Robert Tchenguiz (Appellant/Claimant) v Director of the Serious Fraud Office (Respondent/Defendant) HM Procureur for Guernsey and Another (Intervening Parties)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Jackson,Lady Justice Sharp,Lord Justice Vos |
| Judgment Date | 31 October 2014 |
| Neutral Citation | [2014] EWCA Civ 1409 |
| Docket Number | Case No: A3/2014/2548 and A3/2014/2577 |
| Court | Court of Appeal (Civil Division) |
| Date | 31 October 2014 |
and
[2014] EWCA Civ 1409
Lord Justice Jackson
Lady Justice Sharp
and
Lord Justice Vos
Case No: A3/2014/2548 and A3/2014/2577
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
THE HONOURABLE MR JUSTICE EDER
Royal Courts of Justice
Strand, London, WC2A 2LL
Miss Catherine Newman QC and Mr John Robb (instructed by Stephenson Harwood LLP) for the Appellant and the second Intervening Party.
Mr Pushpinder Saini QC and Mr James Segan (instructed by The Treasury Solicitor) for the Respondent
Mr Khawar Qureshi QC (instructed by Law Officers of The Crown, Guernsey) for the first Intervening Party
Hearing dates: 13 th & 14 th October 2014
This judgment is in seven parts, namely:
| Part 1. Introduction | Paragraphs 2 to 11 |
| Part 2. The facts | Paragraphs 12 to 46 |
| Part 3. The application for permission to make use of disclosed documents | Paragraphs 47 to 51 |
| Part 4. The appeal to the Court of Appeal | Paragraphs 52 to 54 |
| Part 5. The law | Paragraphs 55 to 67 |
| Part 6. Decision | Paragraphs 68 to 96 |
| Part 7. Executive summary | Paragraphs 97 to 101 |
This is an appeal against an order of the Commercial Court refusing permission for documents disclosed in English litigation to be used in litigation proceedings in Guernsey. The principal issue is whether the judge correctly weighed up the conflicting public interests which are in play.
Mr Robert Tchenguiz was first claimant in the English litigation ("the Tchenguiz proceedings"). He was applicant in the application to the judge and is appellant in this court. I shall refer to him as "RT".
R20 Ltd ("R20") is a company controlled by RT. It was second claimant in the Tchenguiz proceedings, but not a party to the present application or appeal.
Rawlinson and Hunter Trustees SA ("R & H") is a company incorporated in Switzerland. It is the current trustee of the Tchenguiz Discretionary Trust ("TDT") of which RT and his family are the principal beneficiaries. R & H was third claimant in the Tchenguiz proceedings (in its capacity as trustee of the NS1 Trust and Tchenguiz Discretionary A Trust) and second intervening party in the present appeal.
The Director of the Serious Fraud Office ("the Director") was defendant in the Tchenguiz proceedings and is respondent in the present appeal. I shall refer to the Serious Fraud Office as "SFO".
Mr Vincent Tchenguiz ("VT") is the brother of RT. Although he too has been embroiled in complex litigation about related matters, he only appears on the fringes of the present appeal. I shall refer to RT and VT collectively as "the Tchenguiz brothers". VT and his family are the principal beneficiaries of the Tchenguiz Family Trust.
Other abbreviations which I shall use in this judgment are as follows:
"BVI" means British Virgin Islands.
" CJA 1987" means Criminal Justice Act 1987.
"CPR" means the Civil Procedure Rules 1998, as amended.
"CPS" means Crown Prosecution Service.
"Eliza" means Eliza Ltd, a company registered in the BVI.
"GCA" means Guernsey Crown Advocate.
"Glenalla" means Glenalla Properties Ltd, a company registered in the BVI.
"HMP" means HM Procureur of the Bailiwick of Guernsey.
"Investec" or "ITGL" means Investec Trust (Guernsey) Ltd, a company registered in Guernsey and the former trustee of TDT.
"Kaupthing" means Kaupthing Bank hf, which was once the largest Icelandic bank but became insolvent and collapsed in October 2008.
"LOR" means the Letter of Request dated 26 th August 2011, referred to in Part 2 below.
"Oscatello" means Oscatello Investments Ltd, a company registered in Guernsey.
"SPV" means special purpose vehicle.
"Thorson" means Thorson Investments Ltd, a company registered in the BVI.
"WGM" means Weil, Gotshal and Manges, the American international law firm.
The Crime (International Co-operation) Act 2003 ("the 2003 Act") provides a framework within which the SFO and similar bodies may co-operate with overseas authorities in the investigation of crime. Section 7 of the 2003 Act provides:
" Requests for assistance in obtaining evidence abroad
(1) If it appears to a judicial authority in the United Kingdom on an application made by a person mentioned in subsection (3) —
(a) that an offence has been committed or that there are reasonable grounds for suspecting that an offence has been committed, and
(b) that proceedings in respect of the offence have been instituted or that the offence is being investigated,
the judicial authority may request assistance under this section.
(2) The assistance that may be requested under this section is assistance in obtaining outside the United Kingdom any evidence specified in the request for use in the proceedings or investigation.
(3) The application may be made —
(a) in relation to England and Wales and Northern Ireland, by a prosecuting authority."
Section 9 of the 2003 Act provides:
" Use of evidence obtained
This sectionnoteType=Explanatory Notes has no associated
(1) This section applies to evidence obtained pursuant to a request for assistance under section 7.
(2) The evidence may not without the consent of the appropriate overseas authority be used for any purpose other than that specified in the request."
Having set out the relevant statutory provisions, I must now turn to the facts.
RT is a businessman, who has operated a range of businesses through a complex corporate structure based offshore. At the centre of this structure is the Tchenguiz Discretionary Trust ("TDT"), of which RT and his family are the principal beneficiaries. For many years the professional trustee which administered the TDT was Investec. On 2 nd July 2010 R & H replaced Investec as trustee. Since that date R & H has been administering the TDT.
R20 is a UK company owned by RT and based in London. At all material times RT has been a director of R20. R20 is the vehicle through which RT has conveyed to the trustees his wishes as to what investments should be made and what transactions should be effected by TDT's trustees.
TDT used a number of offshore companies to carry out individual transactions. Many of these were SPVs. Oscatello, which was registered in the BVI, controlled a number of these companies.
By the autumn of 2007 TDT had built up a substantial share and property portfolio. It had acquired these assets with extensive financial support from Kaupthing.
In early 2008 Kaupthing made further loans to Oscatello. By 30 th May 2008 Oscatello's indebtedness to Kaupthing was approximately £600 million. Between January and July 2008 Kaupthing made money market loans to Oscatello totalling £345 million. Of these loans £143 million was repaid, but £156 million was outstanding when Kaupthing collapsed.
As is well known, during the summer and autumn of 2008 the financial markets deteriorated significantly. On 15 th September Lehman Brothers collapsed. On 8 th/9 th October Kaupthing collapsed. By then the indebtedness of Oscatello to Kaupthing substantially exceeded the value of its assets and the value of the security which Oscatello had provided to Kaupthing.
On 9 th October 2008 a Resolution Committee was appointed to get in the assets of Kaupthing and to make recoveries for the creditors. Grant Thornton Iceland was a member of the Resolution Committee. In mid-November 2008 the Resolution Committee instructed WGM to examine Kaupthing's lending to entities associated with RT.
On 13 th November 2008 the TDT companies entered into a series of transactions through which the security previously pledged to Kaupthing for loans to Oscatello was replaced by "payment in kind" notes. The purpose of these transactions appears to have been to put certain assets of substantial value beyond the reach of Kaupthing's liquidators, at least for the time being. Investec immediately notified the Resolution Committee of the transactions.
In December 2008 the Resolution Committee brought proceedings in the BVI against Investec and the Oscatello companies. Those proceedings were settled in June 2010 for £137 million.
In December 2008 WGM and Grant Thornton presented a report to the Resolution Committee. This report concluded that Kaupthing's lending to TDT and its associated companies had been highly irregular. There was strong prima facie evidence that potentially fraudulent activities had taken place within Kaupthing with regard to the TDT/Oscatello lending.
On 13 th May 2009 Kaupthing obtained judgment against Oscatello in Iceland for £643.92 million.
On 15 th December 2009 the Director of the SFO authorised a formal investigation into possible criminal offences committed by RT and his brother VT. The Director exercised his statutory powers to require Grant Thornton to produce reports which they had prepared.
On 24 th March 2010 Grant Thornton made a presentation of its findings to the SFO. Grant Thornton alleged that Oscatello appeared to have been technically insolvent from late 2007; this had been masked by successive reconstructions. According to Grant Thornton, there were documents which appeared to show R20 instructing Kaupthing to give unqualified support, notwithstanding the insolvent position of Oscatello; it appeared that RT and VT were protected at a senior level...
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