Omers Administration Corporation and Others (the “SL Claimants”) v Tesco Plc
| Jurisdiction | England & Wales |
| Judge | Mr Justice Hildyard |
| Judgment Date | 25 January 2019 |
| Neutral Citation | [2019] EWHC 109 (Ch) |
| Docket Number | CLAIM NO. FL-2017-000001 |
| Court | Chancery Division |
| Date | 25 January 2019 |
[2019] EWHC 109 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
FINANCIAL LIST (ChD)
7 Rolls Building
Fetter Lane
London
EC4A 1NL
THE HON Mr Justice Hildyard
CLAIM NO. FL-2017-000001
CLAIM NO. FL-2016-000019
Mr Neil Kitchener QC and Mr Andrew Lodder (instructed by Stewarts Law) appeared on behalf of the SL Claimants
Mr Peter de Verneuil Smith and Mr Dominic Kennelly (instructed by Morgan Lewis & Bockius UK LLP) appeared on behalf of the MLB Claimants
Ms Victoria Wakefield and Ms Emma Mockford (instructed by the Government Legal Department) appeared on behalf of the Serious Fraud Office
Mr Michael Watkins (instructed by Freshfields Bruckhaus Deringer LLP) appeared on behalf of the Defendant
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
This is the final public form of the judgment provided in unredacted form confidentially in December 2018 and contains redactions to protect third party confidentiality.
Nature of the Issues to be considered
The Defendant has in its possession and control certain documents obtained by the Serious Fraud Office (“the SFO”) for the most part pursuant to (or in anticipation of) the exercise of its powers under section 2 of the Criminal Justice Act 1987 (“the CJA 1987”). The SFO provided the Defendant with these documents (“the SFO Documents”) for the purpose of negotiations (actual and prospective) about a deferred prosecution agreement (“the DPA”) eventually concluded between the SFO and the Defendant's subsidiary, Tesco Stores Limited (“TSL”) in 2017. These documents are, in the view of the Defendant and its advisers, relevant to the matters in issue in the present proceedings. However, in circumstances where most of the documents had been obtained by or in the anticipation of compulsion, the SFO imposed strict restrictions on the Defendant as to the use that could be made of such documents to protect the persons from whom they were obtained. The Defendant is thus caught between its obligations to the parties to the litigation as regards to disclosure, and its obligations to keep the SFO Documents confidential and private, unless otherwise directed by the Court.
The question now to be considered is whether, having regard to (a) the terms on which the SFO obtained the SFO Documents and (b) the terms on which the SFO provided the SFO Documents to the Defendant, such documents should be disclosed to the Claimants, and if so, whether any restrictions should be stipulated in relation to their retention and use.
As I shall explain, the case law reveals many situations which are suggested to be nearly analogous, but no exact precedent: and both the proper test to be adopted and its application raise issues of some novelty, difficulty and importance.
As it happens, there was no real contest between the parties, the Defendant being ready if so directed to disclose the SFO Documents, and the Claimants being broadly agreeable to appropriate restrictions in respect of their retention and deployment. However, a number of third parties (for convenience and anonymity together “the Third Party Objectors” or “the TPOs”) from whom the SFO had obtained documents or information objected to any further disclosure.
In such circumstances, Mr Kitchener QC (leading Mr Andrew Lodder) on behalf of the SL Claimants and Mr Peter de Verneuil Smith (leading Mr Dominic Kennelly) have diligently advanced submissions from slightly different perspectives to illuminate the difficulties and their possible resolution. Further, although the Defendant (represented by Mr Michael Watkins) has been studiously neutral, the SFO (represented by Ms Victoria Wakefield and Ms Emma Mockford) has provided valuable further assistance both in addressing the legal principles involved and in drawing to my attention, and where necessary elaborating, the various objections received, in effect as a self-appointed amicus curiae. I am very grateful to them all, and their teams, for their very considerable assistance.
Structure of this judgment
I propose to deal with the issues thus canvassed before me under the following headings:
(1) The context in which these issues arise and the nature of the SFO Documents in question.
(2) The circumstances in which the SFO (a) obtained the SFO Documents from third parties (including the TPOs) and (b) thereafter disclosed them to the Defendant.
(3) The process preceding this hearing to enable the issues to be adjudicated on notice to potential objectors.
(4) The nature of the TPOs' various objections to being permitted or directed to disclose the documentation onwards to the Claimants.
(5) The debate as to the applicable legal principles, and my views in that regard.
(6) The application of the legal principles as I perceive them to be to the objections.
(7) The question whether, and if so what, further restrictions should be imposed in respect of any disclosure directed.
(8) Summary of Conclusions.
(1) Context of the issues arising and nature of the SFO Documents
As will be apparent from my previous decisions in this matter, in these proceedings the two sets of claimants (“the SL Claimants” and “the MLB Claimants”) seek compensation under the Financial Services Act 2000 (“ FSMA”) in respect of the losses they contend they suffered as a result of the Defendant's false and misleading statements to the market and its omissions from those statements. It is contended that these statements wrongly reported the Defendant's commercial income and very materially overstated its trading profits, and were designed to and did conceal a serious downturn in the Defendant's business. The Defendant is a well-known high street retailer with publicly listed shares (“Tesco shares”).
The two claimant groups differ in that (amongst other things) one is comprised of some 77 institutional investors who dealt in Tesco shares between April 2013 and 22 October 2014 and the other is comprised of two claimants bringing claims on behalf of investors for whom they purchased and/or retained Tesco shares between October 2009 and 19 September 2014. However, the broad thrust of their respective claims is similar enough that an exegesis of their differences in detail is not required for present purposes.
What is of more direct import is that the circumstances which have given rise to the claims of both sets of Claimants also led the SFO to pursue a criminal investigation (“the TSC01 investigation”) into the Defendant, its subsidiary TSL and certain associated individuals, which in turn led first to the conclusion and approval (by The President of the Queen's Bench Division, Sir Brian Leveson), under section 45 of and Schedule 17 to the Crime and Courts Act 2013, of the DPA referred to in paragraph 1 above, and secondly to the commencement of criminal proceedings against three individuals (one of whom was a director of TSL). Those criminal proceedings were at the date of the hearing being re-tried at the Crown Court at Southwark against two of the three original defendants, but have now entirely been concluded.
The SFO Documents comprise (a) documents provided to the SFO by third parties and (b) documents containing information provided to the SFO by third parties (including, in particular, transcripts of interviews with third parties and their witness statements).
I return to the relevance of the documentation in more detail later: for the present suffice it to say that there can be no real doubt, and (although the SFO was careful to emphasise that it could not “comment on the probative value of the underlying documents”) there was no dispute, as to the likely relevance of the SFO documentation in the context of these proceedings. The Defendant's solicitors, having reviewed them at least twice, accept that they are such as would be required to be disclosed, leaving aside the confidentiality undertaking given by acceptance of the terms of the SFO's letters. Counsel for the SL Claimants put it this way in their skeleton argument for this hearing:
“The SFO investigation concerned how the [alleged] fraud was carried out, by whom and who knew about it. The material is therefore not merely relevant to these proceedings, it goes to the very heart of the Claimants' pleaded case against Tesco under section 90A of FSMA.”
(2) The circumstances in which the SFO (a) obtained the SFO Documents from third parties (including the TPOs) and (b) thereafter disclosed them to the Defendant
This material had been obtained by the SFO during and for the purposes of its TSC01 investigation, generally by the use or prospective use of the SFO's powers to compel the production of information and documents conferred by and pursuant to section 2 of the CJA 1987.
Such powers are effected through a production notice (a “section 2 notice”). Specifically:
...(1) Under section 2(2) CJA 1987, the Director of the SFO may:
“ by notice in writing require the person whose affairs are to be investigated … 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 an investigation at a specified place and either at a specified time or forthwith”.
Interviews conducted by the SFO pursuant to section 2(2) CJA 1987 are referred to below as “section 2 interviews”.
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High Court Orders Tesco To Disclose SFO Documents In S.90A FSMA Shareholder Class Action
...representatives in the course of negotiating a deferred prosecution agreement: Omers Administration Corporation & Ors v Tesco plc [2019] EWHC 109 (Ch). The material in question comprised documents, interview transcripts and witness statements that the SFO had obtained from third parties......