Parallel Investigations and Litigation
| Pages | 300-302 |
| Published date | 01 February 1999 |
| DOI | https://doi.org/10.1108/eb027195 |
| Date | 01 February 1999 |
| Author | Michael Chan |
| Subject Matter | Accounting & finance |
Journal of Money Laundering Control — Vol. 2 No. 4
Parallel Investigations and Litigation
Michael Chan
Parallel investigations and litigation occur quite com-
monly. Investigations are frequently lengthy in areas
of financial crime, where months can be spent build-
ing evidence. Within this period, civil litigants can
easily commence an action. The main problem in
this situation is when and how much disclosure
should take place and to whom. Disclosure in one
set of proceedings may be detrimental to another
or to an ongoing investigation. For example, a defen-
dant may not wish to disclose certain information in
civil proceedings, as it would be detrimental to his
criminal trial. However, these documents may be
the best way of preventing the civil action from suc-
ceeding against him. Thus, the defendant must
choose between a successful civil outcome and a
possible or even probable criminal conviction. The
same predicament faces the prosecution authorities
who may risk a certain victory in one set of proceed-
ings against the possibility of revealing a source or
prejudicing an ongoing investigation. A variation is
where a criminal investigatory body requests non-
disclosure to the defendants in a civil trial to
prevent prejudicing a criminal investigation. The
Court of Appeal encountered this problem in C v S
and others2
THE FACTS
The plaintiffs had alleged that some of the defendants
had misappropriated large sums of money from
them. Subsequently, they sought orders against a
bank for discovery of documents to assist them
tracing the money and consequently obtain relief
against the other defendants. However, the plaintiffs
were unaware that the bank had made a series of
money-laundering reports to the NCIS (National
Criminal Intelligence Service). These reports were
subject to the tipping-off provisions in s. 93D of the
Criminal Justice Act 1988.3
The NCIS had made it clear to the bank that the
disclosure of information requested by the plaintiffs
would constitute tipping off. Therefore, the bank
found itself in the difficult position of either
breaching an order for discovery and facing con-
tempt proceedings or facing criminal prosecution
for tipping off.
Lightman J had initially granted the disclosure
order but Rimer J discharged it upon an application
by the NCIS. Nonetheless, the plaintiffs were given
leave to apply for a further order against the bank.
Jacob J heard this in camera and refused to grant an
order. However, he requested and obtained two
undertakings from the bank:
— the bank would take all steps within its power to
resolve the issue;
— the bank would inform the plaintiffs' solicitors as
soon as the bank was not at risk of prosecution.
The plaintiffs appealed.
THE DECISION
The Court of Appeal, citing Rowell v Pratt, held that
a court would never make an order if it would result
in a person being required to commit a criminal
offence. On the other hand, the court was required
to protect the interest of
litigants.
Thus, before refus-
ing a disclosure order, the court should be able to
satisfy itself that an offence was likely to be com-
mitted if disclosure were to be made. Moreover,
the court should explore the possibility of reconciling
the parties' positions by making a more restricted
order for disclosure than normal.
In the Court of Appeal, both the Attorney-General
and the NCIS accepted that on the facts, disclosure
to the plaintiffs would not interfere with any investi-
gations. Thus, the plaintiffs could succeed in their
appeal by consent. Nevertheless, the Court of
Appeal considered that it was for the courts to
decide how to resolve this type of conflict as there
was no parliamentary provision. In addition, when
considering how to reconcile the interests of the
parties, the courts should be entitled to receive
the assistance of those involved, in particular the
NCIS.
THE GUIDELINES
The Court of Appeal laid down eight guidelines for
future reference, stating that these could be adapted
to the particular bodies and situations as they arose:
Page 300
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