Hamilton and Another v Muhammad Naviede
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE DILLON,LORD JUSTICE STEYN,LORD JUSTICE ROSE |
| Judgment Date | 07 April 1993 |
| Judgment citation (vLex) | [1993] EWCA Civ J0407-10 |
| Date | 07 April 1993 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | No. CHANI 92/1582/B |
[1993] EWCA Civ J0407-10
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
(CHANCERY DIVISION)
(Mr. Justice Vinelott)
Before: Lord Justice Dillon Lord Justice Steyn and Lord Justice Rose
No. CHANI 92/1582/B
IN THE MATTER AND ARROWS LIMITED and IN THE MATTER OF THE INSOLVENCY ACT 1986
MR. M. COLLINGS (instructed by Messrs. Alsop Wilkinson) appeared on behalf of the Appellant.
MR. E. McQUATER and MR. R. DE LALY (instructed by Messrs. Lovell White Durrant) appeared on behalf of the Liquidators.
MR. R. KAYE, Q.C. and MR. R. RITCHIE appeared on behalf of the Serious Fraud Office.
MR. A. CHARLES appeared on behalf of the Secretary of State for Trade and Industry.
( )
The Court has before it an appeal, by leave of the Judge, by the Director of the Serious Fraud Office against an Order of Vinelott J made on the 10th November 1992. That was an Order made by the Judge on an application by the liquidators of Arrows Ltd., (which is in compulsory liquidation) under section 168(3) of the Insolvency Act 1986 seeking directions and a determination whether and if so how the liquidators should deal with the transcripts of the examination of the Respondent Mr Naviede under section 236 of that Act, in consequence of the receipt by the liquidators of a letter from the Director of the Serious Fraud Office requesting copies of the transcripts. The liquidators had been directed by an earlier Order of Millett J to make such an application under section 168(3) on receipt of any request or demand by the Serious Fraud Office for copies of the transcripts.
The Order of the Judge directed that the liquidators release and disclose the transcripts and certain affirmations made by Mr Naviede in the course of his examination under section 236 to the Director of the Serious Fraud Office upon the Director undertaking (1) that he will not use the transcripts or affirmations or any copies thereof in evidence against Mr Naviede save in the circumstances specified in subsection 2(8) of the Criminal Justice Act 1987 and (2) that he will procure an undertaking in the same terms as (1) from any party to whom he supplies such transcripts or affirmations. But the Order further provided that the undertakings of the Director should cease to have effect in the event of a successful appeal by the Director against the Judge's Order. The present appeal is therefore an appeal against the exaction by the Judge of the undertakings.
To understand the undertakings it is necessary to look at provisions in the Criminal Justice Act 1987.
Section 1 of that Act constituted the Serious Fraud Office, provided for the appointment of the Director and prescribed his functions.
Section 2 provides for investigations by the Director. In particular, subsection (2) provides that 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….
Subsection (3) provides that 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.
Subsection 2(8) then 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."
Subsection (14) there mentioned is not relevant to the present case.
Subsection 2(9) preserves legal professional privilege and subsection (10) contains special provisions as to bankers' obligations of confidence.
Subsection 3(3) of the Criminal Justice Act 1987 provides that "where any information is subject to an obligation of secrecy imposed by or under any enactment other than an enactment contained in the Taxes Management Act 1970 the obligation shall not have effect to prevent the disclosure of that information to any person in his capacity as a member of the Serious Fraud Office."
Section 236 of the Insolvency Act 1986 provides by subsection (2) that the Court may on the application of the office-holder -which includes the liquidators in the present case —summon to appear before it (a) any officer of the company in question (b) any person known or suspected to have in his possession any property of the company or supposed to be indebted to the company or (c) any person whom the court thinks capable of giving information concerning the promotion, formation, business, dealings, affairs or property of the company. Subsection 237(4) provides that any person who appears or is brought before the Court under section 236 or 237 may be examined on oath, either orally or (except in Scotland) by interrogatories, concerning the company or the matters mentioned in section 236(2)(c). By subsection 236(3) the person summoned under 236(2) may be required to submit an
affidavit (or an affirmation) to the Court or to produce documents.
In Bishopsgate Investment Management Ltd v Maxwell [1993] Ch 1 this Court held that a person summoned to appear before the Court under section 236 could not rely on the privilege against self-incrimination as an excuse for refusing to answer questions put to him in the course of his examination. Beyond that any statement made by a person during his examination under section 236 (or other provisions of the Insolvency Act) is admissible in evidence against him in any proceedings whether criminal or civil. See section 433.
I should refer next to the Insolvency Rules 1986. Rule 9 deals with examination under section 236. Rule 9.5 is concerned with the record of any such examination, and provides as follows:-
" 9.5. Record of examination
(1) Unless the court otherwise directs, the written record of the respondent's examination, and any answer given by him to interrogatories, and any affidavits submitted by him in compliance with an order of the court under the applicable section, shall not be filed in court.
(2) The written record, answers and affidavits shall not be open to inspection, without an order of the court, by any person other than -
(a) the applicant for an order under the applicable section, or
(b) any person who could have applied for such an order in respect of the affairs of the same insolvent.
(3) Paragraph (2) applies also to so much of the court file as shows the grounds of the application for an order under the applicable section and to any copy of proposed interrogatories.
(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.
I should record for completeness that section 235 of the Insolvency Act imposes an obligation on various classes of persons, including those who are or have at any time been officers of the company and those who are in the employment of the company to give to the office holder such information concerning the company and its promotion, formation, business, dealings, affairs or property as the office-holder may reasonably require and to attend on the office-holder at such times as the latter may reasonably require. Under Rule 7.20(1)(c) of the Insolvency Rules the Court may make such orders as it thinks necessary for the enforcement of obligations falling on any person in accordance with section 235. So far as I am aware there was no express statutory antecedent of section 235. But for obvious reasons, it has for a very long time been the practice of the Court not to order the private examination of a person under section 236 if it appears that that person is willing to cooperate and supply whatever information is sought informally i.e. now under section 235. In fact in Mr Naviede's case we are not concerned with any questioning under section 235; the only questioning of him was under section 236.
There have ben suggestions, for instance in the skeleton arguments of the liquidators, that a distinction ought to be drawn, in relation to public interest immunity, between a formal private examination under section 236 and informal questioning under section 235. For my part, I see no such distinction. The informal questioning, under section 235, is backed by the sanction in Rule 7.20(1)(c), and informal questioning is and always has been subject to the threat, express or implicit, that if the person being questioned does not cooperate there will be an application to the Court by the office-holder for the formal examination of that person under section 236.
Given therefore that the transcripts of Mr Naviede's examination under section 236 and the affirmations he made are admissible evidence against him in the criminal proceedings now pending against him, I find it surprising that the Chancery Court should be invited to restrict the use of that evidence in the criminal court. The starting point, in my judgment, is the statement by Lord Wilberforce in Rank Film Distributors Ltd v Video Information Centre [1982] AC 380 at 442F-G:-
"But I cannot accept that a civil court has any power to decide in a manner which would bind a criminal court...
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