Hamilton and Another v Naviede and Director of the Serious Fraud Office
| Jurisdiction | England & Wales |
| Judge | Lord Keith of Kinkel,Lord Jauncey of Tullichettle,Lord Browne-Wilkinson,Lord Lloyd of Berwick,Lord Nolan |
| Judgment Date | 25 July 1994 |
| Judgment citation (vLex) | [1994] UKHL J0725-2 |
| Date | 25 July 1994 |
| Court | House of Lords |
[1994] UKHL J0725-2
House of Lords
Lord Keith of Kinkel
Lord Jauncey of Tullichettle
Lord Browne-Wilkinson
Lord Lloyd of Berwick
Lord Nolan
My Lords,
For the reasons given in the speech to be delivered by my noble and learned friend Lord Browne-Wilkinson, which I have read in draft and with which I agree, I would dismiss this appeal.
My Lords,
For the reasons given in the speech to be delivered by my noble and learned friend Lord Browne-Wilkinson, which I have read in draft and with which I agree, I too would dismiss this appeal.
My Lords,
This is yet another case in which the courts have had to grapple with the impact of statutory provisions on the privilege of an individual not to be required to incriminate himself.
Shortly stated the position is as follows. The appellant was concerned with the running of a company. When it collapsed, he was examined by the liquidators under section 236 of the Insolvency Act, 1986 ("the I.A."). There are transcripts of that examination. Acting under powers conferred by section 2(3) of the Criminal Justice Act 1987. ("the C.J.A.") the Serious Fraud Office ("the S.F.O.") required the liquidators to produce those transcripts with a view to the S.F.O. using them as evidence in criminal proceedings against the appellant. The liquidators applied to the Companies Court for directions and the judge ordered that transcripts should not be handed over to the S.F.O. except upon an undertaking not to use the transcripts in evidence in the criminal proceedings. The question is whether the judge (whose decision was reversed by the Court of Appeal) was entitled to impose such undertaking precluding the use of the appellant's answers as evidence in the pending criminal trial.
(a) Insolvency
When a company becomes insolvent, the liquidators or administrators need to obtain information as to the company's affairs for the purposes of the winding up or administration of the company. The I.A. provides two procedures for this purpose, one informal, the other formal.
Section 235 of the I.A. imposes on a wide class (consisting of all those who have been concerned with the running of the company) a duty to give to the liquidators
"(2)( g) � such information concerning the company and its promotion, formation, business, dealings, affairs or property as the office-holder may at any time after the effective date reasonably require."
Failure to comply with that obligation is punishable by a fine under section 235(5) of the I.A. and Insolvency Rule 7.20(1)( c) of the Insolvency Rules 1986 ( S.I. 1986 No. 1925).
The second procedure is under section 236 which is the material section in the present case. It is more formal. The court, on the application of the liquidator, can summon to appear before it (2)( c) "any person whom the court thinks capable of giving information concerning the promotion, formation, business, dealings, affairs or property of the company." An examination under section 236 takes place before a registrar or judge, both the liquidators and the respondents being entitled to be represented by solicitors and counsel. Under Insolvency Rule 9.4(6) a record of the examination, usually a transcript, must be made. A statement made by the respondent in the course of a section 236 examination may be used as evidence against him in any proceedings whether or not under the Insolvency Act: I.A. section 433; Insolvency Rule 9.4(7).
Insolvency Rule 9.5 lays down a special procedure regulating the custody of transcripts and affidavits obtained under the section 236 procedure. They are not to go on the court file and, unless the court so orders, are not available for inspection by anyone other than the liquidators or other persons who could have applied for an order under section 236. Insolvency Rule 9.5(4) provides:
"(4) The court may from time to time give directions as to the custody and inspection of any documents to which this Rule applies, and as to the furnishing of copies of, or extracts from, such documents."
Until recently, it was thought that a person examined under section 236 could refuse to answer self-incriminatory questions. However in Bishopsgate Investment Management Ltd. v. Maxwell [1993] Ch. 1 the Court of Appeal held that the statutory provisions of the I.A. impliedly overrode the privilege against self incrimination. Leave to appeal to your Lordships House in Bishopsgate was refused. On this appeal, no attempt has been made to persuade your Lordships to overrule it.
In sum, therefore, a person examined under section 236 can be compelled to give self-incriminating answers which are admissible against him in criminal proceedings. However, the record of his answers is not available to outsiders without an order of the court under Insolvency Rule 9.5(4).
(b) The Serious Fraud Office
The C.J.A. conferred on the Director of the S.F.O. special powers to assist him in the investigation and prosecution of serious fraud. When the Director has launched an investigation under section 1, section 2 confers on him two exceptional powers, one to put questions, the other to obtain documents.
The inquisitorial power is contained in section 2(2) which provides:
"The Director may by notice in writing require the person whose affairs are to be investigated ("the person under investigation") 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 at a specified place and either at a specified time or forthwith."
This House has recently decided in Reg. v. Director of Serious Fraud Office, Ex parte Smith [1993] A.C. 1 that the privilege against self incrimination has been impliedly overridden by the C.J.A. Therefore a person required to answer questions by a subsection (2) notice is bound to answer the questions put to him by the Serious Fraud Office even if by so doing he may incriminate himself. Failure to do so gives rise to criminal sanctions including imprisonment: section 2(13). However, section 2(8) provides the person interrogated with a valuable safeguard which, to a substantial extent, protects him against the consequences of giving self incriminating answers. It provides:
"(8) A statement by a person in response to a requirement imposed by virtue of this section may only be used in evidence against him - ( a) on a prosecution for an offence under subsection (14) below; or ( b) on a prosecution for some other offence where in giving evidence he makes a statement inconsistent with it."
Proceedings under subsection (14) are irrelevant in the present case. Therefore the section effectively prevents the answers being used by the prosecution unless, at the criminal trial, the accused elects to give evidence. The protection afforded by this subsection in relation to answers given in response to a subsection (2) notice lies at the heart of this case.
The special power to obtain documents is conferred on the S.F.O. by section 2(3) which provides:
"(3) The Director may by notice in writing require the person under investigation or any other person to produce � any specified documents which appear to the Director to relate to any matter relevant to the investigation or any documents of a specified description which appear to him so to relate; and - ( a) if any such documents are produced, the Director may - (i) take copies or extracts from them; (ii) require the person producing them to provide an explanation of any of them;"
( b) �
Failure to comply with a notice served under subsection (3) "without reasonable excuse" is a criminal offence punishable with imprisonment (section 2(13)). In the present case, the S.F.O. acting under subsection (3) has demanded from liquidators production of the transcripts of an examination of the appellant under section 236 of the I.A.
The protection afforded by section 2(8) does not apply to documents obtained under section 2(3): the liquidators are not required to make a "statement" and the appellant's statements contained in the transcripts were not made "in response to a requirement imposed by virtue of this section" but in response to a requirement under section 236 of the I.A. There is no other provision in the C.J.A. restricting the use that may be made by the S.F.O. of documents obtained by use of a subsection (3) notice.
(c) The combined effect of the statutory provisions
Unless the court has some discretion to restrict the use to which section 236 transcripts can be put, the result of these statutory provisions, read together, is this. Self incriminating answers given by the appellant in the course of the section 236 examination (which he could not refuse to give) will be obtained by the Serious Fraud Office and will be admissible in evidence against him in criminal proceedings. Whereas, if the Serious Fraud Office had itself asked the same questions acting under the inquisitorial procedure laid down by section 2(2) of the C.J.A., the appellant's answers to such questions would not have been admissible against him in criminal proceedings.
The privilege against self incrimination
One of the basic freedoms secured by English law is that (subject to any statutory provisions to the contrary) no one can be forced to answer questions or produce documents which may incriminate him in subsequent criminal proceedings. The principle evolved from the abhorrence felt for the procedures of the Star Chamber under which the prisoner was forced, by the use of torture, to answer self incriminating questions on the basis of which he was subsequently convicted. Although physical torture is...
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