Re Pergamon Press Ltd

JurisdictionEngland & Wales
Judgment Date13 July 1970
Judgment citation (vLex)[1970] EWCA Civ J0713-2
Date13 July 1970
CourtCourt of Appeal (Civil Division)

In the Matter of Pergamon Press Limited


In the Matter of the Companies Acts 1948 and 1967

Rondle Owen Charles Stable, Q.C.
Ronald George Leach (Inspectors appointed by the Board of Trade pursuant to section 165(b) of the Companies Act, 1943 as amended)
(1) Cecil Thomas Clark
(2) Edwin Sidney Street
(3) Gilbert Frank Richards
(4) Eric Joseph Buckley
(5) Anthony John Wheaton and
(6) Robert Maxwell Respondents

[1970] EWCA Civ J0713-2


The Master of The Rolls (LORD DENNING)

Lord Justice Sachs and

Lord Justice Buckley

In The Supreme Court of Judicature

Court of Appeal

Mr MORRIS FINER, Q.C. and Mr S.A. STAMLER (instructed by Messrs Lewis Silkin. & Partners.) appeared on behalf of the Appellant (6th Respondent, Mr Maxwell.

Mr MICHAEL SHERRARD, Q.C. and Mr A.A.M. IRVINE (instructed by Messrs. Lewis Silkin & Partners) appeared on behalf of the Appellant (1st Respondent, Mr Clark).

Mr P. PHILLIPS (instructed by Messrs. Herbert & Gowers & Co.) appeared on behalf of the Appellant (2nd Respondent, Mr Street).

Mr EDGAR FAY, Q.C. and Mr J.P. WARNER (instructed by The Solicitor to the Board, of Trade) appeared on behalf of the Respondents (Applicants).


In the middle of 1969 there was an upset in the City of London. It concerned Pergamon Press Ltd, a public company, of which the leading figure was Mr Robert Maxwell, M.C., M.P. In June 1969 an American corporation called Leasco made a take-over bid for the shares of Pergamon Press Ltd. They bought many of the shares in Pergamon and made an offer to buy the rest, but on the 21st August, 1969, they withdrew the offer. The price of the shares slumped. Dealings were suspended. The City Panel looked into the happenings. They had misgivings, and made them known. In consequence, on the 9th September, 1969, the Board of Trade ordered an investigation under Section 165, subsection (b), of the Companies Act, 1948. They appointed two Inspectors. One of them was eminent Counsel; the other a distinguished Accountant.


It was important in the public interest that the investigation should be completed as speedily as possible. Time was of the essence. Only thus could confidence be restored. At once Mr Robert Maxwell, the most prominent member of the Pergamon Board, assured the Inspectors of his full co-operation. He sent a memorandum saying: "In the interests of clearing the Company's good name and reputation and in the interests of getting the inquiry completed as soon as possible, we promise the Inspectors full co-operation".


So far so good. Soon afterwards, however, things happened which considerably affected the attitude of Mr Maxwell and his colleagues. On the 10th October, 1969, the Leasco Corporation, who had a sufficient holding for the purpose, removed Mr Maxwell and some of the others from the Board and appointed new Directors in their stead. These new Directors were Leasco men. On the 3rd November, 1969, Leasco filed a suit in New York against Mr Maxwell and some of his companies, charging them with fraud and deceit in connection with the sale of shares in Pergamon. The claim was for $22 million.


These events made Mr Maxwell and his colleagues apprehensive about the Board of Trade investigation. They were afraid that the Inspectors might make an interim report which would find its way into the hands of Leasco and be used against them in the American litigation. They were also fearful lest allegations should be made which would reflect on their conduct.


In November 1969 the Inspectors told each of the Directors that they would like to hear evidence from them. They said that their hearings would be in private at the offices of the accountants. They added: "It is our intention to permit any witness, who desires it, to be represented. Whilst information which you may give us may be reflected in our report, it is right to tell you that any information which we receive will be treated as confidential save for the purpose of reporting to the Board of Trade, who may publish our report". The Inspectors also said that they would allow any witness to obtain a copy of his own evidence and give him an opportunity of supplementing it, if he desired.


This did not satisfy Mr Maxwell and his colleagues. They decided to ask the Inspectors for further assurances about the conduct of the inquiry. They wanted to be assured that, in case allegations were made against them, they should be given an opportunity to read the transcripts of the evidence and of meeting the allegations by evidence or by written or oral submissions.


The Inspectors replied on the 1st December, 1969 that they were "most anxious that no-one affected by our inquiries should feel that he has been unjustly treated at our hands and neither of us would be a party to acting under the provisions of Section 41 in respect of anyone or criticising anyone in either an interim report or a final report without first giving the person concerned an opportunity of giving us his explanation, which implicitly involves thathe should be told in general terms of the allegation. We cannot, however, agree to allowing you a right to peruse the transcripts". I will not read the letter in full. It was, to my mind, a very proper letter, giving every reasonable assurance.


But these assurances did not satisfy Mr Maxwell and his colleagues. They demanded even more assurances. The Inspectors declined to give them.


A little later the Inspectors called on the Directors to give evidence. Each of them refused. Typical was the attitude of Mr Robert Maxwell himself. He came with his solicitor, Mr Freeman, to the place where the Inspectors were meeting. He gave his name and address and said that he was the holder of the Military Cross and a Member of Parliament. Then Mr Stable, a Queen's Counsel, one of the Inspectors, asked him this simple question, "When did you first become associated with Pergamon Press Ltd?" to which Mr Maxwell replied: "Mr Stable, in view of the submissions made on my behalf by Mr Freeman, I respectfully refuse to answer any further questions unless I am ordered to do so by the Court". This attitude left the Inspectors with no alternative but to report the refusal to the Court.


Accordingly, they gave a certificate under Section 167, subsection (3), of the Companies Act, 1948, and made an affidavit setting out the facts. The matter came before Mr Justice Plowman on the 24th April, 1970. The case is reported in 1970 1 W.L.R. at page 1075. He held that the objections taken by the Directors were premature; they were not justified in their refusal to answer the questions. He made no order against them save that they pay the costs of the application.


The Directors appeal to this Court. Mr Morris Finer, on behalf of Mr Maxwell, claimed that they had a right to see transcripts of the evidence of the witnesses adverse tothem. Mr Sherrard, on behalf of Mr Clark, claimed a right to cross-examine the witnesses. Mr Phillips, on behalf of Mr Street, claimed that they ought to see any proposed finding against them before it was included finally in the report. In short, the Directors claimed that the Inspectors should conduct the inquiry much as if it were a judicial inquiry in a Court of law in which Mr Maxwell and his colleagues were being charged with an offence.


It seems to me that this claim on their part went too far. This inquiry was not a Court of law. It was an investigation in the public interest, in which all should surely co-operate, as they promised to do. But if the Directors went too far on their side, I am afraid that Mr Fay, for the Inspectors, went too far on the other. He did it very tactfully, but he did suggest that in point of law, the inspectors were not bound by the rules of natural justice. He said that in all the cases where natural justice had been applied hitherto, the tribunal was under a duty to come to a determination or decision of some kind or other. He submitted that when there was no determination or decision but only an investigation or inquiry, the rules of natural justice did not apply. He cited Parry-Jones v. The Law Society, 1969 Chancery, 1, to support his proposition.


I cannot accept Mr Fay's submission. It is true, of course, that the Inspectors are not a Court of law. Their proceedings are not judicial proceedings. See re Grosvenor Hotel in (1897) 76 Law Times, 537. They are not even quasi-judicial, for they decide nothing; they determine nothing. They only investigate and report. They sit in private and are not entitled to admit the public to their meetings. See the Hearts of Oak case in 1932 Appeal Cases, 392. They do not even decide whether there is a prima facie case, as was done in Wiseman v. Borneman, 1969 3 Weekly Law Reports, 706.


But this should not lead us to minimise the significance of their task. They have to make a report which may have wide repercussions. They may, if they think fit, make findings of fact which are very damaging to those whom they name. They may accuse some; they may condemn others; they may ruin reputations or careers. Their report may lead to judicial proceedings. It may expose persons to criminal prosecutions or to civil actions. It may bring about the winding-up of the Company, and be used itself as material for the winding-up. See re S.B.A, 1967 1 Weekly Law Reports, 799. Even before the Inspectors make their report, they may inform the Board of Trade of facts which tend to show that an offence has been committed - see Section 4-1 of the 1967 Act. When they do make their report, the Board are bound to send a copy of it to the Company; and the Board may, in their discretion, publish it, if they think fit, to the public at large.


Seeing that their work and their report may lead to such consequences, I am clearly of opinion that the Inspectors must act fairly. This is a duty which rests on them, as on many other...

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