Istel (AT & T) Ltd v Tully
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE NEILL,LORD JUSTICE BUTLER-SLOSS |
| Judgment Date | 12 November 1991 |
| Judgment citation (vLex) | [1991] EWCA Civ J1112-2 |
| Docket Number | 91/1026 |
| Court | Court of Appeal (Civil Division) |
| Date | 12 November 1991 |
[1991] EWCA Civ J1112-2
The Master of The Rolls
(Lord Donaldson)
Lord Justice Neill
Lord Justice Butler-Sloss
91/1026
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
(MR. JUSTICE WRIGHT)
Royal Courts of Justice
MR. M. TUGENDHAT Q.C. and MR. R. SPEARMAN (instructed by Messrs. Taylor Joynson Garrett) appeared for the Appellants.
MR. J. GIBBONS (instructed by Messrs. Dutton Gregory & Williams, Eastleigh, Hampshire) appeared for the Respondents.
This appeal once again raises the vexed question of the extent to which the right to discovery in a civil action is curtailed if the opposing party can raise a convincing plea that compliance might tend to incriminate him.
The factual background
In April 1988 the second plaintiffs, Abbey Business Consultants Limited ("Abbey") entered into a contract with the Wessex Regional Health Authority ("Wessex") to provide what might broadly be described as computer services. At the time Abbey was controlled by Mr. and Mrs. Tully, the first and second defendants. In May 1988 the first plaintiffs (A. T. & T. Istel Limited ("Istel")) bought the entire shareholding of Abbey. The vendors were expressed to be Mr. and Mrs. Tully and two Tully family trusts ("A.T.S. Trustees" and "M.T.S. Trustees"). Mr. Tully entered into a service agreement with Istel under which he was employed until May 1991.
In April 1991 Istel learnt of allegations that the Wessex contract had been fraudulently operated by Mr. Tully and others including employees of Wessex and this action was begun claiming sums of the order of £5m. There are 24 defendants some of whom are sued as alleged participants in or beneficiaries of the frauds and some (the banks and building societies who are the 17th to 24th defendants) for discovery.
The matters complained of in the action are the subject of a major police investigation and Mr. Tully was at one stage arrested and then released on police bail. Neither Mr. nor Mrs. Tully has at present been charged with any offence.
The proceedings in the court below
On 5th June 1991 Buckley J. on the ex parte application of the plaintiffs made a massive order for Mareva injunctions and discovery against each of the defendants, other than the banks and building societies. It ran to 56 pages of orders and nine pages of schedules.
On 20th August 1991 Wright J. heard an application by Mr. and Mrs. Tully to vary Buckley J.'s order in various respects, the only one material to this appeal being a claim to have paragraphs 18(a) and (c) and 19(a) and (c) set aside. The paragraphs are in identical terms, paragraph 18 being addressed to Mr. Tully and paragraph 19 to Mrs. Tully. They provide as follows:
"[The relevant defendant] do within 7 days of the service of this order upon him make and serve on the Plaintiff's solicitors an Affidavit:—
(a) Setting out with full particularity all dealings by the [relevant] Defendant or anyone on his behalf with:
(i) the monies referred to in Schedule 1 to this Order; and
(ii) all and any sums or assets representing or derived from those monies; and
(b)…
(c) Exhibiting copies of all documents which relate to the receipt or transfer of, or dealing with all such assets, and in particular all such documents as are set out in schedule 3 hereto and are in the possession custody or power of the [relevant] Defendant."
It is unnecessary to refer to Schedules 1 and 3 in detail because it is not suggested that these sub-paragraphs are objectionable, otherwise than upon the ground that compliance with their terms might tend to incriminate Mr. Tully or Mrs. Tully. It is, however, essential to refer to paragraph 33 of the order of Buckley J. to which both paragraphs 18 and 19 were subject and which was in the following terms:
"No disclosure made in compliance with paragraphs 18 to 32 inclusive of this Order shall be used as evidence in the prosecution of an offence alleged to have been committed by the person required to make that disclosure or by any spouse of that person."
This paragraph is based upon a similar provision in an order made by this court in In Re O. (Restraint Order: Disclosure of Assets) [1991] 2 W.L.R. 475, 481E.
Wright J. "with very great reluctance indeed" set aside the sub-paragraphs complained of. Counsel for the plaintiffs had submitted that the effect of paragraph 33 was such as to reduce the risk of self-incrimination to such a level that the court could properly ignore it. Wright J. rejected this submission on the footing that no civil court can bind a criminal court as to what evidence is admissible in criminal proceedings ( per Lord Wilberforce in Rank Film Distributors Limited v. Video Information Centre [1982] A.C. 380, 442G) and that to make an order in this form would be to deprive the defendants of an absolute right and substitute dependence upon the exercise by the criminal court of a judicial discretion.
The grounds of appeal
As is not unusual, particularly when the appeal is concerned with a difficult area of the law, the arguments in this court have been considerably refined and to some extent amended. I hope that I do no injustice to Mr. Michael Tugendhat Q.C., appearing for the plaintiffs, if I suggest that essentially his arguments fall into three categories, namely, (i) the effective protection argument, (ii) the proprietary claim argument and (iii) an argument based upon section 72 of the Supreme Court Act 1981.
Effective protection
For the purposes of this argument Mr. Tugendhat accepts the all-embracing scope of the ancient common law privilege against self-incrimination. However, he submits that recent developments in the law enable a civil court to give Mr. and Mrs. Tully full protection by means of paragraph 33 of Buckley J.'s order. In summary the argument goes this way:
(a) It is accepted that no civil court "has any power to decide in a manner which would bind a criminal court that evidence of any kind is admissible or inadmissible in that court" ( per Lord Wilberforce in Rank at p. 442F) and that restrictions embodied in the order of the civil court would not bind "an English criminal court…from admitting the information in evidence at a trial" ( per Lord Fraser of Tullybelton ibid at p. 446E).
(b) However it is different if the prosecutor is personally restrained from placing the information before the criminal court, because in that scenario no question of admissibility arises.
(c) In Re O. (supra) this court clearly regarded a condition in the terms of paragraph 33 as effective where the prosecutor was the party seeking the disclosure. A similar view appears to have been taken by Lord Fraser of Tullybelton in Rank at p. 446D.
(d) Since the decision of the House of Lords in Attorney-General v. Times Newspapers Limited [1991] 2 W.L.R. 994 it is to be taken as settled law that it is a contempt of court, as constituting an interference with the course of justice, for anyone, whether a party to the action or not, knowingly to thwart or subvert the purpose of an order of the court. Accordingly the Crown Prosecution Service and a private prosecutor having notice of the terms of paragraph 33 would be unable to adduce in a criminal court evidence disclosed in compliance with the paragraphs of the order to which exception is taken. Again no question of admissibility or inadmissibility could arise.
I acknowledge the force of this argument, but I do not think that it is one which can be accepted in this court, although it may be worthy of consideration by the House of Lords. The effectiveness of such restrictions was considered in Rank by Lord Wilberforce at pp. 442D-443F and by Lord Fraser of Tullybelton at pp. 446D-448B, but there is no suggestion in their speeches that the restrictions could be effective other than in relation to the conduct of the party seeking the order (see in particular Lord Fraser of Tullybelton's discussion, at pp. 446H-447G, of Riddick v. Thames Board Mills Limited [1977] Q.B. 881 and the remarks concerning the use which third parties might make of the information if it was referred to in open court in the civil proceedings at pp. 443E and 447G-448B).
I regard the making of restraint orders at the request of the prosecutor under section 77 of the Criminal Justice Act 1988 as a special case. Although technically they are civil proceedings, they are intimately bound up with criminal proceedings. In the nature of things most respondents to applications for discovery in aid of restraint orders would be able to rely upon the privilege against self-incrimination and the fact that Parliament has made no special provision in this regard suggests that, in that context, restrictions upon the use which can be made of the information were accepted as being effective. It is to be remembered that the problem of third parties making use of the information as a result of it becoming public knowledge in other civil proceedings does not arise. The information will only be used in the criminal proceedings and then only if a conviction has been obtained.
The decision of this court in In Re O. does not avail the plaintiffs unless the operative effect of paragraph 33 can be extended to all potential prosecutors by means of the route adopted in Attorney-General v. Times Newspapers. For my part I do not think that the House of Lords in that case had in mind the special position in the administration of justice of the Director of Public Prosecutions and the Crown...
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