Marlwood Commercial Inc. v Viktor Kozeny
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE CLARKE,LORD JUSTICE WALL,Lord Justice Rix |
| Judgment Date | 25 June 2004 |
| Neutral Citation | [2004] EWCA Civ 548,[2004] EWCA Civ 798 |
| Court | Court of Appeal (Civil Division) |
| Date | 25 June 2004 |
| Docket Number | Case No: A3/2004/0289,A3/04/0289 |
[2004] EWCA Civ 548
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT
QUEEN'S BENCH DIVISION (COMMERCIAL COURT)
(MR JUSTICE MOORE-BICK)
Royal Courts of Justice
Strand
London, WC2A 2LL
Lord Justice Clarke
Lord Justice Wall
A3/04/0289
MR R SLOWE (solicitor/advocate instructed by Messrs SJ Berwin, London, WC1X 8HB) appeared on behalf of the First, Third and Fourth Applicants
The Respondent did not appear and was not represented.
This is an application for permission to appeal by the 1st, 3rd and 4th defendants ("the applicants") against paragraphs 1 and 2 of the order of Mr Justice Moore-Bick dated 9 February 2004. By paragraph 1 of that order he gave the claimant permission, pursuant to CPR 31.22(1) (b), for Mr Charles Lloyd of the claimant's solicitors, Macfarlanes, to produce copies of certain specified documents to the Serious Fraud Office ("SFO)" pursuant to a notice dated 5 March 2003 addressed to him under section 2 of the Criminal Justice Act 1982. A similar notice has been served on Miss Catherine Bailey of the applicant's solicitors, S J Berwin. By paragraph 2 of the order, the judge dismissed the applicant's applications for an order directing that neither Mr Lloyd nor Miss Bailey comply with the notices. The specified documents were all disclosed by the applicants in this action. As I understand it, the specified documents in both notices were the same.
The claimant claims damages for fraud against the applicants in circumstances which are set out in some detail by the judge. The first defendant is the subject of criminal proceedings in New York arising out of the same alleged events. In December 2002 the New York District Attorney made a formal request to the Home Office for assistance in connection with his investigation into the first defendant's, (Mr Kozeny's) affairs.
Pursuant to that request, the Secretary of State, acting under section 4(2A) of the Criminal Justice (International Cooperation) Act 1990 ("the 1990 Act"), requested the director of the SFO to exercise her powers under section 2 of the Criminal Justice Act 1987 ("the 1987 Act") to obtain evidence requested by the authorities in the United States. As a result, on 5 March 2003, a member of the SFO acting on behalf of the director served notice on Mr Lloyd to produce copies of any documents (other than those to which legal privilege attached) disclosed by the 1st, 3rd and 4th defendants in these proceedings. As I have indicated, the SFO served a similar notice on Miss Bailey.
In making the application, the SFO relied upon section 2(3), (9), (10) and (13) and section 3(3) of the 1987 Act as follows:
"2. Director's investigations powers
(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.
(9) A person shall not under this section be required to disclose any information or produce any document which he would be entitled to refuse to disclose or produce on grounds of legal professional privilege in proceedings in the High Court, except that a lawyer may be required to furnish the name and address of his client.
(10) A person shall not under this section be required to disclose information or produce a document in respect of which he owes an obligation of confidence by virtue of carrying on any banking business unless
(a) the person to whom the obligation of confidence is owed consents to the disclosure or production; or
(b) the Director has authorised the making of the requirement ….
(13) Any person who without reasonable excuse fails to comply with a requirement imposed on him under this section shall be guilty of an offence ….
3. Disclosure of information
(3) 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 prohibit the disclosure of that information to any person in his capacity as a member of the Serious Fraud Office…."
The judge described the submissions made by Mr Slowe, on behalf of the applicants, as follows in paragraph 10 and 14 of his judgment:
"10. Mr Slowe, who appeared on behalf of Mr Kozeny on these applications, submitted that although the powers of the Director under section 2 of the 1987 Act are very wide, they are nonetheless subject to certain exceptions dictated by considerations of public policy. In support of that submission he relied on a passage in the judgment of Hoffmann J in In Re Arrows Ltd [1992] Ch 545, subsequently approved by the House of Lords in Hamilton v Naviede [1995] 2 AC 75. He submitted that the importance of preserving the confidentiality of documents disclosed under compulsion in the course of proceedings was sufficient to outweigh the importance of providing information in furtherance of investigations into serious fraud and that therefore considerations of public policy demanded that the notices served on Mr Lloyd and Ms Bailey should not be complied with. He did not suggest, however, that the requirements of the 1990 Act or the 1987 Act were not fully satisfied and the validity of the notices is therefore not in issue.
14. Mr Slowe submitted that, although the 1987 Act overrides any duty of confidence that Mr Lloyd or the claimants may owe to the defendants in relation to the documents at common law, there is a public interest in maintaining the confidentiality of documents disclosed in the course of litigation pursuant to the rules of court which it does not override. He based that submission on the importance which the courts have always attached to the obligation of disclosure and the need to ensure that parties to litigation comply fully with their duty in this respect. He submitted that, if the SFO were able to obtain access to documents disclosed in litigation in circumstances such as those which exist in the present case, it would discourage many parties from complying with their duty and so adversely affect the administration of justice."
CPR 31.22 (1) (b) provides:
"A party to whom a document has been disclosed may use the document only for the purposes of the proceedings in which it is disclosed except where-
….
(b) the court gives permission."
The judge correctly recognised the general principle that a party to whom documents are disclosed in an action gives an implied undertaking not to use the documents other than for the purposes of the action or for any collateral purpose. The judge referred to a number of relevant cases, including Home Office v Harman [1983] 1 AC 280; Crest Homes v Marks [1987] AC 829; Bank of Crete SA v Koskotas (No 2) [1992] 1 WLR 919; and Attorney General for Gibraltar v May [1999] 1 WLR 998. He then expressed his conclusion thus in paragraph 20:
"These cases all emphasise the importance which the courts attach to the implied undertaking not to use material obtained by means of the court's coercive powers for purposes not directly related to the litigation in which it was obtained. The justification for it is that the exercise of coercive powers involves an infringement of the defendant's right to maintain privacy in the material in question. As Millett J observed in Bank of Crete v Koskotas,
'The material obtained from the banks was ordered to be disclosed because it was within the account-holders' power and was compellable from them. Material obtained by the use of the court's coercive powers, whether from a defendant in respect of material in his possession, or from his bank in respect of material which is confidential to him but which is within his power, may in general be used only for the purpose for which it has been obtained. To use it for any other purpose would be to invade the defendant's privacy.'
It is only right, therefore, that the use of documents and information obtained by the exercise of those coercive powers should normally be carefully confined within the limits necessary to enable justice to be done in the proceedings in which they were obtained."
Mr Slowe submits that the judge erred in principle in his approach to the circumstances in which the court should make an order under CPR 31.22(1) (b) . He submits that the judge approached the problem on the basis that he was merely being asked to preserve the applicant's confidentiality in the documents whereas he should have approached it on the basis that the public policy underlying the rule is that it is essential, for the purpose of the administration of justice, that parties to litigation should be compelled to give, and should not be inhibited from giving, full disclosure. In rejecting Mr Slowe's submissions on paper, Mance LJ said:
"The criticisms (in paragraphs 21–22 of the skeleton) of the judgment for overlooking the public interest in the proper administration of justice are based on a misreading. The judge addressed the question whether parties might be discouraged from litigating in England in paragraph 22. He addressed Mr Slowe's primary argument that they might be discouraged from bringing their documents here in paragraph 23 and identified two strands to it in paragraph 24. Paragraph 24 went on to deal with the first strand, that the...
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Subject Index
.... . . . . . . . 58–63O’Reilly andJudge v DPP[1984] ILRM 224 . . . 220Omega Group Holdings Ltd v Kozeny; MarlwoodCommercial Inc. v Kozeny [2005] 1 WLR 104,CA (CivDiv) . . . . . . . . . . . . . . . . . . . . . . . . . .240Omychund vBarker (1745) 1 Atk2, 26 ER15 . . 293Patel v Comptroller of C......
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Going over the Implied Undertaking in Respect of Evidence of a Crime: Juman v Doucette
...but they are given prima facie precedenceover it. See e.g. Omega Group Holdings Ltd v Kozeny; Marlwood Commercial Inc. v Kozeny [2005] 1 WLR 104,CA (Civ 38 For example, when solicitor–client privileged material is disclosed pursuant to an exception (such as the public safety exception), the......