful to the FSA for providing most helpful and uncontroversial written submissions. The following account is based largely upon those submissions and on the affidavit evidence of Mr DG Choyce, a solicitor and Chief Counsel of the Banking and General Department within the General Counsel's Division of the FSA. He exhibited and referred to an affidavit sworn by Mr Michael D. K. W. Foot, in April 1997, in connection with similar proceedings for the disclosure of documents subject to the restriction of s.82(1). Mr Foot was then the Executive Director responsible for the Supervision and Surveillance Division of the Bank of England and now occupies a comparable position at the FSA.
Prior to 1979, there was no formalised system of banking supervision in England, but the Banking Act 1979 established for the first time a formal supervisory system for banks and credit institutions operating in the UK for which the Bank was responsible. In 1984, a committee was established by the Chancellor of the Exchequer under the then Governor of the Bank, Robin Leigh-Pemberton, to report on banking supervision with a view to identifying areas of possible improvement. A Treasury White Paper, published in December 1985, incorporated many of the committee's recommendations and in the light of that the supervisory system created in 1979 was modified and strengthened by the Banking Act.
The wide purposes of the Banking Act are clear from its pre-amble:
'An Act to make new provision for regulating the acceptance of deposits in the course of a business, for protecting depositors and for regulating the use of banking names and descriptions…and for purposes connected with those matters'.
Section 1(1) of the Banking Act creates the Bank's supervisory power. The section states :
'The [Bank] shall have the powers conferred on it by this Act and the duty generally to supervise the institutions authorised by it in the exercise of those powers.'
Section 1(2) provides:
'It shall be the duty of the [Bank] to keep under review the operation of this Act and developments in the field of banking which appear to it to be relevant to the exercise of its powers and the discharge of its duties.'
In order to fulfil its statutory responsibilities, it is essential that the Bank has access to information about authorised institutions. The information necessary to its functions is obtained by the Bank in four main ways. These are;
(i) statutory returns from authorised institutions under sections 36–38 of the Act;
(ii) pursuant to a request for information or a report by a suitably qualified person under section 39;
(iii) by an investigation under section 41; and
(iv) by voluntary disclosure.
S.41(1) provides:
"If it appears to the Bank desirable to do so in the interests of depositors or potential depositors of an authorised institution the Bank may appoint one or more competent persons to investigate and report to the Bank on –
(a) the nature, conduct or state of the institutions business or any particular aspect of it; or
(b) the ownership or control of the institution;
and the Bank shall give written notice of any such appointment to the institution concerned."
Section 41(2) provides if a person appointed under section (1) thinks it necessary for the purposes of his investigation he may also investigate the business of any body corporate which has at any relevant time been related to the company under investigation.
Section 41(5) provides that it shall be the duty of every person who is or was a director, controller, manager, employee, agent, banker, auditor or solicitor of a body under investigation to produce documents, attend on request and to give all assistance which he is reasonably able to give. Failure to co-operate without reasonable excuse would be an offence under section 41(9).
BoBS is a statutory committee established by and within the Bank in 1987 as required by section 2 of the Banking Act to assist the Bank in its supervisory role. The White Paper made clear that its purpose was to assist in banking supervision by providing a forum in which independent commercial banking experience could be applied to assist the Governor.
The form and function of BoBS as contemplated in the White Paper finds expression in section 2 and Schedule 1 of the Banking Act. At the relevant times, BoBS consisted of three ex officio members (the Governor, the Deputy Governor and the executive director responsible for bank supervision) and six independent members appointed by the Governor and the Chancellor. The Governor acted as chairman.
BoBS' advisory function under section 2 is defined by reference to the Bank's broad supervisory role as defined by section 1. Section 2(3) states that:
'It shall be the duty of the independent members to give such advice as they think fit to the ex officio members—
(a) on the exercise by the Bank of its functions under this Act either generally or in any particular respect or in relation to a particular institution or institutions; and
(b) on any matter relating to or arising out of the exercise of those functions.'
In accordance with its statutory function, BoBS provides advice to the Governor on the principles and policy of supervision of institutions authorised under banking...
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