Maxwell v Department of Trade and Industry

JurisdictionEngland & Wales
JudgeTHE MASTER OF THE ROLLS,LORD JUSTICE ORR,LORD JUSTICE LAWTON
Judgment Date25 January 1974
Judgment citation (vLex)[1974] EWCA Civ J0125-2
Date25 January 1974
CourtCourt of Appeal (Civil Division)
Between:
Ian Robert Maxwell
Plaintiff Appellant
and
Department of Trade and Industry
First Defendant Respondent
Rondle Owen Charles Stable
Second Defendant Respondent
Ronald George Leach
Third Defendant Respondent

[1974] EWCA Civ J0125-2

Before:

The Master of The Rolls (Lord Denning),

Lord Justice Orr and

Lord Justice Lawton.

In The Supreme Court of Judicature

Court of Appeal

Appeal by plaintiff from judgment of Mr. Justice Wien dated December 20, 1972.

Mr. E.M. OGDEN, Q.C., and Mr. ANTHONY GRABINER (instructed by Messrs. Lewis Silkin and Partners) appeared on behalf of the Appellant Plaintiff.

Mr. J.G. Le QUESNE, Q.C., Mr. GORDON SLYNN, Mr. B. GIBSON and Mr. DAVID HUNT (instructed by the Treasury Solicitor) appeared on behalf of the First Defendant Respondent.

Mr. RAYMOND KIDWELL, Q.C., Mr. GORDON SLYNN, Mr. B. GIBSON and Mr. DAVID HUNT (instructed by the Treasury Solicitor) appeared on behalf of the Second and Third Defendants Respondents.

THE MASTER OF THE ROLLS
1

The Pergamon Press affair still goes on. Three and a half years ago we laid down some guide lines for the inspectors to follow. The case is reported in Re Pergamon Press Ltd. (1971) 1 Ch, 388. The inspectors have since then held their investigation. They have made two interim reports and a final report. Their reports are very critical of Mr. Robert Maxwell. He is very upset by these criticisms. So much so that he has launched attacks against all of the reports and against the inspectors themselves. Today we are concerned with his attack on the first interim report. Mr. Maxwell says that many of the criticisms were made in disregard of the rules of natural justice. He asks us to declare accordingly.

2

The matter has already been considered by two of the Judges of the High Court. The first Interim report was signed on 2nd June, 1971. Mr. Maxwell applied to Mr. Justice Forbes for an interim injunction to restrain the inspectors from proceeding with their investigation. After hearing which lasted several days, on 30th September, 1971, Mr. Justice Forbes refused the injunction: but in the course of his judgment he expressed the view that the inspectors had failed in their duty. He said:-

3

"At no time did they formulate their tentative criticisms and give Mr. Maxwell an opportunity of dealing with them. It follows that, in my judgment, the probability is that the trial Judge would find a failure by the inspectors to direct themselves properly as to the rules of natural Justice which should govern their investigation" and would hold the report to be a nullity (page 37).

4

But, although he expressed that interim view, Mr. Justice Forbes thought that the investigation should go on: because the inspectors could still remedy their failure by putting their criticisms to Mr. Maxwell. So the Judge refused an injunction.

5

Mr. Maxwell did not appeal from that refusal. Encouraged, no doubt, by the opinion that the Judge expressed, he took the case on to trial.

6

In December 1972 the case was tried before Mr. Justice Wien. It lasted several days. At first Mr. S.C. Silkin, Q.C., appeared for Mr. Maxwell. Next Mr. Maxwell conducted it himself. Afterwards he Instructed Mr. Ogden, Q.C. Eventually Mr. Justice Wien came to a conclusion which was entirely opposite to the opinion reached by Mr. Justice Forbes. Mr. Justice Wien said (at page 71):-

7

"I am quite satisfied that in every instance the inspectors gave proper and sufficient notice to Mr. Maxwell of what was said against him or what it was that he had to meet. I consider that they succeeded in being eminently fair and that the plaintiff has no Just cause for complaint."

8

Each of the Judges had substantially the same material before him. The difference between them is this: Mr. Justice Forbes thought that, at the inquiry before inspectors, there were three stages:

9

"First, the hearing of the evidence (including Mr. Maxwell's) and the study of documents; Secondly, the inspectors coming to a conclusion (necessarily tentative in the circumstances); and

10

Thirdly, putting the substance of that conclusion to the witness."

11

Mr. Justice Wien held that natural justice did not require those three stages. In particular, it did not require the third stage. All that was required was that the inspectors should give Mr. Maxwell "a fair opportunity of correcting what is said against him. An outline of the case is enough."

12

In view of this difference between the Judges, I will try to state the considerations which are to be borne in mind in respect of an inquiry under the Companies Act. First and foremost: When a matter is referred to an inspector for investigation and report, it is a very special kind of inquiry. It must not be confused with other inquiries which we have had to consider. Remember what it is not. It is not a trial of anyone, nor anything like it. There is no accused person. There is no prosecutor. There is no charge. It is not like a disciplinary proceeding before a professional body. Nor is it like an application to expel a man from a trade union or a club, or anything of that kind. It is not even like a committee which considers whether there is a prima facie case against a person. It is simply an investigation, without anyone being accused.

13

Second: There is no one to present a case to the Inspector. There is no "Counsel for the Commission". The inspector has to do it all himself. He has himself to seek out the relevant documents and to gather the witnesses. He has himself to study the documents, to examine the witnesses and to have their evidence recorded. He has himself to direct the witnesses to the relevant matters. He has himself to cross-examine them to test their accuracy or their veracity. No one else is there to cross-examine them. Even if a witness says things prejudicial to someone else, that other does not hear it and is not there to cross-examine him.

14

Third: The investigation is in private. This is necessary because witnesses may say something defamatory of some one else: and it would be quite wrong for it to be published without the party affected being able to challenge it. The only persons present are the inspectors and their staff, the shorthandwriter, the witness and his lawyers, if he desires them.

15

Fourth: the Inspectors have to make their report. They should state their findings on the evidence and their opinions on the matters referred to them. If their report is to be of value, they should make it with courage and frankness, keeping nothing back. The public interest demands it. It may on occasion be necessary for them to condemn or criticise a man. Before doing so, they must act fairly by him. But what does fairness demand? That is the question.

16

Mr. Justice Forbes thought that, in order to do what was fair, after hearing the evidence and studying the documents, the inspectors ought to come to a conclusion ( which was necessarily tentative) and put the substance of that conclusion to the witness. He was led to that view by the observation of Lord Justice Sachs in Re Pergamon Press Ltd. (1971) 1 Ch. at page 405. I do not think that is right. Just think what it means. After hearing all the evidence, the inspectors have td sit down and come to tentative exclusions. If these are such as to be critical cal of any of the witnesses, they have to re-open the inquiry, recall those witnesses, and put to them the criticisms which they are disposed to make. What will be the response of those witnesses? They will at once want to refute the tentative conclusions by calling other witnesses, or by asking for further investigations. In short, the inquiry will develop into a series of minor trials in -which a witness will be accused of misconduct and seek to answer it. That would hold up the inquiry indefinitely. I do not think it is necessary. It is sufficient for the inspectors to put the points to the witnesses as and when they come in the first place. After hearing the evidence, the inspectors have to come to their conclusions. These need not be tentative in the least. They can be final and definite, ready for their report.

17

Mr. Michael Ogden, Q.C, realised that we might not accept the view of Mr. Justice Forbes. So he put a lesser alternative. He submitted that, in order to do what was fair to a witness, the inspectors ought to take all the relevant statements made by other witnesses — or contained in documents — which were prejudicial to the man and put them to him, so as to give him an opportunity of answering them. If the inspectors failed to do this on matters of substance, they failed to observe the rules of natural Justice and the Court should declare accordingly.

18

In support of this submission, Mr. Ogden treated us to a detailed analysis of the voluminous documents in the case. On the one hand he took the report of the inspectors with all the many criticisms they made of Mr. Maxwell. On the other hand, he took the transcripts of the evidence given by Mr. Maxwell before the inspectors. The report was long and detailed. It covered 209 pages of close type. The transcripts were, even longer. They covered twelve days of evidence and contained 366 pages of closely typed questions and answers. Mr. Ogden took each of the criticisms in the report, one by one. He then went to the transcripts of evidence to see if each criticism had been put to Mr. Maxwell. In all he took us through some thirty criticisms contained in the report and the transcripts. He asserted that in about three-fourths of the cases the criticisms had net been put — or not fully put — to Mr. Maxwell. In answer Mr. Le Quesne, Q.C., followed the same course. He took us through the criticisms. He showed that in nearly every one the inspectors had put the point to Mr. Maxwell or had indicated it in such a way that he must have known what was troubling them. Mr. Le Quesne acknowledged that there were a few criticisms in which the...

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2 books & journal articles
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