Robert Tchenguiz and Another (Claimants in Hq12x05106 and Hq13x00672) Rawlinson and Hunter Trustees Sa and Others (Claimants in HQ12X05082 and HQ13X00414) v Director of the Serious Fraud Office (Applicant/Defendant to all claims) Deutsche Bank Ag (Third Party Respondent)
| Jurisdiction | England & Wales |
| Judge | Mr Justice Eder |
| Judgment Date | 18 July 2013 |
| Neutral Citation | [2013] EWHC 2128 (QB) |
| Docket Number | HQ12X05082, HQ13X00414, |
| Court | Queen's Bench Division |
| Date | 18 July 2013 |
[2013] EWHC 2128 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Eder
HQ12X05082, HQ13X00414,
HQ12X05106, HQ13X00672
and
Ms Rosalind Phelps and Mr James Duffy (instructed by Stephenson Harwood LLP) for the VT Claimants
Mr Joe Smouha QC, Mr Alex BailinQC andMs Alison Macdonald (instructed by Shearman & Sterling(London) LLP) for the RT Claimants
Mr Dominic Dowley QC, Mr James EadieQC andMr Simon Colton (instructed by The Treasury Solicitor) for the Defendant
Mr Michael Beloff QC and Mr Tom Smith (instructed by Freshfields Bruckhaus Deringer) for The Third Party Respondent
Approved Judgment
Hearing dates: 10 and 11 July 2013
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.
Introduction
The background to these present proceedings is to be found in the judgment of the Divisional Court in judicial review proceedings with Claim Nos CO/4236/2011 and CO/4468/2011 delivered on 31 July 2012 with the reference [2012] EWHC 2254 (Admin). Those proceedings concerned the business interests of two individuals i.e. Robert Tchenguiz ("RT") and Vincent Tchenguiz ("VT") and the companies and trusts through which their businesses are carried on in relation to what was and is said to be the unlawful entry, search and seizures by or at the instigation of the defendant, the Serious Fraud Office ("SFO") at certain premises in London as well as the arrests and investigations connected to this. In broad terms, there are two groups of claimants i.e. those referred to as the R&H or VT Claimants and those referred to as the RT Claimants. In summary, the present claimants say that the effect of the searches, arrests and investigation and the publicity surrounding them had a disastrous effect on their business interests causing very extensive financial losses and reputational harm; and they now seek damages in these proceedings in the total sum of approximately £300 million. The substantive hearing of that claim is now scheduled to take place in 2014.
In the course of the original investigation about which complaint is brought in these proceedings, the SFO gathered material using its powers under s2 of the Criminal Justice Act 1987 (" CJA"). Following the court's order that the parties give disclosure in these proceedings, the SFO wrote to various third parties who could be identified as having provided documents to the SFO in the course of that investigation for their observations as to whether disclosure should be given of material provided by them to the SFO pursuant to the CJA. Several third parties objected to the SFO giving such disclosure on the basis, so it was said, that, pursuant to the CJA, the SFO was not legally entitled to give disclosure of such material absent the consent of the party who provided it.
The SFO does not agree with that position taken by those third parties. Hence, the SFO has issued the present application seeking a declaration in the following terms: " A declaration that [the SFO] is not prevented by the provisions of the Criminal Justice Act 1987 (" CJA") from giving disclosure in this action of documents received from third parties in response to notices under section 2 of the CJA and permitting inspection of such disclosed documents." That application has been served on the following third parties viz Royal Bank of Scotland, Deutsche Bank, BNP Paribas and Goldman Sachs International. In the event, only one of these third parties i.e. Deutsche Bank has appeared to make submissions in support of its position although, as I understand, the formal position of the other third parties remains unchanged. The claimants support the position taken by the SFO.
It is important to note that the declaration sought by the SFO is limited to the point of principle i.e. whether the terms of the CJA in effect prohibit the SFO from giving disclosure of the relevant documents or, in other words, whether there is an absolute bar on disclosure under the CJA. Thus, it is common ground that I am not concerned, at least at this stage, with any issue that might arise as to what specific documents might or might not be discloseable or be subject, for example, to any other statutory bar (eg. under the Official Secrets Act) or other claim for privilege. Notwithstanding, Mr Beloff QC on behalf of Deutsche Bank submitted that if, contrary to his primary position, there was no absolute bar under the CJA, it would, or at least might, be convenient for the court to pronounce at this stage on the principles which should inform the disclosure exercise that would then have to take place. In particular, Mr Beloff submitted that Deutsche Bank should not, as a result of the exercise of compulsory powers, be any worse off than if the application for disclosure had been made against Deutsche Bank directly. I recognise that that may be an important point which may have to be considered in due course. However, it does not seem to me to be appropriate to deal with it at this stage in particular because (i) the point does not strictly arise in the context of the present application for a declaration; (ii) both the SFO and the claimants had not had sufficient time to consider the point; and (iii) it seems to me that any such argument should, if possible, be considered not in the abstract but, if and when it arises, by reference to particular documents or classes of documents.
S1(1) of the CJA constitutes the SFO. Under s1(3), the Director has power to " investigate any suspected offence which appears to him on reasonable grounds to involve serious or complex fraud". S2 then provides for the investigation powers of the Director (s2(1)). In this context, s2(3) provides that:
" The Director may by notice in writing require the person under investigation or any other person to produce [at such place as may be specified in the notice and either forthwith or at such time as may be so specified], any specified documents which appear to the Director to relate to any matter relevant to the investigation or any documents of a specified class which appear to him so to relate; and—
(a) if any such documents are produced, the Director may—
(i) take copies or extracts from them;
(ii) require the person producing them to provide an explanation of any of them;
(b) if any such documents are not produced, the Director may require the person who was required to produce them to state, to the best of his knowledge and belief, where they are."
For these purposes, pursuant to ss2(4) to (6A), the SFO can obtain a warrant authorising a constable to enter (using such force as is reasonably necessary for the purpose) and search premises, and to take possession of documents. S2(10) allows obligations owed in respect of banking confidentiality to be overridden in the specific circumstances therein identified. S2(13) provides that:
" Any person who without reasonable excuse fails to comply with a requirement imposed on him under this section shall be guilty of an offence and liable on summary conviction to imprisonment for a term not exceeding six months or to a fine not exceeding level 5 on the standard scale or to both."
Accordingly, s2 of the CJA subjects the recipient of a notice to a compulsory obligation to produce the relevant documentation, enforceable by criminal sanction.
S3 of the CJA deals with disclosure of information. Ss3(1) and (3) provide that:
" (1) Where any information [to which section 18 of the Commissioners for Revenue and Customs Act 2005 would apply but for section 18(2)] has been disclosed by [Her Majesty's Revenue and Customs] to any member of the Serious Fraud Office for the purposes of any prosecution of [an offence relating to a former Inland Revenue matter], that information may be disclosed by any member of the Serious Fraud Office—
(a) for the purposes of any prosecution of which that Office has the conduct
(b) to the [Revenue and Customs Prosecutions Office] for the purposes of any prosecution of an offence relating to a former Inland Revenue matter; and
(c) to the Director of Public Prosecutions for Northern Ireland for the purposes of any prosecution of [an offence relating to a former Inland Revenue matter],
but not otherwise.
…
(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 but any information disclosed by virtue of this subsection may only be disclosed by a member of the Serious Fraud Office for the purposes of any prosecution in England and Wales, Northern Ireland or elsewhere and may only be disclosed by such a member if he is designated by the Director for the purposes of this subsection."
S3(5) provides that:
" Subject to subsections (1) and (3) above and to any provision of an agreement for the supply of information which restricts the disclosure of the information supplied, information obtained by any person in his capacity as a member of the Serious Fraud Office may be disclosed by any member of that Office designated by the Director for the purposes of this subsection–
(a) to...
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High Court Finds SFO Can Compel Production Of Documents Held By Foreign Company Outside The Jurisdiction
...against the SFO giving disclosure of documents obtained under its compulsory powers (see Tchenguiz v Rawlinson and Hunter Trustees SA [2013] EWHC 2128 (QB), considered here) - although the circumstances in which this is likely to be the case will be rare. Or, if it was known that the SFO ha......