Chancery Division

Publication Date01 Nov 1992
DOI10.1177/002201839205600405
SubjectChancery Division
CHANCERY
DIVISION
LIQUIDATION OF
COMPANY-WHETHER
COURT CAN DIRECT THAT
EXAMINATION OF DIRECTOR SHOULD NOT BE PRODUCED TO SFO
Re Arrows
Ltd
In Re Arrows
Ltd
[1992] 2
WLR
923 the Chancery Division considered
again, in another form, the relationship between interviews given in the
liquidation of an insolvent company and the investigation of fraud by the
Serious Fraud Office.
The
company had been in the business of providing short-term trade
finance against bills of exchange.
It
diverted monies from this activity
into the property dealings of its managing director and sole beneficial
shareholder and in July 1991 provisional liquidators were appointed by
the court. The company's affairs were in a state of considerable disarray
and the liquidators wished, in order to attempt to trace missing assets, to
interview the former director.
The
director had been charged with offences
under the Theft Act 1968in connection with his property dealings.
Under
s 236 of the Insolvency Act 1986 the liquidators applied for an
order
for the examination of the director and they coupled their request
with the unusual one that the examination should not be disclosed to the
Serious Fraud Office (SFO). Hoffmann Jgranted the order for the
examination of the director but adjourned the request relating to non-
disclosure to the SFO until after hearing argument from them.
The argument put forward by the liquidators was that without such a
direction the director would be unlikely to be helpful to them. He would
be entitled to claim a privilege against self-incrimination and would
probably invoke it.
If
he did not and the interview was disclosed to the
SFO the evidence contained in it would be admissible against him in a
trial.
The
SFO argued that the request for the direction was premature:
the Insolvency Rules provide that the record of an examination is not to
be disclosed without leave of the court and that the liquidators or the
director could object at that stage if the SFO decided to seek disclosure.
Furthermore the SFO argued that, since Parliament has conferred a right
to information upon the SFO, the court cannot restrict it.
Under
the Criminal Justice Act 1987 the SFO may under s 2(2) require
'the person whose affairs are to be investigated . . . or any other person
whom he has reason to believe has relevant information to answer questions
or otherwise furnish information with respect to any matter relevant to
the investigation'.
Under
s 2(13) a refusal to comply with such a request
without reasonable excuse is an offence. Information supplied as the result
of such a request is only admissible against the maker as a prior inconsistent
statement or in a prosecution for knowingly or recklessly making a false
or misleading statement.
In its arguments before the court the SFO cited the narrow grounds on
399

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